DISH Network - Q4 2022
February 23, 2023
Transcript
Operator (participant)
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 (EVP and General Counsel)
All right. Thanks, Shelly. Good morning, everyone. Thanks for joining us. We're joined on the call today by Charlie Ergen, our Chairman, Erik Carlson, our CEO, Paul Orban, our CFO. On the wireless side, we've got Tom Cullen, EVP of Corporate Development, John Swieringa, President, CEO of Wireless, and Dave Mayo, our EVP of Network Development. 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 forecasts. 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 gonna generally go straight to questions, but before we do that, I'm gonna turn it over to Erik for a brief update.
Erik Carlson (President and CEO)
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 (participant)
If anyone would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open, please state your name and company name before posing your question. Again, it is star one to ask a question.
Ric Prentiss (Managing Director, Global Head of Telecommunications Services Research)
Hey.
Operator (participant)
Ric Prentiss, your line is open.
Ric Prentiss (Managing Director, Global Head of Telecommunications Services Research)
Yeah, thanks. Hey, it's Ric Prentiss, Raymond James. Hope you're all doing okay despite the internal outages. Two questions if I could. First is a very detailed question. It looked to us like wireless retail equipment revenue seemed 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 Bye leaving the operations and joining the board, T-Mobile, Amazon, AWS had an announcement this week talking about private networks and working together for 5G. How should we think about the enterprise wholesale side? What's needed to get that business going, and when could it become meaningful?
Charlie Ergen (Co-Founder and Chairman of the Board)
Take that first.
Paul Orban (EVP and CFO)
Yeah, this is Paul. I'll take the first question. As it relates to retail wireless, cogs revenue or hardware revenue, it was down slightly and that's due to units shipped. You may notice, though, that equipment cogs is up higher. In the fourth quarter, we shipped a lot, a higher percent of 5G units that has our chipset in it. That's gonna be a good investment for us because in the future we'll be able to upgrade customers to our network and obviously get O&O economics at that point in time.
Charlie Ergen (Co-Founder and Chairman of the Board)
This is Charlie on the second part question. At first, the T-Mobile AWS announcement is what we would expect. I think that we're leaders in where the wireless network's gonna go. I'd expect that everybody is gonna have cloud-based networks and also whether they have a private cloud or a public cloud, you know, maybe everybody will do it a little bit differently, but that's gonna be a necessity to get into the enterprise business, businesses. There's gonna be a lot of business for everybody in the enterprise businesses. If we're better positioned there, we would expect as, you know, as a gross generalization with four players with national networks, you know, 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 double digits would be a reasonable expectation for us. We're just not gonna be a dominant player in the retail wireless business. Our network is designed for enterprise, it's designed for wholesale. So, you know, we think we'll get. We're leaders there from an architecture point of view today. Then to the further part of your question, it's 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.
We're, we're looking at verticals where we already have relationships, whether that be in rural America, think agriculture, think, you know, whether it be in the, in the leisure and entertainment business. We're already doing video for some of the customers. That's a. Then there's all kinds of verticals that our partners are, you know, whether it be a Cisco or an Amazon or a Dell, that already have sales forces, already parties in those products. I think you're gonna see a lot of business for everybody. Once companies start putting in private networks, it will, it will force their competitors to do it because they just won't be competitive without their own private networks. That's the big picture answer.
you know, I think we would expect that you'll start seeing real revenue from that next year from us. 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. 'Cause whatever they can do, we can do better.
Ric Prentiss (Managing Director, Global Head of Telecommunications Services Research)
Do you think VoNR, Voice over New Radio, is that something enterprise wholesale people wanna see working or is it more nationwide coverage? What's kind of one of the hurdles to that long sales cycle that they're really wanting to see that box checked? Anything in particular?
Charlie Ergen (Co-Founder and Chairman of the Board)
I think at... 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 gotta make a return on that investment. Where do they get productivity? How do they make their products cheaper, faster, safer? How do they have increase their security as a result of it? You gotta 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 (Managing Director, Global Head of Telecommunications Services Research)
Great. Thanks, Charlie.
Operator (participant)
Phil, your line is open.
Phil Cusick (Managing Director and Senior Analyst)
Hey, Charlie, it's Phil Cusick, J.P. Morgan. Thanks for your time. Two, if I can. One, can you talk about the s-comment in your disclosure today that said you've started sites that will cover over 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 2025? What fines would be in there.
