Q1 2021 EchoStar Corp Earnings Call
There will be a question and answer session to ask a question during that time, you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star Zero I would now like turn conference over to your speaker today Terry down.
Please go ahead.
Thank you operator, and good morning, everybody and welcome to our earnings call for the first quarter of 2021.
I'm joined today by Mike Dugan, our CEO, Dave Rayner, COO and CFO, Rob recall president of Hughes.
Anders Johnson, Chief strategy Officer, and President of Echostar satellite services, and Dean Manson General Counsel and Secretary.
As usual, we invite media to participate in a listen only mode on the call and ask that you not identify participants for their firms that are reported.
We also do not allow audio recording which we ask that you respect.
Let me now turn this over to Tim for the Safe Harbor disclosures.
Thank you Terry all statements we make during this call other than statements of historical fact constitute forward looking statements made pursuant to the safe Harbor provided by the private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks uncertainties and other factors that could cause our actual results to be materially different from historical results and.
From any future results expressed or implied by the forward looking statements.
For a list of those factors and risks please refer to our annual report on form 10-K for the year ended December 31, 2020 filed on February 23rd and our subsequent filings made with the SEC 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.
As described in our reports and should not place any undue reliance on any forward looking statements. We assume no responsibility for updating any forward looking statements I'll now turn the call over to Mike Dugan.
Thanks, a lot.
Good morning, everyone and welcome.
The management team, we remain focused on operating the business in an efficient and profitable manner.
I'm pleased to report that we delivered great results.
In the first quarter, we grew revenue net income and adjusted EBITDA over the same period last year as we continue to manage through the various challenges associated with COVID-19.
India, and Brazil countries, where we have large operations are experiencing higher infection rates.
We are posting top priority on protecting the safety and health of our employees there.
I'm extremely proud of the organization for showing tremendous resolve to keep our customers connected and functional during these difficult times.
Let me now turn it over to President honors and day to expand on their business segments pregnant.
Thank you Mike.
The first quarter was very strong for Hughes revenue was up 4%.
Adjusted EBITDA was up 44% over the same quarter last year.
And adjusted EBITDA margin in Q1 was 42, 4% increasing from 39, 1% in the fourth quarter of 2020.
And higher by 700 basis points from the first quarter of 2020.
We ended Q1 of 2021 with approximately 1.533 million subscribers.
11000 from December 31, 2020.
Our Hughes net subscriber base in the United States declined by approximately 25000, but that's not the whole story.
As U S retailer pool continues to increase due to the high demand for broadband services.
While we continue to operate at peak capacity, we are managing our sales activity to optimize service to our existing subs.
And we expect these trends to continue in the near term.
Also in March 2031, we secured additional capacity on the Telesat <unk> satellite.
Pillow to Puerto Rico that will enhance the customer experience for current use net customers.
And enable us to serve even more customers on the island.
Portable reliable internet access.
In Latin America in Q1, we grew our subscriber base by approximately 14000.
Sales in our food increase relative to Q4, 'twenty, despite a challenging environment associated with the COVID-19 pandemic specifically in Brazil.
We remain focused on managing churn and continue to monitor all aspects of our consumer operations.
We anticipate ongoing growth in our Latin American consumer markets throughout 2021.
As you know 2020 was a difficult year for our enterprise business.
Many customers delayed or canceled orders and we dealt with several bankruptcies.
We're pleased to report that our Q1 enterprise orders were robust and grew 74% from the same quarter last year.
Speaking of new orders, our North American Enterprise Division average.
Stronger Q1 in years.
That included the extensions with existing customers and significant activity in the franchise bucket.
The active deployment cycle from Q4 continued into Q1.
Installations dispersed across several of cones and regions.
The industry research firm vertical systems released the 2020 market analysis, covering the North American managed SD Wan market.
For the third consecutive year Hughes continue to grow market share and maintained its number two position behind ATT and frontal horizon.
This is a welcome validation of our commitment to service delivery excellence and our practice of doing SD Wan solutions for our customers.
For the in flight connectivity to redo market, we've seen activity increases and increases in terms of flights and preparations for further deployment of equipment and services to our partners.
