DISH Network Corporation (NASDAQ:DISH) Q4 2022 Earnings Call Transcript

DISH Network Corporation (NASDAQ:DISH) Q4 2022 Earnings Call Transcript February 23, 2023

Operator: Good day, and welcome to the DISH Network Corporation Q4 and Year-End 2022 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Tim Messner. Please go ahead, sir.

Tim Messner : All right. Thanks, Shelley. Good morning, everyone. Thanks for joining us. We are joined on the call today by Charlie Ergen, our Chairman; Erik Carlson, our CEO; Paul Orban, our CFO. And then on the wireless side, we’ve got Tom Cullen, EVP of Corporate Development; John Swieringa, President and COO of Wireless; and Dave Mayo, our EVP of Network Development. And before we start, I need to remind you of our Safe Harbors. During the call, we might make forward-looking statements, which are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from historical results or from our forecast, we assume no responsibility for updating the forward-looking statements for more information on factors that might affect future results. Please refer to our SEC filings. We’re going to generally go straight to questions. But before we do that, I’m going to turn it over to Erik for a brief update.

Erik Carlson : Thanks, Tim. Before we open it up for questions, just a quick update. This morning, we experienced an internal outage that’s continuing to affect our internal servers and IT telephony. Our DISH and Sling services and our wireless and data networks continue to operate normally, are up and running. However, some of our internal communications, customer care functions, Internet sites were affected and are currently down. We’re analyzing the root causes and any consequences of the outage while we work to restore the affected systems as quickly as possible. With that, I’ll open it up for questions.

Operator: And Ric Prentiss. Your line is open.

Ric Prentiss: Yes. Thanks. Hey, it’s Ric Prentiss, Raymond James. Hope you’re doing okay despite the internal outages. Just two questions, if I could. First is a very detailed question. It looked to us like wireless retail equipment revenue seem low for the implied fourth quarter given the year-to-date. Was there anything unusual there or any kind of catch-up? The second question is more strategic with Stephen leaving the operations and joining the Board, T-Mobile, AWS had an announcement this week talking about private networks and working together, how should we think about the enterprise wholesale side? What’s needed to get that business going? And when could it become meaningful?

Q&A Session

Paul Orban: Yes. This is Paul. I’ll take the first question. As it relates to retail wireless COGS revenue, our hardware revenue, it was downside, and that’s due to units shipped. You may notice still that equipment COGS is up higher. In the fourth quarter, we shipped a lot — 100% of 5G units that has our chipset in it. That’s going to be a good investment for us because in the future, we’ll be able to upgrade customers to our network and obviously get M&O economics at that point in time.

Charlie Ergen: And this is Charlie on the second part of the question. The — first, the T-Mobile/AWS announcement is what we would expect. I think that we’re leaders in where the wireless network is going to go. I’d expect that everybody is going to have cloud-based networks, and also — and whether you have a private cloud or a public cloud, maybe everybody would do a little bit differently. But that’s going to be a necessity to get into the enterprise businesses, and there’s going to be a lot of business for everybody in the enterprise businesses. We’re better positioned there. We would expect as a gross utilization with four players with national networks, 25% of the enterprise business wouldn’t be unreasonable for us to get, as opposed to the retail business where we’re starting decades behind people and maybe getting to low single — low double-digits would be a reasonable expectation for us.

We’re just not going to be a dominant player in the retail wireless business. But our network is designed for enterprise, it’s designed for wholesale. And so we think we’ll get — and we’re leaders there from an architecture point of view today. So that will — and then to the further part of your question, it is a slow sales cycle, obviously, because you have to go through and architect. Everybody’s got a little bit different flavor of what they want and so forth. So we’re looking at verticals where we already have relationships whether that be in rural America, think smart — think agriculture. I think whether it be in the leisure and entertainment business, we’re already doing video for some of the customers. So that’s — and then there’s all kinds of verticals that our partners are — whether it be a Cisco or an Amazon or Dell that already have sales forces that are using those products.

So I think, you’re going to see a lot of business for everybody. And what companies start putting new private networks it will force their competitors to do it because they just won’t be competitive without their own private networks. So that’s the big picture answer. And so I think we’ve said we would expect that you’ll start seeing real revenue from that next year from us and you’ll start seeing — you’ll see some movement this year. Obviously, you’ll see some announcements from people in the industry. It’d be great. I’m a fan, if T-Mobile goes out and get customers — I’m a fan of that because whatever they can do, we can do better.

Ric Prentiss: And do you think VoNR, or Voice over New Radio is that something the enterprise wholesale people want to see working, or is it more nationwide coverage? But what’s kind of one of the hurdles to that long sales cycle that they really wanting to see that box checked? Anything in particular?

Charlie Ergen: I think cracking up you broke up a little bit. I think you asked whether — what’s the hurdle to the sales cycle? It really is showing where a company can get productivity increases. Obviously, it’s an investment, so they got — they can make a return on that investment. Where do they get productivity? How do they make their products cheaper, faster, safer? How do they have increased their security as a result of it? And you got to go through a lot of — these are big companies that are looking at you, going through a lot of layers from the CIOs to the CFOs to the executive branches to go through and make that investment.

Ric Prentiss: Great. Thanks, Charlie.