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah, I'm gonna.
Phil Cusick (Managing Director and Senior Analyst)
if it comes to that?
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah, I'm gonna let I'll let Dave Mayo answer that.
Phil Cusick (Managing Director and Senior Analyst)
Yeah.
Dave Mayo (EVP)
Hi, Phil, it's Dave. We're optimistic about the 70%. You know, we talked about 15,000 sites started at the end of the year, yielding greater than 60%. Ops, we've now started over 17,000 sites. You know, we're on pace with 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 till you finish the construction, get power and telco. Power and telco are probably the two risks that we have, but we're optimistic that we'll see the 70%.
Charlie Ergen (Co-Founder and Chairman of the Board)
The bottom line.
Phil Cusick (Managing Director and Senior Analyst)
You know, just to make sure.
Charlie Ergen (Co-Founder and Chairman of the Board)
We're on track.
Phil Cusick (Managing Director and Senior Analyst)
Yeah.
Charlie Ergen (Co-Founder and Chairman of the Board)
Bottom line, let me be clear. We're on track to beat the 70%. We don't expect to be paying fines.
Phil Cusick (Managing Director and Senior Analyst)
Okay. I just wanted to give you the opportunity to let everybody know that does automatically go out to 25-
Charlie Ergen (Co-Founder and Chairman of the Board)
Guys, but.
Phil Cusick (Managing Director and Senior Analyst)
If it comes to it.
Charlie Ergen (Co-Founder and Chairman of the Board)
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 (Managing Director and Senior Analyst)
Thank you. Can I ask as well, what does it take to do a wider launch of Boost Infinite at this point?
Charlie Ergen (Co-Founder and Chairman of the Board)
I'll answer briefly, maybe turn that over to John. We have two paths. One is the FCC requirements for data, right? To build data in a network, that's where we're gonna cover 70% of the pops in data. The problem that we've run into is that we are for commercial launch of Infinite, we need voice, and we're doing 5G voice or VoNR. 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? 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. Many companies are working on that. Obviously, T-Mobile's launched a couple 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 VoNR in the United States, voice of 5G in the United States. John will give you a little bit more detail on that. Now we've got it up and working. That was probably one of our biggest technical challenges, and we're very thankful to the Mavenir of the world and our vendors that kind of helped us, you know, get there. We wouldn't have got there without them.
Now we're starting to roll that out as fast as we can, but we've kind of got over those hurdles. That's what we need for a commercial launch. What happens is you're gonna see a six month lag, I'm gonna 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 or to do 5G voice because it's very tricky, and you have to have a very dense network to do it. John?
Dave Mayo (EVP)
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. Then we need to get our post-paid 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 VoNR. We're happy with how the performance of the network is going. We're starting to get devices onto that network.
We're now loading a Motorola, and most recently, Samsung devices onto our DISH 5G network for Boost. That sort of cleans the way for us starting to work with Apple and get Apple certified. Apple's obviously very important from a postpaid market share perspective, we're working hard on that. With Infinite, you'll see us get moving as an MVNO to build momentum, then we can really hit the gas when we get devices onto our network in our markets. We do expect to increase our sort of full commercial VoNR 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, you know, 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. You'll start to see a Boost Infinite in the market here in the first half of the year with more...
Charlie Ergen (Co-Founder and Chairman of the Board)
Great
John Swieringa (President and COO)
... marketing and advertising support.
Charlie Ergen (Co-Founder and Chairman of the Board)
By the way.
Dave Mayo (EVP)
Thanks very much, guys.
Charlie Ergen (Co-Founder and Chairman of the Board)
... just since you guys are all from Boost, many of you are finance guys. A postpaid customer is materially more profitable than a prepaid customer. I've said this many times, like, the marketplace is to me as a former financial analyst, 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. Postpaid, probably not as competitive as it should be. It's a little bit upside down. We're excited to be able to enter the really lucrative part of the wireless business, the consumer side. That's not to say, I believe personally, the enterprise business will be equally or more lucrative for us.
The, the postpaid side has been a long time coming for us. Even, you know, we started in, you know, with Ting, you know, on a small scale, but now we're able to with 30 million, you start to it starts to be something you can market. By the end of this year, we'll have scale at, you know, 70% of the United States. That's, you know, that's about the size of where Sprint was. That starts to be interesting for us.
Dave Mayo (EVP)
Thank you again.
