EchoStar (SATS) Q1 2025 Earnings Transcript

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Date

Friday, May 9, 2025 at 11:00 a.m. ET

Call participants

• President and Chief Executive Officer — Hamid Akhavan
• Executive Vice President and Principal Financial Officer — Paul W. Orban
• President of Technology and Chief Operating Officer — John Swieringa
• Executive Vice President and General Counsel — Dean Manson

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Takeaways

• Total revenue -- $3.9 billion, a decrease of 3.6%, mainly attributed to a reduction in Pay-TV subscribers, partially offset by increased wireless revenue.
• Wireless net subscriber additions -- 150,000 net adds compared to a net loss of 81,000, driven by expanded marketing and increased device demand during the tax season.
• Wireless subscribers -- 7.15 million, with churn improvement of 7.2%, and higher ARPU, indicating better retention and quality.
• Wireless segment revenue -- $973 million, growing 6.4%, supported by 3.3% ARPU growth and higher handset sales.
• Wireless service revenue (sequential) -- Grew 2.7% quarter over quarter, accelerating compared to 1.3% growth in Q4 2024.
• Wireless OIBDA loss -- ($415 million), increased from ($363 million), as higher marketing and subscriber activations drove greater expense.
• Pay-TV revenue -- $2.5 billion, a 6.9% decrease due to lower average subscriber count, partially offset by increased ARPU.
• Pay-TV OIBDA -- $730 million, down from $756 million, but OIBDA per subscriber rose 6.8% as subscriber acquisition and personnel expenses declined.
• DISH TV subscribers -- 5.5 million, with churn reduced to 1.36% from 1.53%, an 11% decrease, now at the lowest level in over a decade excluding the pandemic.
• Pay-TV ARPU -- Year-over-year increase of over $3, or 3%, as the impact of prior price increases fully materialized.
• Broadband and satellite services (BSS) revenue -- $371 million, a 3.1% decline due to lower broadband sales, slightly offset by higher hardware revenue.
• BSS OIBDA -- $86 million, up 8.1% from $79 million, attributing gain to reduced SG&A and bad debt expense.
• HughesNet consumer subscribers -- Over 850,000 at quarter-end.
• Pay-TV (Sling) subscribers -- 1.9 million at quarter-end.
• Operating free cash flow -- $77 million, calculated before debt service and EchoStar XXV CapEx; management reiterated the goal for sustained positive operating free cash flow for the full year.
• Free cash flow (including debt service) -- Negative $172 million, improved by $55 million, driven by a $299 million reduction in CapEx, partially offset by lower operating cash flow.
• Total cash and marketable securities -- $5.4 billion, $464 million lower than year-end, mainly due to $378 million in CapEx and debt repurchases, offset by $207 million in operating cash flow.
• FCC network milestone -- Achieved early compliance with the June 14 deployment requirement for 3GPP Release 17, and surpassed 24,000 on-air 5G sites more than a month ahead of schedule.
• 5G network coverage -- Over 80% U.S. population covered by Boost Mobile network; with partners, 99% nationwide coverage available to customers.
• On-net customers -- Over 1.25 million active on the Boost Mobile network, with more than 75% of compatible new devices activated directly on-net in accelerated markets.
• Capital expenditures (wireless) -- $164 million invested, down from $391 million, reflecting shift from initial network build to optimization and monetization.
• Universal airline terminal compatibility -- New Hughes in-flight connectivity terminals announced as compatible with both Ka- and Ku-bands, with secured contracts for both regional and wide-body aircraft.
• HughesNet enterprise contracts -- Signed for SD-WAN and AI ops with customers in Europe and India; multi-orbit managed network deployed in Latin America serving both private and public sector clients.
• Additional financing -- Received $150 million via privately negotiated add-on to 10.75% senior secured notes.

Summary

EchoStar (NASDAQ:SATS) reported notable wireless subscriber acquisition and retention improvements, with marketing efforts and device upgrades fueling 150,000 net additions and ARPU gains. The company emphasized accelerated operational execution by surpassing FCC 5G rollout milestones ahead of schedule and stated an intent to further migrate traffic onto its owned network to boost economics. Declines in Pay-TV and broadband revenues were partially offset by ARPU increases and cost efficiencies as EchoStar managed through competitive and macro headwinds. Management highlighted the financial flexibility afforded by a sizeable cash position, the progress of cost optimization, and readiness to capture opportunities in direct-to-device global connectivity, while reiterating a disciplined focus on sustained positive operating free cash flow for 2025.

• Management described its combined terrestrial and satellite spectrum rights as a key differentiator for the global direct-to-device initiative, especially given “S-band rights globally, highest ITU level authorization,” and AWS-4 domestically.
• Swieringa confirmed that more than 24,000 5G sites were deployed over a month ahead of FCC deadlines, and separately described the deployment of 3GPP Release 17 as “a key enabler for 5G advanced across our network.”
• About one-third of new wireless net adds were postpaid, but management stated a strategic intent “eliminate the concept of prepaid, postpaid entirely” in future quarters.
• Orban clarified, “CapEx lower in '25 than we've shown you in 2024. And it will ramp up as our deadlines approach,” suggesting short-term moderation before a return to higher network investment based on needs.
• EchoStar stated recent repurchases of secured Hughes bonds and new spectrum-backed debt issuance were unrelated, with Hamid Akhavan characterizing buybacks as “part of the basket of securities that Paul is investing in the short term.”
• The company announced membership in the Airbus HBCplus program, adding line-fit capability for in-flight connectivity terminals at Airbus factories, increasing backlog and reach.
• Management described the current LEO IoT system as “not targeting” direct-to-consumer mobile, with any future solution intended to deliver undifferentiated device experience globally using in-house assets.
• Akhavan commented on industry partnerships by stating willingness “that on a mobile business with anybody in the wholesale business,” subject to appropriate negotiations with current roaming partners.