Operator: Phil, your line is open.

Phil Cusick: Hi, Charlie. It’s Phil Cusick, JPMorgan. Thanks for your time. Two if I can. One, can you talk about the comment in your disclosure today? That said you’ve started sites that will cover 60% of the population. Are you able to start and complete the incremental 10% by June, or are we getting ready for you to miss this year’s, 70% deadline and extend to 25%? And what fines would be if it comes to that?

Charlie Ergen: Yeah. I’ll let Dave Mayo answer that.

Phil Cusick: Yeah.

Dave Mayo: Hi Phil, its Dave. So we’re optimistic about 70%. We talked about 15,000 sites started in — at the end of the year, yielding greater than 60% ops. We’ve now started over 17,000 sites. We’re on pace at that 1,000 sites a month number that we’ve been talking about for a couple of quarters. It typically takes three, maybe four months from the time you start the site until you finish the construction, get Power & Telco. Power & Telco are probably the two risks that we have, but we’re optimistic that we’ll see the 70%.

Charlie Ergen: So bottom-line

Phil Cusick: Yeah. Just to make sure

Charlie Ergen: bottom-line

Phil Cusick: Yeah.

Charlie Ergen: Let me be clear. We’re track to beat to 70%. We don’t expect to be paying fines.

Phil Cusick: And — okay. I just wanted to give you the opportunity to let everybody know that, that does automatically go out.

Charlie Ergen: I see why the disclosure is confusing, but bottom-line is we’re on track for 70%. We’re not spiking the football, but we’re on track, and we don’t expect fines.

Phil Cusick: Thank you. And can I ask as well, what does it take to do a wider launch of Boost Infinite at this point?

Charlie Ergen: I’ll answer briefly maybe turn that over to John. But we’re going — we have two paths. One is the FCC requirements for data, right? So to build that in a network, that’s where we’re covering going to cover 70% of the POPs and data. The problem that we’ve run into is that we are — for commercial launch of it, we need voice, and we’re doing 5G voice or banner. We made the strategic call not to do 2G, 3G, 4G voice and have all, that legacy and carry that around for the rest of our life, right? So we’re thinking long term about that and saying, ‘Look, let’s have the best voice in the industry. Let’s go with 5G voice.’ That was — there are many companies are working on that. Obviously, T-Mobile has launched a couple of markets.

The Chinese are working on that. But we’re now the largest — as far as we know, the largest company that has real time the United — the voice of 5G in the United States. And John will give you a little bit more detail on that. That — we’ve got — so now we’ve ended up and work and that was probably one of our biggest technical challenges. And we’re very thankful to the Mavenirs of the world and our vendors that kind of helped us get there. We wouldn’t have got there without them. And so — now we — we’re starting to roll that out as fast as we can, but we’ve kind of got over those hurdles. But that’s what we need for commercial launch. So what happens is, you’re going to see a six-month lag. I’m going to say six months. It could be a little less than that.

But a six-month lag from the time we get data to the time that we optimize that network, fully to be able to do voice to do 5G voice because it’s very tricky. And you have to have a very dense network to do it. John?

John Swieringa: Yeah. Thanks. Hi, everybody. It’s John. Charlie, hit a number of the key points. There’s, really three major things we need to accomplish. We need to get the 70%, as Dave talked about. We need to exit our TSA with T-Mobile, which we expect to complete by the end of the second quarter. And then, we need to get our postpaid business up and running and expanding. We did launch Boost Infinite early access programs. It’s riding closely alongside the progress with the network. We do have 12 big markets and 30 million POPs, where we’re loading Boost Mobile customers onto our 5G network today with Bonner. We’re happy with how the performance of the network is going, and we’re starting to get devices onto that network.

So we’re now loading Motorola and most recently, Samsung devices onto a Dish 5G network for Boost. And that sort of cleans the way for starting to work with Apple and get Apple-certified. Apple is obviously very important from a postpaid market share perspective. So we’re working hard on that. And with Infinite, you’ll see us get moving as an MVNO to build momentum, but then we can really hit the gas when we get devices onto our network in our markets. We do expect to increase our full commercial Bonner coverage, which is 30 million POPs today includes markets like Dallas, Houston, Las Vegas, Cleveland to name a few. We do expect to be able to increase that by about 50% per quarter, and we certainly hope to beat that. We are getting tremendous support from our teams and many of our key partners in making that happen.

But we like postpaid. We like it better with our own owners’ economics, and we’re full steam to go make that happen, and you’ll start to see a boost input in the market here in the first half of the year, with more marketing and advertising support.

Charlie Ergen: By the way, since you guys are up, many of your finance guys, a postpaid customer is materially more profitable than a prepaid customer. And I’ve said this many times that the marketplace to me as a former financial as is a bit upside down with prepaid being the most competitive in the world. Everywhere else in the world, prepaid is actually less competitive than postpaid or more expensive than postpaid. In postpaid, probably not as competitive as it should be, so it’s a little bit upside down. So, we’re excited to be able to enter the really lucrative part of the wireless — the consumer side. That’s not to say the — I believe, personally, the enterprise business will be equally or more lucrative for us, but the postpaid side has been a long time coming for us even — we started with Ting on a small scale, but now we’re able to — with 30 million, you start to — it starts to be something you can market.

