Dish Network reported a small drop in third-quarter revenues after losing both pay-TV and mobile subscribers. Revenue dropped to $4.45 billion from $4.53 billion a year earlier, while net profit improved over the same period to $557 million from $505 million, helped by improved profitability at the mobile business following the integration of various acquisitions.

DISH Network’s 2021 revenue through the third quarter totaled $13.43 billion, compared to $10.94 billion in revenue from the same period last year. In the first nine months of 2021, net income attributable to DISH Network totaled $1.86 billion, compared with $1.03 billion during the same period last year.

Dish said it lost 13,000 pay-TV subscribers in the quarter, compared to a net increase of 116,000 in the year-ago quarter. It ended September with a total 10.98 million TV customers, including 8.42 million Dish satellite users and 2.56 million subscribers for the streaming service Sling TV.  That compares to 8.55 million Dish TV subscribers and 2.44 million Sling TV subscribers at the end of June.

At the mobile (MVNO) business, the company lost 121,000 retail customers in Q3, less than the drop of 212,000 in the year-ago quarter. The company blamed the decline on device shortages, ongoing integration and optimization of operations and the pending closure of T-Mobile’s CDMA network. Dish closed the quarter with 8.77 million retail wireless subscribers, down 6.8 percent from a year earlier, and Q3 wireless service revenue was down 4.1 percent to $1.04 billion.

Dish said the construction of its 5G Open RAN network is underway in 35 markets across the U.S. and confirmed it’s started a consumer beta service on the network in Las Vegas. Capex for the network build jumped to $281 million in the third quarter from $22 million a year ago, and Dish said spending will ramp up further in the rest of 2021 to support the roll-out.

Analyst Craig Moffett isn’t able to evaluate Dish’s wireless business at this time. He wrote in a note to clients:

We’re still years away from any real understanding of Dish’s wireless prospects. A  discounted cash flow would be utterly absurd (How many subscribers? In what business segments? At what ARPU? At what margin? After what capex?).

We still don’t even know what or where they are building, so answering any of those questions would be little more than throwing darts. In the dark. And what will we learn from their Las Vegas beta? Nothing important, in all likelihood, other than “yes, the equipment seems to work.” Spectrum-based valuations that assume that Dish is a liquidation play aren’t much better. Sure, they’re easier to ground in some sort of reality (there are, at least, comps). But this methodology is all but impossible to reconcile with use-it-or-lose-it FCC buildout requirements that come before the window to sell opens.

Well, consider that Dish’s long-term tower lease obligations now total more than $13.6B [1.]. For a 5G network that is supposedly only going to cost $10B to build [2.] – and, yes, they haven’t even started really “building” yet – they are already $14B underwater. And that doesn’t count the $62M of EBITDA losses on the segment this quarter… and whatever they might have spent on the ongoing 3.45 GHz spectrum auction.

Note 1.  Dish has signed tower lease agreements with each of the big four tower companies. Dish Network’s 10-Q report details their “other long-term obligations,” which represent minimum payments related to tower obligations, certain 5G Network Deployment commitments, obligations under the NSA with AT&T, and satellite-related and other obligations.” The total tower lease obligation is currently $13.6B.  It is notable that this obligation now far exceeds the $10B Dish said would be the total 5G network cost.  Yet Dish has barely started spending on the network yet.

Note 2.  Boost Mobile America founder Peter Adderton said the the actual cost to build Dish’s 5G network may be closer to $20 billion, according to a Seeking Alpha article.