Q1 2023 DISH Network Corp Earnings Call
Okay.
Good day and welcome to the Dish Network Corporation first quarter 2023 earnings Conference call.
Today's conference is being recorded at this time I would like to turn the conference over to Tim Messner. Please go ahead.
Alright, Thanks, Rachel and good morning, everyone. Thanks for joining us on the call today, we have Charlie Oregon, Our chairman Erik Carlson, our CEO , Paul Orban, our CFO on the wireless side, we have Johnson, <unk>, President and CEO of wireless and Dave Mayo Edp of network development before we start I need to remind you of our safe harbors as usual.
During this call we may make forward looking forward looking statements, which are subject to risks uncertainties and other factors that could cause our actual results to differ materially from historical results or from our forecast we assume no responsibility for updating forward looking statements for more information on factors that may affect our future results. Please refer to our SEC filings.
And with that I'd like to turn it over to Eric for opening remarks.
You, Tim and welcome everyone and thank you for being here today I'm going to begin with a few brief comments before opening it up to your questions. As most of you are aware its been a busy few months some planned and some not.
On our last earnings call, we announced we had experienced a network outage that affected our incident response and business continuity plans.
Once we determine the outage was due to a cyber security incident, we appropriately notified the appropriate law enforcement authorities.
February 28, we further disclose at certain data had been extracted.
From our I T systems as part of the incident.
Our investigation to the extent to the incident is now substantially complete and we have determined that our customer databases, we're not accessed in this incident.
However, we have confirmed that certain employee related records and a limited number of other records containing personal information were among the data extracted.
We've taken steps to protect the effected records and personal information and we have received confirmation that the extracted data has been deleted.
Well, we have no evidence of this data has been misused. We have started the process of notifying individuals', whose data was extracted.
We restored the systems affected by the cyber security incident, our website customer care functions self service applications and payment systems are operational and have been since March.
Our customer care operations are up and running it's service times have normalized.
Our dish TV sling TV boost mobile and wireless services, all remained up and running throughout the duration of the incident.
Fairly regret the inconvenience to our customers and team members and certainly appreciate their patients while we work to restore systems and returned our customer care operations to normal.
Data security is extremely important to us our team, including third party cyber security experts has been working to enhance our cyber defenses and overall security posture, we've upgraded our endpoint detection and response system and we've taken other measures to fairly further secure our data and systems.
We've also refined and will continuously improve our business continuity and system restoration processes.
Yeah with respect to the financial impact of the incident, we disclosed in our 10-Q today that we incurred about $30 million of expenses, mainly related related to remediation additional customer support.
<unk> costs.
This amount is included in cost of sales in our financial statements.
We also disclosed that the outages related to the incident negatively impacted our disconnects and churn for dish TV.
The outages did not materially affect our boost mobile or sling TV subscribers.
During the incident, we undertook extensive efforts to support and protect our customers and employees and to further enhance our cyber security practices.
Amendable efforts by our team at dish, we do not expect any additional material future costs or further impacts to our subscriber base from the incident.
Look I want to thank our customers employees and partners.
Pliers and vendors for their support patience and understanding.
And with that I'm going to hand, it back to the operator to start taking questions from the analyst community operator, Please open the phone lines.
Thank you.
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Yes.
Okay.
Our first question comes from the line of David Barden with Bank of America Securities. Please go ahead.
Hi, This is marlene per airline for David Barden of Bank of America Securities You know, what's the startup questions regarding Capex. You know can you talk about the run rate Capex post the June 2023 build outs.
Then if possible provide you know what potentially could be a new run rate when that run rate would start and then potentially when capex would ramp again heading into 'twenty five zero build out requirements.
Hi, This is Paul I'll jump in and that's a good question I think we will come in slightly lower than last year's capex, but unlike last year. It will be front end loaded with the dropping off after we hit our June milestone.
But other than giving future capex guidance, we're not going to we don't provide that.
This is Charles I'll comment I think.
I think I think I'd add little more color to that I think that obviously, we had two back to back milestones in 'twenty, two and 'twenty three.