And by the end of this year, we’ll have scale at 70% of the United States. That’s about the size of where Sprint was. That starts to be interesting for us.

Phil Cusick: Thank you, again.

Operator: Your next question comes from Doug Mitchelson. Your next question comes from Doug Mitchelson with Credit Suisse.

Charlie Ergen: Operator, we’ll move on.

Doug Mitchelson: I’m sorry, I’m here. Can you hear me?

Charlie Ergen: Yes, hi Doug.

Doug Mitchelson: Sorry about that, interesting system. So, I guess first question, Charlie, I’m just thinking about your broader strategy and financing needs in the next few years. So is the 11.75% pricing for DISH, latest bond issue, have you rethinking anything? I guess I think about they need to roll over your existing bonds, need to invest in wireless and then potentially buying out that T-Mobile spectrum as kind of three buckets of financing needs. And any clarity as to how you’re — think about those three things. And anything I’m missing and your latest thoughts would be helpful. And I’ve got a follow-up.

Charlie Ergen: Yes. Sure, Doug. Big picture is, obviously, we look at the marketplace and where we probably — in the hindsight, we went a little too early for the Bond deal before the first of the year. But we wanted certainty to make sure that we bet our build out and took that overhang off the table and get into. And so — but Paul, can answer this maybe a little bit better. But we — obviously, at DBS, we have a bond payment due on March 15. We intend to pay that with our DBS — from DBS with cash on hand there. They continue to generate good cash flow, and we’ll look at their maturities in the future with their cash flow. And then obviously, we’re looking at retail, wireless and the Network Co to finance some of that business.

And I think the first hurdle we look at there is a convert next year about — in March. I think it is next year, and we’ll look to refinance that with hopefully an equity component. I think you talked about the 800 megahertz, that’s — we’ve said publicly, that’s a nice to have. It’s not a must-have. There are positive developments there. Obviously, we built that frequency out, so there’s not a build-out cost, incremental build-out costs for that. So there’s some opportunity there. But we’re not suicidal. We’re not going to sacrifice balance sheet for some short-term gains. So, we will have capital needs in the future, but we’re going to start — our network is going to start generate a lot of cash, and we just got to make those two marry up in a timely manner and relate that to the Street in a way that you guys can understand it.

It’s so deja vu for me back in the DBS business when exactly the same position. And once we launched our satellite, we had a period of time where we had to make it work and work out the kinks. But once we’re able to do that, it started to generate a lot of long-term cash. And interesting, the best metric for us early on there was pre-marketing cash flow. But it alter — I used to always say it was like a slot machine, you put $1 in and get $2 back every time you got a customer. So you couldn’t go fast enough. I mean you put $1 in, but you got the $2 back over a period of years. So, we’re in a very similar situation as our Network comes up to scale.

Doug Mitchelson: It’s lead right in my…

Charlie Ergen: And that’s before you add the enterprise business in which we have to prove to the Street, obviously. But internally, we know that that’s a place — we know that’s a place people are going to go.

Doug Mitchelson: And that leads right into my follow-up, which is on the retail side, since you’ve already addressed enterprise, when should we expect kind of a material ramp in subscribers? When does that kick-in? Does that later this year, post to broad launch? Is that really a 2024 event? When does that start?

Charlie Ergen: You’ll start seeing some numbers, but you won’t see — you’re going to see a material ramp when you have scale, which I define as 70% with voice coverage. So again, given our build-out, take six months from build-out to optimize. So that gets you to 70% by the end of this year optimized, and then you can do things like national market and things because you have scale to do it. It doesn’t mean that we’re not going to put people — that we’re not going to add subscribers prior to that on our network. We will. But in terms of the hockey stick, it starts when you have scale on — we’re a good steward of capital. And I’ll just give you an example, but the prepaid business, if we invest $1 in the prepaid business, we get a small return on it.

And if we invest $1 in the postpaid business, we get a big return. So we’re obviously saving capital for the postpaid business, and that’s a pivot that the market probably doesn’t fully understand yet. It’s not your fault. We haven’t gone out and explained it to you. But that’s a pivot that you’re going to see this year, and you’re going to see that, that makes a world of difference in the long-term financial stuff. And that’s before you add enterprise. So if you give us no credit for enterprise, if you gave us zero credit for enterprise, you’ll see you’ll ultimately be able to see it in the postpaid business that you can generate a return on capital from just the consumer, assuming that we can get our fair share of postpaid customers and continue to continue on the prepaid path, obviously, just not as a priority over postpaid.

Doug Mitchelson: Got it. Thank you, John

Operator: Your next question comes from James Ratcliffe .

Q €“ Unidentified Analyst: Hi. If I could, going back to the T-Mobile 800 megahertz, you said it’s nice to have. I noticed you wrote up the value of the option in 4Q and attributed to both increase in option values and also increased probability. Can you talk about what drove the increased assessment of probability to exercise the option? Thanks.

Charlie Ergen: I can only say that there have been — that there’s positive things around that frequency, and that’s about all I can say, and so that’s why the probability went up and so forth.

Q €“ Unidentified Analyst: So essentially, that became more appealing spectrum to own?