Also very excited that global Eagle Entertainment, a longtime IFC customer has successfully emerged from the restructuring process. We're now engaged in their efforts to optimize the current operational network and support the new opportunities.
We've also made substantial progress in our engineering work associated with the next generation system in support of the Ses 17 platform.
Our international Enterprise business also got off to a great start for the year.
Particularly excited about a major U S. O program, then in Columbia valued at approximately $80 million plus satellite broadband services to help bridge the digital divide.
These orders will provide 10 years of managed services predominantly using the you said 65 day and Telesat <unk> 19.
Satellite is currently under lease.
The capacity will be used to provide broadband services to rural and remote villages, mainly through community Wi Fi hotspots.
We expect future growth in digital divide projects as governments around the world realize the importance of providing broadband to all citizens no matter, where they live and satellite is one of the most effective solutions for who runs about eight years.
In India. Our team has crossed the 70000 site count with regard to the number of VSAT supporting the banking industry, including branch and ATM connectivity.
Also in Indiana, we received an order from Niagara energy to collect 3500 retail outlets across the country, which brings our total oil retail type services to 28000.
Elsewhere in Asia, a major multinational oil company has awarded US a five year project to provide managed services using a multi transport capabilities.
400 sites and one of the region's largest countries.
The Jupiter system continues to be the de facto standard for satellite broadband.
And we continue to receive orders from major operators around the world.
Specific satellite NUCYNTA, our BSN, who are involved with a consortium to build and operate the <unk>.
<unk> satellite, which provides a range of services to the Indonesian government.
As always the Jupiter system to be used as the issue referenced gateway system for the satellite.
This reference gateway will be used to measure the quality of services provided to the entry satellite and should pave the way for additional orders in support of user traffic.
Against the Indonesian government agencies for you.
Use the entry sales in Asia, not only bridge the digital divide to cellular backhaul and community Wifi, but also to enable broadband connectivity to a wide range of government offices.
Yeah.
The Middle East region, Oman, Tim.
I'll go to the Jupiter system that supports multiple satellite Ku band and Ku band and will initially be used to provide two G and PG cellular backhaul over satellite connecting previously and connectivity is.
Ultimately one day will deploy <unk> connectivity to rural areas as well.
Using the Jupiter system.
We also received orders from existing partners, including Youtube sales and you guys said.
Are you deliberately more terminals to supposedly subscriber basis.
We continue to work on closing line JV agreements about D N S.
As previously noted this is subject to regulatory approvals.
While still a small component of Hughes.
Defense and civilian government teams were busy with the deployment of previously signed programs.
As well as the continued involvement.
Many exciting prospects as a federal and state level.
We have active engagements with partner support.
Off the enterprise infrastructure solutions opportunities.
Then spirit project awards, beginning in late Q2 and into Q3.
Also yesterday, we announced our selection in a partnership with funded by the U S. Air Force Research lab to provide managed deals satellite.
Communications services to connect the Arctic region sites around the globe.
As the prime contractor for the project Hughes, who leaves adaptation integration testing and ongoing management of the services demonstration.
Progress continues on our Jupiter three satellite in Mexico as well.
As expected launch in the second half of 2022.
We continue to work closely with Blackstone opportunities to recover schedule without a nurse to the satellite.
This satellite will leverage the latest technology to lower our cost per bit and provides additional capacity to power. The continued demand for services as well as the ability to offer higher speed service plans to our customers.
We remain active in the engineering efforts to support the launch of services on.
The one where blue orbit constellation, providing the gateway electronics and the core modules.
We have assumed deployment the gatekeepers and are ahead of the requirements.
To support the one web services launched in D C region.
We are excited about the recent announcement of Eutelsat investing environment.
And believe it validates our long term strategy of providing hybrid solutions using voodoo and Geo satellites.
Geo satellites will continue to provide the lowest cost per bit for high capacity density applications and news will provide five coverage and enable new agency called mobility enterprise and government applications.
Continue to explore various other hybrid architecture solutions.
So I'm very pleased with our performance and outlook demand for connectivity continues unabated and hybrid solutions like Leo networks will satisfy this need.
Cost efficiency.
Satellite broadband market is large enough.
To support the different service providers with multiple technologies and Hughes remains uniquely positioned to play a leading role in providing these solutions let.
