EchoStar has decided to delay a potential bankruptcy filing, buying more time for negotiations with regulators. The company is under scrutiny concerning its compliance with conditions linked to its spectrum licenses.
On June 26, EchoStar announced it would meet overdue interest payments, avoiding immediate default. However, the company will not pay approximately $114 million in interest due July 1, triggering another grace period. This decision reflects ongoing uncertainty surrounding its regulatory standing with the U.S. Federal Communications Commission (FCC).
According to Jonathan Chaplin, an analyst at NewStreet Research, EchoStar is essentially postponing a Chapter 11 filing to secure an agreement with the FCC. However, he notes that a filing remains likely if negotiations prove unsuccessful. The FCC is reviewing EchoStar's adherence to terrestrial network buildout obligations in the AWS-4 band, along with its utilization of adjacent 2 gigahertz spectrum for satellite services.
In April, prior to the FCC’s inquiry, SpaceX publicly claimed that EchoStar had failed to meet the FCC’s 70% 5G buildout requirement in the AWS-4 band by the December 31, 2023 deadline. EchoStar refutes this claim. A June 26 regulatory filing mentioned that U.S. President Donald Trump had encouraged a mutually agreeable resolution; however, EchoStar emphasized that no resolution has been reached and may not be reached.
"The operator is effectively “pushing off a Chapter 11 filing to provide adequate time to reach an agreement with the FCC while signaling that they will still file if they can’t come to terms with the agency,” said Jonathan Chaplin, an analyst at NewStreet Research.