Charlie Ergen: It — I said there’s positive developments in terms of a return on that spectrum.

Paul Orban: Yes. This is Paul. I’ll just jump in there. What happened is the probability that we would exercise has increased, which obviously leads to Charlie’s comment that there’s positive things going on there.

Q €“ Unidentified Analyst: Great. Thank you.

Operator: Your next question comes from John Hodulik.

John Hodulik: Thanks. Maybe a couple of follow-up questions if I could. So first of all, Charlie, does the pivot to the postpaid market come with substantially higher EBITDA losses as you sort of go after that market? I mean I’ve seen the EBITDA, the wireless EBITDA losses sort of ramp a bit. Does it ramp further from here as you go after that market? And then in terms of the timing, is the timing of the postpaid launch sort of more tied to the iPhone certification, or is it the 70% voice coverage or both? Thanks.

Charlie Ergen: I didn’t hear — I didn’t get the part that, but let me maybe ask to answer the question in a little bit broader terms, and you can ask a follow-up. The focus that we have is focus we have today as management is let’s hit to 70% with the FCC milestone, right? That takes any chance of taking our spectrum back off the table. It takes something that a lot of times people focus on out of the conversation, and it’s an unbelievable effort during COVID and supply chain shortages to even do that from a standing start. So it’s — it would be a real feather in our cap. We’d be really proud to do that. So that’s the focus. The second focus has been to get off. As John mentioned, this is something that’s important that the Street probably didn’t focus on.

We’re on two operating systems, OSS/BSS and the TSA that we have from T-Mobile and then our own internal. We’ve got to get everything to our own internal system, and we’ve got to migrate all those customers over, which is not as difficult as CDMA migration, but nonetheless, a big focus for us to do, and it takes a lot of time and effort to do it. So that, we got to get done. So those are two big things to get done before the end of the next quarter. And then to your point, you — in postpaid world, obviously, Apple is a trusted partner and important for us. But we haven’t been able to do kind of things that maybe they’d like us to do or we’d like doing the prepaid business. You just — it’s hard to sell $1,000 phones to customer that has no credit.

But in the postpaid world, that’s obviously a different issue. So we’re excited to get started with them. And yes, I think it is a — when the 15 comes out and you can put it on your network in a postpaid environment and you got — pretty close to scale at that point, I think that’s a game changer for us to the extent that we get certified and have a business arrangement with Apple that’s productive for both of us, right? So we have to focus on that because that’s not done yet. But it gives you a feel for some of the big things that we work on. And last quarter, we were able to get a couple of things. We now have Samsung and Mavenir in our network. So we have two vendors that prove ORAN works. We have two vendors for radios, a third vendor in test that should be completed pretty soon.

The world that — we’ve got phones now, both on Motorola and Samsung, that work on our — that have all our bands and for the network. So we’re making a lot of progress every day. It’s not showing up in the numbers yet, probably not going to show up in numbers next quarter. But then you’re going to start seeing it, you’ll start seeing the beginnings of that. And then as we get to scale, you’ll see the real — at that point, somebody will be glad they’re an investor.

John Hodulik: Got it. And just the

A €“ Erik Carlso: John, I think your first question, are postpaid more costly from a SAC perspective to prepaid. As Charlie alluded to earlier, postpaid, will end up subsidizing less. So it should be a cheaper acquisition costs when we add those subscribers.

A €“ Charles Ergen: SAC per se will probably be higher.

A €“ Paul Orban: Yeah. But the subsidy will be lower.

A €“ Charles Ergen: ARPU — SAC — that churn is much lower. So you just got to — and again, the real world is today, we’re seeing at least in the industry 1% churn in postpaid and we’re seeing 4% plus in postpaid and prepaid. So that gives you a feel for it. But look, I would say a postpaid customer is worth 5 times when a prepaid customer is. I could be off by one turn there. It could be six, it could be four. But that — if you — anyway, you can see where that goes.

Q €“ John Hodulik: For sure. And I guess just to finish that off. I mean — but as you go after the postpaid opportunity, should we expect sort of an uptick in EBITDA losses to capture that opportunity from where we are here exiting the fourth quarter?

A €“ Charles Ergen: I hope so. And we look at EBITDA, but we obviously look at — we look at long-term cash flow. So EBITDA is not our driving force. It’s all about cash. So we would — it would be a nice problem to have, assuming we were doing it efficiently.

John Hodulik: Got it. Thanks guys.

Operator: Your next question comes from David Barden.

David Barden: Hi, guys. Thanks. It’s Dave Barden from BofA. I guess a couple of ones. Just a housekeeping item, and maybe this is getting to the heart of the question of good things happening around 800 megahertz. But with the rerating of the value of that option, people are wondering if the opportunity exists to maybe sell that option to someone else or executed on someone’s behalf, and we might look at that as a funding vehicle for DISH rather than kind of the entry point to spend $3.6 billion on spectrum you already have. The second question if I could would be…

A €“ Charlie Ergen: I’ll stop you there.

David Barden: Okay.

