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EchoStar Corporation
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Greetings. Welcome to the EchoStar Corporation First Quarter 2025 Earnings Conference Call. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Dean Manson, Chief Legal Officer. Dean, you may begin.
Thank you, and good morning. Welcome to EchoStar's first quarter twenty twenty five 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 reports.
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-K and our subsequent filings made with the SEC.
With that, I'll turn it over to Hamid.
Hamid Akhavan-Malayeri: Thank you, Dean. Welcome, everyone. EchoStar is positioned as a global provider of connectivity and entertainment solutions with a unique set of assets across satellite, video, wireless and enterprise. Our wireless segment showed strong momentum with 150,000 subscribers net adds in the first quarter as compared to an 81,000 net loss in the same period of 2024. We increased our wireless subscribers to approximately 7,150,000 with a 7.2 improvement in churn year over year. We announced universal compatibility of our terminals in the Ka and Ku bands for inflight connectivity, and began commercial shipment of a new single panel version of our electronically steerable LEO antenna. We closed Q1 with over 850,000 broadband subscribers. On the Pay-TV side, DISH finished with approximately 5,500,000 subscribers and churn was 1.36% compared to 1.53% in the prior year. Sling closed with 1,900,000 Sling subscribers. Our 2025 operating plan targets a positive operating free cash flow, optimized subscriber profitability from our pay TV segment, expansion of our enterprise business and continued growth from Boost Mobile.
Thank you, Hamid. Revenue was approximately $3,900,000,000 in the first quarter, that's down 3.6% year over year. This decline was primarily due to fewer subscribers at our Pay-TV segment, partially offset by increased ARPU at our Wireless segment. OIBDA was $400,000,000 in the first quarter, a decrease of $70,000,000 year over year or approximately 15%.
EchoStar generated positive operating free cash flow of $77,000,000 in the quarter. Free cash flow including debt service in the first quarter was negative $172,000,000. At the end of the first quarter, our total cash and marketable securities was $5,400,000,000. Today, we received $150,000,000 from an add on issuance to our 10.5 senior secured notes. Total Wireless revenue was $973,000,000 driven by 3.3% ARPU growth. Wireless OIBDA loss was negative $415,000,000 compared to a negative $363,000,000 in the prior year.
Pay-TV revenue was $2,500,000,000, down 6.9% year over year. Pay-TV OIBDA was $730,000,000 from $756,000,000 in the prior year. BSS revenue was $371,000,000. ESS OIBDA was $86,000,000 from $79,000,000 in the prior year. With that, I'll turn it over to John.
Thanks, Paul. The Boost Mobile Network provides 5G broadband coverage to over 80% of the U.S. population, with 99% coverage across the U.S. via partner networks. We have already met our June 14 FCC requirement by deploying 3GPP Release 17. We have deployed more than 24,005 5G sites on air more than one month prior to our commitment date. We have over 1,250,000 customers on net with 75% of compatible devices on our network in the accelerated markets.
Just last month, we expanded our device portfolio to include iPad and Apple Watch with Android options in the near term pipeline. During the first quarter, we invested $164,000,000 in CapEx compared to $391,000,000 in Q1 of twenty twenty four. With that, I'll turn it back to Hamid.
Hamid Akhavan-Malayeri: Thank you, John. Our 2025 operating plan targets a positive operating free cash flow, optimized subscriber profitability from our pay TV segment, expansion of Fuze enterprise and continued growth from Boost Mobile. With that, we'll open it for Q&A from the analyst community.
And the first question comes from Sebastiano Petti with JPMorgan Chase and Company.
I wanted to address wireless segment EBITDA pressure and potential cost levers, and also inquire about the LEO strategy integration with D2D wireless and enterprise efforts.
Hamid Akhavan-Malayeri: Adding customers directly on net provides significant owner economics improvements.
We've expanded device compatibility, highlighting newer iPhone models and iPad and Apple Watch compatibility coming.
Hamid Akhavan-Malayeri: We are exploring distribution and how we go to market through more efficient routes, with results expected in the second half of 2025 and 2026. On LEO, the company intends to be the leading provider of global direct to device connectivity. It is one of the most important strategic priorities, but I will defer detailed announcements until we have more substance.
And our next question comes from Rick Prentiss with Raymond James.
What market factors drive momentum in wireless net adds and whether Q1's 150,000 net adds should improve given typical seasonality?
Hamid Akhavan-Malayeri: We have some of the most attractive offers in the market. There are hidden costs in competitors' offerings. I attribute success to network quality and significant contribution from the digital channel. Q1 is historically productive. Tax season has always been a very good season. We are committed to delivering good adds for the rest of every quarter.
Can you provide an update on CapEx timing relative to build-out deadlines mentioned in the 10-Q?