Industry glossary

• OIBDA: Operating Income Before Depreciation and Amortization—a non-GAAP profit measure excluding non-cash charges for asset depletion.
• CBRS: Citizens Broadband Radio Service—U.S. shared wireless spectrum band used for 4G/5G networks and private wireless solutions.
• 3GPP Release 17: Industry standards update from the 3G Partnership Project that advances 5G technology, network efficiency, and device capabilities.
• S-band: A range of radio frequencies (2–4 GHz) used for satellite and terrestrial communications, valued for penetration and coverage properties.
• AWS-4: Advanced Wireless Services 4; U.S. frequency spectrum block licensed for terrestrial or satellite mobile communications use.
• SD-WAN: Software-Defined Wide Area Network, providing enterprise-grade networking functions managed over multiple connection types.
• AI ops: Application of artificial intelligence to IT operations for automation, performance improvement, and problem resolution.
• LEO: Low Earth Orbit; describes satellites circling the Earth at altitudes between 160–2,000 km, used for broadband, IoT, or mobile connectivity.
• On-net: Wireless subscribers or traffic served directly by a provider’s owned infrastructure, as opposed to roaming over partner networks.

Full Conference Call Transcript

Dean Manson: Thank you, and good morning. Welcome to EchoStar's First Quarter 2025 Earnings Call. We will begin with opening remarks from Hamid Akhavan, President and CEO; followed by Paul Orban, EVP and Principal Financial Officer; and John Swieringa, President of Technology and COO. We request that any participant producing a report, not identify other participants or their firms in such performance. We also do not allow audio recording, which we ask that you respect. All statements we make during this call, other than statements of historical fact constitute forward-looking statements made pursuant to the safe harbor provided by the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by the forward-looking statements. For a list of those factors and risks, please refer to our annual report on Form 10-Q for the quarter ended March 31, 2025, filed today, May 9, and our subsequent filings made with the SEC. All cautionary statements we make during this call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our reports and should not place any undue reliance on any forward-looking statements.

We assume no responsibility for updating any forward-looking statements. We refer to OIBDA and free cash flow during this call. The comparable GAAP measure and a reconciliation for OIBDA is presented in our earnings release and in the case of free cash flow in our 10-Q. With that, I'll turn it over to Hamid.

Hamid Akhavan: Thank you, Dean. Welcome, everyone. Thank you for joining us today. We have updated our format for today's earnings call to include the use of a slide show presentation. While this information has historically been included only in our quarterly filings, we have opted to include this slide deck format as part of our prepared remarks. Last year, we set the foundation as a global provider of connectivity and entertainment solutions and services. We drove efficiencies across all our brands and invested in profitable growth. Our unique set of assets across satellite, video, wireless and enterprise along with our U.S.-based manufacturing position us well for the remainder of 2025 and beyond.

We built upon our strong foundation in the first quarter and saw improvements in many key metrics. I'll now comment on some details across our lines of business. Wireless' performance remained strong with 150,000 subscribers net adds in the first quarter as compared to an 81,000 net loss in the same period of 2024. Our consistent marketing efforts combined with the ongoing optimization and recognition of our network performance are key factors in this success. In the first quarter, we expanded the benefits of our prepaid and postpaid offerings to both our branded stores and digital sales channels and build up on gains in combining our services under the single Boost Mobile brand.

We also increased our marketing to spend and offers during the important tax return window, which seasonally increases demand for new devices and upgrades. These activities helped anchor our first quarter subscriber growth and positions us well for additional opportunities in 2025. As a testament to our excellent network experience and competitive mix of offers in the quarter, we increased our wireless subscribers to approximately 7.15 million while improving the quality of our subscriber base as evidenced by 7.2% improvement in churn year-over-year and an increase in ARPU. Overall, we are satisfied with what we have managed to achieve over the past year, and we'll continue to focus on profitable subscriber additions.

Furthermore, in light of recent economic uncertainty, we believe we have some of the most attractive offers in the market for consumers looking to capture the best value in the mobile business. In our Hughes business, we continue our progress in the enterprise domain. Our in-flight connectivity business recently announced universal compatibility of our terminals in the Ka- and Ku-bands, dual compatibility means our airline customers are not limited to one constellation, enabling cost effectiveness, flexibility and an optimal passenger experience. We also recently announced membership in the Airbus HBCplus program, which gives us the ability to serve airlines with a line fit option at Airbus factory.

These developments in addition to our expanded contracts for regional and wide-body aircraft with Delta Airlines add to our in-flight product offering and increase our backlog. In Q1, we began commercial shipment of a new single panel version of our electronically suitable LEO antenna, this cost-effective, high-performance addition to the user terminal family is uniquely suited for global enterprise use due to its size, weight and ease of installation. We have signed contracts from customers in Europe and India for our SD-WAN and AI ops capabilities. In Latin America, we finished deploying our multi-orbit managed network to support private network and security services on LEO and GEO satellites and secured additional demand for similar services for Brazilian national parks.