A €“ Charlie Ergen: I would just comment on that, and then you can ask your question that we’re not going to do anything that doesn’t make economic sense, right? But it’s clear that we value the option, right? But we’re not going to do anything that doesn’t make it make economic sense. So that — you could — there’s no downside in that option. There’s no downside in doing nothing, right? There’s only upside. If your strategy was you would only do something if it was accretive, the only way you do anything, then it’s a positive. Obviously, if you’re suicidal, don’t know you do something at all costs, that might be a different story.

David Barden: Fair Enough. And if I could maybe just two follow-ups. So just maybe, Charlie, I think you kind of made an offhand remark about this earlier. But could you tell us a little bit about the process that maybe you think did or didn’t happen that led to the Amazon/T-Mobile relationship? And whether you think that maybe there are other relationships like that, that could emerge in the private 5G network development space with the hyperscalers? And then my last question would just be related to the kind of — Charlie, you keep talking about getting to scale and that being the gatekeeper, the threshold through which once you get there, you’ll create scalable return opportunities. About a year ago in March, Verizon, who has more skin in the game than anyone, who’s put $100 billion of money into this, laid out a multiyear game plan for revenue growth in May.

You did kind of the same thing. Over the course of last year, Verizon, again, skilled player, presumably has the keys to most of the doors out there in the market, decided that, that opportunity wasn’t nearly as large as they thought and had to really scale back people’s expectations. And you guys have not kind of revisited that thought process. I’m interested to kind of understand why you think nothing’s changed from kind of the view you had in May when it seems like all the other players have changed their view. Thanks.

A €“ Charlie Ergen: Yes. Again, it boils down to we have a modern 5G smart network based in the cloud on Open RAN principles. That’s the — again, I’ll say it again. That’s Netflix versus blockbuster. So if you’re a blockbuster, you’re not going to say, oh, we think OTT streaming. We thought it was a big thing, but we’re scaling it back because you just can’t do it. You can’t do it with stores, right? But if you’re Netflix, you say, well, we have the modern network. We have the modern technology. It took Netflix some time. Wall Street was very skeptical of them early on. It took them time to prove the concept. But it was better, faster, cheaper. And it’s pretty hard to fail in business if you’re better, faster, cheaper. And our network is going to be better, faster, cheaper.

And it’s architected different. So it’s it — I don’t want to spend a lot of time on it because it’s not something that’s going to be readily understandable on this call. But you’re starting to see the skepticism of Open RAN and the kind of things we’re doing. You just saw a white paper from all the — from the big players in Europe yesterday. They almost verbatim, articulated DISH’s and one architecture. They almost verbatim articulated everything we said. And they have legacy. So they’re starting in more rural areas to start, right? So legacy is a negative for — it’s nice that you have scale. They all do it. But legacy is an anchor around their neck. And so we have an opportunity there to the extent that we execute. And obviously, you have to execute, and that’s what we have to prove.

And then obviously, the T-Mobile — Amazon, again, we’re not exclusive to Amazon. They’re not exclusive to us. Amazon got into and helped us. They’ve been a great partner. They’ve helped us a lot, and they’re putting an investment in so that they can go sell this architecture to people around the world. And we would expect that many more telcos will sign up with Amazon or perhaps the other cloud providers because everybody now — I think almost everybody believes the course and run in the cloud. And I think that they’re going to get kind of the — everybody is going to look at edge compute and some of those things. And that leads to — that’s a precursor to private networks. And so I guess maybe the Street looked at that as a negative at least as far — I don’t know the exact deal, but I think the more the merrier when it comes to private networks because I think you need — that’s something that you need competition between companies to make sure it scales.

David Barden: Fair enough, Charlie. Thank you.

Operator: Your next question comes from Kannan.

Kannan Venkateshwar: Hi. This is Kannan Venkateshwar from Barclays. Charlie, from a funding perspective, obviously, you mentioned the 800 megahertz is an option you can choose or not choose to exercise. And then from a scaling perspective, it sounds like the retail business in terms of scaling may happen more towards the end of the year or next year. Does that mean for this year, you don’t need to raise any more capital and you’re more or less done with capital business, or should we expect more by way of funding? And secondly, I mean in some ways, funding is a discretionary choice for you. It depends on how fast you really want to go in order to build retail. And so would love to get your thoughts on the scaling there. Is it a function of the funding you can raise, or is it independent of that? And you’re going to essentially scale to 70% of the country once the network is up and running? Thanks.

Charlie Ergen: The short answer is we don’t need to raise capital this year to meet our business objectives, right? The second part is a little more complicated because everything is intertwined, everything is interrelated. So you — I’d say it this way. Investors are smart, and they’ll invest in good business plans and good management and to the extent they understand it. And so to the extent that we have good plans and good execution and to the extent that we need to go faster because it makes sense, then I think that — and to the extent you would need to raise capital to do that, I think it would be available. To the extent you have a bad plan and bad management, you probably not. So, I don’t know. We’re not arrogant, but I think we’re confident. But we know we have a lot to learn. We know we’re making a lot of mistakes, but we’re through the hard part — through to the hardest part.

Kannan Venkateshwar: Got it. And anything on the scaling component, I mean, to what extent you might choose to maybe extend the service all throughout the country this year versus maybe doing it more gradually over the next couple of years?

