Q3 2020 EchoStar Corp Earnings Call
Excuse me, ladies and gentlemen. This is your conference operator Your conference call is scheduled to begin momentarily until that time your lines will once again be placed on him. He is a call. Thank you for your patience and please do not disconnect.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Costar earnings Conference call for the third quarter of 2020 at this time, all participants Arnie listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session that you'll need to press star one on your.
Well it sounds like.
Please be advised that todays conference is being recorded and if you should require any further assistance. Please press star zero I'd now like to hand, the conference over to your speaker for today Mr. Terry Brown. Thank you Sir Please go ahead.
Thank you good morning, everybody and welcome to our earnings call Group third quarter 2020.
I'm joined today by Mike Dougan, our CEO, Dave Rayner, COO and two of them.
Cole President of Hughes.
Understood Johnson, Chief strategy Officer, and president of focused or satellite services.
And Dean Manson General Counsel.
As usual, we invite media to participate in a listen only mode on the call and ask that you not identify participants or their phones. In your report. We also do not allow audio recording which we ask that you respect.
Let me now turn this over to Dean for the Safe Harbor disclosure. Thank.
Thank you Terry.
All statements we make during this call other than statements of historical fact constitute forward looking statements that 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 quarterly report on form 10-Q filed with the FCC 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 assumed responsibility for updating any forward looking statements I'll now call I'll turn the call over to Mike Dougan.
Thanks, Steve and thanks to everyone joining us for Q3 2020 hurdle.
The third quarter saw the Echostar team around the world deliver another solid quarter as we operate business.
The efficient manner. The team has done a great job staying safe and supporting this new work environment of working from home is required.
We continue to grow our news not satellite consumer Internet service, which has become a central for so many families and businesses across the Americas.
Although the current economic conditions have created some challenges for our customers in the enterprise space, we've been aggressive in managing the business risks and implement cost savings initiatives to help drive strong margins and associated or let.
Let me now turn it over to the management team to expand on their business segments before closing with some final comments.
And questions that there thank you prabha.
Thank you Mike.
Despite continued economic uncertainty foreign exchange headwinds and some customer bankruptcy filings, we delivered another terrific quarter of earnings at Hughes.
Adjusted EBITDA grew 8% in the third quarter compared to the same period last year and a Hughes adjusted EBITDA margin was 40%.
We increased our Hughes new subscriber base by approximately 38000 subscribers ended Q3 with 1.580 million subs.
In Brazil, which is our largest Latin American market. The majority of the integration work related to our recent joint venture, but yes that has been completed.
They are beginning to realize the synergies associated with the transaction Oh.
After converting yachts had subscribers to the Jupiter platform, eliminating the duplicate always says B.S. system.
And consolidating this stuff.
Yeah. We are three below is now an integral part of the Hughesnet service.
In Mexico, we recently celebrated the first you're not.
Providing consumer satellite broadband services.
We continue to roll out community, but if I suppose is without a Facebook connectivity partnership in Brazil, Colombia, Chile, Mexico and Brazil.
We're seeing a steady increase in a monthly ARPU is at these community locations the targeted marketing activities and data selection criteria, what new sites.
We expect subscriber growth to continue in that international consumer markets.
Our U.S. mclucas operating near full capacity as we support Delaware remote learning virtual healthcare and other such requirements.
Our focus remains on providing an outstanding customer experience, while also managing churn.
We continue to see robust growth in our U.S. retail ARPU.
Driven by the strong demand for broadband capacity.
Based on an updated delivery schedule from space systems around.
We expect the Jupiter three satellite to be launched no earlier than the first quarter of 2022.
The satellites will add significant additional capacity.
Well, it's maintained a high quality and competitiveness of our service for Unserved and underserved regions in North and South America.
It Leverages the latest satellite system technology to lower our cost per bit and enable us to meet our customers' increasing usage demands.
We remain in active discussions with the launch providers.
Our North American Enterprise business had an uptick in orders relative to Q1 in Q2 of this year.
We closed deals with the new retail customer for digital media services for 2000 sites and a new retail customer for network services.
We also signed a 60 month extension within existing retail customer.
