Property and Equipment

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

The following tables presents the components of Property and equipment, net:


	As of
	June 30, 2020		December 31, 2019
Property and equipment, net:
Satellites, net	$	1,648,744	$	1,749,576
Other property and equipment, net	750,967		779,162
Total property and equipment, net	$	2,399,711	$	2,528,738

Satellites

As of June 30, 2020, our operating satellite fleet consisted of 10 satellites, seven of which are owned and three of which are leased. They are all in geosynchronous orbit, approximately 22,300 miles above the equator.

The following table presents our operating satellite fleet as of June 30, 2020 which consists of both owned and leased satellites:

Satellite

Segment

Launch Date

Nominal Degree Orbital Location (Longitude)

Depreciable Life (In Years)

Owned:

SPACEWAY 3 ⁽¹⁾

Hughes

August 2007

95 W

EchoStar XVII

Hughes

July 2012

107 W

EchoStar XIX

Hughes

December 2016

97.1 W

Al Yah 3 ⁽²⁾

Hughes

January 2018

20 W

EchoStar IX ⁽³⁾

ESS

August 2003

121 W

EUTELSAT 10A ⁽⁴⁾

Corporate and Other

April 2009

10 E

EchoStar XXI

Corporate and Other

June 2017

10.25 E

Finance leases:

Eutelsat 65 West A

Hughes

March 2016

65 W

Telesat T19V

Hughes

July 2018

63 W

EchoStar 105/SES-11

ESS

October 2017

105 W

⁽¹⁾ Depreciable life represents the remaining useful life as of June 8, 2011, the date EchoStar completed its acquisition of Hughes Communications, Inc. and its subsidiaries (the “Hughes Acquisition”).

⁽²⁾ Upon consummation of our joint venture with Yahsat in Brazil in November 2019, we acquired the Brazilian Ka-band payload on this satellite. Depreciable life represents the remaining useful life as of November 2019.

⁽³⁾ We own the Ka-band and Ku-band payloads on this satellite.

⁽⁴⁾ We acquired the S-band payload on this satellite in December 2013. Prior to acquisition, the S-band payload experienced an anomaly at the time of launch and, as a result, is not fully operational.

The following table presents the components of our satellites, net:


	Depreciable Life (In Years)	As of
				June 30, 2020			December 31, 2019
Satellites, net:
Satellites - owned	7 to 15	$	1,801,847		$	1,816,303
Satellites - acquired under finance leases	15	347,146			381,163
Construction in progress	—	384,298			365,133
Total satellites		2,533,291			2,562,599
Accumulated depreciation:
Satellites - owned		(823,487)			(756,635)
Satellites - acquired under finance leases		(61,060)			(56,388)
Total accumulated depreciation		(884,547)			(813,023)
Total satellites, net		$	1,648,744		$	1,749,576

The following table presents the depreciation expense and capitalized interest associated with our satellites, net:


	For the three months ended June 30,						For the six months ended June 30,
	2020		2019		2020		2019
Depreciation expense:
Satellites - owned	$	32,073	$	32,015	$	64,147	$	64,029
Satellites acquired under finance leases	7,205		6,402		13,218		12,892
Total depreciation expense	$	39,278	$	38,417	$	77,365	$	76,921

Capitalized interest	$	6,897	$	5,456	$	13,578	$	10,356

Construction in Progress

In August 2017, we entered into a contract for the design and construction of the EchoStar XXIV satellite, a new, next-generation, high throughput geostationary satellite. The EchoStar XXIV satellite is primarily intended to provide additional capacity for our HughesNet satellite internet service (“HughesNet service”) in North, Central and South America as well as enterprise broadband services. In the first quarter of 2020, Space Systems/Loral, LLC (“SS/L”), the manufacturer of our EchoStar XXIV satellite, invoked the “force majeure” clause of our contract and notified us of a possible delay in completion of the satellite due to “shelter-in-place” orders affecting personnel at SS/L and its subcontractors, and other potential impacts of the COVID-19 pandemic. Since that time, we have continued to work with SS/L to monitor the impact of COVID-19 on the anticipated delivery schedule for our EchoStar XXIV satellite. We currently expect the EchoStar XXIV satellite to be launched no earlier than the second half of 2021. Capital expenditures associated with the construction and launch of the EchoStar XXIV satellite are included in Corporate and Other in our segment reporting.

Satellite Commitments

As of June 30, 2020 and December 31, 2019, our satellite-related obligations were $385.1 million and $419.0 million, respectively. These primarily include payments pursuant to agreements for the construction of the EchoStar XXIV satellite, payments pursuant to regulatory authorizations, non-lease costs associated with our finance lease satellites, in-orbit incentives relating to certain satellites and commitments for satellite service arrangements.

In certain circumstances, the dates on which we are obligated to pay our contractual obligations could change.

Satellite Anomalies and Impairments

We are not aware of any anomalies with respect to our owned or leased satellites or payloads that have had any significant adverse effect on their remaining useful lives, the commercial operation of the satellites or payloads or our operating results or financial position as of and for the three and six months ended June 30, 2020.

Satellite Insurance

We generally do not carry in-orbit insurance on our satellites or payloads because we have assessed that the cost of insurance is not economical relative to the risk of failures. Therefore, we generally bear the risk of any in-orbit failures. Pursuant to the terms of the agreements governing certain portions of our long-term debt and our joint venture agreements with Yahsat, we are required, subject to certain limitations on coverage, to maintain only for the SPACEWAY 3 satellite, the EchoStar XVII satellite and the Al Yah 3 Brazilian payload, insurance or other contractual arrangements during the commercial in-orbit service of such satellite or payload. Our other satellites and payloads, either in orbit or under construction, are not covered by launch or in-orbit insurance or other contractual arrangements. We will continue to assess circumstances going forward and make insurance-related decisions on a case-by-case basis.

Fair Value of In-Orbit IncentivesAs of June 30, 2020 and December 31, 2019, the fair values of our in-orbit incentive obligations from our continuing operations, based on measurements categorized within Level 2 of the fair value hierarchy, approximated their carrying amounts of $55.9 million and $57.0 million, respectively.