The vast majority of the population.
You have 70% of population. So you can look for us to.
To be able to.
Two things that we really would do from a capex perspective. One is we can go we certainly will but we'll be able to take a little bit of a pause in terms of some of the new markets, but we will continue some capex to to densify. The current markets that we have where we once were with customers. You always find you have some gaps and things. So we have we will have some capex on current markets, but future markets.
We will be able to take a bit of a pause.
Until the 2000.
Really the late 2024 early to 2025 time frame.
Got it and then you know as you build out the licenses to meet the mid 23 requirements is is it possible to give any update on the build of the 600 megahertz that you might be building out concurrently with the other licenses.
So yeah, Hi, this is Dave Mayo.
Starting construction on about 18000 sites as of the end of the first quarter.
It'll take approximately 16000 sites for us too.
Meet the objective.
And those sites will have been fully fiber and tower and we're well on our way to achieving that.
Yes, I think on the second part of that question the seven or the 700 megahertz is in our R&D is in those numbers, but additional more excuse me six hundreds et cetera as it is in those in those numbers, but in terms of new cities for 600.
That's something that that you know.
We'll take it.
<unk>.
Case by case basis as you find that you have more roaming charges and you could do them by putting something on your own network, you'll make that you'll feel you'll you'll build for success ultimately youll build for the FCC well, we're well in addition to that yeah, we're well on our way to meeting the 70%.
With respect to the 600 megahertz licenses.
Got it.
And then once you do hit the mid June requirement is it possible to give us a sense of how much this will make in terms of business operations.
Ergo markets go to market strategy, you know it was 20% last year, 70%. This year. So just trying to think about the impact it could have on the business now with a much broader offering.
Hi, Good morning, it's John <unk> I'll take that part of the question.
Uh huh.
So at the end of the first quarters, we're now serving serving 70 million people with commercial Bonder.
<unk> network through boost mobile.
That's a little bit more than 50 cities.
So as we are.
Build out fiber broadband, we then come in and optimize the network densify it.
And move those markets towards commercial launch.
So we would expect that by the end of the year will be serving.
The majority of the U S population with commercial Bonner.
And loading retail customers onto that network.
We're making steady progress with getting of honor in band 70 devices into our distribution and our supply chain and we expect that to pick up as the year continues.
Got it and then just turning to your cost of capital just given you know the current cost of capital.
Can you walk us through maybe what some of the levers are that you could've poll could pull to address one.
Coming maturities and two other funding needs, including additional capex.
Yeah.
As Charlie well obviously.
You know we focus on you know our maturities with obviously the next one coming up in March of next year. So for.
For $1 billion and that's a convert so it so we look at the levers there and say that that needs to be dealt with that idea it would be equity or equity like in terms of nature, because it's kind of equity like today.
And we think Theres a number of levers obviously were liquidity liquidity liquidity poor in the sense that the market is probably from a debt perspective, just really aren't open to us.
But we are asset rich and so.
We look at all the different levers, we have I'm not going to give you those on the call but over the years, we've been a good steward of capital and we think that there is there are many things that we can do.
And some that are you.
You know that we can do to meet those maturities and so.
We're focused on.
Two things one is the operations of our business and obviously, there's obviously to the extent that we operate our business efficiently start putting people on our network and start competing a little bit stronger way with with the postpaid which is a more profitable customer on our network.
Quiddity liquidity, it becomes a little bit easier to attack because people will see the growth and the profitability of what you're doing if you're not able to do that then that's a different story and obviously, we have to wait and see where the markets are.
Next year.
But even the government, having a debt crisis. So obviously.
Theres market there is money available today out there marketplace. There is a fair amount of capital in the marketplace.
We hope that doesn't change but.
We're like everybody else, we don't control.
Where the economy goes.
Thank you and then one final one if I could can you provide any update on 800 megahertz spectrum auction is there anything there that you could share.
Terms of tiny or you know potentially what you'll do with that.
I think I can repeat what but the but the CEO of T mobile side.
We did get an extension of 60 days.
On that end.
At a minimum and.