And we're very active with deployments in Q3 on several projects, including a few that were delayed from Q2 due to call. It.
Although there has been a reduction in our deployment and operation of I've see systems in airplanes due to the overall state of the industry. We continue to review opportunities and I'm excited.
About the prospects associated with the recently announced strategic collaboration with Inmarsat for in flight connectivity.
We see this alliance as a continuation of a strategy of enabling service providers in the industry with a Jupiter technology and satellite capacity.
We're also continuing our engineering activity with SCS on the next generation jobs system in support of the SCS 17 platform.
Turning to our international Enterprise business in India under the previously announced project was bought a broadband Nick I'm limited and telecommunications consultants limited to provide satellite connectivity for more than 5000 remote.
But giants our village councils.
We have no past the point of 50% deployment.
And I've also install two more Jupiter system gateway stations to support this large project.
In addition, Hughes, India, one to frost in suburban Twentytwenty into it'd be sad sub is right a company of the year.
Award in recognition of our leadership in danger in satellite broadband market.
We continue to work on closing a joint venture agreement Bharti Airtel in India.
And this joint venture will help us bring greater scale operational efficiencies and market reach to provide engine customers with broadband solutions for enterprise and government networks.
As a reminder, bhakti will contribute.
It's me said business to use communications, India limited, our existing Indian subsidiary for a 33% stake.
As previously noted this is subject to regulatory approvals.
Our business.
If we are ultimately able to secure funding, we would expect economic upside in our us consumer business.
We announced last quarter that we have agreed in principle to joined a consortium of the UK government and party enterprises purchasing oneweb from bankruptcy.
It is anticipated sales of the company to new owners will be completed before the end of the year subject to final regulatory approvals.
We remain excited about continuing our involvement with oneweb as an investor and asset technology and distribution partner.
We believe the Geo and Leo systems will be complementary and see numerous strategic synergies in the future for our business as complex hybrid networks become the norm in this industry.
We recently announced the commercial availability delivery of our artificial intelligence for righty operations solutions for enterprise networks.
The technology automatically predicts and preempt or sell fields undesirables network behavior.
In U.S across over 32000 sites. This artificial intelligence operations feature has preventive service disrupting systems and routers.
As the van devices, and firewalls with an estimated 70% success rate.
The self healing technology targets the network.
Device failure can be catastrophic for a site and cost hours of network downtime.
Co star of Global mission.
Echostar mobile our European subsidiary has continued to ramp up proof of concept activities with multiple distribution partners over the last quarter and is seen a strong interest and it's new products and services and a lot of appetite for the application of M. S. S technologies to.
Emerging vertical including autonomous platforms and five G integration.
We continue to work towards our longer term strategical of full integration of S band satellite services into five G networks and to explore ways to integrate are complimentary ground component authorizations in the E U into these and other opportunities.
And I'll turn it over to Dave.
Thank you Anders.
Like previous quarters or will be speaking to our adjusted EBITDA measurement. The measurement excludes from eve at a certain non-recurring items as well as gains and losses on our investments and unrealized gains and losses on foreign exchange.
More detail around on the gap to non-GAAP reconciliation on our earnings release.
We believe it adjusted even more closely represents our operating efficiency and financial performance.
[noise] consolidated revenue third order was $474 million up slightly compared to the same period last year.
<unk> revenue was $467 million higher by 3 million than last year, despite negative foreign exchange impacts of approximately $11 million.
Strong growth and accused consumer surface was driven by higher <unk> in the U S and continued growth in Latin American subscribers.
This was offset by lower equipment sales to enterprise customers compared to last year, primarily driven by the impact of the one with bankruptcy.
As well as lower sales with domestic and international Enterprise services.
<unk> revenue Q3 was $4 million up slightly at the same period last year, while corporate and other revenue decreased about 2 million, primarily due to certain real estate being transferred to dish in Q3 last year as part of the PSS transaction.
Consolidated adjusted EBITDA third quarter was $167 million, an increase of over 9% from last year.
<unk> suggested EBITDA in Q3 was $186 million higher by 13 million to Q3 last year.
The margin associated with the growth in consumer broadband revenue was a primary contributor to the large increase.
Corporate and other was slightly higher due primarily lower losses and equity affiliates.
