Q2 2025 Earnings Call Transcript

Greetings. Welcome to the EchoStar Corporation Second Quarter 2025 Earnings Conference Call. [Operator Instructions] 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 welcome to EchoStar's Second 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 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-Q -- the quarterly report on Form 10- Q for the quarter ended June 30, 2025, filed today, August 1, and our subsequent filings made with the SEC.

This information and supplemental materials relating to today's call will be posted on our Investor Relations website. All cautionary statements we make during the 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-Malayeri: Thank you, Dean. Welcome, everyone. Thank you for joining us today. I would like to address a few notable items from the second quarter as well as an additional recent development. As we have said in our SEC filings, on May 9, the FCC informed us that it had begun a review of our spectrum licenses. This includes a review of certain obligations to provide 5G broadband service, the September 2024 build-out extension granted by the FCC and our exclusive rights to the AWS-4 band. This event and the inquiries it introduced have led to considerable amount of uncertainty over our spectrum rights. It has effectively frozen our ability to make decisions about our 5G terrestrial network build-out, has materially impacted our ability to implement and adjust our overall business plan and has required us to reevaluate the deployment of our resources. As a result of the FCC's inquiry, we chose to delay several of our scheduled interest payments. We submitted detailed responses in the various public proceedings the agency launched back in May. As explained in our responses, we strongly disagree with the factual and legal basis of the FCC's inquiries. On June 11, our Chairman met with FCC Chairman, Carr, and explained how the FCC's actions threaten our viability. Following this meeting, President Trump encouraged the parties involved to reach a positive resolution. Due to the nature of our ongoing discussions with the FCC, government and other entities, we chose to make our delayed interest payments within the permissible grace periods. In addition, today, we made the due payment for our HSSC bonds. Since then, we have had numerous collaborative conversations with the FCC, the administration and various parties to try and reach a constructive solution that is beneficial to EchoStar and consumers while also addressing the FCC's wishes and fosters U.S. leadership in telecom. It is our highest priority and a huge focus of the leadership team, including myself. But given the ongoing nature of this issue, I can't say more or get into any specifics today. The commitment to securing our future and promoting U.S. leadership in the global communications industry is a top priority. In an exciting step towards that goal, we have announced an agreement with MDA Space for them to be the prime contractor for our new LEO direct-to-device or D2D satellite constellation. This new constellation will enable EchoStar to provide global wideband services directly to standard 5G NTN devices such as popular Android and Apple and other compatible IoT products and help foster U.S. leadership in D2D connectivity and the space economy. The constellation is enabled by our global S-band spectrum rights, which includes exclusive U.S. rights for AWS-4, along with the 30 megahertz of S-band 2 gigahertz MSS rights in Europe and similar magnitude of spectrum around the world. These spectrum rights, our technological leadership and our strong service delivery capabilities will allow us to provide the dedicated capacity and security services that are in demand by consumer, enterprise, public safety and government sectors within the U.S., Europe and the rest of the world. Since 2012, EchoStar has invested well over $13 billion in the S-band, beginning with the acquisition of 2 of the original MSS operators, DBSD and TerreStar, who held S-band FCC licenses as well as 3 geostationary satellites, which are in operation today. We also led the efforts to include the S-band in the 3GPP standard to allow for satellite compatibility with off-the-shelf handsets. EchoStar's total investment includes the acquisition, integration, deployment and operation of the AWS-4 band as part of its 5G Open RAN network in the U.S. EchoStar's new LEO constellation will utilize up to 25x20 megahertz of AWS -4/S-band spectrum. And we will be fully compliant with the newly created NTN and 3GPP standards, allowing EchoStar to provide messaging, voice, broadband data and video services upon launch to all devices with the current 3GPP NTN specification without modification. This is true 5G mobility. This wideband service is a fundamental improvement over the existing satellite messaging and SOS services. Launch of the satellites is planned for 2028 with commercial services starting in 2029. Initial full configuration of the system consists of 200 satellites rapidly growing from there to provide continuous growth of capacity globally. Peak funding of the project is estimated to cost $5 billion, which will be self-funded by EchoStar. As we said when we merged EchoStar and DISH in 2024, a key goal was to unite the spectrum and technological assets across both companies to realize our vision of a global D2D service seamlessly integrated with terrestrial connectivity to everyone. We look forward to sharing more details on this project in September at World Space Business Week in Paris. I'll now comment on some details across our lines of business. Our Wireless segment continues to perform well as we executed on another quarter of sequential growth with 212,000 subscribers net adds in the period compared to a 16,000 net loss in the same period of 2024. Boost Mobile continues to focus efforts on driving profitable subscriber growth and delivering an exceptional customer experience with better value than the established carriers. The quality of our subscriber base continues to improve as evidenced by churn of 2.69%, an improvement of 24 basis points year-over-year and an industry-leading level of prepaid ARPU. A significant factor in this success is our net port positive performance. These efforts led to us ending the quarter with approximately 7.4 million subscribers. Our Broadband and Satellite Services segment offers market-leading products and services to a wide range of consumers, enterprises and governments throughout the world. Our technology leadership in satellite, networking and broadband services enables us to provide advanced communication services and solutions, fueling an 8% increase in our enterprise committed contract volume year- over-year. On the Aero front, we are pleased to be recently selected by 2 large airlines to deploy our Hughes in-flight connectivity solution in their fleets, continuing our penetration in the market. Our in-flight connectivity business provides the aero industry's only future-proof solution leveraging multi-frequency LEO-GEO satellite networks with multiple connectivity providers to offer airline customers a unique, flexible and cost-effective solution. We have made significant advances with our in-flight product offering such as in-line line fit production capabilities and selection by Airbus to offer joint service technology solutions to their customers via their HPC+ in-flight connectivity program. In the second quarter, Hughes also received the AS9100 quality certification, a complement to the numerous FAA certification milestones for products we have received over the past year. We are pleased with the success of this business unit and are optimistic about future global opportunities in this market. Finally, our HughesNet consumer business, we closed Q2 with approximately 820,000 broadband subscribers, delivering higher ARPU as a result of focusing on higher-value customers. In regard to our Pay-TV business, we remain steadfast in acquiring and retaining the most profitable subscribers despite headwinds in the Pay-TV landscape from new service entrants, M&A activity and the overall cost of programming. DISH TV finished the quarter with approximately 5.3 million subscribers. Churn continues to be at its lowest levels in more than a decade, excluding the pandemic, while viewership is up 8% year-over-year. For the quarter, churn was 1.29%, a reduction of roughly 11 basis points from Q2 of 2024. Our customers appreciate our exceptional product and the performance we are able to deliver as is evidenced by this decrease in churn year-over-year. Pay-TV also grew its ARPU 3% year-over-year. In spite of the highly competitive headwinds in the streaming market and lower tune-in events across the sports and politics, Sling viewership increased 18% year-over-year. Additionally, Sling's streaming quality reached an all-time high, increasing our industry- leading performance measured by Conviva. We closed the second quarter with approximately 1.8 million Sling subscribers. Now I would like to turn it over to Paul Orban for commentary and color on the numbers.