Operator (participant)
Your next question comes from Doug Mitchelson with Credit Suisse.
Charlie Ergen (Co-Founder and Chairman of the Board)
Operator, we'll move on.
Operator (participant)
Okay.
Doug Mitchelson (Managing Director, Equity Research)
I'm sorry, I'm here. Can you hear me?
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah. Hey, Doug.
Doug Mitchelson (Managing Director, Equity Research)
Hey, sorry about that. Interesting system. I guess first question, Charlie, I'm just thinking about your broader strategy and financing needs the next few years. Does the 11.75% pricing for DISH's latest bond issue have you rethinking anything? I guess I think about, you know, the need to roll over your existing bonds, need to invest in wireless, and then potentially buy now, you know, that T-Mobile spectrum as kind of three buckets of financing needs. Any clarity as to how you're thinking about those three things and anything I'm missing and your latest thoughts would be helpful. I've got a follow-up.
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah, sure, Doug. You know, big picture is obviously we look at the marketplace and where we probably in hindsight, went a little too early for the bond deal before the first of the year. You know, we wanted certainty to make sure that we bet our all build out and took that overhang off the table and get into. Paul could answer this maybe a little bit better. We obviously at DBS have a bond payment due on March 15th. We intend to pay that with our DBS, from DBS with cash on hand there. They continue to generate good cash flow and, you know, we'll look at their maturities in the future with their cash flow.
Obviously we're looking at retail, wireless and the Network Co. to finance some of that business. I think the first hurdle we look at there is a convert next year, about, you know, in March, I think it is of next year, and we'll look to refinance that with hopefully an equity component. I think you talked about the 800 megahertz. That's, you know, we've said publicly that's a nice to have. It's not a must-have. There are positive developments there. It's obviously we built that frequency out, so there's not a build-out cost, the incremental build-out cost for that. There's some opportunity there.
You know, we're not, we're not suicidal and we're not gonna sacrifice, you know, balance sheet for some short-term gain. You know, we will have capital needs in the future, but, you know, our network's gonna start generating a lot of cash, and we just got to make those two marry up in a timely manner where, 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. Once we launched our satellite, we had a period of time where we had to make it work, and work out the kinks.
Once we're able to do that. It started generating a lot of long-term cash and, you know, interesting, the best metric for us early on there was pre-marketing cash flow. It all turned, 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. You put $1 in, but you got the $2 back over a period of years. We're in a very similar situation as our network comes up to scale.
John Hodulik (Managing Director, Sector Head of US Communications Group)
That leads right into my-
Charlie Ergen (Co-Founder and Chairman of the Board)
That's before you add the enterprise business in, which we have to prove to The Street, obviously. Internally, you know, we know that's a place people are gonna go.
John Hodulik (Managing Director, Sector Head of US Communications Group)
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, you know, later this year, you know, post the broad launch? Is that really a 2024 event? When does that start?
Charlie Ergen (Co-Founder and Chairman of the Board)
You'll start seeing some numbers, but you won't see you're gonna see material ramp when you have scale, which I define as 70% with voice coverage. Again, given our build-out, takes six months from build-out to optimize, so that gets you to 70% by the end of this year optimized. Then you can do things like national marketing and things 'cause you have scale to do it. It doesn't mean that we're not gonna add subscribers, you know, prior to that on our network, we will. In terms of the hockey stick, it starts when you have scale. You know, we're a good steward of capital and, you know...
I just gave you an example, but the prepaid business, if we invest $1 in the prepaid business, you know, we get a small return on it. If we invest $1 in the postpaid business, we get big return. 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 gonna see that that makes a world of difference in the long-term financial stuff. That's before you add enterprise.
If you give us no credit for enterprise, if you gave us zero credit for enterprise, 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.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Thank you for the time.
Charlie Ergen (Co-Founder and Chairman of the Board)
Continue to continue on the prepaid path, obviously, just at not as a priority over postpaid.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Got it. Thank you, Charlie.
Operator (participant)
Your next question comes from James Ratcliffe.
Speaker 18
Hi. If I could, on going back to the T-Mobile 800 megahertz. You know, Charlie said it's nice to have. I noticed you wrote up the value of the option in four Q and attributed it to both an increase in other three option values and also an increased probability. Can you talk about what drove an increased assessment of probability to exercise the option? Thanks.
Charlie Ergen (Co-Founder and Chairman of the Board)
I can only say that there's positive things around that frequency, and that's about all I can say. That's why the probability went up and so forth.