2025 CapEx will be lower than 2024, with increases approaching deadlines. However, the 2026 deadline more than likely will be pushed out to future years to a success based build model where tower construction decisions depend on MVNO roaming costs versus build economics.
Your next question comes from Marlene Pereiro with Bank of America Securities.
Were the Hughes bond repurchases and the $150 million spectrum notes issuance related and what are other capital allocation uses?
Hamid Akhavan-Malayeri: Repurchasing undervalued securities represents optimal cash deployment.
Both actions were unrelated. The spectrum notes issuance honored a prior commitment to a party with strong market demand for the security.
Why did management choose secured bonds over unsecured for repurchase?
Hamid Akhavan-Malayeri: There was no particular reason. Management might sell other bonds in the future. I would advise against reading significance into the secured versus unsecured distinction.
Can you provide updates on DBS bondholder litigation and potential mediator appointment signaling settlement possibility?
We decline to comment on the litigation.
Thank you. Your next question comes from Brian Kraft with Deutsche Bank.
Where do new Boost customers originate, are there third-party device financing options, and what about potential spectrum partnerships or sales to other operators?
Hamid Akhavan-Malayeri: We attract customers across all of the three other players. We are acquiring better customers with the highest in the market prepaid ARPU. We have the lowest churn now in our prepaid.
We have access to various device finance partners while prioritizing own cash.
Hamid Akhavan-Malayeri: On spectrum, I decline to discuss spectrum related or trading of assets. We feel very comfortable where we sit.
Can you provide color on prepaid versus postpaid mix of new connects?
Hamid Akhavan-Malayeri: We are working very hard to eliminate the concept of prepaid postpaid entirely as it is a fifty year old concept. Historically, roughly one third of Q1's 150,000 net adds were postpaid additions.
And our next question comes from Walter Piecyk with LightShed.
Can you discuss investment in distribution, advertising, and new routes to market, referencing competitor strategies?
Hamid Akhavan-Malayeri: We are working on additional distribution channels and digital has been a very significant contributor. New routes from digital side, from a national retail side, from other non traditional distribution are under development, with results expected towards the end of this year and beyond.
Would you consider an MVNO partnership with Comcast and would customers access both Boost's network and AT&T/T-Mobile roaming?
Hamid Akhavan-Malayeri: We would look at every opportunity and are not close minded to any sort of partnerships, but I could not comment or imply in any way that we are discussing anything with Comcast.
Technologically, yes solutions exist for roaming access, but it would come down to a business deal requiring cooperation from AT&T and T-Mobile.
Do AT&T and T-Mobile restrict pass-through wholesale arrangements?
It would require cooperation from all parties to advance any wholesale relationships.
And your next question comes from Adam Rhodes with Octus.
How does EchoStar's combined terrestrial and satellite network capabilities differentiate it in direct-to-device communications versus competitors?
Hamid Akhavan-Malayeri: We are the only company that can do it all in house. We have spectrum holdings in S-band internationally and AWS domestically, satellite manufacturing and technology capabilities via Hughes, and we are the largest ORAN provider in the world. The timing relates to waiting for 3GPP 5G standard compatible devices. If I had a satellite today, I would not launch it today without device availability. We target a universal solution everywhere, no interference, no coverage holes.
And our final question comes from Jonathan Chaplin with New Street Research.
Can you provide color on LEO aspirations, how many satellites have launched, and whether direct device communications are planned? Are there Starlink or Kuiper discussions?
Hamid Akhavan-Malayeri: Our historical LEO system Lyra is IoT in what we call a narrow band, not designed for mobile device direct-to-device. However, we have done messaging to device directly to mobile phones in Europe for years using S-band. Our aspirations are for service that would be undifferentiable from what you already use in your mobile device. Nobody does that today in a proper way. We position 2028 efforts by others as potentially regional with restrictions, while we pursue universal coverage with no interference.
Would EchoStar pursue LEO with its own constellation or through partnerships?
Hamid Akhavan-Malayeri: We certainly do not rely on anybody since we can do it all. But we would accept pieces, parts of the picture from others if they improve the business case. No pride of ownership here.
And our next question comes from Sam McHugh with BNP Paribas Asset Management.
What is the government support program lifeline impact on net adds? Can you explain the Hughes secured bond buyback reasoning versus EchoStar unsecured bonds? Do T-Mobile and AT&T deals preclude white-labeling?
Hamid Akhavan-Malayeri: The ACP program termination led to customer migration to prepaid brands, making lifeline no longer separately reported.
Regarding the Hughes bond purchase, there was no strategic, no special strategic rationale.
We have strong relationships with carriers and new wholesale arrangements would require a new business deal and new cooperation.
And with that, we conclude today's conference. All parties may now disconnect.