Charlie Ergen: It’s a good question. We will extend the postpaid throughout the whole country this year. Obviously, through some the country that will be on €“ that will ride on T-Mobile’s or AT&T’s network. So, that’s not as economical for us, but we will — but it will give us nationwide scale, which is important. So, a customer we put on T-Mobile or AT&T is more profitable than a prepaid customer by far, but it’s not as profitable as to put them on our own network. So you can imagine how we’ll play that. To answer your question, we will be nationwide on postpaid.

Kannan Venkateshwar: Thank you, Charlie.

Operator: Your next question comes from Jonathan Chaplin.

Jonathan Chaplin: Hi, Charlie. A couple of questions if I may. I’m wondering if you can give us an update on the DBS deal and the prospect of a wireless spin on DBS. I’m surprised given comments earlier that we actually haven’t seen an announcement yet. So, wondering what might be holding that deal up that seems so, obviously, in everybody’s interest. And then you mentioned that you don’t need to raise capital this year to meet business objectives. Do you need to raise capital before March 2025 to meet business objectives sort of leaving aside refinancing, the convert and things like that?

Charlie Ergen: The second part, I would say based on what we see today, we would have to raise capital before March 2025. I think there was a question about DBS deal. Obviously, I’ve said I’ve always felt that it was inevitable. I haven’t changed my opinion on that, but we have nothing to report today. On wireless spin, I mean, obviously, our Board looks at a lot of different opportunities. There’s certainly — the wireless business on the retail side is, you can make the case. It’s separate and apart from the wholesale side of our business. It does track a lot with what Erik and his team to do daily with DBS and Sling, a lot of the same potential customers and those kinds of things. So there potentially are strategic things that may make sense there, but nothing to announce today.

Jonathan Chaplin: Great. Thanks, Charlie.

Operator: Your next question comes from Bryan Kraft.

Bryan Kraft: Hi. It’s Bryan Kraft from Deutsche Bank. As Dave Barden alluded to in his question earlier, there’s been a lot of discussion lately about the slower than expected pace of 5G adoption among enterprises. Many investors are asking the question as to whether there’s some connection between that and Stephen Bye leaving his management role at DISH as Head of Enterprise. Can you just talk about what’s going on there from a demand perspective? If you can share anything on maybe, why Stephen decided to leave and lastly, how you’re managing the enterprise sales effort now? Who’s leading that? Thank you.

Charlie Ergen: Yeah. I can’t speak for Stephen, but he did get an opportunity to be a CEO of the company. And he’s well qualified for that. But I think Stephen would take a call, right? And obviously, he remains on our Board, important. I don’t think — I don’t personally think that there was anything in his leaving that would reflect badly or reflect any kind of concern that the private enterprise business isn’t a big business. I don’t think — if anything, I think that — if anything, I think he and we are probably more optimistic than we were a year ago on that. So — but feel free to call him because, I just can’t speak for him.

Bryan Kraft: Sure. And can you just talk — thank you for that. Can you talk about who’s leading the business now? And how you’re managing the sales effort leadership there, now that he’s no longer in that role?

Charlie Ergen: Do you want to take that, John?

John Swieringa: Yeah. Hi. It’s John Swieringa. Look, we’ve been building our team for the last four years. There’s a lot of talent inside DISH Wireless now. So I don’t think it’s about any one person. And I’m personally calling on a number of enterprise customers as our several members of our senior management team. And I think the momentum is picking up to echo Charlie’s comments. We’re really busy having really good discussions with a lot of big companies. And that’s what we expect to be doing. And I think we said earlier, we’d be seeing some of that business start to pick up next year. But we’re not confused. Job one is getting our 5G network up and operating at scale. And there’s a lot of focus there. And I can take the eye off the ball, looking at other things that — it’s really about sequencing. We need to get the network up and running first, and then there’s, lots of opportunities in the pipeline we can take advantage of.

Charlie Ergen: Operator, we will take one more question from the analyst community

Bryan Kraft: Yeah. Thank you.

Charlie Ergen: Operator, one more from the analyst community before we move to media.

Operator: Okay. Perfect. And our final call from the analyst is coming from Michael Rollins.

Michael Rollins: Thanks, a question and a quick follow-up. So in terms of the wholesale side of the business, what are you seeing in terms of the potential to sign some large anchor wholesale deals, for the 5G capacity you’re building? And are there certain commercial milestones that you need to reach potentially different than what you outlined on the retail side, in order to put DISH in a prime position for acquiring these wholesale opportunities? And then, just a quick follow-up on the network, I was just curious, as you’re on this pace of building 1,000 or starting 1,000 sites per month. At what point in the future, does that pace change either accelerate or decelerate from the current level? Thanks.

Charlie Ergen: Yeah. Hi. This is Charlie. I think we’ve answered that first part of your question a number of times, but the — from an enterprise side or private network side of the business, we’re already positioned, because we’ve got the architecture that we believe is required to do that properly, right? And that’s before you get into things like AI and ChatGPT only a positive for what we’re doing, which we properly foresaw as part of what we needed to be able to do. Scale will matter, and reaching 70% of the country will start opening up a lot more opportunities because now some conversations are only on a regional basis today. So that is probably the one thing that’s missing, but we’re not having to change the architecture of what we’re doing.