Speaker 18
Essentially that became more appealing spectrum to own.
Charlie Ergen (Co-Founder and Chairman of the Board)
I said there's positive developments in terms of return on that spectrum.
Paul Orban (EVP and CFO)
This is Paul. I'll just jump in there. What happened is the probability that we would exercise it increased, which obviously leads to Charlie's comment that there's positive things going on there.
James Radcliffe (Equity Research Analyst)
Great. Thank you.
Operator (participant)
Your next question comes from John Hodulik.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Great, thanks. Maybe a couple of follow-up questions, if I could. 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? 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 (Co-Founder and Chairman of the Board)
Yeah, I didn't hear it. Did you?
Paul Orban (EVP and CFO)
I didn't get-
Charlie Ergen (Co-Founder and Chairman of the Board)
I didn't get the first part of that, but Let me maybe answer the question in a little bit broader terms, then you can ask a follow-up.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Sure.
Charlie Ergen (Co-Founder and Chairman of the Board)
The focus we have today as management is let's hit the 70% for the FCC milestone, right? That takes any chance of taking our spectrum back off the table. It takes something a lot of times people focus on out of the conversation. It's an unbelievable effort during COVID and supply chain shortages to even do that from a standing start. It'd be a real feather in our cap. We'd be really proud to do that. That's, 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 doesn't focus on, but we're on two operating systems, you know, OSS/BSS systems 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 got to migrate all those customers over, which is not as difficult as CDMA migration, but nonetheless, big focus for us to do, and it takes a lot of time and effort to do it. That we got to get done. Those are two big things to get done before the end of the next quarter.
To your point, in postpaid world, you know, obviously, Apple is a trusted partner and important for us, but we haven't been able to do the kind of things that maybe they'd like us to do or we'd like to in the prepaid business. You just... It's hard to sell a $1,000 phone to customer who has no credit. In the postpaid world, that's obviously a different issue. We're excited to get started with them. Yes, I think it is a...
I think it is when the 15 comes out and you can put it on your network in a postpaid environment and you're pretty close to scale at that point, I think that's a game changer for us, to extent that we get certified and have a business arrangement with Apple that's productive for both of us, right? We have to focus on that because that's not done yet. It gives you a feel for some of the big things that we work on, you know. Last quarter, you know, we were able to get, you know, a couple of things. We now have Samsung and Mavenir in our network, so we have two vendors that prove O-RAN 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. You know, we're making a lot of progress every day. It's not showing up in the numbers yet. Probably not gonna show up in numbers next quarter, but then you're gonna start seeing it. You'll start seeing the beginnings of that. Then as we get to scale, you'll see the real... You'll... At that point, somebody will be glad they're an investor.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Got it. Yeah, I guess the.
Paul Orban (EVP and CFO)
John
John Hodulik (Managing Director, Sector Head of US Communications Group)
Yeah, the follow-up is.
Paul Orban (EVP and CFO)
I think your first question was, are postpaid more costly from a SAC perspective than prepaid? As Charlie alluded to earlier, postpaid, we'll end up subsidizing less, so it should be a cheaper acquisition cost when we add those subscribers.
Charlie Ergen (Co-Founder and Chairman of the Board)
No. SAC per se will probably be higher.
Paul Orban (EVP and CFO)
Yes. The subsidy will be lower.
Charlie Ergen (Co-Founder and Chairman of the Board)
The churn is much lower. 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 prepaid. That gives you a feel for, you know, for it.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Got it.
Charlie Ergen (Co-Founder and Chairman of the Board)
I would say a postpaid customer is worth five times what a prepaid customer is. I could be off by one turn there. It could be six, could be 4. That... You know, Anyway, you can see where that goes.
John Hodulik (Managing Director, Sector Head of US Communications Group)
For sure. I guess just to finish that off, I mean, 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?
Charlie Ergen (Co-Founder and Chairman of the Board)
I hope so. In other words, we look at EBITDA, but we obviously look at long-term cash flow, so EBITDA is not our driving force. It's all about cash. It'd be a nice problem to have, assuming we were doing it efficiently.
John Hodulik (Managing Director, Sector Head of US Communications Group)
Got it. Thanks, guys.
Operator (participant)
Your next question comes from David Barden.
