Satellite Networks

What next for Hughes after bankruptcy filing?

What next for Hughes after bankruptcy filing?

Satellite internet company Hughes Satellite Systems Corporation, a unit of telecommunications company EchoStar, has announced that it and some of its US subsidiaries, including Hughes Network Systems, have filed voluntary chapter 11 petitions in a Texas bankruptcy court.

The aim of the move, says the company, is to facilitate a financial and operational reorganisation. The company has explained that it plans to continue serving customers while refocusing operations on its enterprise, government and defence lines of business, assuming it is permitted to continue to operate its businesses during the process.

Hughes says it has sufficient liquidity to fund its operations in the near-term and will seek to use its existing cash as it works to right-size the company’s balance sheet.

However, a number of reports note that the Hughes is seeking relief for a US$1.5 billion debt that matured on 1 August with payment due Monday 3 August. They point out that the Hughes filing says it lacks the cash and access to capital markets to pay off the debt. The company apparently had US$102 million in cash on hand as of the end of March, according to its May earnings report.

It has also been suggested that the Hughes filing arrives without a pre-negotiated restructuring plan. In addition, this event marks the second Chapter 11 filing from the EchoStar family in a matter of weeks, following subsidiary DISH DBS Corporation’s prepackaged bankruptcy on June 30th. That said, this week saw EchoStar swing to a profit in the recent quarter.

Hughes provides broadband internet services to about 641,000 consumers in rural communities in North and South America. It also serves defence, airline and government customers. Indeed, earlier this year, Air India selected the Hughes In-Flight connectivity solution to deliver what is described as a consistent Wi-Fi experience using a common connectivity platform across its mixed widebody fleet.

One problem for Hughes' business may be increasing competition from low-Earth-orbit (LEO) satellite providers like Starlink. It may be that Hughes’ geostationary satellite technology cannot offer the levels of performance – and in particular low latency – consumers now expect.

Hughes satellites are powered by JUPITER system technology, while its fleet of high-throughput satellites (HTS) supports a wide range of consumer, small business, enterprise, in-flight and mobile services across two continents.



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