Thank you, Hamid. Revenue was approximately $3.7 billion in the second quarter, a decrease of 5.8% year-over-year. This decline was primarily due to fewer subscribers at our Pay-TV and Broadband and Satellite Services segments, partially offset by increased ARPU at our Wireless segment. OIBDA was $280 million in the second quarter, a decrease of $163 million year-over-year.

The decrease in OIBDA was primarily driven by fewer subscribers in Pay-TV and an increase in operating loss in wireless due to our increased subscriber acquisition efforts and enhanced network coverage. Through the first half of the year, EchoStar generated $166 million in positive operating free cash flow. This is defined as free cash flow before debt service payments and nonoperating CapEx related to EchoStar '25 and '26. Free cash flow includes debt service -- or free cash flow, including debt service, was negative $739 million for the second quarter compared to negative $191 million in the prior year.

This $548 million decrease was primarily due to $326 million in higher cash interest, $163 million decrease in OIBDA and changes in working capital, partially offset by $56 million in lower CapEx. In Q2, we paid $777 million in cash interest, significantly higher than the $236 million paid in Q1. This increase reflects the timing of interest payments related to the capital we raised at the end of last year. Going forward, you'll notice a pattern where cash interest payments will trend lower in Q1 and Q3 and higher in Q2 and Q4. As a result, our free cash flow will also follow the seasonal cadence.

We continue to expect positive operating free cash flow for the full year as we remain disciplined in managing our operating cost structure for growing our Wireless and Hughes enterprise businesses. As of June 30, 2025, our total cash and marketable securities, including restricted cash, was $4.7 billion, a decrease of $711 million compared to the prior quarter. This decrease primarily resulted from $739 million of negative free cash flow and $167 million of debt repayments. This was partially offset by the issuance of an additional $150 million of our 10.75% senior notes due 2029 and $47 million of proceeds related to the sale of our fiber business.

In our 10-Q, we have included a going concern qualification. Please read the statements contained in our 10-Q to see the precise disclosure. But to provide some color, the accounting rules require us to project our cash position 1 year from our filing date. The rules do not allow us to consider any new funding sources unless that financing is committed at the time of our filing.

There are 2 maturities due within 1 year of this window. $2 billion due at DDBS on July 1, 2026, and $1.5 billion due at HSSC on August 1, 2026. We believe we have adequate time to address these maturities. Now turning to our segment performance. Total Wireless revenue in Q2 increased by 4.7% to $935 million. This was driven by a 4.1% increase in ARPU to $37.40, mainly due to a shift to higher-priced service plans and increased sales of value-added services.

Equipment sales and other revenue increased by 3.1%, driven by the sale of higher-priced devices, including a greater share compatible with our 5G network. Wireless OIBDA loss increased to a negative $452 million compared to a negative $394 million last year. This was due to higher marketing expenditures and increased costs to support the expanding footprint of the wireless network. We added approximately 212,000 net subscribers, ending the quarter with just at 7.4 million subscribers.