We think at 600 800 megahertz is.
Extremely important for us to be able to compete.
And.
So obviously.
Capital Wise, where we are.
Our challenge to be able to do that transaction today, but we think that there's ways that we can make that transaction happen.
We think it would be.
From a competitive point of view that.
Important low band, particularly uplink spectrum.
Great I'll leave it there and pass it on thank you.
Yeah.
Our next question comes from the line of Ric Prentiss with Raymond James. Please go ahead.
Thanks can you hear me okay.
We cannot Rick.
Okay.
I want to follow up on that if I could with the 800 megahertz spectrum.
Are you required or is there a regulatory requirements to build that is it possible that we sell it all.
Also spectrum securitization market typically what men's at about.
35, 40% of value just wondering if you could elaborate a little further on what the requirements are without 800.
The requirement is is to build it but we haven't built it so part of what Dave and his team have done is to build 800 megahertz and in.
It's my understanding that.
T mobile has turned that network down for the most part theres still some statutory requirements that they keep.
Couple of towers up, but they pretty much turned that network down. So we basically have a functioning 800 megahertz ER.
From a transformation point of view would be to 70% of the population.
And in a few weeks so.
<unk>.
We wouldn't have a regulatory problem for meeting our commitment to for build out.
Oh, if we dose.
For some reason if for some reason we weren't able to exercise the option, we would have a penalty of $72 million to T. Mobile that's the other piece of it.
Okay.
You're able to take over any of those old nextel antenna sites them to help me with a transmission.
We were we did not take over.
If we take the R&D taken we've taken some sites, Rick but not a not a.
So I wouldn't call it a significant number but it's not the next cell radio gear that we would use the 800 megahertz frequencies or in the radios that we've deployed the low band radios that we've deployed.
Okay.
That in perspective, if you were if you were.
Were to do a new build of 800 megahertz, you're talking several billion dollars to do it. If you were to go out on your own and build 800 megahertz.
Extent that we have.
That would certainly be up.
That would potentially be a multibillion dollar bill to cost you almost as much to build is.
It is.
As we've had to build for all our frequencies.
Last one.
Okay.
I leave it up to the analysts dawn here to figure out.
That's positive or negative, but I think that's a big positive for for an asset we have that people just don't recognize them.
Sure.
For me is on the private network side I think you said several times that the best use of the network might be for wholesale business enterprise private network type applications update us as far as what Youre seeing in the marketplace. I know, it's a long sales cycle. How is the team performing there what are the hurdles and all of that revenue stream in and are there any opportunities for financing with.
Tangible strategic partners in that area.
So I think youre talking about the enterprise side of the business.
Exactly yes, yes, yeah, we havent made substantial progress in terms of the enterprise business in terms of announcements were behind the scenes, obviously, they're there they're really.
And you mentioned it a couple of ways that we would approach a market.
One would be we'd actually build it out.
And.
At least that which would take capex that obviously is a bit less less attractive to us. The second is people just pay for it from the get go. So it's cash positive from day, one and the third is that some of our some of our partners.
And our bill whether it be.
Cisco or a dell or AWS come to mind, where they already have a big enterprise business.
That they just add R. R. R spectrum into their thinking about how they would design private networks and at that point, we'd be we would be more of a wholesale provider of spectrum. So any of those three things or possibilities of how you would go.
Go ahead, and build an enterprise business, but.
It's going to be where it's going to be a huge market for all the players I. Just think we're I think we're a little bit better position because I think the kind of network. We have is the kind of network that companies when they really become ambition about what a private network can do for you and what it should do for you. The architecture of what we have is just is just without the legacy is just.
Better is if you're going to build it knew that you should build it right.
Any idea of when we can look towards formerly announced so we can see it on our side of the fence.
Don't have a timeframe for you.
We said before that we think youll see so 2024 event for us.
Great. Thanks, a lot guys.
Yes.
Your next question comes from the line of Michael Rollins with Citi. Please go ahead.
Thanks.
Questions. The first one is I'm just reading the 10.
10-Q. This morning, there was a comment in there.
