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EchoStar Hughes Unit Adds 53K Satellite Broadband Subs in Q3

Hughes Network Systems, a unit of EchoStar, tallied 53,000 new satellite broadband subs in Q3 2017, extending that total to 1.14 million and improving on a year-ago decline of 12,000 subs.

As of September 30, Hughes had about 340,000 subscribers on its new Gen5 platform, which delivers up to 25 Mbps down and 3 Mbps up. Gen5, which entered service in March, and delivers speeds that are aligned with the FCC’s current definition of “broadband.”

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“We continue to believe that the market for satellite broadband in the United States remains large, and [represents] over 18 million households, with about half of these being unserved and the other half underserved by existing wireline technologies,” Pradman Kaul, Hughes’ CEO and president, said on Wednesday’s earnings call.

He noted that the satellite broadband market here has fewer than 2 million subs, so Hughes still believes that there’s “significant opportunities for material growth” in that segment.

But some analysts aren’t impressed with Hughes's current rate of growth. One on today’s call asked why Hughes hasn’t been able to secure more customers and if more marketing or partnerships were needed to move the needle.

Pradman said Hughes is pleased with its progress, but is also hopeful that those sub numbers will rise more rapidly as it sees improvements in churn.

He said earlier in the call that new Gen5 service has helped to improve churn, and that it’s seeing strong demand in areas covered by DSL.

Michael Dugan, EchoStar’s president and CEO, added that the company is also being careful to ensure that it’s getting the “right consumers” on board.

"We’ve learned some hard lessons from other businesses,” Dugan said. “We could increase the number of gross ads and even net adds, but in the long term some of those subs won’t stick with us. We are very focused on the right sub base.”

Pradman continued to downplay the threat posed to Hughes from fixed wireless broadband services.

“The impact of wireless is limited because as we see growth of LTE and 5G, frequencies they are operating in and the markets they're operating in involved in are not markets we are going into…We continue to go after the unserved and underserved markets, where we don't see an expansion of the 5G and the LTE networks.”

Looking ahead, Hughes has contracted Space Systems Loral to build a next-gen satellite – EchoStar XXIV/Jupiter 3 -- that will enable the company to offer speeds of 100 Mbps or more in the U.S., Canada, Mexico, Brazil, as well as other parts of South America. 

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Pradman noted that the new satellite, which isn't expected to launch until early 2021, will use beam coverage to reach areas where it anticipates the most demand, rather than using it for uniform blanket coverage.

“Our new satellite will be the engine that powers our future growth,” he said.