Q4 2020 DISH Network Corp Earnings Call

[music].

Yeah.

Good day and welcome to the Dish Network Corporation Q4, and year end 2020 earnings Conference call. Today's conference is being recorded and at the kind of like to turn conference over to Tim Messner. Please go ahead Sir.

Oh, Thanks, and good morning, everyone. We're joined today by Charlie Oregon.

And our chairman Erik Carlson, our CEO, Paul Orban, our CFO, Tom Cullen EVP of corporate development, and Mark Ron Our Chief Network Officer, and Jon Springer EVP and head of our retail wireless business. We have some opening remarks, the first time and run through our Safe Harbor statements. We make during this call that are not.

Not statements of historical fact constitute forward looking statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from historical results and our forecasts.

No responsibility for updating forward looking statements for more information. Please refer to the the risks and other factors discussed in our SEC filings.

The filed and applications potentially participate as the bidder for spectrum and the FCC auction one of seven due to the FCC's the anti collusion rules and we will not be answering any questions of that auction. During today's call. That's it for me I'd like to turn it over to our CEO Eric.

And thank you, Tim and welcome everyone and I hope, you're all doing well, we appreciate you being with us today.

Part of it going to keep our comments brief and leave.

We've got plenty of time for your questions.

And there has been a try and ear for every one of the face of the pandemic and other.

Proud of how the dish team has responded and the chart the obstacles and opportunities and I'm also proud of how we've kept it on the safety of our team of our customers and our communities, who sort of top of mind as we execute against our goals throughout the year.

And we've accomplished a lot and 2020 and we've entered the retail wireless business with the acquisition of boost mobile and.

And we partner with two cows to utilize their mobile services solutions, and we acquired the Ting mobile subscriber base over the.

The past six months, we've worked to implement the same discipline, we have on the pay TV side of the business to a retail wireless business. We've introduced the plans offers.

Shadow of profitable customers and have been making plans to grow the business in 'twenty and 'twenty one and in addition, we made great strides and building the nation's first cloud native of open Red based five G broadband network in 'twenty and 'twenty, we signed significant contracts and software partners.

For providers and equipment manufacturers and tower companies.

And we started.

Started of course for a great 'twenty and 'twenty, one and we look forward and sharing updates throughout the year on progress on our network.

We also had a solid year and pay TV. Despite the headwinds presented by the pandemic. This was driven by our continued discipline and better execution of both dish TV and sling TV and we're focused on providing products and services with the best technology outstanding customer service and a.

A great value.

Thrive off of our customers with a better price the value of relationship than those available from other pay TV subscription providers.

And through our efforts and the recognized by our customers for the third year in a row as being number one and customer satisfaction with JD power and 2020.

We reported strong revenue numbers for the year and brought in more than 3 billion.

And and OIBDA and.

We've increased our revenue and more than $2 $5 billion from 2019, and our net income by nearly $400 million.

With that I'd like to highlight a few items across several key lines of business for the fourth quarter and the.

The fourth quarter, we continued to advance our wireless efforts.

The wireless net subscribers decreased by approximately 363 thousands of the fourth quarter.

And largely due to our ongoing efforts to integrate our retail wireless operations shed unprofitable customers and make the operational changes to enhance profitability.

As I mentioned last quarter, our profitability is determined and part of it with day to access the network and be at all as we roll out of our own network will begin the benefit from owner economics, that's one of the drive profitability.

And allow us to be more disruptive and drive better competition and the retail wireless space and.

In addition, we made great strides and Q4 with our wireless network efforts since our last call was the unlisted fiber providers.

Like other streams, zale crown and certain <unk> and.

The unity for front haul backhaul network support we reached an agreement of Crown Castle.

And the wireless towers, and just last month, we sign of similar agreements with vertical bridge, we've announced an agreement with IBM for five and microwave transport services and side of the deal with the Avenir for cloud based messaging and Qualcomm and utilize the slides you ran platforms. We've also completed our first five G validation and December 2021 is gonna be a landmark year for us and.

The wireless and Charlie and Tom and Mark are here with US today and are available to talk more in depth of about of wireless progress and a few minutes.

With regard of the quarter dish Division performed well given the current environment with the gross activations of nearly 235000.

We're down year over year, primarily due to the Covid and our approach to it as I stated before the crisis has impacted our customers' willingness.

And respond to some marketing tactics like the opening direct mail or a bad day sales and in some cases, allowing technicians to perform services and their home.

As a result, we reduced our marketing expenditures and the gross new TV subscribers had decrease however are just Tvs strategy has been anchored and acquiring and retaining long term profitable customers we've been focused.

Just out of more rural and higher credit quality customer base, and we remain committed to that path.

And the quarter, we saw dish TV net subscriber loss of 149000, and our losses are primarily primarily the result of a lower gross new dish TV subscriber activations and partially offset by lower dish TV churn rate Paul can have a few.

A bit more detail on that and a moment.

Turning to sling TV and the quarter, we gain of approximately 16000 and subscribers and we well we still have considerable room to grow we're encouraged that we added subs and the back half of the year compared to the first half of the year.

This was primarily due to the return of sports and it was also helped by the improvements we've made and the platform we.

And watch party to enhance the collaborative view and experience at a new programming like the big churn and increased our on demand library of over 150000 titles and most recently, we added 50 hours of free DVR storage.

That said, we continue to focus on it and acquiring and retaining profitable of course.

And delivering a great experience for both dish TV and sling TV.

The large slate of 'twenty, one is going to and exciting and transformative year for many on many fronts.

Got a lot of work to do but we've got the focus and resolve to realize our vision with that I'm going to turn it over to Paul furlough of commentary the commentary on the numbers.

Thank you Eric I ask the brief remarks, and the quarter before we open it up for questions. As a reminder, we made changes.

The answer reporting and the third quarter.

And I'll disclose operating results for both of our pay TV and wireless segments and.

In addition, we report results for our two wireless business units retail wireless and <unk> network deployment.