Finally, our HughesNet consumer business, we closed Q1 with over 850,000 broadband subscribers. In Q1, the performance of our Pay-TV business, consisting of DISH and Sling was in line with our expectations. DISH business and media sales performed well, and we delivered roughly 7% growth in OIBDA per subscriber. Despite macro headwinds in the Pay-TV landscape, we remain focused on acquiring and retaining the most profitable subscribers that value our service offerings. Our Video segment remained focused on operational efficiency, customer loyalty and improving user experiences. These efforts helped increase ARPU and reduce non-programming variable cost per subscriber.

This work will serve us well in the remainder of 2025 as we introduce new offerings to meet evolving consumer demands and expand our cross-sell opportunities with Boost Mobile. DISH TV finished the quarter with approximately 5.5 million subscribers and churn was 1.36% compared to 1.53%, a reduction of 11% for the same period of 2024. Our lower year-over-year churn is a result of our data-driven loyalty initiatives and bundled offers. DISH TV churn is now at the lowest level in over a decade, excluding the pandemic. We also drove Pay-TV ARPU growth with a year-over-year increase of over $3 or 3% due to the full effect of 2024 price increases.

Also in spite of competitive headwinds in the extreme market, we closed the first quarter with 1.9 million subscribers. Now I would like to turn it over to Paul Orban for commentary and color on the numbers.

Paul Orban: Thank you, Hamid. Revenue was approximately $3.9 billion in the first quarter. That's down 3.6% year-over-year, primarily due to fewer subscribers at Pay-TV, partially offset by an increase in revenue from our wireless segment driven by ARPU growth and higher handset sales. OIBDA was $400 million in the first quarter, a decrease of $70 million year-over-year or approximately 15%. The decrease in OIBDA was primarily driven by increased marketing in Wireless as well as decreased OIBDA from our Pay-TV segment due to fewer subscribers. EchoStar generated positive operating free cash flow of $77 million in the quarter, defined as free cash flow before debt service payments and nonoperating CapEx related to EchoStar XXV.

We continue to expect positive operating free cash flow in 2025 as we remain disciplined in managing our operating cost structure while growing our Wireless and Hughes enterprise businesses. Free cash flow, including debt service in the first quarter was negative $172 million, an improvement of $55 million compared to the prior year. This improvement was driven by a $299 million reduction in capital expenditures, including capitalized interest, primarily due to optimizing our 5G network spend, partly offset by lower cash flow from operating activities. At the end of the first quarter, our total cash and marketable securities was $5.4 billion, a decrease of $464 million compared to year-end.

This decrease primarily resulted from capital expenditures of $378 million, including capitalized interest and repurchases and redemptions of our near-term maturities, partially offset by cash generated from operating activities of $207 million. Today, we received $150 million from an add-on issuance to our 10.75% senior secured notes from a privately negotiated transaction. Turning to our segment performance. Total wireless revenue in Q1 increased by 6.4% to $973 million, driven by 3.3% ARPU growth in higher handset sales. Service revenue grew 2.7% in Q1 sequentially accelerated from 1.3% in Q4. Due to increased subscriber activations, the Wireless OIBDA loss increased to a negative $415 million compared to a negative $363 million last year.

Pay TV revenue decreased by 6.9% to $2.5 billion due to a lower average Pay-TV subscriber base, partially offset by increased Pay-TV ARPU. Pay TV OIBDA decreased to $730 million from $756 million, while Pay-TV OIBDA per subscriber increased 6.8% year-over-year due to lower average Pay-TV subscriber base, partially offset by lower subscriber acquisition costs from fewer gross activations and lower personnel costs. We continue to focus on retaining profitable customers and remain disciplined in our cost structure. Broadband and Satellite Services, or BSS revenue decreased by 3.1% to $371 million due to lower sales of Broadband services to consumers and enterprise customers, partially offset by higher hardware sales to enterprise customers.

We remain focused in the near term on accelerating our enterprise revenue in order to return this segment to profitable revenue growth. BSS OIBDA increased by 8.1% to $86 million from $79 million in the prior year due to lower SG&A, including a decline in bad debt expense. With that, I'd like to hand it over to John to cover our network deployment progress.

John Swieringa: Thank you, Paul. We are the worldwide leader in developing and operationalizing a cloud-native Open RAN 5G network. And today, the Boost Mobile network provides 5G broadband coverage to over 80% of the U.S. population. In combination with our partner networks, we are offering customers 99% coverage across the U.S. I'm also pleased to announce we have already met our June 14 FCC requirement by deploying 3GPP Release 17, a key enabler for 5G advanced across our network. Also, we now have more than 24,000 5G sites on air, more than 1 month prior to our commitment date. These network enhancements further demonstrate our commitment to scaling our network and giving Boost Mobile customers access to the latest technology.

As we have expanded and optimized the network, we've continued to drive a competitive customer experience, and we're outperforming the competition in many markets. During the first quarter, we invested $164 million in CapEx compared to $391 million in Q1 of 2024 as we continue to transition from the initial build-out of our network to running, optimizing and monetizing it. A key priority for us continues to be migrating as much traffic as possible to our owned and operated 5G network to provide our pure 5G experience to our customers and reap the benefits of owner economics.