So we’re already positioned and so forth. And I think the thing is, ultimately, regardless of who signs private network deals, it’s going to be a positive because if your competition does it — if Uber signs a deal, then Lyft has to sign a deal or just going to be out of business as an example. So that’s that part. And then on the — what was the second part?

Michael Rollins: Charlie, I’m talking more about the wholesale side of the equation. So like someone using you as their wholesale partner like an MVNO relationship, whether it could be a cable company or a big Internet company. So someone using you for national wholesale capacity to meet whatever strategy.

Charlie Ergen: Yes. Same answer because we’d have to have scale in the network, and we have — two things have to happen. We have to be off TSA from T-Mobile. Again, our focus on for the first half of the year by end of June. And the second one, we have to have scale, which, again, we’re focused on by the end of this year. Then I think we have a really neat platform for people who might be interested from a wholesale perspective, but that’s very similar to what the enterprise opportunity is as well. And then on the second — I think that once we hit 70%, that, that 1,000 a month will decline. In other words, what — at that point, there’s — I think Dave’s focus — I shouldn’t talk for him, but since I’m talking, his focus will be to optimize the network within the markets that we are There’ll be some small sales.

There will be some fill-in stuff as we get traffic on the network and find if we have a dead spot. And we’ll focus — well, that will still be new towers, but it probably will be a lot less than the 1,000 run rate.

Michael Rollins: Thank you.

Operator: Your next question comes from Mike Dano .

Unidentified Analyst : Yes. Thanks for taking my question. Hopefully, you can hear me okay. I had two separate questions. One is, can you just kind of explain how the network launch is going to work the rest of this year. I mean do you have the voice owner service up and running now? And how is that going to be expanded? And how does that — how does the rest of that like commercial launch of the DISH network work throughout the rest of this year? And then my second question is if you could just talk about that, the satellite opportunity, there’s a lot of companies that are offering satellite to phone services. And I wondered what your thoughts about that are, particularly given the ownership of EchoStar. Thank you.

John Swieringa: This is John. I’ll take the first part and then pass it to Charlie for the second. So I made a few comments on this earlier in the call. First of all, all of our on-air sites are providing 5G broadband. And now as a subset of those, we’re going market-by-market to tune the market for commercial honor. As I said earlier, we now have handsets that are available through Boost Mobile that run on our DISH 5G network with commercial of honor, and we view that as going pretty well. So as we look at really the 20% markets from last year, we’re going through each of those markets and doing the optimization and the fill-in so that we can achieve commercial honor KPIs. When that happens, we load that market up with handsets that work on our network.

And we start marketing services with those devices, and we are basically going to be launching new markets every — sometimes every week. But as I said earlier, we expect to increase that 30 million POP footprint by about 50% every quarter, and we hope to beat that. And you’d see us certainly marketing services digitally in those areas, starting with Boost Mobile and then adding Boost Infinite. And we’re doing quite a bit of work to prepare our indirect distribution to market and provide those devices to our customers. And you’ll see us really picking up speed there as we do that throughout the year. And really by this time next year, we’d expect to have commercial honor available throughout the 70% footprint, as we’ve said earlier.

A €“ Charles Ergen: And then this is Charlie. On satellite to handset or device, obviously, it’s going to — it might be a really good question to ask EchoStar on their conference call. But we’re unique in that, obviously, the common ownership between the two companies, we’re — when you look at the two companies together, we understand satellites really well, we understand video really well, and now we understand the future of telco really well, all within the same sister company. So we’re well positioned for — a, we believe that there’s going to be a big market for satellite to handset. There’s a number of — there’s a half a dozen companies that are playing or announced that they want to play in that category. The FCC is going to do a rulemaking with some rules around it that are interesting.

They will have to see — they’ll pick winners and losers when they do that. But we’re well positioned. We are doing some satellite to handset today, both in Europe and the United States. We own spectrum — a fair amount of spectrum in both North America and Europe. And as a result of that, we have a very clear understanding of the technical challenges to make that happen in a way that — you might know satellites, but if you don’t know telco, those two things, you have to make those things married each other. And the big positive development there is that the 3GPP standard now has an NTN or non-terrestrial network standard that relates to satellite that has never been there before. So that in Release 17, that is there now, so chipset manufacturers can make something to a standard so that the handsets and devices can operate with satellites.

So I think there’ll be a number of players that will play there. There will be a number of players that will fail, and there’s certainly room for one really, really good system.

Unidentified Analyst : Okay. Thank you.

Operator: Your next question comes from Amy Maney .

Unidentified Analyst: Hi, there. I feel like the odd man out asking a video question. But the Cox Media blackout, should we probably not expect any resolution before the FCC weighs in on Standard General and Tegna?

Erik Carlson: Yes, Amy, this is Erik. Obviously, the situation with Cox, we’re open for discussions with Cox. But as we’ve talked about on the call before, retrans is one of those things that from a rate perspective is really going up higher than any cost of programming. And like we’re — as we talked about it on the wireless side, so you don’t feel like such an outlier, I mean, we are economic-focused. And so we look at the cost of the content and the benefits to our customers, all things being considered. I mean we’d rather have the Cox stations up than not. But at some point, it doesn’t make economic sense for us. And so we’re unfortunately caught in that particular piece of negotiation, and Cox has decided to put our customers in the middle of it. And so I can’t tell you when or if we will reach a resolution with Cox. But we’ve had a decent relationship, and we certainly hope that we would. But at this time, I can’t announce any resolution.