And since we now report segment operating results were disclosing segment or the that is a measure of profitability.

Our final day for each segment.

Erik address the overall subscriber trends and all that.

And a little color on our commercial subscribers the dish TV.

The Covid pandemic has significantly impacted our commercial subscribers.

And as discussed in previous quarters 250000 of these accounts were put on pause and I received.

Profit before a rate relief.

They were removed from our Q1, ending dish TV subscriber count.

During 2020 80000 of those subscribers restored service or had temporary rate relief and the.

The subscribers came back with minimal or no cost and were added to our and a subscriber count without being counted as a gross activation.

Of the remaining commercial accounts 69000 of these accounts disconnected during the year.

We're hopeful of the remaining 100000 commercial accounts will restore service in the coming quarters. However, we cannot be certain of this.

Companies and the hospitality and the airline industries continue to evaluate the amenities provided to their customers.

Customers and that includes pay TV.

Turning to the financials.

And the fourth quarter compared to last year of consolidated revenue and OIBDA of are both up significantly revenue.

Kris do to the boost acquisition.

The order the increase was driven by pay TV generating over $1 billion.

And retail wireless.

$188 million during the quarter.

Let's dig into the details of each segment.

Our pay TV revenue and the fourth quarter increased due to higher <unk>, partially offset by a lower subscriber base.

The increase and pay TV <unk> was mainly driven.

Driven by price increases for both dish and sling.

Our subscriber margins for the quarter were positively impacted by the RPI increases just discussed and our cost cutting initiatives related to COVID-19.

SG&A expenses for the fourth quarter decreased compared to last year as a result of fewer subscriber additions and our cost cutting initiatives related to COVID-19.

As of January settled our telemarketing litigation for $210 million, which was $70 million less and what we had accrued benefiting SG&A expenses and the quarter.

This TV sac per activation decreased slightly from $850 last year to 842, largely due to lower equipment cost per activation.

Okay.

Now, let's turn to our retail wireless business unit.

Service revenue was almost $1 $1 billion down slightly from Q3, and OIBDA was 188 million for the quarter.

Consistent with dish and sling.

Focusing on acquiring long term profitable retail wireless subscribers.

Activations are currently and the process of making changes to our marketing sales and operations.

Further enhance our profitability given our NV and no economics.

And lastly, let's look at our <unk> network deployment group.

We invested over $50 million and Opex and Capex during the fourth quarter we.

We expect Capex.

The increase substantially throughout 2021, as we ramp up our <unk> network deployment.

During Q4, we generated $357 million of free cash flow and made the final payment of $730 million to the SEC for our licenses to acquire the four licenses acquired and auction one of them alive.

Two of them.

Finally in December we issued $2 billion of zero percent convertible notes due in 2025.

We ended the quarter with approximately $3 $7 billion of cash and marketable securities.

With that I'm going to turn it over to Charlie for some comments.

Good morning, everyone. The normally.

Life.

<unk> made comments and I certainly not one to look in the rearview mirror, but I did want to point out something and I think sometimes gets lost and and and when you. Analyze addition, obviously, we don't talk a lot.

Got a lot of conferences and and we remain focused on and I'm really building their business, but 2020 was the what's.

Attrition year for us.

It's very successful transition year for us and it's.

Third time that we've had a transition in my 40 years and business and and.

And I've always felt the trend that the transition year. The transition time is always the toughest and and if you could get through the transition and then you can you can really you can really jump.

The trend of our chip you can really grow your business and in a dramatic way. So you know and 1980 and when we started the business of the transition and really wants to survive.

The most companies go out of business are probably 90% of the companies go out of business, but the because they just don't have a good idea of run out of funds and and for US. It was it took us about three years to make the transition from a retail company to.

Especially and company and actually get past the survival stage.

The second transitioning with them and when it took us over a decade, which as we realize some of the technology would the thought there was the technology experimental technology called the DBS and we run of the big dish business and let that was going on and that was going to transform big dishes and there's a lot of dishes.

The distributions and it and so and 1995 with the launch of our first satellite that year was the transition year for us because we have put all of it all the pieces in place with spectrum satellite construction and launch and digital technology to go compete with the cable cable industry and 2020 was over a decade long transition of accumulating.

After him.

And getting critical mass with spectrum.

The to go and compete and in the wireless World and.

We finalized our long term executive team, which took years to do we were able to enter the retail market and wireless and and unexpected way with the acquisition of boost.

And in spite of the seven year and being out.

<unk>.

The modems, and whose quietly or not so quietly build and the probably the finest network and the United States.

The we are purchased.

14 megahertz of low band spectrum, and 800, and we purchased C.

Approximately 20 megahertz of C. P. R S spectrum nationwide and the only nationwide provider.

And and over six around 600 megahertz of millimeter wave of.

All of last year.

We solidify key vendor relationships, who and and have a number of companies that are helping us and are on our quest to build the world's best network.

And.

The $4 billion of cash and our balance sheet. So.

And that all leads to the fact that as we enter 2021, we have everything that we need to build the build this one of the guy and by the <unk> network.

And now it's now for us its execution and so once you get through the transition stage you have to focus on it it's all about execution.

And we have over and that there are certainly significant risk for us as we as we go execute and you have to deploy our network and then we've got to put it altogether the work and make it to make it work and there certainly will be substantial risks, we're certainly moving lots of problems, but we have the team and and the focus to the overcome that and our company.

As always.

He's been a company.

And execute so and high degree of confidence that we're going to execute and 2021 and that means that we're going to we're going to build our first major cities by the end of the third quarter and.

More to come.

We're going to round out our R. R. R team, the really really great engineers wireless engine and where they.

And that can work for this company because we're building something special.

And the.

We're going to continue with rounding out our vendor partners and making sure that we have we still have cloud we still of transport we still of orchestration just to name a few so we'll continue to do that and the at the end of the day.

I want to come in and we're gonna have this this this really really special five G. Cloud Native open ran Virtualized network that really doesn't exist and the world per day. So it's it's it's not our first rodeo of its very similar to building the digital video and the world was the analogue mm.