Let me now hand, it over to Anders.
Thanks problem and good morning.
In Q1, <unk> revenue was $4 million.
Down slightly from Q1 of last year we.
We saw a slight uptick in FSS backlog in the quarter and we remain focused on pursuing revenue opportunities in the ku band sector as the market continues to slowly recover.
Regarding S band developments, we previously disclosed the first pair of NGL. So satellites for Echostar global subsidiary have been precluded from fulfilling merit intended regulatory milestone mission due to force majeure events.
I am pleased to report that we have been granted an extension of the key regulatory milestone reset to August 10 2021.
Our third nano fab is expected to launch mid year, and we are evaluating options for additional space crafts as we continue to use the EG one satellite for market testing.
A related business development activities are continuing and we're excited about a broad range of potential applications being proposed for the new constellation.
On the European front, we recently announced that Echostar mobile joined with the Lora Alliance in February and May.
We are collaborating with <unk> to use our echo 21 satellite to develop and deploy the first real time bi directional satellite service delivery massive Iot services.
These new Iot services will leverage <unk> Lora devices augmented with L. R. H SaaS technology, which was adapted adopted by the Lora Alliance as part of the lower wind protocol, allowing satellites to use lora to connect Iot devices in remote areas around the globe.
We expect initial operations on this L. R F H SaaS service to begin in the second half of this year.
In addition, the Echostar mobile team is pleased with the recent decision by the court of Justice in the European Union supporting our use case for Echostar mobile S band MSS CGC licenses.
Finally, we are continuing our work on multiple fronts further our longer term strategic goal of full integration of S band satellite services into the global <unk> networks.
I'll now turn it over to day.
Thank you Anders and good morning to everybody.
My comments today will include comments on adjusted EBITDA, which is reckoned reconciled the GAAP measurements in our press release.
Consolidated revenue in the first quarter was $483 million up $17 million compared to the same period last year entirely from our Hughes segment.
Higher consumer revenue from increased <unk> and growth in Latin American subscribers were offset by lower equipment sales through our mobile satellite systems customers.
In addition, we experienced negative foreign exchange impacts of approximately $6 million principally related to revenue in Brazil.
ESF revenue in Q1 was $4 million in corporate and other revenue was $3 million, both relatively flat compared to last year.
Consolidated adjusted EBITDA in the first quarter was $186 million, an increase of 25% from last year Hughes.
Hughes adjusted EBITDA was in Q1 was $202 million, an increase of $40 million from Q1 last year.
He used adjusted EBITDA reflects the growth in the growth higher gross margin consumer broadband business, lower sales and marketing expenses and lower bad debt expense, primarily driven by the collection of amounts reserved on certain enterprise customers in 2020.
<unk> adjusted EBITDA was flat as compared to last year.
Corporate and other adjusted EBITDA.
It was a loss of $18 million compared to a loss of $16 million last year. The primary driver of the increase loss was lower equity and earnings of unconsolidated affiliates as well as somewhat higher legal expense.
Net income was $78 million in Q1, an increase of $135 million from last year. This change was primarily due to the higher operating income of $43 million and higher gains on investments of 125 million, partially offset by higher income tax expense of 30.
Capital expenditures in the quarter were $179 million compared to $105 million in Q1 last year <unk>.
The increase was primarily due to spend associated with our J three launch contract, which we signed in December 2020.
Yeah.
Free cash flow defined as adjusted EBITDA minus Capex was $7 million during the quarter.
In the first quarter of 2021, we bought back $4 8 million shares of our stock in the open market at a cost of $111 million.
We purchased $90 million of our 7% five eight senior unsecured notes in open market trades in the first quarter our.
Our intent remains to repay the balance of the seven and five eight senior notes due in June out of current cash and marketable securities, which was $2 3 billion.
As of March 31.
Finally, I would note that Moody's recently reaffirmed our review of HSA Sc's credit and made no change to our ratings.
With that let me now turn the call over to the operator to start the Q&A session.
At this time I would like to remind everyone to ask a question you will need to press star one on your telephone keypad to withdraw your question press. The pankey. Please standby, while we compile the Q&A roster.
Yeah.
Yeah.
Yeah.
Yeah.