Disclaimer to implement one or more of the following options raise additional capital pursue strategic transactions <unk> advance additional cost reduction initiatives. Just curious if you could unpack that a little bit more and what investors should expect over the next number of months from that.
Well I mean, I think I think we're good stewards of capital and we obviously realize that the that that were more of a look right now we're more of a liquidity story than than anything.
In the market and obviously, we have to address that.
And I think there's two ways.
I don't know what else I can say about that the that the options out there but.
You know obviously, we obviously the first thing we do is focus.
And you know I've really focused the team on executing to build it.
The best network in the World.
And the end of the postpaid business, which is more profitable than to make sure. We get more devices that we can put on our network.
Because that makes liquidity that much easier because obviously, you're proving you can compete and we really haven't proven that yet so.
That's kind of that's kind of number one the second thing is that didnt meet our milestone with the FCC, we just have to do that.
And the third thing, which is maybe a bit more nuance for the people on this call but.
You know we've been on the TSA agreement with T mobile since inception, which is which is basically our billing and provisioning and all are operate in our back office functions and we have to be off of that.
By the end of this quarter so.
Those are our big things that we need that we need to do and if we do that then.
So with that then you get you start to see the growth that everybody's been hoping for and expecting probably a year earlier than this.
And then and then that obviously helps you in your in your in your liquidity side of it.
Because you are showing you can compete.
John There's one other thing we need to do this quarter, which we actually have done well, there's two things one was to get the cyber security.
And this and that was a massive effort and I wouldn't say it was record time based on but it certainly is certainly for US. It was you know I think I think.
Right up there at best in class and how you recover from a from an incident.
And a lot of.
Real solid effort in our team and it gives you a lot of confidence going forward that your team can when went under pressure can operate in.
And the other part maybe John can talk about.
Well theres been a lot of focus on getting boost incident ready to go and we've made a lot of progress there.
Youll see us ramping up marketing later in the year as well as distribution and one of the big things there that it's been a focus for us is bringing the iPhone to boost infinite and Youll see it come later this year.
Big effort there across the teams to make sure we're ready to go in postpaid.
Yes.
I think that iPhone is important because it's obviously a big part of the market share out there and I think it would be very difficult to be successful in the postpaid business without it and so we're pleased that we have that we have.
That we will be able to bring the iPhone to the market actually within the next few months so.
So we're we've done a couple of things that already this quarter that we needed to do and we've got two more things to do and then I think we get to go a bit more on offense.
It's been a little bit frustrating to play defense as long as we have.
And then just shifting gears to the video side I also read that you entered into a contract to bill.
Build and launch another satellite can you share a little bit more details on that.
The cost in <unk>.
Just thoughts around continuing with the satellite side.
There is an opportunity at some point to maybe take these customers and leverage the sling product and accelerate migration.
Migration to streaming.
Yes, Michael this is Eric I'll take that.
Maybe Charlie has a few comments, but we did enter into an agreement to build out what we would.
Call Echostar 25.
So our 20 <unk> satellite.
We entered into that agreement with with Max are we fly match our satellites today and so we're it's a satellite that we're familiar with.
Obviously you know.
As we've been talking about on the on the call for quite some time for.
From a dish TV perspective, we've really been focused on you know, adding profitable subscribers in rural America.
And you know we've had some success there and we've had decent success in retaining some of those customers.
As our fleet continues to age we're in a position where we need to.
I'd add a satellite in order for us to continue.
To operate.
The service with appropriate backups.
Within the latter half of this decade.
So that satellite is under construction now we're under contract with Max are and we would expect to launch that somewhere in the neighborhood of 2020.
26 46.
Got it.
We don't think that the DBS business has gone away, it's still up but its still up.
Preferred choice for a lot of Americans in terms of.
Inefficient way to watch TV, and obviously theres been.
Obviously, you were able to add apps and things to that to the set top box or a seamless experience. So really that business has gone away. We just want to make sure that that that we have the right facilities in place for our customers and.
To some extent.
Some of these satellites you have to have a satellite for insurance policy insurance.
