Dish Network to cut Capex by building virtual 5G network

U.S. satellite TV provider Dish Network said it would cost $10 billion to build out its virtual 5G network, which relies less on company-specific hardware and software for upgrades.
DISH Network retail store
Dish Network in July 19, 2019 announced the appointment of Kannan Alagappan as chief technology officer reporting to Dish Network CEO Erik Carlson. Kannan Alagappan has held technology leadership roles with telecom and cloud services providers, including Reliance Jio, Telstra and Rackspace.

Dish Network did not disclose its strategy on the analyst call on Wednesday, but estimated spending $250 million to $500 million for its wireless build-out in 2020, half of its prior forecast for 2019 and 2020, Reuters reported.

Dish will benefit from the $26 billion merger deal between T-Mobile and Sprint, which received the final green light from a federal judge last week. The merger includes Dish acquiring Sprint’s prepaid phone businesses and T-Mobile cell towers to create the fourth-largest U.S. wireless carrier.

Dish has committed to providing 5G to at least 70 percent of the U.S. population by 2023. Dish would face $2.2 billion in fines from the U.S. Federal Communications Commission (FCC) if it misses the deadline.

Dish Chairman Charlie Ergen said Dish’s 5G strategy makes the company “a different animal.”

“Some big incumbents today spend as much money in a year or two just to maintain their networks as we’ll spend to build the network,” Ergen said.

“Sure, virtualization will help significantly reduce Dish’s cost of equipment,” said Craig Moffett, an analyst at MoffettNathanson, in a note.

But equipment is only 20 percent or so of the cost of building a network. Labor, tower leases and zoning and other expenses could exceed $10 billion, Craig Moffett said.

Dish has struggled to retain pay-TV subscribers as it re-positions itself as a wireless phone carrier, because customers are shifting to online streaming services including those from Netflix, Walt Disney and Apple.

Dish’s pay-TV business, which includes satellite TV and streaming service Sling TV, lost 194,000 subscribers in the fourth quarter, fewer than the 334,000 lost a year earlier.

Sling TV had 94,000 fewer subscribers in the quarter, its first subscriber loss ever.

Dish Network said its total revenue fell 2.1 percent to $3.24 billion from $3.31 billion in the year-ago quarter. Net income rose to $389 million, or 69 cents per share.