David Barden ) (Managing Director and Senior Telecommunications Equity Research Analyst)
Hey, guys. Thanks. It's David Barden from BofA. I guess a couple ones. Just a housekeeping item, and maybe this is getting to the heart of the question of, you know, good things happening around 800 megahertz. With the re-rating of the value of that option, people are wondering if the opportunity exists to maybe sell that option to someone else or execute it on someone's behalf. We might look at that as a funding vehicle for DISH rather than, you know, kind of the entry point to spend $3.6 billion on spectrum you already have. The second question, if I could, would be-
Charlie Ergen (Co-Founder and Chairman of the Board)
Well, I'll stop you there.
David Barden ) (Managing Director and Senior Telecommunications Equity Research Analyst)
Okay.
Charlie Ergen (Co-Founder and Chairman of the Board)
I would just comment on that, and then you can ask your question. We're not gonna do anything that doesn't make economic sense, right? It's clear that we value the option, right? We're not gonna do anything that make economic sense. That. There's no downside in that option. There's no downside in doing nothing, right? There's only upside.
David Barden ) (Managing Director and Senior Telecommunications Equity Research Analyst)
Fair enough.
Charlie Ergen (Co-Founder and Chairman of the Board)
If your strategy was you would only do something if it was accretive, that's the only way you'd do anything, then it's a positive. Obviously, if you're suicidal and you would do something at all costs, that might be a different story.
David Barden ) (Managing Director and Senior Telecommunications Equity Research Analyst)
Fair enough.
Charlie Ergen (Co-Founder and Chairman of the Board)
That's not us.
David Barden ) (Managing Director and Senior Telecommunications Equity Research Analyst)
If I could maybe just do two follow-ups. 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? My last question would just be related to the kind of Charlie, you keep talking about getting to scale and, you know, that being the gatekeeper, the threshold through which once you get there, you'll create scalable return opportunities.
You know, about a year ago in March, you know, Verizon, who has more skin in the game than anyone, who's put $100 billion of money into this, laid out a multi-year 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 opportunity wasn't nearly as large as they thought and had to really scale back people's expectations. 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.
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah. Again, it boils down to we have a modern 5G smart network based in the cloud on Open RAN principles. Again, I'll say it again, that's Netflix versus Blockbuster. See, if you're Blockbuster, you're not gonna say, "Oh, we think OTT we thought it was a big thing, but we're scaling it back," 'cause you just can't do it. You can't do it with stores, right? 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. It's pretty hard to fail in business if you're better, faster, cheaper. Our network is gonna be better, faster, cheaper, and it's architected different.
I don't wanna spend a lot of time on it 'cause it's not something that's gonna be readily understandable on this call. 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 the big players in Europe yesterday. They almost verbatim articulated DISH's and Marc Rouanne's architecture. They almost verbatim articulate everything we said. They have legacy, so they're starting in more rural areas to start, right? Legacy's a negative for You know, it's nice that you have scale, they all do, but legacy is an anchor around their neck. We have an opportunity there to the extent that we execute, right?
Obviously, you have to execute, that's what we have to prove. You know, obviously, the Amazon, again, we're not exclusive to Amazon, they're not exclusive to us. Amazon got in to 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. 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 core should run on the cloud, and I think that they're gonna get kind of Everybody's gonna look at edge compute and some of those things and that's a precursor to private networks.
I guess maybe the Street looked at that as a negative. I don't know the exact deal, but I think the more the merrier when it comes to private networks, 'cause I think That's something that you need competition between companies to make sure it scales.
David Barden ) (Managing Director and Senior Telecommunications Equity Research Analyst)
Fair enough, Charlie. Thank you.
Operator (participant)
Your next question comes from Kannan.
Kannan Venkateshwar (Managing Director and Senior Equity Analyst)
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. From a scaling perspective, it sounds like, the retail business, you know, 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 raises, or should we expect more by way of, funding? 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. 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 (Co-Founder and Chairman of the Board)
The short answer is we don't need to raise capital this year to meet our business objectives, right? The second part's a little more complicated because everything's intertwined, everything's interrelated. I 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. 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. 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're probably not. I don't know. You know, we're not arrogant.
I think we're confident. We know we have a lot to learn. We know we're making lots of mistakes. We're, we're through the hard part. I should say, we're through the hardest part.
Kannan Venkateshwar (Managing Director and Senior Equity Analyst)
Got it. Anything on the scaling component? I mean, to what extent you might choose to, maybe, extend the service all throughout the country to this year versus maybe doing it more gradually, over the next 2 years?