References to so that's the reason.
Is there a rough cost that we should just keep in mind for that.
We don't disclose that but if you take a look at the capital commitments footnote in the Q. It's included in there. So what is it what you don't make them read just tell them. What it is we don't disclose quoted in the total commitments table I gotcha.
Thanks.
Our next question comes from the line of Walter <unk> with <unk>. Please go ahead.
Thanks.
Charlie when you look at the sub losses in DBS and and boost what would they have been.
If you hadn't had the cyber security event.
And then similarly.
You know to the extent there wasn't collected revenue how do you account for that is it.
But our Pune and like.
Our receivables it gets written off as you're just not reported in our revenue and then kind of a third part to the same question, which is what's what's been the impact I know you said as of March. It's been you know the systems have been repaired.
But given the impact it had on customers what have you seen in April and early may in terms of any lingering impacts.
Two subscriber churn or our usage or anything.
Alright, let's unpack that probably a couple of different people here to answer that I'll take the boost in really quick.
Not a material impact on boost.
Mobile.
We're in a situation of Walt as you might expect were.
We realize we're entering the post paid business now.
As we bring up our network.
And postpaid customers, just a lot more profitable than prepaid customer so.
If you have limited capital you're going to spend your capital on the most profitable customers and so were havent been.
Perhaps as aggressive and boost is as.
But just knowing that we've got better things coming better economics coming so a dollar spent today that makes a small return you're better off waiting.
Well next quarter, just spend that money, where you have a much better return at least that's our theory.
And then for both mobile we also know that there is another benefit of putting those people on our network and that's starting to happen now too so.
That's.
I wouldn't read too much into boost.
As it relates to.
The accounting question about yes revenue you can take that when you take that.
Yeah I'll jump in this is Paul.
Revenue impact was really immaterial.
So you and you are seeing at the immaterial amount show up in our <unk> to answer your question.
Okay.
Well, it's a little of that.
How is that possible.
Because I mean, if you werent able to collect.
Revenue from customers and there's reports that people have like go to stores and bring cash to stores how is that possible.
Did you go back and look people that weren't able to collect one you did collect.
A lot of that a lot of the press stuff is exaggerated it's just really hard to okay.
It's really hard to comment on every exaggeration is out there, but theyre okay.
Casey I think the more cases, maybe you didn't collect a late fee or something like that I think there's I think there's a little bit of that maybe Paul you can maybe yeah noted we were up and running collective all amounts by the end of the quarter. So that did get all caught up. So you would have seen Ed to answer your specific question I would have been sitting in an AAR, but as you can see our AR balances are.
Down from year end.
But there might we might have waived late day delay, but you know that.
You'd probably you're probably a little down a little down on the margin because you waived late fee.
Are you.
Extended somebody three more days than you would've because you knew you'd be able to collect it.
There's some stuff around the margin there Walt but nothing material.
And there was a third part of the question Yeah, I mean, I think Walt I mean, this is Eric just to add a little bit more color I mean, obviously.
You know.
My opening statements, we talked a little bit about it but you know on.
On the dish side of the business.
That's where most of the impact was really felt right. The legacy if you might explain why why that was.
Legacy infrastructure as you can imagine we've talked about it here, we definitely modernize ton of our tools in staff associated with sling.
Obviously, one of the TSA for some of the business through T mobile.
For boost and then obviously, we're building out or new.
Now digital operator platform.
For our new boost and boost.
Infinite businesses and so.
The modern architecture really wasn't as impacted as much right, where we have different principles cloud based et cetera, but so when you think about dish in the legacy side of the business, that's where the impact happened and you know quite frankly.
We've been giving award winning customer service, we've talked about our J D power.
Awards here, which are which are five in a row and we're quite proud of them and so you know quite frankly, we just didnt live up to the expectation and so there were long hold times and you know, we weren't able to process payments and dish I mean, obviously, where we're to postpaid billing cycle.
So as Paul mentioned, we caught up on some of that so there might've been a late fee here.
Or are there.