Our net income from continuing operations was $23 million in Q3, an increase of $46 million. This change was primarily due to the higher operating income of 11 million improvement in foreign currency transactions of 22 million gains out investments of $7 million and lower.
Income tax provision of $2 million.
Capital expenditures in the quarter were $98 million compared to $95 million in Q3 last year. The increase was primarily due to higher spend on consumer equipment driven by growth in our consumer business.
Free cash flow defined as adjusted EBITDA minus Capex was $69 million during the quarter $11 million higher than the same period last year.
As we move into the fourth quarter and next year operationally our goal is to generate the highest yields possible on R. U S capacity grow our consumer Latin American subscribers and continue to look for opportunities with our enterprise business.
Our balance sheet remains the strongest in the industry and we continue to seek opportunities deploy cash for both organic and inorganic growth.
Let me now turn it back over to Mike.
Thank you day I do want to take this opportunity to recognize how well the executive team and the whole employee base hotel up through these trying times so dramatically.
And dramatically perform.
Their duties and work.
Work from home situation, so I really really appreciated the COVID-19 pandemic has definitely a firm the need for global connectivity and communications.
I am truly excited about our position within the satellite communications industry, both short and long.
The demand on all our networks is currently at an unprecedented level and we continue to innovate ways to provide more broadband service domestically and internationally.
Gardens to the network type demand for service will continue to outpaced supply and we are very well positioned to remain on the forefront for supporting the continued growth in this segment of the industry.
Let me now turn it over to the operator to start a question and answer session.
Ladies and gentlemen, just as a reminder, if you'd like to ask a question. Please press star and then the number one on your telephone keypad. Once again that is star and the number one and we will pause for just a moment to compile all roster.
Our first question comes from the line of contest with Raymond James.
Thanks, Good morning, glad to hear you're doing okay. So these covid troubling times.
Have a couple of questions for you guys.
First on the Jupiter to reschedule.
Premium you mentioned it been now delayed a little bit when the manufacturer how should we think about launch to service timeframe, but more importantly.
Can you guys grow and maybe ballpark how much can you grow on the huge side of it revenues and EBITDA given the capacity constraints.
This is Mike they're going to take the first question.
We are aggressively that now the only advantage took the delay I'm a deliberative satellite is there is a lot of things going on in the launch industry and we do believe that we're going to have a launch that's going to get us into service, probably a lot quicker than we expected before is that going to make up to slips.
And the production of the satellite.
Can't answer that right now, but we're optimistic.
Certainly as you know, California in the area, where Jupiter through is being assembled has been hurt dramatically by restrictions are people going into the office and requirements to work from home and you can assemble satellite work. So there's been significant delays there and we're working very closely.
With the manufacturer.
To both understand and innovate ways to work around some of the delays and get the satellite as quick as possible.
We're very optimistic from time of launch to launch a service is going to be a fairly short period of time I can't give you a specific.
Commitments right now, but I can tell you that I put a huge focus here.
Every day.
As to the second question.
Please remember it's easy for people to focus on the U S business, because we've been so successful there, but we have a lot of international.
Operations that are growing every month.
And we continue to be able to grow there's areas that we do have capacity that we are able to grow their to continue our growth until we get Jupiter. Three we're also looking at technology, which has helped us expand the number of customers that we can support and very.
<unk> beams under the current requirements of video work from home and so on software to when you've done a great job on that so I hope that answers your question I'm, sorry can't be more specific.
Breakfast is Dave just add a little bit to what Mike said in terms of the revenue growth.
I mean, clearly we're going to be somewhat restricted on how much we can grow.
Consumer business in North America, but we do expect our food to continue to grow which is going to provide for both top line and the bottom line and it's Mike said.
That we're not seeing any slowdown in order because fate any slowdown consumer business in South America. An addition on the enterprise site that has been somewhat held back so far this year because of.
<unk>.
Pandemic related.
Existing businesses as well as some businesses that are struggling.
But there are a number of positive outcomes on the horizon from.
From the enterprise business that we foresee.
Potentially some significant upsides.
Okay.
