Property and Equipment and Intangible Assets

12 Months Ended

Dec. 31, 2022

Property and Equipment and Intangible Assets

Property and Equipment and Intangible Assets

8.     Property and Equipment and Intangible Assets

Property and Equipment

Property and equipment consisted of the following:

	Depreciable
	Life			As of December 31,
	(In Years)			2022		2021
				(In thousands)
Equipment leased to customers	2	-	5	$	1,318,272	$	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		1,215,496		1,197,409
5G Network Deployment equipment	3	-	15		770,153		76,828
Software	3	-	6		1,354,656		1,076,602
Buildings and improvements	5	-	40		380,519		376,952
Land		-			17,513		17,513
Construction in progress		-			3,170,623		1,309,757
Total property and equipment					10,290,544		7,887,898
Accumulated depreciation					(4,650,425)		(4,630,111)
Property and equipment, net				$	5,640,119	$	3,257,787

Construction in progress consisted of the following:

	As of December 31,
	2022		2021
	(In thousands)
Pay-TV	$	36,936	$	39,269
Wireless		3,133,687		1,270,488
Total construction in progress	$	3,170,623	$	1,309,757

Depreciation and amortization expense consisted of the following:

	For the Years Ended December 31,
	2022		2021		2020
	(In thousands)
Equipment leased to customers	$	191,746	$	244,755	$	290,081
Satellites		148,051		189,126		202,724
Buildings, furniture, fixtures, equipment and other (1)		223,735		126,661		128,876
Intangible assets		153,541		164,310		92,871
Total depreciation and amortization	$	717,073	$	724,852	$	714,552

(1) This increase primarily resulted from depreciation expense related to software and certain assets placed into service in connection with our 5G Network Deployment.

Cost of sales and operating expense categories included in our accompanying 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 December 31, 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 (2)	August 2003	121	December 2022
Leased from Other Third Party:
Anik F3 (3)	April 2007	118.7	April 2025
Ciel II	December 2008	129	July 2023
Nimiq 5	September 2009	72.7	September 2024

(1) See Note 19 for further information on our Related Party Transactions with EchoStar.

(2) As of December 31, 2022, we no longer lease this satellite.

(3) 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.

AWS-4 Satellites

		Degree	Estimated
	Launch	Orbital	Useful Life
Satellites	Date	Location	(Years)
Owned:
T1	July 2009	111.1	14.25
D1	April 2008	92.85	N/A

GAAP requires that a long-lived asset be reviewed for impairment when circumstances indicate that the carrying amount of the asset might not be recoverable.

During the first quarter of 2020, in light of, among other things, certain developments related to the Sprint/T-Mobile merger, we determined that revisions to the AWS-4 build-out deadlines were probable, which we determined to be a triggering event. Accordingly, we quantitatively assessed the value of the AWS-4 satellites (T1 and D1) and wrote down the fair value of the satellites to their estimated fair value of zero, resulting in a $103 million non-cash charge recorded in “Impairment of long-lived assets” during the year ended December 31, 2020 on our Consolidated Statements of Operations and Comprehensive Income (Loss).

Satellite Anomalies

Operation of our DISH TV services requires that we have adequate satellite transmission capacity for the programming that we offer. While we generally have had in-orbit satellite capacity sufficient to transmit our existing channels and some backup capacity to recover the transmission of certain critical programming, our backup capacity is limited.

In the event of a failure or loss of any of our owned or leased satellites, we may need to acquire or lease additional satellite capacity or relocate one of our other owned or leased satellites and use it as a replacement for the failed or lost satellite. Such a failure could result in a prolonged loss of critical programming or a significant delay in our plans to expand programming as necessary to remain competitive and thus may have a material adverse effect on our business, financial condition and results of operations.

In the past, certain of our owned and leased satellites have experienced anomalies, some of which have had a significant adverse impact on their remaining useful life and/or commercial operation. There can be no assurance that future anomalies will not impact the remaining useful life and/or commercial operation of any of the owned and leased satellites in our fleet. See Note 2 for further information on evaluation of impairment. There can be no assurance that we can recover critical transmission capacity in the event one or more of our owned or leased in-orbit satellites were to fail. We generally do not carry commercial launch or in-orbit insurance on any of the satellites that we own and therefore, we will bear the risk associated with any uninsured launch or in-orbit satellite failures.

Intangible Assets

As of December 31, 2022 and 2021, our identifiable intangibles subject to amortization consisted of the following:

	As of
	December 31, 2022				December 31, 2021
	Intangible		Accumulated		Intangible		Accumulated
	Assets		Amortization		Assets		Amortization
	(In thousands)
Technology-based	$	63,545	$	(60,022)	$	63,361	$	(59,462)
Trademarks		135,134		(61,007)		135,131		(50,524)
Contract-based		41,500		(41,500)		41,500		(41,500)
Customer relationships		628,598		(366,357)		582,395		(223,859)
Total	$	868,777	$	(528,886)	$	822,387	$	(375,345)

These identifiable intangibles are included in “Intangible assets, net” on our Consolidated Balance Sheets. Amortization of these intangible assets is recorded on a straight-line basis over an average finite useful life primarily ranging from approximately two to 20 years. Amortization was $154 million, $164 million and $93 million for the years ended December 31, 2022, 2021 and 2020, respectively. The increase in amortization expense during 2021 primarily resulted from the Republic Wireless Acquisition.

Estimated future amortization of our identifiable intangible assets as of December 31, 2022 is as follows (in thousands):

For the Years Ended December 31,
	(In thousands)
2023	$	180,621
2024		95,641
2025		13,535
2026		11,838
2027		11,355
Thereafter		26,901
Total	$	339,891

Goodwill

Goodwill represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed as of the acquisition date and is not subject to amortization but is subject to impairment testing annually or whenever indicators of impairment arise. The non-recurring measurement of fair value of goodwill is classified as Level 3 in the fair value hierarchy. As of December 31, 2022 and 2021, our goodwill was $225 million and $225 million, respectively, which substantially all relates to our Wireless segment, with $120 million and $99 million related to our 5G Network Deployment business unit and our Retail Wireless business unit, respectively.

FCC Authorizations

As of December 31, 2022 and 2021, our FCC Authorizations consisted of the following:

	As of December 31,
	2022		2021
	(In thousands)
Owned:
DBS Licenses	$	677,409	$	677,409
700 MHz Licenses		711,871		711,871
AWS-4 Licenses		1,940,000		1,940,000
H Block Licenses		1,671,506		1,671,506
600 MHz Licenses		6,212,579		6,211,154
MVDDS Licenses		24,000		24,000
28 GHz Licenses		2,883		2,883
24 GHz Licenses		11,772		11,772
37 GHz, 39 GHz & 47 GHz Licenses		202,533		202,533
3550-3650 MHz Licenses		912,939		912,939
3.7-3.98 GHz Licenses		2,688		2,580
3.45-3.55 GHz Licenses		7,327,989		—
Subtotal		19,698,169		12,368,647
Noncontrolling Investments:
Northstar		5,618,930		5,618,930
SNR		4,271,459		4,271,459
Total AWS-3 Licenses		9,890,389		9,890,389
Capitalized Interest (1)		7,344,515		6,373,629
Total	$	36,933,073	$	28,632,665

(1) See Note 2 for further information.