SBC Communications is teaming with EchoStar Communications to offer a co-Branded satellite TV service as part of its integrated local, long distance, wireless and DSL bundle. The deal is an exclusive telecom partnership for single-family residences throughout the SBC 13-state traditional service area, where SBC provides service to more than 56 million access lines. The two companies will begin work immediately on integrating operations, including order entry, customer service and billing, so they can begin offering customers the co-branded service in early 2004. EchoStar’s DISH Network currently reaches more than 8.5 million customers nationwide. SBC said the strategic alliance fulfills a long-term strategic objective to integrate television entertainment into its consumer bundles. Key elements include extensive co-branding and a single bill for consumers. SBC will also provide integrated customer relationship management.
Longer term, the companies agreed to develop technology that combines the functionality necessary to conveniently receive DISH Network satellite television, DSL Internet and home networking as well as more convenient ways to receive SBC DISH Network bundled services.
As part of the deal, EchoStar Communications issued and sold a $500 million 3.0 percent convertible subordinated note due 2010 to SBC Communications. The note is an unsecured obligation of EchoStar convertible into approximately 6.87 million shares of EchoStar’s Class A Common Stock at the option of SBC ($72.82 per share), subject to adjustment in certain circumstances. Commencing July 21, 2008, EchoStar may redeem, and SBC may require EchoStar to purchase, all or a portion of the note without premium.
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- EchoStar Communications’ DISH Network satellite service added 350,000 net new subscribers in Q1 2003, giving the company a total base of 8.53 million subscribers. During Q1, EchoStar reported total revenue of $1.36 billion, a 23% increase over Q1 2002. EBITDA totaled $277 million, an improvement of $100 million compared to $177 million for the corresponding period in 2002. Free cash flow from operations totaled $125 million for the quarter.
Earlier this month, EchoStar Communications Corporation awarded a contract to Marconi to supply a Distributed Protection Switching solution for EchoStar’s video transport network. Equipment purchased by EchoStar includes Marconi’s ASX-4000 40 Gbps switch-router, TNX-1100 10 Gbps and TNX-210 2.5 Gbps switch-routers and ForeThought system software.