A lot of discussion in the marketplace with the Starling beta test out there can you guys talk a little bit about what you see in that offering how you think it compares tier offer you what it might mean in the competitive dynamics as we look out into the future.
Private fragments governor.
<unk> question and deal with it but we can only say.
Realizes to beta test realize the current pricing.
Is to start to to grow a segment that they've never dealt with before but preference got more specific so pregnant, which would take over sure.
S S.
The the fundamentals.
A whole bunch of markets and.
Continental United States and in South America.
In all of our markets.
The requirement of Nathan C is not a major deal because if you look at the traffic network getting on the Internet, 70% to 80% of it is video which is really insensitive to an agency, which is the biggest advantage that style links.
Would have on us two offerings.
June generally provide the lowest cost per bit the highest density and India and lowest cost but doesn't know.
<unk>, obviously have the Lord an agency.
But we believe that.
The market's that we are and we have total coverage, which is another advantage of kneels all of the United States.
And we have.
Speed and bandwidth available with Jade tree that can meet all the needs upset market, but.
But the big advantage, we would have a style links is the economics as you can see from the recent offering.
The basic offering requires the customer to put up $500.
Front, and then debased plan is $99 per month.
The cost, but you compare that to our base offering <unk> somewhere between zero to $100 upfront for the customer and the base offering is $60 per month, so economically b a significantly.
At an advantage over.
Startling now the reason we have that is the cost of the phase of the antenna.
Denying Jupiter it costs 40 to $50.
I think most people would agree that today the phase of the antenna costs.
Around 14, $1500. So the economics, just gonna not be a big.
Advantage for them. It's in fact, it's going to make our offerings much more attractive.
Now in terms of speeds.
You know the Jupiter three will be able to have plans that offered 100 megabit per second speeds, which is the maximum speeds astounding since talking about.
And a.
Terms of capacity there'll be adding another 500 550 gigabytes of capacity Oh in this region.
In the.
With the launch of Jade tree and I think if you look at the and then lies the.
Capacity that.
<unk> people that talked about 19312 terabits per second assuming that they have.
Full usage of the Ku band.
Spectrum, the two gigahertz spectrum to the user terminal.
But remember.
One web guys have the priority and get you back to the user terminal. So let's assume they shared the spectrum with the stylings, they're not going to get the full spectrum that has to be they'll have to work out coordination between the two.
So on and all you know for the the.
The market that's B R N I think.
They're not very concerned.
Always respect the competition, we never discount them.
But I think in this case.
For the for the market's we are in.
Expect to see a significant impact on the size of the market all of that competitive posture in that market.
Okay. That's very helpful. One quick following question, we get that question a lot from people well that's kind of the average population density where your customer base Lib.
Well.
Mark Cooper.
[laughter], Yeah definitely were although we've got customers everywhere, but <unk> you have a number that can answer that.
Mmm.
Yeah, I mean, I think generally what we've seen very very low rule aerials with the majority of subscribers.
I think households.
Five households.
Less than or within one kilometer retriever, so very very lucky, but it's also a function of the the the actual offering that you're making to that market segment. So it was very but it's definitely moving in this.
It's not the urban areas and it's not the high density.
<unk> it would always be the lesser density started discreet line that you can drive drawers, but.
Yeah.
Payment it impacts of this what's the competitive offer.
They are certainly areas, where we're very successful that are not that rural because we're a better alternative to what's available so.
Okay.
Okay, but that's pretty rural or something and that was at five homes for square kilometers that what you were saying Terry.
On average I think though can say specific if you want a number that's the best software creativity.
But again I think it varies all over the place.
I want to stick to one number.
I understand alright, thanks, guys I hope to continue to be safe and well and your families and employers during this difficult time.
Thank you so much in the same per your guys', we really appreciate your support thanks.
Your next question comes from the line as a credit card today with <unk>.
Hi, guys wanted a follow up on the Inmarsat announcement Uhm, obviously, there was a different incident partnership back a couple of years ago, where there were rumors were.
Where you made a bit for the company. So apparently some of those issues you've been hammered out can you talk about how relationship came about.
In terms of partnering and then.
<unk> part of it.
How do you look at the use of the Jupiter three capacity between the IFC market.
And the consumer opportunity.
In terms of.