Your first question comes from the line of Ric Prentiss from Raymond James Your line is now open go ahead. Please.
Well.
Thanks for the operational detail.
The first question.
At what it takes is one of the more unappreciated assets.
In value on the S band Andres, you talked a little bit about it.
In the last couple of weeks, we've seen a real big Aha moment with dish with an Amazon announcement, they've got people. Realizing what was happening with dish is five G network help us understand what the ASP and what's kind of the timing as you worked through how you might be able to operationalize the spectrum band network design anchor tenants.
Just kind of help people understand what that that timeframe is for that longer term.
Utilization of integrating <unk> into <unk>.
Well right now what we're focused on is first and foremost, bringing our IND filing and to use but we're finding having access to the one operational satellite that we have in orbit as a test platform.
To be giving us some experience and understanding the art of the possible.
As far as <unk>.
Going forward.
Many of the standard relating to <unk> and how MTN is going to integrate into the larger ecosystem.
We're expecting and we're hoping that that will be codified in the next.
Turn.
In rips 17, I believe which is due to be done.
First quarter of 2022.
That will allow manufacturers to move forward with standards, which we're going to allow the market to give us guidance as to exactly what the constellation will look like.
As I mentioned in my comments, we continue to work with.
A number of partners.
And moving the ball forward on both devices applications, but also with potential partnerships for use of the system in the future.
Okay.
That helps get a little bit of a timeline as far as people are realizing what might be there.
And then the Jupiter three still looking with Microsoft for a second half 'twenty to launch.
Should we think about that capacity as far as how much of that capacity should we assume stays earmarked for existing customers that just want more versus how much of the capacity is able to be used for for new customers.
Brad when you want to address that yes sure.
First of all the way, we look at that capacity.
We'd have roughly about 400 gigabit toward North America, coolness, and about 100 to 150 gigabit in Latin America and Mexico.
So the mix of the <unk>.
Capacity versus new subs will be different in.
In these two regions.
It's very difficult at this stage to exactly quantify that difference obviously, our objective is to provide the level of service to our subscribers that define satisfactory.
And.
We'll just have to play that as the growth of the Internet traffic is you know is increasing tremendously.
We will continue to maintain a high level of customer satisfaction, which means giving them more bids but at the same time, we think there's a big pent up demand for new subs. So we don't see any problem in utilizing the satellite to its full capacity quite quickly.
Makes sense.
And then obviously our thoughts go out to the people in India.
How should we think about the timing of the party JV, though I assume.
These are very difficult down there right now but is it the party JV as maybe year end 'twenty one is it slipping into 'twenty two.
Yeah, I would expect second half of 'twenty one.
I was talking to the folks just a few days ago.
Things.
We need to we need an approval from the department of telecommunications all the other formalities have been met.
And so we're hoping to get that approval in the next.
I know you can't predict exactly but the next three to five months.
That'd be great I'm, hoping a day end of fourth quarter of this year, we should hopefully get it get it through.
Okay, and then one quick one for Dave.
It looks like cost of services, there was a international regulatory feedback I called out in the 10-K for about four and a half million dollars. So should we assume that the cost of services run rate should be maybe 5 million higher or what exactly was that items.
Yes, well.
It was as I said in the Q it regulatory one time items.
We do not expect that to be recurring so somebody looking for a run rate should certainly add that back in.
Okay. Thanks, guys I appreciate the time and stay well.
Thank you Rick.
And your next question comes from the line of Chris <unk> from Cowen Analytics. Your line is now open.
Hey, guys I think Rick partially asked the question, but unless I'm wrong.
You reported record EBITDA margins in the Hughes segment, and I was going to inquire about.
Factors that favorably impacted it looks like sales and marketing was down and just trying to get a sense of how supportable that margin level is on a go forward basis here.
Yes, Chris I mean, so we had we've been spending a lot of time over the course of the last year post pandemic or during the pandemic on really addressing our costs and trying to get our operating costs.
Down as much as possible last year, because we were uncertain.
As to what the outcome was going to be during the pandemic can certainly that those actions have continued.
As Rick.
Question and as you correctly pointed out in the Q, we called out a $5 million onetime items.
Four $5 million onetime item.
From a regulatory fee.
