Satellite Giant Hughes Network Systems Faces Impending Bankruptcy
Satellite company Hughes Network Systems, an EchoStar subsidiary, is preparing to file for bankruptcy. The move follows a massive $1.5 billion debt repayment deadline due on August 1.
The satellite company Hughes Network Systems, a subsidiary of the telecommunications conglomerate EchoStar, is preparing to file for bankruptcy within a few days. This move comes against the backdrop of a massive debt repayment of $1.5 billion due on August 1, according to a report in The Wall Street Journal.
According to the report, which relies on sources familiar with the matter, Hughes may file the request as early as this coming Sunday, without a structured or pre-agreed plan with its creditors to settle the debts.
As of the end of the first quarter of the year, the company held cash in the amount of only $102 million. Already in EchoStar's financial report for March, it was noted that without raising capital, refinancing debt, or reorganization, Hughes would suffer from a lack of liquidity to meet its obligations. The EchoStar corporation refused to comment on the report.
Implementing the bankruptcy process will mark the second consecutive blow for the parent company EchoStar in less than a month. At the end of last June, another subsidiary of the conglomerate, Dish DBS, voluntarily filed for a Chapter 11 process as part of a reorganization plan. As part of the move, the closure of the Dish Wireless network operation is planned, following the signing of deals to sell radio frequencies to the companies AT&T and SpaceX.
The economic difficulties come in parallel with a strategic change that Hughes is implementing, shifting the center of gravity from providing satellite internet services to the private sector toward the business market. The transition comes mainly due to the strengthening of competitors operating using satellites in low earth orbit (LEO), led by SpaceX (Starlink) and Amazon.
In the first quarter of the year, Hughes recorded a loss of about 58,000 private subscribers — an increase compared to the loss of 30,000 subscribers in the corresponding quarter — and ended the period with only about 681,000 customers. As part of the change trend, the company is working to expand its services to the business sector, including signing deals with airlines such as Delta and Ajet, with the goal of reaching a situation where the bulk of its revenues will come from the business segment in the coming years.
