Dish Network is set to merge with its sister company Echostar in a move targeted at creating a terrestrial-satellite telecommunications powerhouse, but just what will the combined entity do with its newfound opportunity?

When the deal was announced earlier this month, company executives touted the financial and market strength the combined company will have compared to them continuing to operate on their own.

On their own, Dish Network lost 188,000 wireless customers during the second quarter and witnessed its net income plunge from $523 million during Q2 of 2022 to just $200 million this year. Echostar also lost satellite broadband customers during the most recent quarter and posted a 13% drop in net income compared to Q2 2022.

Charlie Ergen, who is chairman of both entities, said the merger deal will provide a targeted savings of $150 million per year in earnings before interest, taxes, depreciation and amortization (EBITDA). “That will create a more robust capital structure and provide financial flexibility [and] position the company for growth and value creation,” Ergen said.

This savings will also be boosted by a near-term drop in capex by Dish Network, which recently hit a 5G converge milestone that allow it to take a deployment investment breather, and Echostar successfully completing its Jupiter 3 satellite launch that allows for reduced near-term capex investments.

Despite the current dour financial picture, the combined entity does have a lot of potential value.

Echostar CEO Hamid Akhaven, who will keep that title as part of the new combined entity, explained that Dish Network’s spectrum holdings have a value in excess of $35 billion, and for that spectrum portfolio to “support an additional $10 billion or more in financing capacity, in conjunction with additional potential sources of liquidity.”

“Combining will strengthen our capital structure to position the company for sustainable growth moving forward,” he added.

“I think the combination with Echostar is a positive for Dish,” Roger Entner, founder of Recon Analytics, said in a recent podcast. “Both entities are controlled by Charlie Ergen. One is highly indebted, struggles with cash flow and tries to build a network. The other one is in the satellite business, Dish buys their satellite, has good cash flow and is not indebted. So you put together the two things and I think they can finally raise money.”

Dish Network is indeed sitting on a lot of debt, but also a lot of valuable spectrum spread across low-, mid- and high-band spectrum bands. Its initial 5G network deployment taps into its 600 MHz, AWS-4 (2 GHz), Lower 700 MHz E-Block and AWS H-Block (1.9 GHz) spectrum licenses.

Dish Network is also sitting on an option to purchase always valuable low-band spectrum from T-Mobile US. That deal was part of T-Mobile’s acquisition of Sprint and provides Dish Network with the ability to purchase approximately 14 megahertz of nationwide spectrum in the 800 MHz band. The deal as written puts a minimum $3.6 billion price tag on that purchase, which would fall to just a $72 million penalty payment should Dish Network back out of the purchase.

Ergen, sticking to his long-held “gambler” moniker, held his plans for the deal close to his vest, but he did cause some consternation with financial analysts by dismissing the belief there was a deadline for Dish Network to decide on the spectrum acquisition.

“We don’t think there’s a hard date at this point,” Ergen said when asked about an August 11 deadline. “I think both sides are hopefully negotiating in good faith and we'll see where that goes. But from an investor point of view, if we're able to construct a transaction that will be positive and it won't affect Dish’s balance sheet.”

T-Mobile US CEO Mike Sievert during his company’s most recent earnings call on July 27 stated that the deadline for that deal had “come and gone,” adding that “they asked for some additional time of the [Department of Justice] and we did not object to that.”

“And so we have committed that we would not terminate their agreement and right to do that at any time before August 11,” Sievert added. “We’re in discussions with Dish about whether or not there might be a win-win that’s different from their initial privilege. And if there is, that would be wonderful. But obviously, that deadline is coming. But our view was it was worth taking the extra time, especially since they asked for it in case there’s a bigger win-win to be had here.”

But what will the combined entity do with that strengthened capital structure?

Dish Network management has stated ambitions to attract up to 40 million wireless customers by 2030, however it has been cryptic on how it will achieve that mark against established rivals like Verizon, AT&T, and T-Mobile US. It has hinted that its fully virtualized 5G network will allow it to offer unique services in the market to both retail and enterprise customers that will differentiate it from competitors.

“We’re building the first architecture that is truly optimized for the cloud. It promises tremendous advances, not just for human communications, but also for machine to machine, and of course for humans to control those machines,” Marc Rouanne, Dish Network’s EVP and chief network officer, said during the Amazon Web Services (AWS) re:Invent show in 2021.

During an interview on CNBC, Ergen linked the Dish-Echostar combination as having worldwide access to spectrum tied to low-earth orbiting (LEO) communications “that just happens to be a spectrum that's ideal for IoT and devices and sensors, but also for handsets.”

“You've seen reports of people saying that’s a $25-billion-plus business in the future,” Ergen said during that interview. “Suddenly … together we have some of those assets in place. And so I think when you have the kind of portfolio we have as a company, whether it be assets or technology or management, I think there's a lot of opportunity for us.”

Dish Network’s management also touted possible market acquisitions. It chimed in positively on the recent announcement from regional telecommunications provider Telephone and Data Systems (TDS) that it was exploring “strategic alternatives” for its Chicago-based U.S. Cellular wireless operations.

“They have towers, they have spectrum and they operate in geographies that we haven't fully built out so it'd be something that we'd be interested in looking at,” Tom Cullen, EVP of corporate development at Dish Network, said during the presentation.

U.S. Cellular earlier this month touted progress in two areas of admitted interest to Dish Network: private wireless and fixed-wireless access (FWA).

The regional carrier said it recently surpassed 100,000 FWA customers running across its 4G LTE and 5G network. That number might pale in comparison to the millions of FWA customers being served by nationwide rivals, but does represent a growth angle for operator’s otherwise customer-losing mobile business.

U.S. Cellular said it expects to grow its FWA base as it starts to add more robust spectrum assets to its network and take advantage of the National Telecommunications and Information Administration’s (NTIA’s) Broadband Equity Access and Deployment (BEAD) program.

“Based on our conversations with state officials, we believe that fixed wireless [has] a meaningful role in connecting the unserved and underserved in America,” U.S. Cellular CEO Laurent Therivel said during TDS’ earnings call earlier this month. “We believe we're well positioned to participate in that space. We expect to be able to compete for about $7.5 billion in broadband funding that will help us subsidize tower builds that aren't economical otherwise.”

U.S. Cellular also announced a program with Ericsson to provide a private 5G network service targeted at different enterprise verticals. Ericsson has been cautious on that market, but CEO Börje Ekholm recently told investors that the vendor was “starting to see some very interesting use cases for our dedicated networks in manufacturing.”

Ergen has repeatedly touted Dish Network’s potential in the lucrative private 5G business. He previously stated that market could be worth anywhere from $30 billion to $100 billion, and that “it’s unquestionable that there’s really only four companies that can participate in a large degree in the private network business that has” access to licensed spectrum.

“We’re a connectivity company,” Ergen noted. “We think fixed wireless is part of what we do, whether it be from satellite, whether it be from terrestrial.”