And as I said in my comments, we had there were a couple of million dollars worth of reversal of bad debt.
From bankruptcies last year that have exited and we got paid.
Something that we really didn't expect to get paid.
But other than that.
Really don't see a real.
Reason why.
We would see a big step up in operating expenses short of something changing on the revenue line.
Got it and line.
I mean overall SG&A down.
You've already taken out a lot of the costs last year. So it was a little surprised to see them down here in the first quarter.
Where some of those reversals of bad debt did they show up in SG&A.
Yes, the reversals of bad debts showed up in SG&A.
Got it okay.
<unk>.
Since Youre expanding service in Puerto Rico, I'm, assuming you guys are not seeing any issues with the Telstar 19 V. I know there's been some reports around some problems with it but youre seeing a consistent service levels.
Yes, there is no impact on the operations of the spacecraft nor is there expected to be in the future.
Great.
On the equipment side.
Last quarter, you talked about.
Good strengths and yet the revenue is the equipment revenues were down in the first quarter I know you've got lumpy issues, there with one web shipments and it looks like.
In Q.
Q1, you had very strong orders is it fair to assume we should see growth in equipment through the balance of the year.
We certainly expect growth in the enterprise space and the equipment space, specifically and depending on what you are looking at you got to remember Q4 to Q1.
Seasonally.
And historically, we've seen somewhat of a drop as people buy things at the end of the year and if youre looking year over year.
Obviously, we had a lot more activity going on.
The beginning of last year pre COVID-19.
And we're starting to catch back up on that <unk> do you have any further comments you want to make there yeah I think the equipment sales on one web.
Yeah.
Cause.
Rest of this year to see a big increase in equipment sales.
Wish you didn't have last year at the same day.
So that's one major step function increase.
Okay and for clarification purposes, I think in the 10-Q had mentioned.
Hardware sales are down by about 5 million mobile satellite systems, which back in the pre Hughes days pre acquisition by Echostar meant something different in terms of what you were supporting with what do you classify into the I guess I'll call. It the MSS bucket today does that include N.
So it was tough.
No no it's only mobility apps.
Defined in the MSS.
The region right, which is the <unk> band equipment sales that we make to customers like try our inmarsat.
The distributors of the began terminals. So this is a.
Totally different than any fixed.
FSS kind of markets that we serve as the equipment in the key U K band.
So the script.
So.
It's a small business.
Typically represent.
Specific sales of equipment and services to these customers that I just mentioned.
Yes, Chris it tends to be fairly volatile line for us.
See big sales and then things will drop off.
And thats been the historical situation in this case, specifically last year in Q1, we had some meaningful sales.
Yet despite the numbers in Q1 last year.
This is not a reduction in any sort of run rate as I said it tends to be.
A little bit balance sheet.
Gotcha.
One back up a question on one web.
With those deployments going out I know youre doing the core module for the modem are there any large R&D expenses associated with one web or other and GSO systems that you would expect this year.
No I think one word.
We don't do any R&D, specifically for one day.
One <unk> the book.
The development work that we're doing.
For one web is being funded by the project itself.
So it doesn't represent.
It requires no investment from us in terms of R&D new R&D.
Understand.
And if I ran the numbers right that <unk> were up pretty significantly year over year and sequentially is that a fair assumption and again is this just calling of the existing north American base to higher arps customers or was there a significant contribution from international.
<unk>.
You wouldn't see that day.
Yeah, I'll be happy to take it.
You know I mean, the <unk> is significantly up year over year in North America, especially.
And it's really an indication of argue so customers migrating to bigger packages.
And additional charges that we've been making for higher usage customers.
So it is.
It's pretty much entirely in North America, South America is up a little bit, but not nearly as much of an impact in the overall market.
Great and.
One question.
Regarding the S band and the low raw effort.
It sounds like there was actually some some revenue associated with that in terms of the deployment can you maybe describe perhaps the topology I didn't quite understand is this a direct to satellite type of deployment or.
How might that actually generate either services or equipment demands associated with that that business model.
I'm, sorry, Chris could you restate that again please.
So you mentioned it was a bit of a new announcement, what youre doing with some tech and low Ron yes.