Charlie Ergen (Co-Founder and Chairman of the Board)
It's a good question. We will extend the postpaid throughout the whole country this year. Obviously, through some country that will ride on T-Mobile's or AT&T's network. That's not as economical for us, but it will give us nationwide scale, which is important. You know, 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 putting them on our own network. You can imagine, you know, how we'll play that.
Kannan Venkateshwar (Managing Director and Senior Equity Analyst)
Thank you.
Charlie Ergen (Co-Founder and Chairman of the Board)
To answer your question, We will be nationwide on postpaid.
Jonathan Chaplin (Managing Partner and Lead US Communications Services Analyst)
Thank you, Charlie.
Operator (participant)
Your next question comes from Jonathan Chaplin.
Jonathan Chaplin (Managing Partner and Lead US Communications Services Analyst)
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 interests. 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 (Co-Founder and Chairman of the Board)
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, is separate apart from the wholesale side of our business. It does track a lot with what Erik and his team do daily with DBS and Sling. A lot of the same potential customers and those kinds of things.
There potentially are strategic things that may make sense there, but nothing to announce today.
Jonathan Chaplin (Managing Partner and Lead US Communications Services Analyst)
Great. Thanks, Charlie.
Operator (participant)
Your next question comes from Bryan Kraft.
Bryan Kraft (Lead Equity Research Analyst)
Hi, it's Bryan Kraft from Deutsche Bank. Good morning. As David Barden alluded to in his question earlier, there's been a lot of discussion lately about the slower than expected pace of private 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, you know, who's leading that? Thank you.
Charlie Ergen (Co-Founder and Chairman of the Board)
I can't speak for Stephen, but he did get an opportunity to be a CEO of a company, and he's well qualified for that. I think Stephen would take a call, right? Obviously he remained on our board, which is important. I don't personally think that there was anything in his leaving that would reflect badly, would reflect any kind of concern that the private enterprise business isn't a big business. If anything, I think he and we are probably more optimistic than we were a year ago on that. Feel free to call him because I just can't, you know, I can't speak for him.
Bryan Kraft (Lead Equity Research Analyst)
Thank you for that. Can you talk about, you know, who's leading the business now and how you're managing, you know, the sales effort leadership there, now that he's no longer in that role?
Charlie Ergen (Co-Founder and Chairman of the Board)
You wanna take that, John?
John Swieringa (President and COO)
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. I don't think it's about any one person. You know, I'm personally calling on a number of enterprise customers as are several members of our senior management team, and I think the momentum's 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. We're not confused. Job one is getting our 5G network up and operating at scale.
There's a lot of focus there, and we're not gonna 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, there's lots of opportunities in the pipeline we can take advantage of.
Charlie Ergen (Co-Founder and Chairman of the Board)
Operator, we'll take one more question from the analyst. Operator, one more from the analyst community before we move to media.
Operator (participant)
Okay, perfect. After we take that final call, we will begin the media portion of this call. Again, that would be star one to ask a question from the media. Our final call from the analyst is coming from Michael Rollins.
Michael Rollins (Equity Research Analyst)
Thanks. A question and a quick follow-up. 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? 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? Just a quick follow-up on the network. 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 (Co-Founder and Chairman of the Board)
Yeah, this is Charlie. I think we've answered that first part of your question a number of times. The From an enterprise side of our private network side of the business, the we're already positioned because we've got the architecture that we believe is required to do that properly, right? 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, you know, 70% of the country starts opening up a lot more opportunities because now, you know, some conversations are only on a regional basis today. That is probably the one thing that's missing.
We're not having to change the architecture of what we're doing. We're already positioned and so forth. I think that 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 they're just going to be out of business as an example. That's that part. Then on the... What was the second part?
Michael Rollins (Equity Research Analyst)
So Charlie-
Charlie Ergen (Co-Founder and Chairman of the Board)
Oh, yeah, I think.
Michael Rollins (Equity Research Analyst)
I was asking more about the wholesale side of this, the equation. Like, you know, someone using you as their wholesale partner, like an MVNO relationship, whether it could be a cable company or, you know, a big internet company. You know, someone using you for, you know, national wholesale capacity to meet whatever strategy.
