The most recent consolidation ahead of the massive OneWeb rollout beginning next year, presents an excellent entry opportunity. I originally published a buy rating on Echostar in this report back in early December of 2017. The stock is only up 1.5% since the stock went out to Premium members.
In case you haven’t heard about OneWeb, OneWeb’s mission is to enable affordable Internet access for everyone, connect every school on Earth, and bridge the digital divide by 2027. OneWeb is building a communications network with a constellation of Low Earth Orbit satellites that will provide connectivity to billions of people around the world. With more than 7 terabits per second of new capacity in its first constellation, it will transparently extend the networks of mobile operators and ISPs to serve new coverage areas, bringing voice and data access to consumers, businesses, schools, healthcare institutions and other end users.
Half of the world’s population does not have access to reliable 3G internet. OneWeb is a massive installation of 700+ satellites that will be deployed around the world, bringing the internet to everyone. You can read more about OneWeb here.
This is the biggest technological upgrade for the entire planet EVER and its coming fast. For example, in 2019, all of Alaska will be online and have access to the internet.
Echostar’s subsidiary Hughes is building the ground systems that will communicate with the satellites. Echostar currently has a $300 million contract with OneWeb and that is likely to grow. The contract includes production of the gateway sites each with multiple tracking satellite access points to support operation and handoff of high-speed user traffic between satellites. The contract includes equipment to support multiple satellite access points in gateway locations around the world, each including a custom switching complex, outdoor modems, and power amplifiers. Shipments are expected to begin in mid-2018.
Think about. If you’re an ISP, you’re going to be buying this equipment made by Echostar and installing these gateway locations near rural areas that currently don’t have good coverage. It wouldn’t surprise me if Echostar has a growing backlog of orders and intense demand likely to come from ISPs and cell operators around the planet. I know of a rural community near me that is up in the foothills that has horrible and unreliable internet access. If I owned a plot of land, I’d try to get in on installing a OneWeb gateway system on that plot of land and then make a little money off of all the traffic (including cellular backhaul) that came through my gateway system. I’m sure it’s more complicated than that and requires some FCC license or something but you get my point. ISPs and municipalities would be dumb not to purchase these gateway systems and install them everywhere. I mean consider these stats just for Alaska: there are 161,000 people in Alaska without access to a wired connection capable of 25mbps download speeds, there are 237,000 people in Alaska that have access to only one wired provider–leaving them no options to switch, there are another 57,000 people in Alaska that don’t have any higher-speed wired internet providers available where they live.
It’s more than just accessibility though. OneWeb will also offer cellular backhaul applications to speed up everyones smartphone access to the internet for things like streaming video.
OneWeb will also offer better in-flight connectivity and bring low-latency internet to 30,000 feet. The system will provide business jet, commercial airline and military aviation customers with airtime services that will include weather, navigation and health monitoring of the aircraft.
The large players volume has been rising over the last few days and the Twiggs Money Flow is rising. SATS looks like a decent setup pattern. Prices have been consolidating lately. There is a resistance zone just above the current price starting at $61.79. Right above this resistance zone may be a good entry point if you are not already in this stock. There is a support zone below the current price at $61.37, a stop order could be placed below this zone. Very recently a pocket pivot signal (blue dot) was observed. This is another bullish sign.
At some point, EchoStar stock is going to really start moving in 2018 as the first shipments start going out for the OneWeb ground systems and we see what kind of demand there is for OneWeb.
Echostar released its last quarterly earnings results on November 8, 2017. The company reported EPS of $0.36 earnings versus the $0.37 estimate. Revenue also beat coming in at $481.20 million versus the $477.33 million estimate. The company’s revenue was up 9.7% year-over-year.
The OneWeb contract with Echostar recently hit $300 million. That’s just short (about $170 million) of an entire quarter worth of revenue just from this one contract! 2018 is the year that we should see OneWeb making a meaningful impact on Echostar’s financial statements.