Wireless networks really haven't been.

Upgraded from.

Picture of point of view and the last 30 years and.

And we're.

I'm confident that with our focus will actually help the United States, and actually start, leaving again and wireless and and and hopefully.

To bring most of our partners are of American companies with American.

And arguing Odeon and Theres, No reason and America can't lead.

As an example, nobody has the better better cloud companies and the United States Nobody had a better and when you virtualize the network in other words, you're right you do all the software not hardware and nobody has a better software and then the United States and this is the company that has the two main operating systems and the world today.

Engineering, and the apples iOS and Google's, Android and the handset side. So theres no reason with the.

And that this country can lead and Theres no reason that the dish isn't going to be of part of that and probably be upfront and some of those things.

The reason the transition is important.

Is.

And the 1995 and went to the little dismissive.

Today with two other competitors and we had a cable company and we have Directv.

Today, we probably have over 20 and competitors and that very same business and in fact, we compete with their very own suppliers. So that market is very competitive and you've obviously seen the trends and our interest for the last four or five years, we expect that those trends will probably continue.

We the world's becoming and Ala carte world, well with vendors going directly to the to their customers, but and the wireless world. We were one of four competitors. So there's three $200 billion of companies.

And they're out there and winter and the where and we're entering their business with the bedroom with a better network.

And to go compete and it's not just about competition for consumers of handset. It's about what of five G network can do what you put into a lot more than and then just consumers so with that we'll open it up for questions.

Yeah.

Okay.

Thank you click the ask a question please signal by pressing.

One on your telephone keypad using a speakerphone. Please make sure your mute function is turned off to low seasonal III and equipment, we will be taking questions from analysts and first and then questions from the media and press Star one to ask the question, we'll pause for just the moment.

Starting with the first question from Michael Rollins at Citi. Please go ahead.

Oh. Thanks, Good morning couple of questions first on the <unk> side I was curious if you could just provide some additional context and how you're seeing the emerging.

Dressed up of marketing dollars for the business side of what you're focused.

First and the consumer wholesale side for the wireless business plan and secondly on the swing disease with the cord cutting trends in the industry and.

Are you surprised not to C swing grab more share of that video distribution market and is there something that.

On the holding it back that could be unleashed over the next 12 months. Thanks.

And when he Switzerland, Jeff Thanks, Charlie or Michael This is Eric I'll start with the the Sling question and then I'll turn it over and the team for the five key question.

You know look of cord cutting has accelerated Charlie mentioned and.

And the comments I mean, we are now competing with some of our largest partners and the distribution side.

And we feel like sling is well positioned not only from a value perspective.

And maintaining kind of the lowest price the price point, but also from delivering a good customer experience and and.

And technology and we have work to do on the latter.

I was hoping which we've made good progress on our at the end of last year, and we will continue to make progress on this year, but as long as and a unique position based on our of packages and services that we provide and order be very complimentary service.

To some of your larger.

That's about the services, whether it would be.

To me a net.

Flicks, a peacock et cetera, So you know.

I think that obviously, we have work to do on the selling side.

I think customers as Charlie mentioned, you know there is a bit of and Ala Carte world happening I think there'll be some aggregation back we're well positioned to fulfill the unique proposition providing.

And you did kind of the bundle of cable nets.

With you know quality is about services from some of the competitors out there I think the other thing that we do very well and we're giving customers choice right and.

Louis and how the how they acquire the content that is important to them most of uniquely on the local.

Adding the right and.

Look at the expenses.

Expenses Retrans is obviously one of the expenses and that's going up at the highest rate.

And those local the local channels and sling is well positioned to provide services, whether it be it offer and antenna. That's integrated to you know one of our one of our set top boxes or a service like.

Like low cast or a service like CBS, all access, which will now become Paramount and so our strategy. There is to really partner and become complementary and with that I think we can continue to make progress on the acquisition front.

Yeah. This is Joe I'll answer the second part your question and I, just one comment on flying.

I actually.

<unk> for a degree of little bit with the premise that we should have more market share. There. We really were were first to market and we stumbled a little bit of with our with just the the quality of our of the user interface user experience and and the.

And and and technically.

As we are part of network was the best of first but we'd.

<unk> got a little complacent and it's taken a wall of the upgraded but that's all being done.

The first half of this year. So you know, we'll see how it goes but it a week.

We have room to improve the that's for sure and we should we should have gotten more market share.

On the on the business side, we don't have a dollar amount to give you today on.

And we're in the business, but our network is is designed.

Hum, let's talk let's talk about the three things that we do different from from current networks first of all of our network of B will be will be off will be and Oran network. So it means that we separate the baseband and the radio so it gives us a lot more flexibility in terms of mixing and matching off.

Off the shelf parts and radios and.

And and lower cost and more flexibility more of American content and vendors and not one company that controls and and like my current current networks have.

Where virtual or more of a virtual we do a lot more of a software and hardware. So it means a lot of of the big boxes and use a lot of power of those things.

And so all those things become software and and and we're cloud native which means our network runs and the cloud and then why is that important that's important because we can we can use modern techniques like the machine learning and artificial intelligence. So that we can actually analyze our network of real time, we can make our network better but we can also.

We also opens up our ability and.

And it's become a basis to do what we call slicer networks that we can open up our network the private networks and companies and of what we call enterprise business. So that they can have they can have what looks like their own network.

And they can draw their own network and they get access to the data and the cloud where they can and where they can where they can actually.

Use that data to make.

And the auto product the less expensive product and the safer product.

And then also Mary's obviously with the private clouds and if they so choose to do that so were changed and so I think a lot of analysts look at how many how many handsets you're going to have what your market share going to be in handsets and so forth and so on but your question is well taken and the in the sense that the part of our business will be the enterprise.

The bedrooms that is a fairly nascent business a day.

And we will be on the lead me to the edge of that as it grows.

Thank you.

Okay.