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah, same answer because we'd have to have scale in the network. Two things have to happen. We have to be off TSA from T-Mobile, which we again are focused on for the first half of the year or by end of June. The second one, we'd have to have scale, which again, we're focused on by the end of this year. I think we have a really neat platform for people who might be interested from a wholesale perspective. That's very similar to what the enterprise opportunity is as well. On the.
Michael Rollins (Equity Research Analyst)
Thanks. The second question is-
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah, I think that once we hit 70%, that $1,000 a month will decline. In other words, at that point, 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 sell, there'll be some fill-in stuff as we get traffic on the network and find we have a dead spot, and we'll focus on. Well, that will still be new towers, but it probably will be a lot less than the $1,000 run rate.
Michael Rollins (Equity Research Analyst)
Thank you.
Operator (participant)
Your next question comes from Michael Rollins.
Michael Rollins (Equity Research Analyst)
Yeah, 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 throughout the rest of this year? I mean, do you have the voice VoNR service up and running now? How is that going to be expanded? How does the rest of that like commercial launch of the DISH Network work throughout the rest of this year? My second question is if you could just talk about that the satellite opportunity. There's a lot of companies that are offering, you know, satellite to phone services, and I wondered what your thoughts about that are, particularly given the ownership of EchoStar. Thank you.
John Swieringa (President and COO)
This is John. I'll take the first part and then pass it to Charlie for the second. Made a few comments on this earlier in the call. First of all of our on-air sites are providing 5G broadband. Now as a subset of those, we're going market by market to tune the market for commercial VoNR. As I said earlier, we now have handsets that are available through Boost Mobile that run on our DISH 5G network with commercial VoNR, and we view that as going pretty well. 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 VoNR KPIs.
When that happens, we load that market up with handsets that work on our network and we start marketing services with those devices. We are basically going to be launching new markets sometimes every week. As said earlier, we expect to increase that 30 million pop footprint by about 50% every quarter. We hope to beat that. You'd see us certainly marketing services digitally in those areas, starting with Boost Mobile and then adding Boost Infinite. We're doing quite a bit of work to prepare our indirect distribution to market and provide those devices to our customers. You'll see us really picking up speed there as we do that.
Erik Carlson (President and CEO)
Throughout the year, and, really by this time next year, we'd expect to have commercial VoNR available throughout the 70% footprint, as we've said earlier.
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah. This is Charlie on satellite to handset or device. Obviously, it might be a really good question to ask EchoStar on their conference call. We're unique in that obviously the common ownership between the two companies, 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. We're well positioned. We believe that there's gonna be a big market for satellite to handset. There's a half a dozen companies that are playing or have announced that they wanna play in that category.
The FCC is gonna do a rulemaking with some rules around it that are interesting. We'll have to see. They'll pick winners and losers when they do that. 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. As a result of that, we have a very clear understanding of the technical challenges to make that happen in a way that most... You might know satellites, but if you don't know telco, those two things, you have to make those things married to each other.
You know, the big positive development there is that the 3GPP standard now has a NTN or Non-Terrestrial Network standard that relates to satellite that has never been there before. That in Release 17, that is there now. Chipset manufacturers can make something to a standard so that handsets and devices can operate with satellites. I think there'll be a number of players that will play there. There'll be a number of players that will fail, and there's certainly room for one really, really good system.
Operator (participant)
Your next-
Michael Rollins (Equity Research Analyst)
Okay. Thank you.
Operator (participant)
Your next question comes from Amy Maclean.
Speaker 19
Hi there. I feel like the odd man out asking a video question. The Cox Media blackout. Should we probably not expect any resolution before the FCC weighs in on Standard General and TEGNA?
Erik Carlson (President and CEO)
Yeah. Amy, this is Erik. Obviously, you know the situation with Cox. You know, we are, we're open for discussions with Cox. As we've talked about on the call before, you know, the retrans is one of those things that, from a rate perspective, is really going up higher than any cost of programming. Like we're, you know, 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, you know, we look at, you know, the cost of the content and the benefit, you know, 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. we're unfortunately caught in that particular piece of negotiation, and Cox has decided to put our customers in the middle of it. I can't tell you when or if we'll reach a resolution with Cox. we've had a decent relationship, and we certainly hope that we would. At this time, I can't announce any resolution.
Charlie Ergen (Co-Founder and Chairman of the Board)
This is Charlie. I'll just add a couple things. One is obviously with TEGNA acquisition and trying to really get more monopoly power than they already have is something for the FCC to look at. Obviously, that, that may have played into this particular dispute on their side. 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 any rational company will make more money by not having the service.