This increase in net adds was driven by historically low churn rate and higher subscriber acquisitions. Pay-TV revenue decreased 8% to $2.5 billion due to a lower average subscriber base, partially offset by a 3.1% increase in ARPU. Pay-TV OIBDA decreased $663 million from $753 million in the prior year. This was driven by a lower average subscriber base and higher programming cost per subscriber, partially offset by a decrease in SG&A.

This SG&A decrease was a result of lower marketing expenditures, fewer gross new DISH TV subscriber activations and reduced cost to support Pay-TV. Broadband and satellite services or BSS revenue decreased by 13.8% to $340 million. This was primarily due to lower sales of consumer broadband services and enterprise hardware sales. BSS OIBDA decreased by 17.8% to $68 million, primarily due to fewer consumer broadband subscribers, partially offset by lower bad debt expense and lower marketing expenditures.

With that, I'd like to hand it over to John to cover our Boost Mobile network.

Thanks, Paul. The experience on the Boost Mobile network continues to receive accolades from customers and third-party network benchmarking companies. Most recently, OpenSignal ranked our network as the best in 5G reliability and 5G coverage in over 1,200 towns and cities. We provide 5G broadband coverage to more than 80% of the U.S. population.

And in combination with our partner networks, we offer customers 99% coverage across the U.S. 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. Last quarter, we expanded our device portfolio to include the iPad, Apple Watches and Android Tablets, including our first Boost exclusive Celero5G Tablet. Today, we have over 1.55 million customers on-net and are loading more than 75% of compatible devices on our network in the accelerated markets.

As Hamid mentioned earlier, the FCC's review of our previously approved September 2024 network build-out extension has introduced uncertainty around our spectrum rights, which has pushed us to suspend furthering our 5G network build-out. Therefore, we have little to report regarding network expansion within the second quarter. Until this matter is resolved, we are focused on continuing to optimize the network infrastructure in place and continuing to add customers to our network. Wireless CapEx in Q2 was $171 million.

We are not providing network CapEx guidance for the second half of the year at this time. However, we are finishing construction for certain cell sites that are in process. As a company, we have always had the vision of delivering global connectivity seamlessly integrated between terrestrial and non-terrestrial connectivity. We built the world's first 5G stand-alone Open RAN network and have been applying this technical know-how to integrate 5G terrestrial connectivity in coordination with NTN services, specifically with the new LEO constellation across our AWS-4 spectrum in the U.S.

EchoStar and Boost Mobile's extensive experience in building and operating satellite services and terrestrial mobile 5G networks uniquely positions us as a telecommunications company at a truly global scale. We look forward to continuing the important work of helping the administration and FCC continue to deliver for the American people. Now I'd like to turn it back to Hamid for a few short closing comments.

Hamid Akhavan-Malayeri: Thank you, John. We are pleased with the overall performance for the second quarter and are optimistic about our opportunities in the second half of 2025. We remain focused on hitting our operational targets of positive operating free cash flow, optimized subscriber profitability from our Pay-TV segment, expansion of Hughes' enterprise business and continued growth from Boost Mobile. With that, we'll open it for Q&A from the analyst community.

[Operator Instructions] And the first question is from the line of Rick Prentiss with Raymond James.

A couple of questions. Hamid, I'd like to start, obviously, on the news of the day, the nonterrestrial network, direct-to-device LEO constellation. We've known for a long time. You and I have chatted about the S-band and the value it could have and -- but it would take some capital to operationalize or monetize it.

Questions I've got on the nonterrestrial network is, is this a decision that you then are going it alone? Or is there a potential for more partners? The service level sounds like you want to do more than just messaging. You want to get 2G, 3G, 4G, 5G.

How will you go to market? It's a crowded marketplace. There's a lot of people talking about it. Do you anticipate going direct to the consumer, direct via carriers, via OEMs?

And also, maybe can you lay out a little more of the pacing of that $5 billion peak funding?

