EchoStar Signals Satellite Investment

23 March 2006

US satellite operator EchoStar Communications is to hike its spending on transmission hardware to the tune of $1.6 billion (€1.32bn; £916m).

The Colorado-headquartered operator of the Dish TV service is to expand its satellite fleet and plans to lease some of the extra capacity to other companies.

Increased competition from rival cable and satellite services has prompted Echostar chairman/ceo Charles Ergen to take the long view and see beyond soaring fourth quarter profits [WAMN: 17-Mar-06].

In a filing to the Securities and Exchange Commission, EchoStar says: "In addition to our [satellite-television] business plan we are exploring business plans" for additional satellites at as many as five orbital slots.

Lehman Brothers analyst Vijay Jayant says some of the new satellites are intended as replacement and supplemental capacity "to allow EchoStar to leapfrog cable-television providers" in beaming down high-definition programs to homes.

However, he adds, if HDTV fails to set viewers' hearts racing, EchoStar can become a "satellite player" in the wholesale arena.

And Carmel Group consultant Jimmy Schaeffler avers that the EchoStar filing reveals that Ergen has decided "he can be a middleman in wholesaling incremental capacity and still do quite well".

Data sourced from Wall Street Journal Online; additional content by WARC staff