Well now take our next question from John Hodulik.

Rise of business. Please go ahead.

Thanks again.

Again, moving to Charles just let.

I think the milestones and metrics.

Best of should look at.

This year.

As evidence of the debt the.

Our strategy is on plan and moving along with that.

And how many cities and towns.

And at this point for you and.

Lastly, just one follow up you guys executed and the transaction and the fourth quarter for that two of the million dollars out and it looks like that the volume of it doesn't mean that means just to keep the thought process of the driver.

The biomet transaction.

And take the second part of it.

On the DS.

Good evening.

John This is Tom Yes, we did a transaction and the fourth quarter with one of the DVS.

Or are we just bought down their position and it was the.

The transaction that both parties were interested and executing so there's not much more to it and that they had to put right.

Does the do that so.

But out of our control and.

And then and the second the yeah.

Yeah and wasn't as the first part of the question was.

Uh huh.

And the milestones.

Thanks.

Obviously, we have lots of metrics and milestones internally.

And we're not going to go through each and every one of those.

Because it's just a bit complicated and obviously our focus is on actually doing that but the big milestone free for for <unk>.

People is probably going to be our first major city that is up and operational.

That's where we'll find out.

And my experience has been as we open up of per city will have problems.

And as you know the will drop of call Something's going to go wrong that we didn't expect and then that's where we find out how our team and our vendors worked together to solve those problems. So by the end of the third quarter, you'll see that you'll see the first major city will have other cities and I'm not I don't have a number for you the you're in but what we'll be doing.

Every month after after.

Third quarter will be doing multiple cities.

And focused on of June of 2022 metric of 20 per cent of the population of the United States.

And to meet our first the FCC milestone so but by the third and of the third quarter, you'll be able to take of bone and see whether we work or not and see all of the problems and and we will have them.

After the for sure.

And then and then see if we can fix them and then you'll have a feel for how good we are and execution and how good the architecture is and.

And how good our network is.

There's going to be but realize we're not going to be run and in the first of all he won't be crawling.

And then hopefully we will get up and be walking by the end of the year.

And as Dave mentioned on.

Paul you know he has built out a.

Distributed deployment team and many markets around the country.

Our of planning is completed and we now have permitting and zoning activity underway and dozens of markets around the country. So the activity level is very very high.

On the last we just we're not out of position right now the forecast the flow.

And a number of markets by the end of this year, but we clearly as Charles said, we're focused not only on the June 22, 20 per cent milestone, but we're really vectoring towards the 70 per cent milestone in June of 'twenty three and.

And our long pole of.

And radios right.

But we could have done like everybody else is done and we could have built a network that was never going to compete with the Chinese and.

It was never going to be up to the standards of Huawei and.

And we chose the strategic we said what's the next generation what's the next generation of of networks, and that's where you go to open ran and when we went to.

The tenant and they're just weren't any non Chinese current providers that were ready to go and it took us it took us and an extra year to get the Fujitsu and MTI and and now some others to the the two two.

To help us with the El ran radios and the architecture, that's the long haul and with that and those radio start.

Coming in and the second quarter and and.

And.

And as soon as we get them and we will start to flow.

Okay. Okay.

And let's take our next question from Craig Moffett and often the Simpson. Please go ahead.

Hi.

Charlie two questions if I could.

First day.

And you've talked a lot about adding a strategic partner.

The first update us on that and then and perhaps tell US you are thinking of of when is the ideal time to add that partner is it before you have done any of your test markets.

Would you rather have a test market and advance and then related to that you did a a convertible security and the in the December it wasn't a huge number relative to the overall financing, but I wonder if you could just talk about your thought process of of why you decided to go with the convertible rather than.

That and and whether we should read anything into that for for future financing decisions.

Yeah. So I think of I think on strategic part of Craig we looked at and maybe a little bit different and the street does the preferred strategic partners of our strategic relationships and we already have we already have the major cities.

And whether it be Vmware and our mapping error out youll start crown and SBA vertical bridge and other tower companies and and more to come so what we do there is the.

Is it more of a pretty big R&D project and all of those companies are helping us the.

And that they're spending the capital that they're not getting the the immediate return on.

And in terms of entering and in terms of that and like and the cloud. We've got several companies that have been helping us with cloud and and wire and wireless and wireless is the next big growth telcos. The begs the next big growth for cloud and in fact, it's probably the biggest growth of the next decade is probably the biggest growth and and and yet.

It's a little bit different.

Current and the normal normal data the they've been doing today. So there's some things that we have to invent together and and and change and what they're doing so the way we look the strategic partnerships the theirs.

And the money aside is how do we make their company better and how do they make our company better and.

And and everybody, who we're working with that's our goal is where the where they're champion.

To go help make those the care companies better whether it be provide resources or test beds are our testing on our network and then there's been a lot of resources to help make us better.

From a financing point of view.

The the convert security.

We just felt like the putting capital and the Mark on the on the balance sheet.

To get us the 2023, where I think.

You know, there's always a chance more than zero, Craig they were out of business and we did we don't know what that and we're doing and and we fail.

But I think the.

You know the rational bet is that we know what we're doing and the that we'd have the team and partners to help us.

And we're going to get there and then obviously the world looks at us a little bit differently and and you know you were probably one of our biggest skeptics and.

And it's our job to you.

Your stuff is well taken and I read your stuff I think you're a great writer and I think you make great points, but not one of your points not want.

One ever has been something that we haven't thought about here and that we don't at least believe we have of strategic solution to it.

And and therefore, I think that our job is to go out and produces is to go out and execute and build this network and then obviously you know and internally we talk about we just proof of skepticism.

Jeff This wrong and so we don't really talk so we don't go to a bunch of we don't spend a lot of time talk and external about what we're doing we just stay focused on what we're doing and good teams and good good companies that do things they focus and.

You know, we focus probably to our detriment, we don't explain what we're doing to everybody every day.

But.

We're gonna shows and and and and that's why that's why I think John's question and I think earlier when you when we can see something.