Charlie Ergen: And this is Charlie. I’d just add a couple of things. One is obviously Tegna acquisition and trying to really get form and power that they already have is something for the FCC to look at. But the — and obviously, that may have played into this particular dispute on their side. But the fact is that local broadcasters, I feel for them because they — we have real statistics. We know what our customers watch, both on OTT and linear TV satellite. We absolutely know what they watch. We’ve seen the trends for 25 years. The fact that the local networks now are going the path of regional sports where the cost gets so high that it’s more — any rational company we’ll make more money by not having the service. And customers are continuing to show that they might have watched it and the broadcasters themselves are cutting back on the content, and so they’re not producing — the high-value drama shows and stuff are going somewhere else to OTT.

Customers are following them there. And so the former President of NBC many years ago, he said that people go and watch the least objection of old programming, right? And that’s true. And so our customers are going to find alternatives to the networks. And even the mainstay of professional football, which is probably the one mainstay they have, is readily available to a number of sources today. So the next step in retrans is down, not up. And the broadcasters have a budget, and they have debt to pay, and they haven’t got the memo yet. So I think you’re just going to see more people — I just think you could — and every time they lose a customer, they used to come back to them. But those Cox channels, they are not coming back to their local news, they are not coming back to those drama shows because now they’re watching..

Erik Carlson: BBC

Charlie Ergen: Something on HBO or Netflix and they’ve got hooked on some other show, and they’re just not coming back. And the fact of the matter is that any customer that wanted Cox from us is left DISH. So now it’s a tax, if we put them back up. So that’s the — I said it about regional sports I’m saying it now. That’s where that’s going. And it’s a shame, because the local broadcasters are caught in a vice between the network and the distributors. So, we have some empathy for their plight, but we cannot be their bank unless we get a return. And right now, we don’t get a return.

Unidentified Analyst: If I can just throw in one more. I know that Sling just launched this free stream service. I mean do you see FAST channels as a way for some leverage when it comes to retrans or affiliate fees for channels?

Erik Carlson: I mean, Amy, I don’t see FAST necessarily being leveraged for retrans. And obviously, there are certain things around that, that you’re likely aware of. But I mean on Sling, it’s as easy as customers — the customers that we have on Sling lumps lag. But as you know, OTT is a bit seasonal. It’s not much different from regional sports really. And so, folks can come in and out very easy. And free stream is — it’s great for us to launch, because it keeps folks kind of in our Sling ecosystem, right? And so, we’re trying to make it easy for customers to watch TV and have it be a seamless experience. Folks still love TV. Unfortunately, it’s just gotten hard to watch TV. And so free stream helps to have customers without our Sling ecosystem that may want to pay for college football over the course of four months and then pickup some general entertainment on a FAST channel and come back for basketball.

And so it’s very easy for us. And it was just — it makes sense for our Sling customers to have kind of a FAST offering, along with our direct-to-consumer offerings, where you can buy an AMC+ or Discovery Plus, et cetera. So, I don’t see that necessarily — where I see it impacting retrans is, obviously, there’s more content to watch, and the content Cox less. And so, as Charlie said, when Cox goes down and you don’t really miss your local news and you find it elsewhere, you don’t go back, and so it makes linear TV that much harder.

Charlie Ergen: And Amy, this is Charlie. We have no leverage against Cox. We have no leverage against Cox or any local broadcasters. There are absolute monopolies in their markets. They have no leverage. But the consumer has leverage. And the consumer is saying to us, we do not want you to raise our price. And there is so much content out there. There are so many places we can go that absent the Super Bowl. There’s just not many in NFL football, which are now widely available in other places. There is no network programming that generates much excitement anymore.

Erik Carlson: Or that type of stickiness.

Charlie Ergen: Or that kind of stickiness. So it’s rare. So, it’s the — they’re the newspaper of this decade, which is you raise your price for newspapers and there’s a few people continue to read the newspaper. I’m one of them. But the fact of the matter is that I don’t read the newspaper, I get my news elsewhere now. And if I lost my newspaper tomorrow, I’m probably okay. Operator, we’re a little tight on time. We’ll take the last media question.

Operator: Okay. And our last question is coming from John Celentano.

John Celentano: It’s John Celentano of Inside Towers. Thanks for taking the question And Charlie, no true questions this time. I just wanted a clarification that you will be breaking out your subscriber numbers, 5G versus prepaid or MVNO numbers going forward? And when hosting that might happen?

Charlie Ergen: Yeah. I guess, I’ll look at all for that.

Paul Orban: Well, we have no intention to do that right now. It’s probably a little premature as things progress we’ll take a look at that and consider it. But right now we have no plans to do so.

John Celentano: Okay. Well, it would help, but we look forward to that. Thank you.

Charlie Ergen: All right. Thank you, everyone, for joining. Appreciate it, operator.

Operator: You’re welcome. And this concludes today’s call. Thank you for your participation. You may now disconnect.