Where you would contribute the most capacity or what sort of arrangement you have in place with inmarsat, assuming they see success in the North American market.
Yeah actually we've been talking to Inmarsat about this kind of a relationship for a long time, probably four or five years, and you know being able to.
Estimated dean.
That makes sense for both parties, but recently you know, it's it's becoming clear because of a couple of airlines that are actively looking to replace that existing systems.
That a global coverage combined with capacity all of the United States.
A big requirement and <unk> off of that because we didn't have global coverage.
For your info for Airlines and in my set had very little capacity available all of the United States. So that brought US together and we had a series of discussions and came up with a technical solution with the mud men in the planes that inmarsat so.
<unk>.
Could accommodate multiple modems have multiple very farms.
So in addition to the existing Inmarsat may fall.
Adding a modem card from Jupiter technology, we could have these planes.
Access both the mindset.
Space segment, and Hughes Jupiter space segment.
So that made a great sense because now.
Now in Mossad could offer global coverage to their customers with a significant amount of capacity.
From Jupiter at all of the Continental United States. So that's how we came up into so an agent and I think it makes sense for both parties and.
Very excited about.
Competing now and the IFC market and some of the other folks that really kind offer both as effectively.
Understand and.
Just the the balance between the consumer and the IFC market.
Inmarsat famous the a couple of years ago said that they think aviation could be their biggest market, even more larger than their traditional maritime viasat over the years has sort of emphasize difc over their traditional consumer how do you look at that balance of of where you.
Where you want to put your eggs into which basket.
Well.
The answer is clearly the economic the economic so visa application and what each market will bear the way we have designed the system. We we basically taken us is.
Piece of each beam based on an estimation of the market and reserved it for for.
Radical communications and diverse for the consumer, but that's not cost and I. If we can make a better revenues and better economics in one segment blesses. The other we can adjust that capacity.
It needs to be.
Theme by beam percentage of each beam. So it's it's pure it's it's a pure economic decision, which you don't have to do now because of the system is flexible enough.
To support that decision all through the future after satellite.
And Chris This is Dave that also applies not just to IFC versus consumer that also applies to cellar backhaul in some markets to.
Community Wifi to enterprise, we prioritize where we can get the best return per bit of capacity.
Historically consumers given us great returns, but that doesn't mean that we are exclusive to consumer.
And then we're not going to look at other opportunities, but his credit instead. It all comes down to work when we get the best return.
On the capacity and we will move the capacity in that direction.
Understand and.
Under you have taken sort of a arms merchant approach to this IFC market.
Relationship with Inmarsat is consistent with that but does that create any friction with traditional partners, including global legal where you've supplied them with modems and services over the years that ostensibly would be competing within Mossad and is at Ku band.
Service versus K, a band for Inmarsat.
No that's not be the problem is you know in the history of our company.
There's a segment of a business that.
That sounds equipment or services two carriers, we've always sold to multiple carriers and multiple competitors and we're very upfront with our customers. They know upfront that in this market.
<unk>.
Not exclusive and that will supply the best.
222 of the best of our ability all our customers.
And the customer was choose as if he thinks he's getting the best deal on the other end. So we have to be it keeps us on our toes, we have to compete effectively against their competitors.
Right, it's all done you're not industry without people getting upset if you sell today competitor as long as we are open and fed on how we price and make the service available.
I understand the delays on the Jupiter three satellite are they.
Entirely covid related delays or are there other.
Redesign issues that that may be at play there and second question would that delay in any way increase the cost of the satellite.
So so this is Mike.
I don't think it's appropriate to to for us to talk about.
Specific issues on Jupiter three although covered as a huge issue as you know.
As the cough I don't think we're expecting any kind of an impact absolutely not and so.
Let me think.
Or maybe actions to reduce costs two notes like I said as the industry has progressed, we've had current progress on the launch vehicle and and the.
The economics of launch vehicles and so on so.
I don't think we're expecting anything put a positive situation there, but we're very focused on on.
Assembly and test it somewhere.
But also to add to it might just said.
There'll be no significant Gigi design Netflix to start being a <unk>.
Nickel problem, it's more getting all the work done.
And then Covid, obviously has not helped.