Customers are continuing to show that they might they might have watched it, and the broadcasters themselves are cutting back on the content, so they're not producing the high value drama shows and stuff are going somewhere else to OTT. Customers are following them there. So, you know, the former president of NBC, many years ago, I saw he said that people go and watch the least objectionable programming. Right? And that's true. So our customers are going to find alternatives to the networks. Even the mainstay of professional football, which is probably the one mainstay they have, is readily available to a number of sources today.
The next step in retrans is down, not up. The broadcasters have a budget, and they have debt to pay, and they haven't got the memo yet. I think you're just gonna see more people. I just think you could. Every time they lose a customer, they used to come back to them. 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 (President and CEO)
The new ecosystem.
Charlie Ergen (Co-Founder and Chairman of the Board)
They're watching something on HBO or Netflix and they've got hooked on some other show, and they're just not coming back. The fact of the matter is that any customer that wanted Cox from us has left DISH. Now it's a tax if we put them back up. That's the I said it about regional sports, I'm saying it now. That's where that's going. It's a shame. It's a shame because the local broadcasters are caught in a vice between the network and the distributor. We have some empathy for their plight, but we cannot be their bank unless we get a return. Right now, we don't get return.
Speaker 19
If I can just throw in one more. I know that Sling just launched this Freestream 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 (President and CEO)
I mean, Amy, I don't see, you know, FAST necessarily being leveraged for retrans. Obviously there's certain things around that you're likely aware of. I mean, you know, on Sling it's as easy as, you know, customers, the customers that we have on Sling love Sling. As you know, OTT is a bit seasonal. It's not much different from regional sports, really. Folks can come in and out very easy. FreeStream is, it's great for us to launch because it keeps folks kind of in our Sling ecosystem, right? 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.
Freestream helps to, you know, have customers within our Sling ecosystem that, you know, may wanna pay for college football over the course of, four months and then pick up some, you know, general entertainment on a FAST channel, and come back for basketball. It's very easy for us, and it was just, you know, it makes sense for our Sling customers, to have kind of a FAST, offering along with, you know, our direct-to-consumer offerings where you can buy an AMC+ or a discovery+, et cetera. You know, I don't see that necessarily. Where I see it impacting retrans is obviously there's more, there's more content to watch and the content costs less.
As Charlie said, you know, when Cox goes down and you don't really miss your local news and you find it elsewhere, you know, you don't go back. It makes linear TV that much harder.
Charlie Ergen (Co-Founder and Chairman of the Board)
This is Charlie. We have no leverage against Cox or any local broadcasters. They're absolute monopolies in their markets. We have no leverage, but the consumer has leverage. The consumer is saying to us, "We do not want you to raise our price." There is so much content out there. There are so many places we can go that absent the Super Bowl, which is, you know, there's just not many in NFL football, which are now widely available other places. There is no, there is no network programming that generates much excitement anymore.
Erik Carlson (President and CEO)
That type of stickiness.
Charlie Ergen (Co-Founder and Chairman of the Board)
You know, or that kind of stickiness. It's, it's rare. They're, you know, They're the newspaper of the, of this decade, which is, you can, you can raise your price for newspapers. There's a few people continue to read the newspaper. I'm one of them. The fact of the matter is that I don't read the newspaper. I get my news elsewhere now. 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 (participant)
Okay. Our last question is coming from John Celentano.
John Celentano (Analyst)
Hi, it's John Celentano from Inside Towers. Thanks for taking the question. Charlie, no trick questions this time. I just wanted a clarification that you will be breaking out your subscriber numbers of 5G versus prepaid or MVNO numbers going forward, and how soon that might happen?
Charlie Ergen (Co-Founder and Chairman of the Board)
Yeah, I guess, I'll look at Paul for that.
Paul Orban (EVP and CFO)
We have no intention to do that right now. It's probably a little premature. As things progress.
John Celentano (Analyst)
Yeah.
Paul Orban (EVP and CFO)
We'll take a look at that and consider it. Right now, we have no plans to do so.
John Celentano (Analyst)
Okay. Well, it would help, but we'll look forward to that. Thank you.
Charlie Ergen (Co-Founder and Chairman of the Board)
All right. Thank you everyone for joining. Appreciate it, operator.
Operator (participant)
You're welcome. This concludes today's call. Thank you for your participation. You may now disconnect.