Today, we have over 1.25 million customers on-net and are loading more than 75% of compatible devices on our network in the accelerated markets. We continue to focus on activating an increasing percentage of new customers directly on the Boost Mobile network as well as upgrading existing customers to our growing portfolio of Boost Mobile network compatible devices. Just last month, we expanded our device portfolio to include iPad and Apple Watch with Android options in the near-term pipeline. We will continue to ramp up our progress throughout the year. In addition, we look forward to working with the FCC to increase CBRS power levels through its pending rule making.

We see this as a key step to improving spectral efficiency, increased utilization of this band and aligning the U.S. with the rest of the world. Now I'd like to turn it back to Hamid for a few short closing comments.

Hamid Akhavan: Thank you, John. We are pleased with the performance of our business lines from the first quarter. In summary, our 2025 operating plan targets a positive operating free cash flow, optimized subscriber profitability from our Pay TV segment, expansion of Hughes Enterprise and continued growth from Boost Mobile. With that, we'll open it for Q&A from the analyst community.

Operator: [Operator Instructions] And our first question comes from Sebastiano Petti with JPMorgan Chase & Company.

Sebastiano Petti: Strong subscriber results in Wireless, but success-based OpEx is pressuring EBITDA in the segment there. While you are making progress bringing customers on-net, just any help thinking about what some of the other potential cost levers could be within that segment as we think about the glide path to improved EBITDA drag there? And then just another broader term kind of question. So help us think about maybe perhaps your low earth orbit strategy, launching some satellites, but how do you see this fitting within your broader product suite in terms of not only perhaps on the D2D side in wireless, but also some of your enterprise efforts?

Hamid Akhavan: Great. Thanks for the questions. There are two here. I will take the first one and maybe John can add to it. In terms of improving the economics of our new subscribers coming on, I think the first thing is we are adding now the significant majority of our customers directly on net. I think having the owner economics of having the customers be on our own MNO network is probably one of the biggest improvements we can make in cost. And you see that trend will continue. So I think about 75% of the customers being added now that come directly on net.

And John, you may want to correct me on that one if I don't have the right number.

John Swieringa: Yes. Thanks, Hamid. I mean that's with respect to compatible devices. So one of the things that we're doing, Sebastiano, thanks for the question, is making sure when we have a handset that is in a market that's open for Boost Mobile with Bonner that we're adding a very high percentage of getting that device on net. We see that expanding in the back half of the year as a higher number of our devices that we're distributing are compatible with the network. Just to give you a feel for it, a good example would be additional compatible iPhones with 15, 16 and 16Es relative to what we've been previously distributing that's been noncompatible.

On top of that, we have a lot of opportunities for upgrades of existing customers on compatible prices. So you should see those numbers expand in the back half of the year and going forward. In addition to that, with overall OpEx, we're certainly focused where we have the biggest opportunity to win. So you'll see us in the major markets where we've got strong network, making sure that we're bending our business to local efforts there. Back to you, Hamid for your update.

Hamid Akhavan: And then we also are working -- certainly not anything to report today in this earnings call, but we are working on a number of different more fundamental initiatives around distribution and how we go to market in routes that may be more value-enhancing and less expensive, so more efficient. So those will show up starting back half of the year and into '26. We certainly are not only focused on daily optimization of the business, but also we're looking at long-term trends of how we can change the economics fundamentally. So more to come on that one as the year progresses in a couple of few quarters from now. On the LEO business, we have been hard at work.

We are one of those companies don't make too many announcements without having -- without a substance. We don't -- we think that plenty in the market making that, we don't need to participate in that. But we certainly have been very busy in terms of getting our plans ready and engineering ready, and we will make announcements when we feel it is appropriate. But we certainly intend to be in the market as the leading provider of global direct-to-device connectivity using our S-band rights internationally and AWS-4 domestically. We are very much focused on it. It is a priority for us. It's one of the most important strategic priorities in terms of business development.

And we just don't include that in our prepared remarks simply because we don't think it's in our best interest to speak today until we have more substance to deliver to the market.

Sebastiano Petti: That makes sense. And then, Hamid, if I could, one follow-up maybe for Paul, but where will the LEO assets sit under EchoStar outside of Hughes or at Hughes somewhere else? Any color on how to think about that?

Hamid Akhavan: LEO assets outside of Hughes, we don't really -- we have a small LEO asset with Lyra, and that's our Sirion assets that we -- I think that still is at EchoStar level. It's not Hughes.

Paul Orban: Yes, most of the assets are at parent level.

Hamid Akhavan: At the parent level. And the investments we'll be making -- I mean, we have not obviously disclosed any of this, but I don't believe that we would put those assets in Hughes. I think we would keep the assets at the SaaS level with the investments that we would make going forward on the LEO side.

Operator: And your next question comes from Ric Prentiss with Raymond James.

Brent Penter: This is Brent Penter on for Ric. First question, as you've continued to ramp net adds in Wireless, what would you say is resonating most in the market. It's helping you build this momentum specifically? And given 1Q is a seasonally slow period typically, is it right to think you should be able to improve further from this 150 level?