I understand and last questions are on the international business, you've you've continued to outperform in Latin America with your set grows.
Do you think you can maintain that type of stuff grows.
Over the next year or so or do you have potential capacity constraints on the satellite that you're currently leasing in those areas.
No. We have we have a lot of capacity and I think over the next year or so next year. Two years, we should have enough capacity and I think we'll maintain.
Good good growth rate subs.
Consistent is what we've done in the past.
Everything's looking at.
And just add to that President Chris remember, we and last year, we added the capacity on the asset satellite we've got through the JV, we were starting to get constrained in certain themes in Brazil, we're bringing in.
Gave us additional capacity and to those.
Tight markets and so now we've got adequate capacity. Our current forecast has is maintaining capacity or maintaining the sales momentum enough capacity as a sales momentum.
Certainly through what appears to be the launch a J three.
Great and just.
Just shifting the final international India.
I know there's been a lot of political developments ongoing there you obviously have the JV that still coming into place.
There is a big issue of capacity satellite capacity in the region can you give us an update on your latest thoughts and the opportunity in that market.
Yeah, we can do you know.
In India, we have focused on the enterprise market right now.
And that includes the senator backhaul.
Market in the community Wi Fi clearly with a potential partner <unk>.
Yeah there's.
Either the largest on the second largest cellular provider in India. So the cellular backhaul market from just that one partner is going to be reasonably huge and.
In addition to the banks and the gas stations and enterprises that we're serving so all that's very positive.
Space segment part is <unk> bureaucratic.
Problem for us.
But we're making progress the government as of now just announced in the last.
Two weeks, a new space policy, where they're going to foreign ownership of satellites and launch facilities.
Yeah actually beginning to codify that policy as we speak and we're hopeful with that.
More space segment will be available.
I'm more of an international tones and prices and that should open up that market significantly.
Very good thank you for the update gentlemen.
Thanks for the questions are good ones.
Your next question comes from the line of Michael Rollins.
Thanks, and good morning first question is since you did bring up the subject of our golf.
Can you share with us.
What.
Percent of your Hughes subs are in the census block groups roughly.
I don't <unk>.
Now to answer that question right now.
We have bids in.
They are bidding on the hard offs.
Options as we speak.
So we're going to have to see how it turns out.
Okay.
And have you thought about the opportunity to leverage the N D. N L. We didn't dish and the boost business to try to create a product bundle with wireless and satellite broadband for your customers or future customers.
I don't know high.
That question, either I mean, it hasn't been consider now all aspects of partnership and so on have been considered a reworking a specific product with boost right now no we're not.
Okay, and then just one other question Uhm and you look at the cash balance on the balance sheet are there certain placeholders that you had in your internal budget that we should just be mindful of in terms of saving a certain amount a certain destiny priorities will miss.
She used that you're working on.
That we should just sort of yeah consider in terms of how that cash to get used in the future.
I mean, I think for me a organic use of it.
Certainly the business generates enough free cash flow.
To support itself going forward.
Where a meaningful amount of that could get used if we start building out S band, either a chair or nguesso in that business would require significant capital.
As we've said in the past or intent there is not.
To build it and they will come scenario turns a building that network.
But to at least have an anchor tenants.
Support the deployment of that work.
From a significant organic use of the capital.
That would be the one thing that would somewhat beyond the horizon.
Thanks, and then just one last one as we've seen uhm broadband in the marketplace.
The adoption of that accelerate.
Through the pandemic.
Are these <unk>.
Lost opportunities for the customers that you're going after just because of the delay in in the Jupiter satellite or.
Product and the value that your product provides once the new satellite gets up in the air.
Does that create the same type of opportunity to gain share and grow.
Your base over time.
If I understand what you're saying I mean, certainly if we had more capacity today in this marketplace specifically in the U S. I think we would have the ability certainly to grow.
The customer base in our market share more than we have there's no question that the relative lack of capacity.
Diminishes that opportunity in terms of the long term.
The opportunity is there are customers going to buy service from us today with the promise of something multiple years now no consumer but behaviors too much shorter term.
And the thought process that that.
But if the underlying question is.
