Property and Equipment and Intangible Assets

9 Months Ended

Sep. 30, 2024

Property and Equipment and Intangible Assets

Property and Equipment and Intangible Assets

6.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)			2024		2023
				(In thousands)
Equipment leased to customers	2	-	5	$	1,044,268	$	1,181,193
Satellites	6	-	15		1,718,865		1,718,865
Satellites acquired under finance lease agreements		15			344,447		344,447
Furniture, fixtures, equipment and other (1)	2	-	12		799,644		908,924
5G Network Deployment equipment (2)	3	-	15		4,860,116		4,263,327
Software and computer equipment	2	-	8		2,347,536		2,111,305
Buildings and improvements (1)	5	-	40		334,017		381,757
Land (1)		-			12,041		17,513
Construction in progress		-			1,833,073		1,802,000
Total property and equipment					13,294,007		12,729,331
Accumulated depreciation					(6,036,386)		(5,327,384)
Property and equipment, net				$	7,257,621	$	7,401,947

(1) The change primarily relates to the Sale and Transfer of Assets to EchoStar. See Note 1 for further information.

(2) Includes 5G Network Deployment assets acquired under finance lease agreements.

Depreciation and amortization expense consisted of the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In thousands)
Equipment leased to customers	$	38,489	$	34,466	$	110,062	$	126,073
Satellites		32,384		32,956		98,295		101,993
Buildings, furniture, fixtures, equipment and other		12,392		23,195		33,519		47,506
5G Network Deployment equipment		187,281		94,204		533,575		231,085
Software and computer equipment		86,316		65,069		254,830		164,053
Intangible assets and other amortization expense		7,337		44,907		92,102		135,794
Total depreciation and amortization	$	364,199	$	294,797	$	1,122,383	$	806,504

Cost of sales and operating expense categories included in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) do not include depreciation and amortization expense related to satellites, equipment leased to customers, or our 5G Network Deployment equipment and software.

Activity relating to our asset retirement obligations was as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
	(In thousands)
Balance at beginning of period	$	300,475	$	246,656	$	278,287	$	183,135
Liabilities incurred		5,051		11,229		14,010		65,580
Accretion expense		7,114		5,665		20,343		14,835
Revision to estimated cash flows		—		—		—		—
Balance at end of period	$	312,640	$	263,550	$	312,640	$	263,550
Total included in Other long-term liabilities	$	312,640	$	263,550	$	312,640	$	263,550

The corresponding assets, net of accumulated depreciation, related to asset retirement obligations were $215 million and $217 million as of September 30, 2024 and December 31, 2023, respectively.

Satellites

Pay-TV Segment. Our Pay-TV segment currently utilizes nine satellites in geostationary orbit approximately 22,300 miles above the equator, seven of which we own and depreciate over their estimated useful life. We also lease two satellites from third parties: Anik F3, which is accounted for as an operating lease, and Nimiq 5, which is accounted for as a finance lease and is depreciated over its economic life.

As of September 30, 2024, our Pay-TV segment satellite fleet in service 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
Under Construction:
EchoStar XXV	2026	110	N/A
Leased from Other Third-Party:
Anik F3	April 2007	118.7	April 2025
Nimiq 5 (1)	September 2009	72.7	October 2029

(1) Subsequent to September 30, 2024, we extended the Nimiq 5 lease to October 2029 and as a result, beginning in the fourth quarter of 2024, we will account for the Nimiq 5 lease as an operating lease.

Satellite Under Construction

EchoStar XXV. On March 20, 2023, we entered into a contract with Maxar Space LLC for the construction of EchoStar XXV, a DBS satellite that is capable of providing service to the continental United States (“CONUS”) and is intended to be used at the 110 degree orbital location. During the fourth quarter of 2023, we entered into an agreement with Space Exploration Technologies Corp (“SpaceX”) for launch services for this satellite, which is expected to be launched during 2026. The EchoStar XXV contract was included in the Sale and Transfer of Assets to EchoStar on January 10, 2024. Subsequently, on May 2, 2024, the EchoStar XXV contract was included in the Orbital II Transfer from EchoStar. For the nine months ended September 30, 2024, capital expenditures for EchoStar XXV totaled $94 million, which includes $47 million for capital expenditures incurred after May 2, 2024, which is included in “Purchases of property and equipment,” and $47 million for capital expenditures incurred between the Sale and Transfer of Assets to EchoStar on January 10, 2024 and May 2, 2024, which is included in “Other, net” within “Net cash flows from investing activities” on our Condensed Consolidated Statements of Cash Flows. See Note 1 for further information.