Hamid Akhavan: To the first part of the question, look, we have some of the most attractive offers in the market in spite of the headlines that everybody else has in terms of having their offers being best in the market or unique in the market in terms of value. When you look at the actual details of what is included and what is not, ours, it turns out to be the best value. And there's some hidden costs and hidden requirements in everybody else's offers in a way that when people ultimately unpack and manage to unpack all the nuances that each offer includes, they realize that our offers are very attractive.

The other thing is that we also benefited from a significant reduction in churn. As I mentioned in my prepared remarks, we see and we retain customers in a more significant way, which helps us with the net add. That's a testament to the great network that we have. And also our contributions from digital sales is now very significant. So we did not have that in the past at Boost Mobile, historically been an indirect branded shop sales, but now we've seen a very significant contribution from the digital channel. I would not -- to the second part of your question, I would not label the first quarter as historically low. For us, that is not true.

The tax season has always been a very good season for us simply because the younger value-conscious segment in a market that has been our bread and butter and continues to be our focus have always used the tax return opportunity to upgrade their mobile devices and services. And we -- so we consider first quarter actually one of the more productive quarters for us. I will not make any forward statements about our projections for the second quarter. But I would say that our goal for the year is to deliver positive good adds for the rest of every quarter going forward.

We're not going to look back in terms of growth any longer that we are on a growth path, and we're not going to look back. So I can't make you -- can't give you a definitive statement about our performance, but every quarter will be good and seasonality will definitely play a role and first quarter is usually a good quarter for us.

Brent Penter: Got it. And then one more. In the 10-Q, you all noted CapEx should drop and then it sounds like it will increase again as you move toward your build-out deadlines. How should we think about the timing of when you'll need to ramp CapEx again to meet those deadlines?

Paul Orban: No, that is accurate there. You'll see CapEx lower in '25 than we've shown you in 2024. And it will ramp up as our deadlines approach. However, given the milestones that we've met recently, the 2026 deadline that we have more than likely will be pushed out to future years. So we will move to more of a success-based build, meaning when you look at the MVNO enrollment costs that we pay for, say, a tower and the operating cost of those, if you discount those back to today's dollars and it costs more than what it cost to build a tower, we're going to build those towers.

So it's going to ebb and flow based on where subscribers are at and what the need is.

Operator: Your next question comes from Marlane Pereiro with Bank of America Securities

Marlane Pereiro: I just wanted to ask on Hughes on the bond specifically. I saw that you repurchased some of your Hughes secured bonds due next year, and you also issued the $150 million of the new spectrum notes. So I just want to be clear that those -- are those 2 related? And also, do you have some other uses for proceeds, the incremental capacity on the spectrum notes, how are you thinking about utilizing that? And do you expect to continue repurchasing the Hughes bonds?

Hamid Akhavan: Thank you, Marlane, for the questions. Look, the -- we obviously, as you know, as Paul has mentioned, we are sitting on a significant amount of cash on balance sheet as a result of the financing we had a few months back. We need to put that cash to use. And one of the best uses of that cash for us is some of our own securities that are in the market. These are undervalued securities. And when we look at it, we diversify our investments for sure. We're not concentrating on any single source.

But when we look at where we get the highest return with the lowest risk, one of those areas is buying our own debt that Paul decided to do. It's not a very significant amount. So it doesn't really move the needle in terms of our overall financials, but certainly is part of the basket of securities that Paul is investing in the short term and we benefit from. The second part of the question had to do with the $150 million raise, I believe, sale of additional spectrum-backed bonds that we also had in there, and that's an obligation we have had to a party that needed to -- that we need to satisfy.

We had committed to offer some additional bonds, issue some additional bonds that it had been due for many months, and we just honored that obligation. There's a lot of demand for that security for that bond, and we just wanted to make sure that we meet that obligation. There was nothing else more to it.

John Swieringa: Yes, both unrelated.

Marlane Pereiro: Got it. Great. And then just on the buyback on the bonds, why not be like the unsecured versus the secured?

Hamid Akhavan: There was no particular reason for it. We may be selling those bonds back, but who knows. So we -- I think that was a decision that was made. I don't think that you could read anything into it in terms of secured versus unsecured.

Marlane Pereiro: Got it. And one more, if I could. Is there any update that you can provide on the status of the litigation with the DBS bondholders? There were reports earlier this week that a mediator could possibly be appointed. So just wondering if maybe that might signal there could be room for a settlement with bondholders or even reopen the door for discussions with DTV?

Dean Manson: Right. No, we don't have comment on that litigation.

Operator: Your next question comes from Walter Piecyk with LightShed.

Walter Piecyk: Can you talk about what investments you're going to make in the [indiscernible].

Operator: Walter, are you breaking up a bit. Could you just repeat your question or pick up the handset?

Walter Piecyk: Let me come back in the queue. I might need to make some technical adjustments.

Operator: Your next question comes from Bryan Kraft with Deutsche Bank.

Bryan Kraft: I had a couple of Wireless questions. I guess, first, I was wondering if you could just provide any color on where the new Boost customers are primarily coming from. Secondly, I wanted to ask you about your ability to utilize third-party financing to fund handset subsidies and EIP working capital usage. So you don't have to use your own cash flow to fund them and obviously allow you to grow faster. So I just wanted to see where you are on that.