And the third quarter I think it will be important and then and then sort of theirs.

You know sort of the ideal time, because when you when you can show people, what you're doing if you believe and what Youre doing.

So I take that and that means that ideally you want to book before you would think about of major strategic.

And partner in the sense of you've talked about them in the past rather than vendors you would wait until after you have a sort of showcase set of test markets is that the way I should read that.

Well I don't think dish I think that.

I think we always thought we might need of strategic partner, where we didn't have any capital and it had a lot of death of the journey, but I think what the same thing happened to us and DBS. We always we always wanted a partner and DBS and we wanted somebody to help us build satellites and what happened was.

Ultimately, we just got good enough and we just got confident enough and good enough and what we're doing there just.

Just made sense to keep the equity.

And it didn't make sense to get to give up the equity and so I you know I think we're probably in the similar situation today and the sense that we do have enough capital to <unk>.

Building on their balance sheet today to build our network.

And to the point, yet to the point where people can see whether.

Whether open ran cloud native networks work and.

And.

The and I know not everybody in this call season, but we see it every day the debt.

The the number of resumes and the quality of people that are applying to come work with us is exponentially higher than it was last year the number of vendors that.

Are putting resources towards the us is vastly different.

And it was last year the the the.

The concept of the whisper of confidence level for people and the no is vastly higher.

And we're leaving no nobody has built the five G open ran.

And cloud Native network before we're fortunate the G. O took the first step and Rocky time took the second took the second step of the work.

And we're gonna be the first network that does it and and.

Completely and.

And I don't think.

The the.

There, there's certainly always will.

We'll be skepticism, but that every every time, we hit a milestone internally with our partners at it.

That goes that goes down and you saw you see it the you saw the Qualcomm and they put one of our frequencies and their chips and they don't do that for the cost of money the cost of R&D cost some space of custom antenna is of course cost and that.

Radio and they don't do that for companies and aren't going to make it.

And so that's really helpful. Thank you Charlie.

Alright, well now take our next question from Silicotic.

J P. Morgan. Please go ahead.

Hi, Thanks, guys.

Charlie maybe following up on the other end side How's that gone in terms of integrating those network centers, where are you versus what you expected a year ago with those sort of better than the integrations and then second Paul regarding the fourth quarter financials, and you talk about any one timers here last quarter I remember you had some program and credits really repeat of this.

And is it right that the $70 million benefit versus the accrual on the telemarketing fine.

And the G&A line. Thank you.

I'll take that cash the last part of the question. So as it relates to one time or is the only one time and that we had hit the P&L was the $70 million coming back to the the FTC.

T C case, and it gets hit SG&A.

Thanks, Paul Yeah. This is Marc and Ron.

One of the new one.

I'd say that we are now moving into the second phase of our well run the journey that.

We're starting to build.

The a lot of vendors we abroad.

The radios compute software together and now what we're doing is that we are transferring that knowledge to our teams and the field in order to build the.

And the U S. So so that's really where we are in terms of testing and integration.

Hum.

For me and he says.

And the normal journey like other like I've seen in the past for other technologies.

D. C is we were coming at the time windows maturity and the around the industry for us.

And so you know.

Which is deploying it now.

Yeah.

Thanks Mark.

All right, we'll now take our next question from Walter Walter of P. J at Lake Charles Please go ahead.

Thanks.

Charlie the first market, that's getting the Washington, and the FERC quarter.

Can you just give us a little bit more color in terms of interest.

Are you going to sell to consumer wireless is this.

And kind of a profile of what you can do with with network sharing.

For the potential strategic partners and investors, who ever to look at just a little bit more color on that on that first market. Thanks.

Yeah, well first of all of it and it'll it'll be and NFL city.

And it will sort of be a large market.

Yeah Yeah.

Well, we certainly hope to have handset.

And for consumers, although you know its going to be a beta test and that the you know for lack of a better word and even G O and India. You know they had the took him six months of it.

The day, let people try it so.

And I just don't know what.

What kind of problems. We're gonna have I just know, we're gonna have problems and certain things arent going to work and its also helps it's all sort of our integration with T mobile and our core and and the getting the handoffs right and and so it's not it's a big test bed that I think is going to work kinda the day one and.

And and I'm, hoping by the you know and that's why I say it will be crawling and then I think of them I think that the.

As you work those bugs and Kinks out of the major market, it's cookie cutter after that.

But what do you hope the highlight the most of it.

How the network works into the core of the RF works in terms of Hey, we can build the network with some of them will work if you.

Drive around.

Well I think I think that [laughter].

I think the first part of the blocking and tackling and so the foundation as we look and we do compared to what other people do although we won't have as much I mean will be of taught it would be at a 100% by G network, so that'll be completely different than the other people, we certainly wont certainly.

Speeds are important but certainly that the.

Now that you don't everybody doesn't need a car that get Lamborghini that goes 280 miles an hour and I think as long as we make some of that goes 100 miles an hour of would be pretty good shape. So I think and we'll look and consistency.

And then we'll look at where all the problems are where you know where our dead spots where did we go wrong and the RF plan, where the where did we.

And where does our our open ran out of issues and and how are we ever to analyze that and how are we able to self heal itself correct and.

And and.

It's just all of those issues and my experience and DBS was I remember when we launched our pay per view didn't work and low and then and then and then if we started getting customers.

And the basics of the more successful and we thought initially suddenly we couldn't we couldn't actually provision people fast enough. We didnt have enough compute power to do it and once we learned all of those things and.

Took us.

Three of four months to the.

The kind of get the the right things in place and then it was clear sailing and then.

And we still have problems, but.

They were kind of one off one of the time.

So my expectation is and who you know.

Think everybody on this call, we'll have a pretty good idea of where dish stance by the end of the year and and you know some you know some people are going to say you know, we're you know we bit off more than we can chew and and some people are going to say well, we always knew they could do it.

And the but we're gonna of execution of it.

At the transition stuff.

Execution is hard work, but the.