Hamid Akhavan-Malayeri: Great. 7 or 8 great questions in one ask. I'll try to parse it out to the best of my ability. If I miss any part of it, we'll come back to it. Let me start with one of the middle parts you mentioned is a crowded market. And I want to say that there is no one, no one today, no one today and no one on the road map today, we see that is going to do wideband. We are the unique one. Everybody that today -- let me parse this out for you guys. When we talk to satellite connectivity, there are 3 different completely different product sets or segments. One we call wide broadband, and that is connectivity from a space to a DISH. An antenna that usually is mounted, whether you can move it or not, that's a different story, but is an antenna that is on the ground, some very unique piece of equipment, whether it be our HughesNet antenna that is there, whether it be somebody from Wiess has one and Starlink has one, others have -- Kuiper will have some. That replaces your broadband connectivity at home or broadband connectivity in some other location. Then you have the narrow band on the far right end of the product set, which is messaging or SOS. Apple has that. We have that in Europe. We have had it for a long time in Europe. It is being sold not under our own brand, but we allow other people to sell it. We'll be offering that in the U.S. We have always had the capability using our geostationary satellites. Starlink and T-Mobile offer that today and Apple and Globalstar offer that today. That's messaging and SOS. And then you got something in between that is ours, and we call that wideband, and that is a natural use case of your mobile phone the way you use it today. It is not messaging only. It's not SOS. It's not a station, it's in your pocket, it's in your purse, it's in your brief case. You move around anywhere in the world, whether you're on the top of the mountains or in the middle of the oceans or in the middle of Frankfurt or in the middle of Toledo, you're going to get the same connectivity to the satellite, and you will not be able to tell the difference whether it's connected to the satellite, which is the cell in the sky or is it connected to the cell in your neighborhood. That nobody else has. And nobody else is ahead of us. I want to be very clear about that. And so there may be a lot of confusion about this marketplace is crowded, perhaps crowded in the broadband space, maybe crowded at some point in the narrowband space. But it's zero crowd right now in what we call wideband, and we are doing that. And why are we unique in doing that? I can give you 5 different reasons. But the first of it is that we have the unique spectrum rights around the world nobody else has. And second, we are focused on 5G NTN and the standardization, which we have worked very hard to standardize and develop for our spectrum piece, marrying it to our AWS-4 and S-band so that you can have this exact same architecture as 5G that we have in our network on the ground in the sky, moving the cell from your neighborhood to the guy. That's all we're doing, which seems very simple in concept, obviously, it takes incredible amount of work that has been done for over a decade to materialize. But I want to say that nobody else is doing that, and that's my claim and you can quote that. Now coming back to going alone and with partners. Look, at this point, we believe we have everything in-house to make this happen. But we have never been close to partnerships, never on any part of our business. Today, we are a great partner of many, many governments and countries and airlines in our Hughes business. We are absolutely appreciated across the world. Welcome everywhere from Brazil to Europe to far East, Middle East, we have been a stable supplier everywhere in the world, and we continue to be the trusted partner of everyone. And we are not planning to take this to market in a way that would discriminate against the carriers. Our business model relies primarily on a wholesale model, a partnership relationship with every carrier around the world in a nondiscriminatory basis. We want to make this available to 8 billion people in the most easy, cost-effective and convenient way. That is our target. And we believe we are well on the way of doing that. Remember, the system is going to continue to grow both in terms of number of satellites and in terms of capabilities and technological improvements that are absolutely relevant and usually available in the telecom industry in a very quick fashion when you invest into them. And in terms of expenditure, we talk about a peak funding of $5 billion. You can imagine that, that $5 billion is not due day 1. And when the satellite is going to be in service '29, so you have to assume that there's a typical payment schedule for the industry. We can't disclose any of that for both confidentiality and other reasons. But you can imagine that's over a longer price horizon. But I also want to say that the system is in perpetuity after that peak funding in our business model, self-funded. So this is not one of those cases where as we increase the satellite number, as we enhance the capabilities of the satellites and we launched a new one that we need additional injection of capital. Our business model easily self-funds all of that R&D and additional expansion. So we expect that this to be a onetime $5 billion investment. And again, the onetime investment is a spread over a window of time with a peak funding calculation to be $5 billion. As of that point after the peak funding on a typical business model, you start paying down what you have already paid. So it goes -- it starts paying back. I hope I answered the 6 or 7 questions all in there, but if any piece that I missed, happy to talk about.

Yes. Just one other ancillary, and then I'll go to the 5G network question. Do you envision this as a replacement for terrestrial wireless, a complement to terrestrial wireless? How would you envision how this would fit into the marketplace?

Hamid Akhavan-Malayeri: The answer is yes. Like every other technology, this will start being -- in our vision and view, this starts being a complement to every terrestrial network out there. It's not trying to replace a terrestrial network. It will be a great complement covering 70%, 80% of the world's surface that is never possible or economically viable to cover terrestrially. But as the technology becomes more capable and the amount of capacity from the sky becomes much, much larger than its very, very initial version, which by the way, comes very quickly. When we're talking about versions and generations, you can imagine they're only a couple of years apart. These are not like 5G, 6G, 4G that are 10 years apart. You can imagine batches of satellite being only 18 months apart, they are 2 years apart and they go up. So the technological "generation" if there is such a thing in this case, very rapid. So very quickly, in a short few years, we're going to get to know that the satellite capability will be far, far larger. As a result of that, it will eliminate the unnecessary heavy cost structure and a burden on carriers covering very lightly populated rural areas, highways and roads, rural roads where it really is uneconomical. As you know, a great portion of the carrier's network is uneconomical. They're doing that just to have the service for people who travel rarely and occasionally through, and that just become a necessity. But once the satellite capability goes higher, you could eliminate hundreds of thousands, potentially millions of cell sites that are not green, not cost effective, not friendly, hard to maintain. They need air conditioning in the middle of a desert and a bunch of other things. And all of those things will go away. So the answer -- very long answer to a short question is it starts as being a very good complement. But over time, it can relieve the carriers from the obligation and the cost structure to pay for those sites. In fact, the biggest beneficiary of these will be terrestrial carriers that they can have the green service without having to actually pay the cost structure in the longer term. But in the short term, I just want to say that the initial version will be a 100% complement, it is our intent to work with every carrier around the world on a nondiscriminatory and very friendly business-enhancing fashion. We will be -- we absolutely will be complementary for every carrier's business model.