And then lastly, I guess I just want to ask, are you looking at any opportunities to partner with other wireless operators in jointly building out any of your spectrum bands as a way of maybe doing it in a more capital-light way? And then also if you're open to either selling or leasing maybe some pieces of the spectrum that you have to other operators where you might not be using it and could use it to generate some additional cash flow or if it's sold, bring capital in?

Hamid Akhavan: Three different questions. I try to remember all and parse them out. The first question is that we're getting customers across all -- from all of the three other players in the market at Boost Mobile. We're particularly pleased with the fact that we're getting some of the better customers because our ARPU on prepaid to our understanding is highest in the market today. We have the highest prepaid ARPU and is rising and has been historically highest has been. And we have had historically lowest churn now in prepaid and very competitive with the best in the market churn from the others.

It points out that we're getting the better -- a good cohort of subscribers, not getting subscribers that don't have any other options. I think it is a testament to the fact that the value overall is -- it is considered the best. We are actually getting net positive porting by a significant amount. Last year, we mentioned that beginning of the year, we were net port out at the beginning of 2024. By end of 2024, we were complete heterologous situation month-on-month -- every month, we got the port ins got significantly higher. And today, we have a vastly higher port in and port out by a very significant amount.

We're obviously not reporting that, which, again, is a testament to customers are recognizing the Boost Mobile's network and value being the best in the market. When it comes to of, I guess, device financing outside of our own capital. Paul, maybe you can take that piece.

Paul Orban: Yes. Thanks, Hamid. We definitely have access to various device finance partners. We first want to use our own cash on balance sheet, but that may change over time if we feel it's strategic for us, and we'll be obviously opportunistic in that marketplace.

Hamid Akhavan: And as it comes to spectrum, look, we -- I generally don't comment about any sort of spectrum-related or trading of assets that's not appropriate for the earnings call here. We always have every option available to us. We -- at the moment, we feel very comfortable where we sit in terms of our spectrum ownership. There's a few things in the market that FCC is considering that would even enhance our position, such as enhancing the power level on CBRS, which would be vastly attractive to us. And so we believe there's several ways for us to raise capital and have enough resources to be and remain competitive in the market.

And so we're not closing doors on anything, but certainly, I'm not here to discuss any sort of M&A or trading of spectrum.

Bryan Kraft: If I could ask just one quick follow-up. Could you provide any color on the prepaid versus postpaid mix of the new connects?

Hamid Akhavan: Yes. Look, we -- I want to start by saying that -- responding to that by saying we actually have stated and we are continuing and you will see us even accelerate what we call merger or amalgamation of postpaid and prepaid. I think the concept of post versus prepaid is a 50-year-old concept that no longer has significant value when you're talking about how much people pay upfront versus how much we pay. It really -- that whole great scale of payment and credit ratings is something that we are focused on, and we will eliminate and we are well down the path of doing that.

Having said that, therefore, as a result of that, it doesn't make sense for us to talk about prepaid, postpaid as we are working very hard, and you'll see us do this in the next couple of few quarters. We eliminate the concept of prepaid, postpaid entirely. But just to answer your question because there may be a curiosity about what has it been in the past or historical, if I look at today, if I look at first quarter and use the traditional definition of postpaid, I would say roughly 1/3 of net adds in the first quarter were postpaid net adds, just about 1/3 was postpaid of the [ 150 ].

Operator: And our next question comes from Walter Piecyk with LightShed.

Walter Piecyk: That was not my was technical error. My [indiscernible] having some message. Can you just talk about -- without -- I know you don't want to give up any like competitive dynamics. But just in general, as we progress through 2025, is there a willingness to invest in more distribution, more advertising, things to kind of get the channel going? And I'm thinking also about Comcast is certainly taking.

It feels like a pivot after they saw Charter, there was a lot of concern that when Charter was giving away free lines for a year, something that didn't work for Sprint, God knows how many years ago, but they give away free lines for a year, they converted a lot of those to paying customers is Charter. Comcast is now replicating that and plan to be aggressive.

Not to ask if you're going to do free lines, but are you -- is there kind of a plan now that you've kind of gotten over the hump of positive net adds and looks like you're going to be net adds for the next couple of quarters, churn is obviously much more reasonable now. Like you should be -- I would think that you now consider next steps in terms of investment for growth. And I'm just curious if you can speak to that at all in terms of what the game plan is here?

Hamid Akhavan: Walter, yes, absolutely. Listen, we -- nothing that we have delivered to date has been accidental in the sense that we put a lot of foundation in '24. '24 was like fixing the basics and putting the foundation to get the good customers to get the value customers that are higher into the value consciousness coming to us. And you see the results of that today, and we are very pleased and proud of what we have done. We are working on additional distribution channels. Digital is already, as I mentioned, has become a very significant contributor to our net adds of the quarter. And you have seen us even add what traditionally people have been referring to as postpaid.

Now we are increasing -- we will be increasing our routes to market. We are working on fundamental ways from a digital side, from a national retail side, from other nontraditional distribution methods that require significant amount of in-house development and business development before we actually surface them in the market. And I think you have touched on something important, and that is routes to market and access where people can buy from us and how we deliver the service and product to them. I think that's a key focus area for us. I can only comment to this level and just say that, yes, more to come.

I'm not promising that necessarily in the very, very immediate, for instance, this quarter, but not -- it certainly is not too far, and we will -- you'll see the results of that towards the end of this year and beyond.

