Property and Equipment and Intangible Assets

9 Months Ended

Sep. 30, 2022

Property and Equipment and Intangible Assets

Property and Equipment and Intangible Assets

7.Property and Equipment and Intangible Assets

Property and Equipment

Property and equipment consisted of the following:

	Depreciable			As of
	Life			September 30,		December 31,
	(In Years)			2022		2021
				(In thousands)
Equipment leased to customers	2	-	5	$	1,366,141	$	1,530,943
Satellites	4	-	15		1,718,865		1,734,024
Satellites acquired under finance lease agreements		15			344,447		567,870
Furniture, fixtures, equipment and other	2	-	20		2,657,354		2,350,839
Buildings and improvements	5	-	40		379,618		376,952
Land		-			17,513		17,513
Construction in progress		-			3,083,240		1,309,757
Total property and equipment					9,567,178		7,887,898
Accumulated depreciation					(4,566,698)		(4,630,111)
Property and equipment, net				$	5,000,480	$	3,257,787

Construction in progress consisted of the following:

	As of
	September 30,		December 31,
	2022		2021
	(In thousands)
Pay-TV	$	33,766	$	39,269
Wireless		3,049,474		1,270,488
Total construction in progress	$	3,083,240	$	1,309,757

Depreciation and amortization expense consisted of the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
	(In thousands)
Equipment leased to customers	$	47,745	$	60,616	$	148,775	$	188,405
Satellites		36,083		47,833		111,970		146,645
Buildings, furniture, fixtures, equipment and other		53,196		32,176		148,644		92,418
Intangible assets		37,712		36,666		109,911		126,598
Total depreciation and amortization	$	174,736	$	177,291	$	519,300	$	554,066

Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation expense related to satellites or equipment leased to customers.

Satellites

Pay-TV Satellites. We currently utilize 11 satellites in geostationary orbit approximately 22,300 miles above the equator, seven of which we own and depreciate over their estimated useful life. We currently utilize certain capacity on one satellite that we lease from EchoStar, which is accounted for as an operating lease. We also lease three satellites from third parties: Ciel II, which is accounted for as an operating lease, Nimiq 5, which is accounted for as a financing lease and is depreciated over its economic life, and the Anik F3 satellite, which was accounted for as a finance lease until April 2022 and was fully depreciated. During April 2022, we extended the Anik F3 lease and as a result it is currently accounted for as an operating lease.

As of September 30, 2022, our pay-TV satellite fleet consisted of the following:

		Degree	Lease
	Launch	Orbital	Termination
Satellites	Date	Location	Date
Owned:
EchoStar X	February 2006	110	N/A
EchoStar XI	July 2008	110	N/A
EchoStar XIV	March 2010	119	N/A
EchoStar XV	July 2010	61.5	N/A
EchoStar XVI	November 2012	61.5	N/A
EchoStar XVIII	June 2016	61.5	N/A
EchoStar XXIII	March 2017	110	N/A
Leased from EchoStar (1):
EchoStar IX	August 2003	121	Month to month
Leased from Other Third Party:
Anik F3 (2)	April 2007	118.7	April 2025
Ciel II	December 2008	129	July 2023
Nimiq 5	September 2009	72.7	September 2024

(1) See Note 13 for further information on our Related Party Transactions with EchoStar.

(2) During April 2022, we extended the Anik F3 satellite lease for an additional two years with an option to renew for one additional year to April 2025.

Intangible Assets

On June 21, 2022, we and T-Mobile signed an amendment to the MNSA. In connection with this amendment, T-Mobile agreed to transfer to us (subject to required regulatory approvals) all Boost branded customers of former Sprint affiliates, Shentel and Swiftel, as well as Boost branded customers who were previously part of the California Public Utilities Commission CARE program. We received regulatory approvals and on September 1, 2022 closed the transfer and acquired these customers. There was no cash consideration for these customers. The acquired customer relationships were recorded at fair value in “Intangible assets, net” on our Condensed Consolidated Balance Sheets and will be amortized to expense on a straight-line basis over the estimated subscriber life.