EchoStar is thinking inside the box. The company provides TV set-top boxes (STBs) primarily to former parent DISH Network, as well as similar satellite service providers. Its STB portfolio includes HD and standard definition devices that incorporate digital video recorders. Other products include satellite dishes, remote controls, and cable receivers. EchoStar also owns Sling Media, which sells STBs that enable customers to view their home TV signal on Internet-connected devices. Subsidiary Hughes Communications provides Internet service to consumers in North America and network services and systems to businesses worldwide. The US accounts for most of sales.
The company's EchoStar Technologies segment accounts for just more than half of sales and includes its STB and digital broadcasting operations. The Hughes broadband Internet segment contributes about 35% of sales and EchoStar Satellite Services (satellite capacity leasing, primarily to DISH Network) generates about 10%.
EchoStar has operations across the US and in Brazil, Germany, India, The Netherlands, the UK, and Ukraine. Its largest market is the US, which accounts for about three-fourths of sales.
Sales and Marketing
DISH Network is far and away EchoStar's largest customer, accounting for about three-fourths of sales and 90% in both the EchoStar Technologies and EchoStar Satellite Services segments, respectively. The only other customer of note is Bell TV, which accounts for nearly 5% of the Technologies segment's revenue.
EchoStar has reported unprecedented revenue growth the last few years. Revenues climbed 5% from $3.12 billion in 2012 to peak at a record-setting $3.28 billion in 2013. Profits, on the other hand, have fluctuated; after rising in 2012, profits nosedived by 98% from $211 million in 2012 to nearly $3 million in 2013.
The historic revenue growth in 2013 was driven by a 19% surge in Satellite Services sales, a 5% spike in sales from Hughes, and a 3% jump in Technologies sales. The major profit plunge for 2013 was attributed to higher operating expenses including depreciation and amortization which increased by $50 million together with higher impairment of long-lived assets charges and cost of sales. EchoStar's operating cash flow increased steadily from 2010 to 2012, but decreased by $55 million in 2013 due to the lower profits.
EchoStar sees the still-growing demand for broadband services as a rich source of growth opportunities. Besides looking for additional customers for its STBs, the company's strategy includes capitalizing on the proliferation of advanced technologies in its boxes that could spark replacement cycles. EchoStar also has dormant satellite and fiber capacity that it hopes will tempt more customers, such as vendors of pay-TV, satellite-based broadband service, corporate communications, and government services. Bundling services and reaching new markets are high on its list of priorities. Customers outside the US are also particularly attractive. EchoStar considers the more modest cable and telecom infrastructures in many global markets to be particularly suited for satellite-delivered services that could be deployed more quickly.
Mergers and Acquisitions
In late 2013 EchoStar acquired Solaris Mobile, a company based in Ireland and licensed by the European Union, to provide mobile satellite services and complementary ground component services covering the entire European Union. The deal allowed EchoStar to commercialize the license through its satellite and terrestrial technology capabilities and fortified its reach in Europe.