Our next question is from the line of Walter Piecyk with LightShed.

I guess let's bring the dialogue back to Earth on this one. Chairman Pai -- or excuse me, Chairman Carr has said there's really not a need for 4 network operators in the market. Obviously, there's stuff in the press about best and final. I know you said in your prepared comments, you can't really talk about it, but you have suspended capital payments on the network.

So I guess if we just assume that these things get resolved, you get funding, right, because you do have a going concern, which you addressed that you can hit those, it doesn't factor in additional capital you brought in. But the result of whatever is going on with Carr and the FCC is that you remain a network operator. I know that's not necessarily assured one way or another, again, depending on how things play out. What is the go-to-market strategy as the fourth network operator?

And do you think that, that, at this point, requires a major distribution partner? Because it seems like with gross adds and churn up, across the 3 operators, there is an opportunity. It doesn't feel like cable is that alternative because based on what Brian Roberts said on his call earlier this week, doesn't necessarily want to partner in that way or own assets. So like how does it -- how does this work if you remain a network operator?

Hamid Akhavan-Malayeri: Thank you for, again, many questions, Walter. So as I mentioned, I cannot be specific about how we foresee much of that is in play today in terms of our discussions with FCC. I will certainly not comment on whether the market needs 3 players, 4 players. All I know is that I am the fourth player and until changes things, I'm notified to do something different. My head is down in the weeds, running the best business I possibly can as a fourth player in the U.S., competing, winning. You've seen us. We are disruptive. We have taken share. We have gone from losing hundreds of thousands of subscribers per year to gaining hundreds of thousands of subscribers in a net port positive. We will operate, we continue to operate until a different -- if and when a different avenue is open for us or is demanded of us, we'll certainly head in that direction. But we need to maximize the value that we have for our shareholders, be the player that people want us to be in the marketplace, serve the customers that we are increasingly serving. And I will not try to predict or project what the market may end up being. You referenced cable, you referenced others. I certainly don't control their business or their strategy and unable to comment on any of that. All I want to say is that we find ourselves in a very unique position. We have been a good carrier. I think we have delivered on everything that we have been asked to do and committed as part of the formation of, I guess, at that time DISH Network and now EchoStar. We'll march along. What we have done today has been in the works for a very long time. I won't comment on how the funding you talked about that. All of that I'll make more clear when we share with you a more holistic picture of our financial situation and our system when we get to, hopefully, the satellite show in Paris. All I know is that we have a very positive step in front of us right now with this announcement we made today. We will work very collaboratively with FCC to find an amicable solution that is in the best interest of everyone. We still have all the strategic options in front of us. We have not closed any doors with any angle or avenue that we could pursue. But I remain constructive in my view that we'll find a solution going forward.

Given that you're not spending on the network and likely pulling back on marketing expenses given the issue, maybe not, is there any reasonable time frame that you can provide in terms of when whatever the resolution is reached with the FCC? Are we talking by end of year, by end of quarter? And like any type of ballpark kind of end date you can give us on this time line?

Hamid Akhavan-Malayeri: Again, it's primarily not up to us. We have been constructively working with FCC to answer -- provide responses to each one of their inquiries, including detailed information that comes our way as a request from FCC. And we're also in parallel working with a wide- ranging number of alternatives to make sure we may find a win-win-win, I guess, I'd like to call it, solution. Since we have not on all sides of that, I can't predict how this may go. But I want to say that we -- from our side, we are not passive. We're not sitting there and we are progressing with our discussions everywhere we can, but it all depends on other parties and needs and desires. I would think that this will not be years away. This is probably not very far away. I think the patience of FCC or request of FCC has been that we do something together in a reasonably shorter time line. But I wouldn't necessarily tell you that I have a hard deadline or milestone in my mind about how we come to a closure. I know it's a softer answer than you expect to get, but candidly, I don't control all aspects of it. And all I can say is that if there is a delay in finding a solution, it is not because of us. We have every -- this is the highest priority for me and my team, and we're not taking it lightly.

The next questions are from the line of Bryan Kraft with Deutsche Bank.

I guess I had a follow-up question on the LEO constellation announcement. So I wanted to confirm so the right interpretation of the press release language, and I appreciate that you don't want to share details when payments are being made. But is the $1.3 billion for the first 100-plus satellites the -- roughly the amount that gets invested through 2028? Or is the $5 billion the number that gets invested by 2028 or shortly thereafter?

Just those are orders of magnitude different. So I'm just trying to get a sense for what that capital envelope actually needs to look like for you. Then, I had a follow-up after that, if that's okay. Sorry, go ahead.