Which benefits the customer but in some cases, obviously, we weren't able to answer a phone call or or answer a you know a customer issue, where they had a technical issue in and they may have disconnected and youre seeing that in the note.
And the Q1 numbers, but essentially we put that past us like I said in the opening remarks, you know a boost in sling you know not really materially affected dish on the legacy side of the businesses, where we had the impact and that is generally behind us now.
Just because I know the way you guys weigh maybe you guys are to answer your question on the two things that happened on the on the DBS side of the business, which is.
One is we had elevated churn.
But the second thing is we did market I mean, we didn't make sense to go out and try to get so we had lower gross adds and we had higher churn. We would expect obviously that that we return with the with the outage behind us.
More normal run rate.
The more normal run rate.
And that's what you've seen thus far in the first month of the quarter, but.
I don't think we'd give guide.
Thanks for asking the question again.
We don't give guidance, but I think we expect that we would return to operation how about that.
That's fine so let me just do one or a different one.
Uh huh.
You hit the 70% or whatever it is I don't think the FCC has an obligation to do anything but clearly.
It's going to help you in terms of raising capital and becoming the fourth competitor in the market Yada Yada yada like have they.
Given you any indication that when you're done and you submit whatever you got to submit in terms of engineering studies that they're going to give you. Some formal staff or is it going to be normal standard or normal procedure, which is like they don't really have to say anything.
Yeah I think.
It would be very helpful. If they would they would give some indication to the market. They did not do that with the 20%.
It would it would be helpful.
It's one of the things, we don't control, which is which as you know the.
The regulation in the government and so forth, it's probably one of the more frustrating things because I think everything that we can control.
You know we did we just work really really hard.
To be successful at and we've done that for 40 something years right, but the.
From a regulatory point of view you know as an example.
My congratulations to Spacex, but there was a 12 gigahertz study that was out there that that we came on the short end of that that stake Spacex was allocated to spectrum and we were not able to to even though we paid at auction for that spectrum, we weren't able to access that spectrum for.
Mobility so you.
You know, it's a bit of a losing streak there, but you know we've had we've been on both sides of that and.
You know I hope that.
It would be helpful. But I don't think we should expect that the FCC is we'll say.
Anything in part because it will take theyre going to have to do their study.
Verify.
You know our team will will certify under penalties of perjury that we've made it.
But they have to certify that themselves.
I mean, which they shouldn't you think theyre going to.
It will take them. Some time, so I think from an expectation point of view I don't think anybody should expect that the FCC is going to sometime in 2023 is going to say.
Dishes made their build out requirement, but we will be certified at the extent, we do we will certify that underpin all the perjury. So we take that out at all any inhibitor.
Targeted at an all inhibit your does that in all inhibit your ability to reduce capex and to the extent that like let's say Hey, you. You believe you hit the 70% you pulled back on Capex, and then T mobile or whatever and they're in their Reg people are like Oh look at Charlie's cutting capex and trying to get the FTC to hold your feet.
Further to the fire or do you think these are two different things and you shouldn't have to <unk>.
<unk> to spend which is unrelated to hitting that milestone with the FCC.
No I don't think we're.
First of all you can expect our competition to always go to the FCC. We were we were hoarders, we were speculators none of that was true.
When you got three three or four companies coming in and saying the same thing.
That punches you know, we don't quite punch above our weight versus three or four four people at the FCC. So.
You can expect that there'll certainly be a lot of.
You're going to hear about O ran and ran.
Three years ago oriented work and then well maybe it'll work.
And then it was like the additional never maybe at work of additional never make it work and now it'll be well.
Well, maybe dish made it work, but it's still a decade away you know so you're always going to have that noise from from people who aren't doing it.
But.
I don't think that we're required to.
Continue to spend on Capex once we believe we've made our milestone.
With the exception of the third milestone, which is we'll still have to continue which we will a little bit like continued ramp up in late 'twenty four in early 'twenty five.
Understood. Thank you.
Yeah.
Our next question comes from the line of Doug Mitchelson with Credit Suisse. Please go ahead.
Oh, thanks, so much I think two questions.