There are no law of physics the wall.

And this is important there are no law of physics the star.

<unk> us from what we're doing there there is nothing and has to be invented to stop us from what we're doing and people know how to climb towers.

And we'll be getting radios and people and out of build radios.

People now and know how to build the broadband do you.

Do you use cloud exist and we don't have to invent the cloud handsets exist. We just have to execute and you know right. Now. We're you know, it's it's right to be skeptical.

Got the go better execution, because we got to prove it.

And.

But this team we have the team that can do it and it's just it's.

For me, it's a pleasure to get from the transition stage and the execution stage, because it's just hard work and and you know we never knew 10 years.

And I'm looking.

Looking at and it.

Tom here, but you know 10 years ago, we knew we had to get 100 megahertz of spectrum. We've you know we've got 40 megahertz of spectrum and he said how are we going and we just never know if we'd get there or not and now we've got you know.

Well over that and and.

You know the the.

Well I can't talk about the C band auction I think the the.

The that's the that's a whole another dynamic and a whole another strategy counter strategy kind of thing that you guys would be riding on and the next day for the rest of the year and thank all of the analyst day as you get to go to and and.

And here and everybody story and.

And we're going to show you can't really low yours, but we're going to show you kind of showing our story.

Churn can you talk a little bit about.

Boost as well and you took this thing on the margins are thinking of the quarter were 15%, which is higher than the typical of margin is that sustainable is it balanced with just continual sub losses and you also brought on.

So close to run and I think historically you've been very.

Good day of developing ecommerce channels and I'm curious like is there a plan to try and broaden the distribution and maybe reverse some of the sub losses, there while maintaining margins with some type of E commerce type of strategy.

Well the first the first answer to that and maybe John a lot of them. The first is bad news for for boost up because we have some.

So I think we've we we and Craig to his credit pointed this out and as of.

Today, and I talk about the biggest the biggest negative kind of risk factor there is.

C N N. Yeah of course, hi, it's John.

And we're two quarters in our I think we've talked about on the last call that we've had a lot.

Of the operational improvements to make converting to the MD and no economics, we're certainly working with our distribution. We are focused on building, new and more profitable acquisition channels C.

You'll you'll see us look to make changes there as we move forward and we are working through some very big technology and operational.

Parishional projects of with the whose business.

And.

The point out which.

There's new news this quarter is that we have received notice from T mobile dish.

C D and a network will be just can't discontinued on and around January of 'twenty January one 'twenty and 'twenty two sort.

The majority of our retail wireless subscribers receive.

And the services from that network.

We're part of work and planning a big migration.

So we can't be certain that the network largely shut down on that timeline.

But we have the plan and act as if the well which will be costly for us and as Charlie mentioned earlier, we're focused heavily on building devices.

And with our partners and it'll.

The work on our future network and so we've got some timing and other considerations of and we've got to work through.

No I shouldn't say so booster is probable.

I don't think I don't think anything I don't think that this quarter. The kind of margins are probably sustainable at the extent that in fact, it might not be very good at all of in the sense of that.

And that we look at it from a profit and loss of the boost customers or some of the most the economically challenged customers out there that the the.

And those pays attention to them and they're good customers of a boost but they're economically challenged and and so if they it's hard to upgrade to go from a phone that works it works.

Looks great and works in their territory works, Great and then and then go to another phone.

And even working on our network because of work by G. So then we'd have to upgrade them again, so you run the numbers on that.

And there would be significant fallout from that in my opinion and the second thing is.

I don't even think we could get the supply of the.

Phones that we would need and so.

We just don't it's you can't order phones and.

Not no that you can move the phones and and the supply of somewhat limited for the kind of phones, we might need for for for that so that's the material risk that the that's out there on boost and but I think the the positive side as the team the booster and John Lee and the same show they.

Can execute they showed that they and a very short period of time could turnaround some past practices.

And from from boost that Werent.

Economical.

And maybe where to show of wall streets of numbers, we're not into that game here, where and that we're in to actually manage and you know.

Your capital and our capital and efficient manner and so they they've.

I've shown that they can turn around and very short order I I've I that I set of Gulf of that'd be profitable by the end of the year. They they were profitable the first quarter and they became more profitable second quarter. So we've got the management team that can execute and.

They're there on pins and needles and Bachelor seek to get our first market.

And on the on.

And our network, where we can share petroleum and destiny.

Okay. Thanks.

Alright, well take our next question from Jonathan Chaplin New Street. Please go ahead.

Thanks, Tony It seems like the.

The last big vendor and sort of.

The category of vendors to snuck in.

For the network is a is the cloud partner and and I'm wondering if you could sort of talk to the.

The merits of the one cloud partner of buses and other and whether it would be of a single.

The card provider that you would partner with or whether you could.

It could be non exclusive you could partner with multiple and then I'm wondering if that's the relationship that you'll be able to a net the age to sell into enterprise and it's given the given the so much of the opportunity and by.

<unk> seems to be in the private network enterprise type of network space.

And whether you'll be able to leverage the the relationships and the cloud partner, who already has strong relationships and in enterprises to get them to get into that business.

And I'll, let mark I'll make just an opening comment and I'll turn.

And that of this question over to Mark, but the challenge I've given with every vendor to our team and and to Mark is that our cloud provider has the first and foremost be the best in class technically and and and we're fortunate that the the several bankers that actually can live up to that.

And.

And and they're just they're just great cloud technology.

And the United States, and and it's a whole new way of of running the network and maybe I'll, let you.

And I'll talk about how that affects enterprise and.

Yeah. So first of all of you know we are we have seen the very strong progress.

From the cloud the choices I think and maybe it was several different choices and the U S and <unk>.

And the jewelry was saying that and of course, the big different and the cloud and now we have the confidence that the cloud.

And the partners and the U S of.

The.

Telco technology that we eat.

And that's that's the big thing for US. So we feel very good about that when it comes to our software you remember that we the first choice. We made was to set of Vmware and the reason was that we wanted to control the software that we use and Vmware.