Hamid Akhavan-Malayeri: Yes, the $5 billion -- let's talk about $5 billion because that's a more umbrella headline. The $5 billion is the overall peak funding of the project, and I have not specified at least in today's discussion as to when that peak funding will be reached, how many years down the road or days or months down the road that may be. But the peak funding includes, obviously, your satellites, includes the cost of launching them, includes the cost of gateways, operations, everything else that you have to have in a typical business plan as you would put together. Now the peak funding at some point will be reached. who knows? I'm not specified, as I said today, how many years down the road that will be. But once it reaches -- so therefore, we need to have by that time, a total capital of $5 billion available to us. And post that window, post that peak, every day, the system pays back that investment, obviously, as a typical private equity case, you ultimately end up paying that money back and you end up generating the additional value that the system delivers to you. The $1.3 billion is the one piece of that $5 billion that we announced as a result of having made the commitment or agreement with MDA to manufacture the satellites. We have not talked about any of the other components yet of cost structure, which hopefully we will be more informative about and be able to give you more in Paris, which is only a few weeks away. And today, the most important piece is that we have embarked on that journey, which the rest of the picture will also come into play as we are 100% committed to being the best provider of direct-to- satellite connectivity in wideband way. The second part of your question, if there's any, I'll be happy to follow through.

Yes. So I guess I just want to understand, too, what are the service capabilities that you expect to be able to offer, let's say, in 2028? It sounds like that's when the service would launch in terms of geographic coverage. I assume it would be a 24-hour service, what kind of bandwidth?

And also just high level, what do you think the revenue model looks like for D2D? Is it a revenue share model with carriers? Is it sell them low-cost capacity on a per gig basis? Just curious how you're thinking about that.

Hamid Akhavan-Malayeri: Okay. So the service -- our vision of the service is even from day 1 will be to offer everything you have in your pocket today. So if you do text, voice, video, face time, accessing your apps, and if you're in the middle of Grand Canyon or in the middle of the Atlantic Ocean and you just want to watch Netflix, we want you to watch it. Whatever you do on your -- you can't tell the difference whether your cell -- your phone is connected to the nearest cell site, where is the nearest cell site? Is it 600 kilometers above you or 2 kilometers to your right? That is the standard. That is the standard we have worked on and the architecture we have tested and we put it in place and we manufacture it. No one else is doing that. I want to be very on the record. So when they say crowded the space, yes, other parts of the industry is crowded. This one is one player and uniquely positioned to do it. Now of course, on day 1 and the first version and the smallest number of satellites, which I call minimum viable offering to start, you don't have all of that capacity in a way that every person can do that. And we're not planning to do that. We're planning this is not replacing the -- where you already have great 4 other carriers covering your neighborhood. But as soon as you go out of it, and there's hundreds of millions of people that are outside and their travelers and the governments who want it differently and security services, drones, unmanned vehicles, everybody else that needs to be connected that are not necessarily only reliant on terrestrial coverage, we'll be able to serve this. But our product will be indistinguishable from what you already have on your iPhone or your Android phone. As time goes on, the system capacity goes higher, this becomes more affordable, more available to more people. So I can envision that just to be safe, let's put it 20 years down the road, you're going to get to a point that anybody anywhere they want to watch Netflix, they can also watch it through the satellite. They don't have to watch it through terrestrial. That's possible. So let's just leave that. Now -- so that's -- now in terms of go-to-market model, as I said, we are not planning to compete with the carriers. We are producing this as a benefit to the carriers. It will be an additional source of revenue for the carriers. It will be a service enhancement for the carriers. The carriers will be offered instead of 99% coverage or 82% coverage, 100% coverage of globe, not just even where people -- their houses are, whatever they travel. So our model -- we are not able to share the details of our model, but I think it will be value enhancing for a carrier and us in a collaborative way. We do not wish to go direct to consumer. We may be forced to do it or choose to do it in cases where there are no carriers in some geographies over the waters or other places where we may have the obligation to do it or some other way we want to do it, but that would be an abnormal, very unusual corner case. We really like to go to the market with the carriers using their relationship with their customers and strengthening that relationship with their customers, making sure the regulators and local laws and everybody else is happy about our offerings in the countries. So that is our path to market, very collaborative with governments, regulators, carriers, everyone. That's our model.

Our next question is from the line of Ben Swinburne with Morgan Stanley.

Just sort of sticking on the topics of the day, Hamid, you've suspended spending on the Wireless -- on the 5G network. But are you going to be moving forward with your investments in this LEO project? I mean I don't know if it starts immediately, but you've obviously signed a contract with MDA. It just seems a little -- I'm a little confused as to why you'd be moving forward with one and not the other, but maybe I'm just thinking about the timing differently.