Walter Piecyk: The second question is Comcast downplays the impact that the kind of moving on the Verizon MVNO contract that they have has on them going forward. However, they're still restricted under that contract to only sell bundled services where maybe there's an opportunity for them to sell to customers that they don't currently have given that they're losing broadband customers. What's your viewpoint on a willingness to do an MVNO deal with them?

And I guess, more importantly, if you did an MVNO deal with them, do they get the benefit of -- would an Xfinity customer get the benefit of not only your network, but the ability of those customers to then roam on to your AT&T and T-Mobile roaming partnerships?

Hamid Akhavan: I cannot comment about Comcast's intentions and what might be best for them. Obviously, only they can comment on that. I can comment about our ability and willingness to partner, look, we are going to look at every opportunity that comes our way. We are not close minded to any sort of partnerships. We have demonstrated that globally in many ways in our other parts of business. We're doing that today with content providers. We're happy to do that on a mobile business with anybody in the wholesale business. There are some discussions that would have to happen, obviously, with roaming partners. We cannot do this unilaterally without their support.

But if the economics of a deal be such that is conducive to value enhancing to everyone, I think we would be working -- we'd be willing to consider and capitalize any discussion. I absolutely do not want to comment or imply in any way that we are discussing anything with Comcast or we are approaching Comcast. I want to be on the record that I am not commenting in any way about -- this is just a speculation. You asked me a question about Comcast, and I just referred to it, but I certainly don't want any implications that we are working with Comcast on anything.

Walter Piecyk: Does that work on the AT&T, if you were able to do something with them, would those customers be able to then utilize the roaming relationships that you already have with AT&T and T-Mobile?

John Swieringa: Technologically, yes, Walter, this is John. Technologically, yes, there's solutions and paths there, but it would come down to business deals.

Walter Piecyk: But does AT&T, T-Mobile restrict you from doing a pass-through deal like that?

John Swieringa: Yes, I think we've sort of already answered that. It would require cooperation from all parties to advance any wholesale relationships.

Operator: Your next question comes from Adam Rhodes with Octus.

Adam Rhodes: You already touched on it briefly, but direct-to-device has certainly become a more mainstream topic. So a couple of years ago, when you announced the EchoStar DISH combination, each of the company's-band assets were discussed a significant rationale for the transaction. Can you provide any color on how EchoStar's unique positioning as a cooperator of terrestrial and satellite networks differentiates it and benefits it compared with others in the space?

Hamid Akhavan: Yes. So Adam, thank you for the question. We believe we have almost every -- we tick every box that is required to make the #1 strategic play there. Most important of all, we do have the same spectrum and rights to it terrestrially and space to make it work. Obviously, our S-band rights globally, highest ITU level authorization. And then on the -- obviously, U.S., we have the AWS 4. All of that is -- so we don't have to work with anybody else.

We don't have to find many other parties to collaborate with us to complement or complete the spectrum picture in our spectrum is not utilized in a way that we have to clean it, clear it like other bands, L-bands and other bands have to do. So in a way, I think that highway is paved and ready for us. But in addition to that, we have two other things that very -- almost nobody else has. We are both a satellite operator, manufacturer, technology provider, as you have known from our comments on Hughes, and we are a chief supplier to OneWeb, and we have been a supplier to other LEO systems in the past, Globalstars and others.

So we are well positioned from the space perspective. And then we are also a 5G O-RAN national provider, the largest O-RAN provider in the world practically now with partnership and roaming agreements with every carrier around the world. So marrying all of this together for us is just the most natural thing because we have it all in-house. We are the only company that can do it all in-house. And so now you may -- there may be a natural question as to why is it taking time?

And the answer is we did not want to and we would not have built a system that is not 5G O-RAN, all standards, we would not have done that simply because one of the benefits of the business case, one of the ways that the world will benefit from this is that it be built into standard handsets that we do not have to manufacture. We do not have to subsidize. We do not have to uniquely market and distribute rather be built into every device that gets shipped. Those chipsets are in the making now and the handsets will be available. And we don't want to have a satellite up there.

If I had a satellite today, I would not launch it today. I would not because the satellite has a life of several years in the LEO system. And if the satellite goes up there, but there are no devices to talk to, what is the point? What is the point of depreciating a very expensive asset up in the sky without being able to get revenue from it. So the timing of when the satellite has to go up versus what is the available population of usable devices, compatible devices on earth is a timing decision that is very important. And that's why we are timing for that optimized window. It is not that we are late.

If anybody else is doing it earlier, either they're not doing it based on 3GPP 5G standard or if they do it, they're going to end up with devices that are not compatible with it. So we are very excited about it. I think we -- as I mentioned earlier to a different question, we're not going to make announcements and overhang the market until we have the proper substance at hand. But we are not missing the window of opportunity. We will maximize our use -- our business case, and we will be out there taking advantage of this opportunity that's uniquely presented to us. So I think that -- thanks for the question.

Operator, I think we should move to one more question given that we are reaching close to the end of the hour.

Operator: And the last question for today comes from Sam McHugh with BNP Paribas Asset Management.