Are we hurting ourselves today by not having the capacity uhm, yeah, we'd like more capacity because there's no question.
Thanks very much.
Can you do you have a follow up question from the line in fact panic Panic Raymond James.
Thanks for taking the follow up and see if we have a little bit of time left uhm following up on Christmas questions about India.
Is there an update as far as when you think the bar T. J V. My clothes were coming up on your end pretty soon here. So should we think it can make your end does it look more like middle next year, what kind of time frame should we had hoped hoping by ear and.
We're hoping by your and clothes is there then the final steps.
It sounds great and then I take the a G. R issue in India that resolved over to be a 10 year payment how does that affect you I know you guys have taken some reserves in that area, but Z a G O affecting normal.
18, you want to take that one.
Yeah sure sure thing, David just coming off mute.
I looked at the AGR case is I over as far as the Supreme Court is concerned and.
And we've elected the 10 year payment plan.
In addition to the.
To that as you as you may notice we have a lawsuit pending in New York against the former owner of Hughes for identification, there and that's gonna take a bit more time to play out. So we're we're watching that and pursuing that aggressively.
Okay, and then Davey brought up the S band possible Bill there your islanders any update as far as where you are at as in discussions with anchor tenants, what kind of time frame should we be thinking about this coming together and a condors you've talked about economists platforms and five G. But how should we think about the.
And timeframe.
Well certainly in Vicky.
Sure.
Certainly the.
The inability to travel and conduct some of the face to face meetings, we would otherwise be having us and had.
In effect on things, but.
Pacing, probably a lot of the development at this point is the.
Three D T P standards for non terrestrial radio, which the S band piece of five G ecosystem would be.
A lot of those standards are now not due out until first quarter of 22.
And some of those have sort of downstream product implications.
But we continue to have we're running in parallel paths with sort of layers of different customers for the network that are not necessarily competitive with one another some of whom would have immediate sort of large scale use of the network through devices that are already deployed bitter K.
A bowl of communicating with the network, we're thinking of building.
So, but it's it's certainly not anything in the near term break it we we.
We've not suspended we continue to have discussions with a lot of the vendors, who we were talking about the art of the possible from a payload standpoint, we continue to have some of those discussions but until we identify customers that are willing to step up to.
Q material commitments for you said the network all of it as being impacted by the current situation, but I would expect hopefully in 2021.
Some of those delays to be behind US and then we can move forward with it but.
Realistically a network of this type.
Especially in the N G S O environment really doesn't become a reality until 2023 2024.
Right right, Okay, but announcements before then obviously this resource anchor tenants in network topography that sort of thing.
Correct and a number of the potential users are capable of using are in orbit assets.
And Echo 21 over Europe is the Testbed now that we're conducting a lot of testing with some of these potential partners and certainly doing a bunch of the testing of the <unk> standards to verify the the performance B.
B S band relative to the other devices should be picking up off of.
Okay last one on the follow up side Uhm, one web you brought up hopefully they're coming out a C. K at the end of this year, how should we think about what that relationship means for for Hughes as far as equipment, but also that distribution relationship how how does that play out over the next coming once.
Two years.
Yeah, you know, we hope to sign a significant.
Contracts for equipment and services, so that just agenda.
That should be a good good relationship.
You know we hopefully in the next couple of weeks.
And to come out of bankruptcy.
To execute those contracts and.
In terms of distribution when negotiating with them distribution agreements <unk>.
They would be.
A subcontractor to us.
In some up you know like a wholesale retail relationship in some cases and also in parallel in some other applications they could be the prime and we could be the sub doing.
It would be all for so we expect a closer relationship as a vendor as a technology partner Anessa distribution.
<unk>.
Okay and is it still thought that one that I was not really going after consumer but more of the enterprise side.
Under the Gen. One day will not go up us they're not go again, I mean for the consumer market.
Focusing on the mobility in enterprise markets.
Alright, thanks for the follow up guys.
And there are no further questions at this time I'd like to turn the call back and like a tiny brown for any closing comments or remarks.
Yeah. Thank you everybody for joining today and we look forward to talking to you next quarter.
Ladies and gentlemen, this does conclude today's conference call me. Thank you for your participation and you may now disconnect.
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