And it sounds like I thought I heard you say that there is revenues in the second half of the year and I'm just trying to understand the business model of what.
You would be contributing is that services. The echo 21 satellite is there hardware sales is it meaningful in any way.
Well.
What we're planning on doing is.
Deploying the first devices in the field.
Validate.
The functionality of the technology and then we will be working with both customers as well as service providers to turn that capability into devices, which will then be used in those applications. So.
It's not necessarily indicative of revenue in the second half of this year.
It's a meaningful step forward from a development standpoint, and that we're going to extend <unk> reach beyond the footprint of the existing terrestrial capabilities, which we think a lot of vertical more describes some significant value to that.
But from a revenue stand from a revenue standpoint, I wouldn't expect that we're going to see material revenue in 2021.
We certainly have hopes and expectations about 2022.
Great and so this is sort of a hub and spoke type deployment, where you'd have a satellite terminal that within broadcast and low rise to client client devices.
No. This is this will be a device that will primarily communicate with a terrestrial network and when no terrestrial network is available we'll communicate directly to the satellite.
Gotcha, Okay that clears it up thank you guys.
Thank you, Chris and we have a follow up from Ric Prentiss of Raymond James Go ahead. Please.
Yes. Thanks.
Coming back and if there are no other questions I think.
While it might be out there also.
A couple of quick ones on my side than any supply chain issues, we hear that frequently from different people in the system AT&T CEO, obviously say go.
When he was a little bit skittish on stuff. So what are you seeing as far as supply chain.
Yes sure.
Our manufacturing guys have been doing an.
Excellent job in anticipating and.
The needs of the business.
Sure.
Placing.
A lot of orders in advance that we have so far seen.
Impact of lost shipments and at this stage, we are comfortable that our planned shipments for the rest of the year.
There'll be met with.
Good day orders that were placed in the inventory that we have for parts and components.
Factories.
That's good good pull ahead.
Also obviously is the cheaper three launches there'll be some increase in costs.
Operating costs not just the capex to get the bird launch how should we think about the timing and maybe a rough magnitude as far as what the cost might mean, because usually the cost income ahead of revenues and good job reducing costs, but at some point, we should be thinking about maybe.
Increasing because of the <unk> cost.
No that's a fair question.
And it's something we're certainly.
But spending a lot of time paying attention to it because we don't want to get those costs too far ahead. So while we're continuing to deploy capital or the build out of the ground infrastructure. We will start incurring operating expenses at some point in time in advance of the launch.
I would not expect any material increase in those operating expenses during 2021.
We'll start seeing some ramp in 2022.
As we get ready for the launch.
Okay makes sense.
Operating margin is still a fairly high.
As you look even as J three launches.
Yes.
It's going to add cost, but its not going to materially change the margins or anything else and certainly we'll recover that as we resumed growth.
Off of.
<unk> three.
Those costs will be absorbed very quickly.
Right, Okay makes sense.
One final one for me.
You get the question quite a bit obviously with the starlink.
Beta test out there have you experienced any noticeable impact on your subscriber base, while the trial pain trial has been going on as far as impacting the ads at Hughes and how do you expect that to play out in the secondary question is a lot of times, we get people asking.
Roughly I know, it's not a perfect question, what's kind of the population density that's a typical hughes customer lives and how many people per square mile or homes per square kilometer type could there be.
Yes, the number we use 10.
10 families per square mile.
Okay.
It varies in different parts of this.
Now in terms of.
We've had no impact to date, obviously from link side, because all they have been doing is running a beta program.
And they haven't actually started implementing <unk>.
Operational program.
So there will be no impact.
To date.
Okay.
Thanks, guys I appreciate the follow up.
Thank you and your next question comes from the line of Giles Thorne from Jefferies Go ahead. Please.
Thank you my first question.
On why we read about Eutelsat <unk>.
Depending on the big.
It's restructuring funding round for Walmart.
Echostar Hughes.
And then my second question and then picking up on the Australia and funding from last month.
That pretty well funded now and coming with a different model and a different technology to essentially address the same application as your core Hughes business.
So I'll be interested to hear a pregnant bolt on what Australia pads.
Net.
I didn't get the second question guys, but the first.
<unk> is real.
Part of the investment group that invested in bringing one day about a bankruptcy.