Samuel McHugh: Three short follow-up questions, I guess. First, on the net adds, you talked about government support programs. I guess that's maybe Lifeline. Could you maybe just dimension how much of a boost they are to net adds at the moment? That's number one. Second question was on the Hughes secured buyback. Why the Hughes box not the EchoStar box? And I guess, why buy secured versus unsecured? I think you said earlier there was no reason, but I think the unsecured were actually cheaper than the secured at the time. And then third, I think just to clarify, the T-Mobile and AT&T deals from what I always understood precluded you from white labeling. I think the T-Mobile deal was public.

So you basically are saying you couldn't just offer an MVNO without pre-agreement from AT&T and T-Mobile?

Hamid Akhavan: So three different questions, let me remember. There was a question on Lifeline. So when we -- when ACP program kind of terminated, we started migrating our customers to our prepaid and various brands that we have. So we're not no longer breaking that out as that has become a bit of a mix in a way that it doesn't naturally lend itself to individual separate reporting. So we're not breaking that up. There was a question about -- what was the second question? I apologize quickly. I answered that previously. You should not read to it.

I mean the fact that we're buying it was just a question that I think that was a fair question, what do we buy, what assets we buy. It's -- I suggest you don't read anything extra to it other than the fact that we thought that was available to us and it was available to us at a reasonable price, and we thought we could buy it from a seller that could sell it to us for the proper amount. And so there's no strategic -- no special strategic rationale for why we did A versus B. We could have done the other one if we had access to it in a reasonable way.

And then the third question was, I think, John, maybe you want to answer that one.

John Swieringa: It's John again. Well, first of all, we've got strong relationships with AT&T and T-Mobile. We're on track with those partnerships, and they're productive. To the extent we want to enter new business arrangements with them such as wholesale, that would require a new business deal and new cooperation to enter the wholesale market in a way that we could use their roaming services.

Hamid Akhavan: And you would expect that because if somebody shows up here for a wholesale, depending on volume of business they bring to the table, depending on what is the business case looks like and certainly, there's no automatic on any wholesale. In my life, I've never seen a wholesale deal that is prewired when somebody shows up, it's always a custom discussion, custom unique negotiations on economics. We cannot make a statement on behalf of anybody else as to whether they would agree or accept that in any custom negotiation, what the outcome would be. So we're not answering you with a very tangible yes or no simply because the real answer, the proper answer, it depends.

I think we can take one more question given that we still have a couple of minutes left. So operator, let's please take one last question.

Operator: And our final question comes from Jonathan Chaplin with New Street Research.

Jonathan Chaplin: Hamid, I was wondering if you could give us a little bit more color on your LEO aspirations. We saw that some layers have been launched. I think the total plan is for '28. I'm wondering how many have been launched so far? And then are you going to be able to do direct-to-device communications from this constellation? And if not, wondering how discussions with maybe Starlink or Kuiper may have progressed on that front?

Hamid Akhavan: So the LEO system that we have had historically, and we are in the process of continuing to work with it, it's an IoT in what we call a narrow band. It's not designed. We have never designed it, and it's never been meant to do a direct-to-consumer mobile device in your pocket. That -- we call that a LiDAR system. That's a Sirian system that we have had. And that's -- the short answer to that is that we're not targeting it for that.

Having said that, I want to be here mentioning that we have been doing messaging to device directly to mobile phones, like, for instance, a Pixel phone, Google Pixel phone in Europe now using our S-band for a couple of 3 years now, and that's been commercially available and our commercial customers on it. We can easily do the same thing in the United States. So doing the messaging that some of the other companies have done, just pure messaging in regional shape or forms here or there, it's not something -- in fact, we did this before anybody else had done it, and we have done it all in-house assets.

There's no partnership required between a mobile carrier and the space carrier. We've done it all in-house, and we can do that. But we're not focusing on that because our aspirations for direct-to-device is to bring in the service that would be undifferentiable from what you already use in your mobile device in your pocket, whether it be an Android phone or iPhone, iOS phone anywhere in the world. And that is our aspiration. Nobody does that today in a proper way. If anybody is doing that or planning to do that in advance of 2028, as you mentioned, 2028, I don't know. I want to say that it is either going to be regional.

It's going to have incredible restrictions. You're going to get close to within hundreds of miles or kilometers of the border of any country, you're going to start interfering with the neighboring countries, carriers and networks. And yes, there are bits and pieces of, I guess, subcritical solutions that are not of any interest to us. Our interest is a universal solution everywhere, no interference, no coverage holes, no restrictions. And that nobody is ahead of us, and I don't believe anybody is going to be ahead of us.

Jonathan Chaplin: And would you pursue that with your own constellation? Or would it make more sense to partner?

Hamid Akhavan: Look, we certainly do not rely on anybody in order to get this thing done because we can do it all. Having said that, we are commercial animals, just like every other operator in the world, if the pieces -- parts of the picture can be complemented, provided, helped produce better by other people, we would absolutely take advantage. So there's no pride of ownership here. There's a pride of the ability to do it here because we have all the unique assets that over the past 15 years, EchoStar shareholders have created with the vision they've had starting 15 or 20 years ago buying these assets where nobody else was thinking of them.

They bought every pieces of it and brought them together with a view that a day like this, we would be sitting here, having all of it in-house. Now that doesn't give me the permission or pride to say if somebody brought something better to the table that I could do even better on my own that I would walk away from it. I would absolutely take advantage of it.

Operator: And with that, we conclude today's conference. All parties may now disconnect. Have a good day.

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