Curious.
If you're willing to share what percent or maybe ballpark what percent of boost traffics running out in your own network at this point.
T mobile or AT&T is not work and.
Charlie you talked around it a little bit.
So I'm trying to figure out how to ask the question of the most constructive way, but my experience with you. Historically has been you know pretty conservative approach to operating the company, but the market's obviously think you're flying pretty close to the Sun on your capital structure and I guess I'm. Just wondering if you feel like you're in a pretty conservative position or if or if you sort of sympathize with the markets.
We use that up you know.
Things are pretty tight here. Thanks.
Yeah, I would say I would say that I do think we operate pretty considerably but I do think the market has had historical rate changes in the last year. So that certainly has pushed us more into a.
Uh huh.
It's closer to the Sun.
But not to this and so we haven't look we have a narrow window of opportunity here. We are in a witten arrow window to two.
Perform and execute.
And address our capital structure. So we have to do a lot of things right. We have a small margin of error, but it's all doable and it's it's not a place that's unfamiliar to US right. So we started a 1980 I think mortgages were 15% I mean, the capital orders were much worse than they are today, we started the business from scratch.
With no money so are very little capital so.
We had a merger denied wood wood with Directv by the just department. We were we were we were in.
And that's we had a very narrow window back then so we've been there before.
And again, the things that would worry me would be to the markets get worse.
And where are they next year.
We don't know that for sure and obviously from a regulatory point of view, there's obviously a lot of things from a regulatory point of view that we that we have and continue to have a.
In front of the regulators and how do they rule on those things. We haven't you know we didn't do very well on the CD may shut off which was pretty bad we haven't done we didn't do very well in the D E.
Oh litigation, we you know we haven't done very well on some things.
But my experience is you don't you don't you don't always you don't you win some you lose some we'd been on both sides of it but the losers you don't have a losing streak forever and so I'm hopeful that that at least will be a positive but we'll see.
But you know again, we focus on we focus on the on the window of opportunity we have to control the things that we can control.
And we have a good we have a path.
And it's not evident to people on this call, but we have a path and.
And we have to execute on that and hope that nothing gets any worse in the marketplace.
Got it.
And then on the booth traffic.
Okay.
We don't disclose that but it's not it's not a material amount yet in part because.
We only have five we only have five maybe John can talk but we have five we only have five handsets now that add band 70, which is the which is a major part of our spectrum.
Yes, it's Charlie said it is early days.
We're going to continue to have a growing portfolio of products, we're going to be available for boost mobile and boost incident on our own network, including iPhone.
We're really just getting ready to support that business from a supply chain perspective.
Networks up and ready to roll in those markets and we're going to be loading customers and then once we cleared the 70% and we're on track to do that will then start optimizing those markets and loading on our network there as well. So we're ramping this year and we should make one distinction unrealized or realized one of the things that we've done is built.
Our network with voice over new radio so we're the only the only person in the United States really in the world out of the Chinese partly that does that at scale.
So that's the new way to do to do voice and.
Our you know our goal is to have the vast majority of of of has the majority of the population be able to utilize our networks with bonner by year end and obviously to the extent that you do that then the next step is the majority of all your traffic is going on your network. So that gives you a feel for where we think it goes but we're not there yet.
Great. Thanks, so much.
Okay.
Our next question comes from the line of Jonathan Chaplin with new.
Please go ahead.
Thank you very much a couple more questions on the 800 megahertz auction auction so based on the value ascribed to the the option. It looks like the underlying spectrum is being valued at about $5 $3 billion does that values.
I guess, it's not an exercise of the option.
Or is it still a probability weighted.
And it's.
If not what would the value of the spectrum be if it works out.
Right.
This is Paul yes, it's still a probability weighted at this point in time and the only change that you saw quarter over quarter from year end and evaluation is really just the time value of time value of money impact.
Scott, we don't give them.
And were not given the amount of non probability correct.
Right.
Give us what the sort of reference transaction, all the reference value instead of establishing.
Establishing gap I cant think of one dollar value.