Hamid Akhavan-Malayeri: No, I'll be happy to explain. That's a very good question. I would say that, look, our direct to satellite, I've talked about it almost every earnings call. And in fact, going back to the merger of the 2 companies, a key decision factor, a criteria, a benefit of bringing DISH and EchoStar together was to activate this opportunity. We had the spectrum on one side. We had the technology on the other side. There was 2 hands that we wanted to clap. We need to bring them together. And we did that. So this is not an accident that we are doing this. This has nothing to do with -- honestly, it has nothing to do with any of the recent events. Now you have a very good question. The question is that if you have this network issue that you are saying, hey, I don't know until I resolve with FCC, all my issues, I'm hesitant to invest in a network. But why aren't you hesitant to invest in a space? I think that's the nature of your question. We can't alter the terrestrial, I can slow down to get more clarity, and I don't lose a lot of market opportunity. I don't because I have a national roaming, we already have a great, great coverage, 280 million-plus consumers are covered. I have perfect experience with my consumers, the lowest churn, highest ARPU they're satisfied. I'm winning. I'm winning -- I got more consumers -- prepaid consumers than almost all of the other carriers this quarter. And so we're winning there. And I don't need to do anything until I have the certainty shows up. As it comes to space, I don't have that luxury to wait. The opportunity is here and now. And if I wait a few more months, my business model gets impacted negatively. Europe is in the process of asking us and everybody else how we are going to get to space. I need to have a definitive answer in Europe. I want to have this American leadership, and I don't want to lose it in Europe. I don't want to lose it in other places. If I wait to resolve this, that opportunity for U.S. and us is lost. And so we have decided to continue on the path we have been on the direct-to-satellite because we cannot wait. That is critical time path. The national network build, we're already in a phenomenal position. We have over 24,000 cell sites. And so I don't see a few months of delay until we have more clarity detrimentally change my business one way or the other.

Yes. That makes sense. That's a helpful answer. Is there any reason why you are going to be able to share a lot more detail on this in Paris than on this call other than -- that's a more important audience than maybe this one?

Hamid Akhavan-Malayeri: Absolutely, the most important audience is the audience that leans to me, no matter who it is. But no, kidding, is that -- this is in development. We -- there are many more pieces that have to come together for this picture to be clear. For instance, the satellite is one piece. We still need to talk about all the other components. There's launch that we have talked about. We have to talk about gateways. We have to talk about -- but there was a question earlier on that I didn't -- I forgot to, I guess, cover. On the day 1 of the service, we will cover almost all citizens from 60 North to 60 South latitude. So that would be -- that's almost everybody except for North Pole and South Pole, which we'll have the opportunity to cover, but we will leave that for discussions with governments and militaries. That's where the biggest customers are. And -- but we have designed a system that we can provide 100% coverage of the poles. So there's still a few things in play that I think in the next few -- we will clarify and sort out. I think then we can provide more holistic answers. It really isn't to try to hide the ball from you. It's just that I don't have -- I don't want to change the answer in a few weeks. I want to be completely comfortable with every angle of it, and then we share more of the business model and details with you. There's only a few weeks away.

Okay. And last question, I'll take a swing at this. I know it's a tough one. But I think everyone understands what EchoStar is trying to do with your business.

What does the FCC want? What is the end game for them? Because they've sort of made a bunch of accusations about your spectrum use or lack of use and the milestones. The press, I think, and the market at one point, I think, thinks they want you to sell your spectrum.

Maybe there's an Elon Starlink angle. It's just sort of hard for us outside of all this to figure out what the FCC is asking EchoStar to do. I'm wondering if you could share anything there for us.

Hamid Akhavan-Malayeri: Yes. So first of all, we -- I want to reiterate and say that we believe we are standing very tall and good on every obligation we have ever made to FCC. So we stand behind all of those. Today, we have always done, we do it today again. We have made the certifications. We have delivered on every commitment. Any trade that we have made with FCC and relied on FCC's approval has been as a result of us committing to something else that we have delivered. We've committed to put consumers -- more customers on net, have a price plan that is one of the lowest in the industry, a bunch of other things. But in terms of what FCC wants, I think that's a good question for FCC. Honestly, we -- I cannot comment on that because we also ourselves have been in the process of discovering more and more what is it that would satisfy the FCC? Why would these inquiries come when we believe we have been on the -- one of the companies that have been most flexible in terms of meeting the needs of FCC, Justice Department and everybody else. So you're right, I cannot answer any more than that because I honestly don't know. And that's a great question for FCC.

Our next question is from the line of Sam McHugh with BNP Paribas.

I have a few. I'll start on Wireless. I mean you obviously had a great quarter in terms of net, but a pretty high cost. I guess in context of the going concern of the spectrum stuff, do you think you still have a similar budget for subscriber acquisition in the second half of the year? Obviously, you pulled back on the network CapEx on the subscriber side, is it all steam ahead?

Hamid Akhavan-Malayeri: Look, I make the decision, honestly, on -- as it comes to operating business, I make the decision on a very dynamic basis on the market conditions. We do intend to continue to be in the market, and we're not pulling back from our go-to-market. If the market is receptive to our offers and I see a market that is still in demand, I will invest. I will get consumers. But I want to tell you that the market on the consumer side is very volatile today. Is it tariffs? Is it economy? Is it immigration? Is it what is it? I have no idea. But the market demand is unpredictable. We had a great start to the year, even though we delivered our best results so far in the history of this acquisition. The first part of the year, the first few months of the year, all the way through May, market seems to be stronger, but now seems to be a little less to strong. So if the market is not as strong, I will choose not to invest as much into it because the cost of acquisition will not be justified. So a long way of saying, I'm not changing our acquisition strategy, but you have to know that, that is in itself a very big variable depending on conditions of the market. If I don't find a favorable market, I may acquire less customers. If I find it continuing to be in good demand, I will increase my spend in the market. But it's not relevant, but it's not as a result of anything that is going on with FCC today.