And given us over the last.

15 months and given us these capability to move our software between clouds, but also from the top of this down to the edge and no. Other network with no. Other architecture has the capability and the world yet for us.

It was very important because when you discuss price.

Private networks.

And different customers want different set of some won't do.

I have a certain type of flow. Some once you have the of private cloud and someone could put the software on the premise on there of factory or or of the compass.

And for US it has to be able to make good and.

And so we spend it all the time with our cloud partners.

Partners to be able to do that seamlessly and I like I said for the Euro and we are now and the deployment mode, where we added capability, we'd be everywhere and we used some of that with partners to move the software.

East West.

And the south.

And Jonathan this is Tom.

Most of the focus has been and with large team working on the technical architecture, but we clearly expect a cloud partner to bring a go to market component to the relationship.

Yeah.

Got it thanks.

We'll take our next question from could good morale at RBC. Please go ahead.

Thanks for taking the question Charlie talked about transmission and I know the focus is on wireless, but maybe take us through the transition across pay TV and effectively all of your content partners of launch their own direct to consumer services.

Obviously, this isn't new but I'm curious with the tenor of the discussion during the current negotiations is changing and if so is it more about fine tuning pricing and packaging in terms of programmers or do you expect the cake and even harder line that ultimately I guess of who you are distributing and if I could I have a brief follow up.

Yes, I don't know that its a harder line I think that what happened.

And we value of programming.

As to how many people watch it.

So for lack of a better word cost per viewing hour and what are the alternatives to get it. So obviously to the expenses that we had football exclusively with the NFL season tickets and.

That would be and exclusive.

That has value to the extent that you can watch it and 10 different places it has 110th of the value.

And so.

And when are constantly and we have of content negotiation and archive and that content is available through other means there's less just less valuable to us.

And then.

The content providers or are strategically.

I think and their and their strategic rooms, they're saying how do we keep these linear guys paying as much money as possible for as long as possible, while we go direct to the consumer and and and cut them out and.

And.

You know and and Oh by the way, we're making these guys bundle every every channel and we'll we'll go to the consumer and give them a lot more flexibility and be all of the car so far.

Obviously, that's the that's going to be a tough business model.

Going forward and what are unique and that debt and Eric maybe speak to this we've made are viewing.

And we bought the viewing us and experience and we've done a lot of different things to make the experience of on dish network, rather than the experience might be and one of the.

And on one of these vendors and we will go after after people that that you know are more rural and and so forth and so on but but look it's it's one of the transit.

All I can say is.

I'm sleeping at night.

I'm sleeping at night, and now because you know where.

I've been through this before we knew the big dish business and it was going to be what's going to be a business that would be challenged you know 40 years before.

Anybody ever of the first worried about it we knew that this model would be.

Challenged and video I think we talked about it on the conference call probably you go back and when the record probably seven or eight years ago, and everybody kind of laughed at US and said why don't you spend and more money to get these customers and.

We've made that transition that that you know.

It's a mature declining business and.

And it's the solid business the cash flows are good and it's.

It's not going away.

But it's kind of decline and I would expect our cost of programming of.

Would go down or would go or wouldn't go up as much and you know based on customers going direct and we probably will lose some of our cash.

Because you know some of our programming partners and we may lose.

As a result of that.

The well, Eric and his team will run it and run it as the business and have great relationships with the consumers that we found that out with H B O.

H B O didn't renew they wanted and minimum guarantees from us and and the high prices and we werent that made no sense of rest of pay.

And obviously, we're a competitor.

So they had no range and they had game of Thrones coming up the final season of game of Thrones, we didn't lose.

We didnt lose many customers and we put it that way because of our relationship with strong and they've got they bought Showtime and Starz and the other things and Netflix and.

You know, so and H B O of lost the revenue stream so doing.

The thing on that.

And he handled it.

And operator I think.

And more business.

Yeah, sorry, this is John heck of the cooler.

Yeah, I've got the follow up question from truck and Hum true.

Kyle and Atkins with RBC.

On the five key and wanted to basically drill down a little bit on the the tower and of late that you've referenced all of the fly the partnerships and.

And what type of.

Run rate are you targeting per month and per quarter in terms of getting the equipment deployed is the gating factor.

For the delivery of the radio and sort of simple without the permitting and the.

And telling them what kind of pieces can be.

And look forward to gauge of the.

And here.

Yeah, I think the gating that is gonna be radios.

Okay.

So it's the threat and day, it's the supply chain is the supply of fish supply of change.

Management.

Yeah.

And in terms of the number of markets that we're going after the besides the NFL cities and to get to that 20 per cent and targets and beyond.

And you do modest image of the deploy the hardware pre deploy the hunger in the network, so what what kind of a cadence of the.

Looking at getting.

And over the past a lot of day and all age in place and the father of agreements in place.

Well, the the cadence and we'll get into the <unk> to get into the 20% and June. So that's 60 I don't know what the I don't know the exact number of pops of others, but its probably 60.

65 million Pops, and we mentioned it earlier on the call that the activities underway and dozens of markets.

The target is really focused on the 70 per cent build out by June of 'twenty. Three the requirement is for 15000 towers of minimum and and as I said on the last quarterly call I think it'll be north of 15000 and by that time frame may of mail and and our.

Daily staff mean tomatoes, yellow and it is always saying I'm ready whenever you're ready and just looking at.

And Mark and Steven and Tom and that means and I'm ready whenever you guys are when you're gonna have radios and and you know of.

And we haven't scheduled for radios and and you know so it hasn't and gave you that cadence because of supply with COVID-19 and supply chain and everything else.

You know, we've we've already had.

Some delays and that and you know, we're pretty pretty confident but until the factory production of spitting it out and we get to see with their own eyes, you know we'll.

And we'll see but.

And it looks pretty good the the cadence looks pretty good. So operator, we have time for one more from the analyst community and then we'll have time.

And for a couple of from the media.

Alright.