We invested $50 million.
And obviously due to the fed's can't come in with $550 million recently, but we were part of the original group of the UK government.
Bharti enterprises, and us and Softbank were part of that.
So we are we.
We had an early Investor day, we had a strong believer in.
The Leo constellation that one web is building.
Eventually the <unk> architecture.
Hybrid architecture that we are proposing along with what little fact is done and we validated that same strategy going forward in partnership with one of them.
The second one.
Sure.
Why not do more.
I'm just curious why why not be all that why not.
Small.
Well, we've been we continuously look at.
<unk> opportunities.
At this stage, we believe that is the right amount.
That makes sense.
Yes.
There's still a final funding round to be done.
Are you happy to say you definitely won't be part of that final funding for Walmart.
Charles.
As Youre aware, we don't discuss our strategic investments.
And our strategy there.
Sometimes discuss them after we're done but we don't speculate.
On what we may or may not do in the future.
Fair enough.
And the second question was on Australia.
The top.
Top line startup out of.
California.
Just curious what you've told them that technology.
You know.
It's an interesting interesting technology and.
I think there will be potentially a market segment has been addressed but the market segment that we are in.
The broadband area, but it requires so many such large pipes and large amounts of data that is really doesn't apply much in line of business.
All right good thank you.
Thank you and your next question comes from the line of Chris <unk> from Northland.
Go ahead please.
Hey, guys. Thanks for your time.
I was hoping you could comment omni space.
Company, you all know well.
Made a number of public comments on the.
Characterization of their S band kind of global rights in their network in terms of kind of leveraging the S band for a lower <unk>.
Unit cost of ice and better propagation.
Could you Anders maybe you could comment on is the strategy similar.
In terms of the network, they're talking about to what you all and if not.
How is it going to be differentiated.
Thanks.
I think we're both pursuing a moving target.
Sure.
We're very.
Aware of omni space in fact, we coordinate.
On a lot of matters with omni space and the regulatory.
Standards areas to our mutual benefit.
Their business plan has evolved considerably.
And they now have some satellites under construction I believe with talus.
And they I believe are certainly focused on sort of a massive iot opportunity from a lower earth orbit.
We haven't necessarily.
Ourselves locked in to a particular plan, but we are incubating a lot of different potential.
Devices and use cases for using our spectrum, how that will translate into hardware and a constellation.
Is still.
Underdevelopment in essence so.
I read the same things you read about omni space.
And it would certainly.
Suggests to me that they are going after the massive Iot market as a primary thrust.
One of the markets that we're looking at but certainly not the only one.
And and maybe as a follow up and thanks for the context, but.
You guys talked about a mid 'twenty, one launch I presume that's a Leo launch.
It is.
Our Australia and filing is itself a.
Filing so once we bring that filing and to use.
It will crystallize our rights.
On top of that we have made multiple other filings through multiple administrations.
Yes.
And maybe just a follow up in ex U.
Pressing a little bit just because theres not a lot of detail out in terms of what the plan is and I understand that but if you kind of think about the capacity of that type of network.
I think I've heard you all talk about the capacity of having billions of devices, which.
Would leverage that ecosystem and S band.
And you know maybe if you could talk a little bit about five years out like what you see the potential from kind of a revenue.
Cash flow standpoint.
Kind of based on what you're seeing right now and especially considering you talked about hopeful on 22 contribution of revenue.
Yes, I think doing a long range forecast on revenue based on our system, which we haven't settled on a design yet would be highly speculative but.
The fact of the matter is we're going to have.
Sort of a block of spectrum available to us globally, and how we use that block of spectrum, especially as an extension to the <unk> ecosystem is really where we see the value of this residing.
S band is unique in that.
It has.
Qualification from an authorization standpoint to be used both terrestrial and for MSS services, and therefore is very unique when compared to other spectrum, that's being deployed terrestrial. So we think figuring out how to position ourselves to exploit that dual use character.
Is in our best long term interest and that's what we're focused on.
That's super helpful and you know as a long term shareholder appreciate your large share repurchase recently in the market. Thanks very much guys.
Thank you Craig and this concludes today's conference call. Thank you for participating you may now disconnect.
Thank you everybody. Thank you.
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