Dish Network and EchoStar Corp are still slated to merge back, but having flip-flopped on which one will be the parent.
The companies disclosed in a filing with U.S. Securities and Exchange Commission that they are reversing their original plan, and will now merge with EchoStar as the parent company. The two companies said in August that they intended to recombine, and expect the deal to close by the end of the year.
It’s unclear why the companies, both founded and led by billionaire Charlie Ergen, are opting for the switcheroo. The companies note that despite the new ownership structure, Dish shareholders will still own 69% of the combined company, while EchoStar shareholders will own the remaining 31%.
The merger represents a reunion of the two companies, which split in 2008 so each could focus on different aspects of the satellite business. Echostar focuses on satellite communication and networking technologies, while Dish provides pay-TV services through satellite and streaming services through Sling TV. The two are combining to better push into the mobile business, which Dish has spent billions of dollars building out.
“This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business,” Ergen said in August. “Dish’s substantial past investments in spectrum and its wireless buildout, combined with EchoStar’s recent launch of JUPITER 3, are expected to significantly reduce near-term CAPEX requirements.”
Echostar CEO Hamid Akhavan will serve as CEO of both companies, with Ergen retaining his role as executive chairman.
Dish, with roughly $21 billion in debt, has struggled to secure loans to continue its 5G network buildout, or even to buy spectrum from T-Mobile, and needs the combination to shore up its financial shape.
Dish is obligated by the Federal Communications Commission to cover 75% of the country with its 5G network by 2025, no small task given most of the more populous areas are already completed. The company just met its threshold of covering 70% of the country earlier this year.