Got it. And then on -- more broadly on the Wireless business, is it still core for you? Or with this direct-to-device, do you think there's a path maybe to shift to more wholesale business? And have the talks around spectrum with the FCC maybe changed your view at all on that difference?

Hamid Akhavan-Malayeri: I'm sorry, I'm trying to get the gist of the question. I may have missed the gist of it. Could you tell me one more time.

Sure. So I was just saying, is running a retail Wireless business still core for you? It feels like with the direct-to-device and what the FCC is saying around spectrum, do you think there's a future of EchoStar where you become more of a wholesale provider rather than direct-to-consumer?

Hamid Akhavan-Malayeri: We today are -- I am not predicting that we are changing our model in any way other than the fact that we have always talked about adding this. Now how the future goes, obviously, as I said, is a result of a dynamic picture that is -- of the industry, of discussions with FCC. But we have been committed to doing both. We have not been pulling back from one or the other. We've not been trying to switch from one to the other. Let's see how the future holds as some of these developments in the industry happen. We are very capable, incredibly well positioned to do both. We have expertise in satellite. We are the only company in the world that knows how 5G O-RAN really works in great scale as a stand-alone. We can marry the 2 together very well. And again, a unique position of being both a carrier and a satellite company -- satellite technology company puts us in a unique position. But let's see how that goes in the future. So thank you for the question. Next, I think, operator, we can take one more question in the interest of time. Please go ahead.

That question will be coming from the line of Craig Moffett with MoffettNathanson.

Returning to the direct-to-device satellite business for a second. Just given the cash constraints on your business, it's reasonable to assume that you'll be looking for additional financing or financing partners. Are there spectrum bands or other assets that you would be willing to commit and put liens on for that debt? And how do we think about that in the context of the current creditors and the calls on your existing assets?

Hamid Akhavan-Malayeri: Right. Again, a very good question, Craig. Thank you for asking. Look, as I said, I'm not in a position to describe the entire financial picture of this -- the company and this project. But obviously, you need -- you must assume that we're looking at that picture and trying to make sure we are within the means that we can deliver on, and we are within the means of meeting every obligation we have always had. So it is not lost upon us that when we add another $5 billion in here that we need to somehow finance it, we need to meet other obligations. So I'm repeating your question in a way to say that I understand the question. It's not lost on us that we have to have answers for those. I don't believe I can -- I know that I cannot give you those answers today for a variety of reasons, not just 1 or 2, but there's a variety of reasons I cannot provide you a complete detailed answer today. But as time goes on, starting with the satellite show, we hope to disclose more of that and clarify more of that picture. It is my intent to be as transparent as I possibly can, but sometimes that transparency either is not possible or is strategic and not in the best interest of my shareholders, and that's my job. So we disclose the information we must as soon as we can. Great question, Craig. we will be more informative about what our financials looks like. It's not lost upon me or anyone in this business that we do have a significant amount of financial obligations. We believe this is very conducive to solving those and making those better as opposed to worse. Otherwise, we wouldn't be doing it. So I hope that answers at least partly what you needed to hear.

Well, can I ask a follow-up then? I mean, would it -- there was a report earlier this week in Bloomberg suggesting that the FCC was pushing for spectrum sales from AWS-4. Would selling part of your spectrum be a potential avenue for raising capital? And I would presume if the FCC is pushing for that kind of an alternative, they would be inclined to waive the constraint on who would be available to buy it under the consent decree or waive it sooner. If that were waived and the big 3 were able to be participants in an auction for your spectrum, would you consider selling assets as a way to raise capital?

Hamid Akhavan-Malayeri: I don't -- I can't say anything about Bloomberg's article. All I can say is that it did not come from us. And I -- therefore, I have no way of knowing what the source of that comment is. I'm not even able to speculate as to where that comment may have come from. It's not something I can comment on. I mean, all the information available from FCC is the information that you have already heard. FCC would like to see more spectrum in use. They'd like to see the market become more efficient in a number of ways, and I think we understand that. And there's million ways that can happen. Those million ways have not yet landed in a way that I can give you a full picture. We have not eliminated any options from the table. FCC has not necessarily given us a very, very detailed mandate of a certain thing or another. I think we're still in collaboration with FCC and other entities to see what might be a good solution that everyone is happy with. So I honestly would not build any more on what Bloomberg has reported than another piece of information in the market that may or may not be true.

All right. Thank you.

Hamid Akhavan-Malayeri: Thank you, everyone, and hope to see you in Paris on our next earnings call.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation, and have a wonderful day.