The final yes, so we will take our final question from the analyst community members of the media on the call. Please press star one now to enter the queue to ask the question, let's kind of SAR, one and will begin the media portion.

And of this call full and the answer to the final analyst question and our final analyst comes from Doug Mitchelson Credit Suisse. Please go ahead.

Thanks for squeezing me and or just a couple of you guys have already covered a lot com. When you say a cloud provider should bring go to market component to the relationship just you know interested and what you want.

And what you mean by go to market component I think.

The jump ball and are you guys wanted to give us a sense I understand Charlie your comments that you know you could fully fund the the network build out at this point the case on the cash flow and cash on hand, but just curious if you ever want to say, what the 2021 of spending onto the point the network would be.

And then lastly, it sort of just you know.

Not sure if it's much more of fishing I can do here, Charles but just adding on to Craig's question and I think I was pretty surprised by your use of equity and certainly have a pretty long history of avoiding the equity I assume you expect a lot of value creation of if you execute here.

The last couple of years, you mentioned there was a lot of interest in.

Financing and and helping you with funding of the network and shifting over the equity from from that seems like a change in and sort of balancing and how you might financing. So as the demand by other is willing to give you money just sort of too expensive in terms of share of capacity or in terms of the of the.

The.

And if they wanted the charge you versus equity out of any more of that you could help.

Help us with the understanding and issuing a convert rather than issuing data are taken and investment and it would be helpful. Thanks. So much.

Yeah. This is Charlie obviously of the.

There's a balance between how much damage and debt and equity you have and you know for the most part where we believe.

The rate given where we think we're gonna go though of relatively debt free.

And the wireless side, and we thought we'd get better execution.

And.

The the market kind of threw up on on it for whatever reason and we thought we'd get a little bit better execution. So we're disappointed but on the other hand.

It's not it's not going to be material and the scheme of things and where we're going so.

That was the.

Zero percent interest for five years is what is attractive and.

You know again, I think we didn't quite hit our metric of where we thought.

We would come and pricing wise and headwinds and hindsight.

Aleem, maybe known it was gonna be.

The first conversion and the 40 low $40 range you know I think maybe we had thought about it differently.

But you know you went to the them you lose them and.

And our best guess, there wasn't quite as because of it should've been I guess and so you know go back five of that went away and now we're a little smarter, Tom and I will take the rest of it yeah, Doug nice job.

And then for questions or.

Yeah as far as the go to market, obviously, the conversations with a day.

The range, depending on which cloud service provider, we're talking to but they they clearly all have the enterprise sales channels and they all see a movement towards distributed.

Our GAAP mobile edge computing, which brings five G and of the conversation naturally with their customer base. So beyond that I I don't want and go into more detail.

That's helpful and spending this year.

We don't get that and send that alright.

Alright, Thank you all very much.

Hi, Doug Thanks.

Sure.

Well now take our first question from the media from Scott Morris The Blueprint. Please go ahead.

Great.

And he spoke of earlier.

Earlier on the call about the risks of.

The boost network shutting down.

And have you had a chance to talk to.

And the FCC about this Jim.

And the confidence that maybe the break on the and.

And the timing of that shutdown.

We have not the.

Talk to the we have not talked to the I don't well I shouldn't say I haven't talked to the FCC, it's possible that art.

The other staff as you.

You know, it's it's it's the rest of this out there and well.

You know we.

You know where you like the the this administration.

Wanted for providers and we're one of four providers I Hope you know the you know we'll.

And we'll see what what the rig we don't.

And what the regulatory environment is one of the rest of it we always worry about is that the Washington picks winners and losers and they make.

Make a policy that affects people you know one way or the other and you know we've had some good luck and we've had some bad luck.

You know with with that as have other so.

You don't have to C, which way that goes but we would probably tell you a little bit would probably tell you a little bit about which way the wind's blowing, but yeah look we view it as anti competitive I mean, the simple as that and obviously those those customers if the.

They can't go to or we don't have of network up yet.

The obviously.

You know if they.

The only couple of places they can go.

And.

So we.

And we view that as the anti competitive.

Okay.

Yeah.

Great. Thanks, you face the risk of those customers growing back to T mobile and the debt also be consuming and I can tell.

And.

Well you can see what look like.

And I don't I don't know, what the I can't speak to the motivations, but obviously the one of the beneficiaries of what the Kantar is the one of the beneficiaries of of of a premature turn off of the CDMA network would be T mobile.

Good.

Good day.

Yeah.

And once again the star one if you'd like to ask the question not take our next question from Amy Maclean and clean at cable Fox. Please go ahead.

Hi, Thanks for taking the question I, just wonder at discovery and said today that its discovery plus service.

Service has surpassed 11 million paid subscribers and then.

I Wonder if what you what you thought of that service and and do you foresee of changing how are you.

You deal with and as a partner.

And I have discoveries that great content, and we've had of long term relationship with them, but obviously to the extent that you can get it on the other part basis.

Basis and then.

Perfect.

The future negotiations.

Because of our customers.

None of our customers don't watch discovery of lot of our customers don't watch the scrubbers, we burden every customer with with with discovery of they can get it somewhere else and then you know that's the so it has to be a relatively has to be.

Right. The other that we can burden customers, who don't watch it and you have to run that math and.

And that's just the economics, it's not.

And it's not rocket science and we know.

Our customers, who watch and how long they watch it and and real time and and.

And.

Book and that's why it's why I started out with.

Fair and got done and.

The long time, and that's why I talked about transition to start the call because that's why that's why it was so important for us to get work to get and 2020 of where we are.

Okay, operator, I think we can take one more from the media. Please.

Yeah.

And I don't want to again that is star one day, she likes to ask the question with all sorts of at the moment.

Alright. It appears the no further questions I'll turn it back to the speakers. Please go ahead.

Yeah.

Alright, and there won't be the yen.

Alright late April and the money right.

Thank you I appreciate it thanks, everyone.

Yeah.

This concludes today's call. Thank you for your participation you may now disconnect.

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