We look at other options and so forth out there we won't give you the numbers specifically, but that data is out there and I'm sure you know who you can compare it to.
Got it okay. So it would be something like that T mobile's touches from Columbia capital or something like that because 600 megahertz.
You might look at it could be something like that.
Got it and then the.
Can you.
Tell us why the exercise date has been extended till is that July plus stores at September 1st and do you still have to notify the FCC of your intention by June cost.
Okay.
It's a little complicated because they haven't ruled on that actually haven't rolled on the extension request, but the exercise date as I understand is July one.
She likes US got it we're still we're still awaiting the formal.
<unk>.
And then one last one on the tall gigahertz.
It looks like there's a prospect that you might use that for fixed wireless broadband.
Given that you can't use it for mobile use can you give us some more context for your thoughts around that.
Well I mean, I think for us.
For US mobility is really the key use and we were disappointed that we werent able we believed we could we believe that we could have used it on the noninterest bearing dream basis with mobility, but look the engineers are good at the FCC and I respect their decision because they had they had enough information they did a thorough analysis so.
I think.
You know the the the FCC is opening comments on the 13 two to 13, seven five frequency and again given that we paid at auction and given that we believe mobility is imperative for us to compete that would be are you you can imagine that that would be another another place to go but.
We'll just have to wait and see.
Got it thanks very much guys I appreciate it.
Yeah.
Our next question comes from the line of Shannon Thank attached with Barclays. Please go ahead.
Thank you. Thank you.
600 megahertz spectrum I, just wanted to clarify something I think last week.
And you guys or maybe the week before there was an application to cancel comedies like.
I wanted to get some clarity on white cancel an order just waiting out the license period.
And then secondly, when you think about.
The 60 day extension for the 800 megahertz spectrum.
Is that based on some concrete discussions you're having with potential partners in terms of funding it or is this just an extension of an option to see what else is out there.
That you can go out and explore.
That would be helpful and I have one follow up.
Yeah on the 800 megahertz I just don't want I, just don't want to comment on an.
On strategically where we are there other than we believe it its spectrum that we need to compete and we think it's valuable spectrum obviously.
On the cancellation of 600 megahertz, we made a mistake. So when you go to the FCC website, we had a lease with T mobile.
For some markets and that lease we cant that lease was was up about the terms of the lease. So we went in to cancel the lease and it in Burnley canceled the license.
So that was a foot fault.
On our part.
But.
Again, we believe that.
That the FCC will have but then unplug notices.
It did not cancel the lease and we don't think that's going to be an issue.
Okay and does this trip any anything on the secured gets the go ahead, because I think 600.
The collateral for that bedroom.
Hi.
The answer is no because I believe the.
The inadvertent mistake is going to get rectified.
Okay.
Alright, and then on funding I just wanted to I mean, you have maturities, which obviously.
The evident need as you go into next year, but then if you really want to be aggressive competitively.
I mean this is a working capital heavy business that you potentially would need capital for that as well.
And so when we think about the scheme of funding you might.
You might go to market quarter.
Uh Huh, how should we think about that.
As you go into the next year or is that mainly to fund the debt maturities early them together.
Might you be proactive and may be accessed the market for more than just a maturity amount.
I mean look I guess, what we would look at it you have here.
The first priority is to fund the debt. So that's you know and then we'll be opportunistic beyond that and and creative I mean, I think again.
Right. That's why management gets paid is to make sure that that you can navigate when you have narrow windows you can navigate those narrow windows and teams that are really good they do really well when when when when they have to focus and you know I.
I'm quietly confident here that this team can can navigate that right and we just have to focus on the things that we control and.
And and do that.
You know, we I'd say it is I think the market lithium market looks it looks at us as half empty, maybe even 90% empty today right and I think the truth is that the glass is more than half full right. This is a company that's been around wearing our 43rd year. So we didn't start yesterday. So we've had a lot of experience.
And some are situations.
It's a it's a seasoned management team, we're not starting from scratch here. So we know how to work together.
We know we know how to assess risk right and were asset rich. So arguably we have spent $34 billion.
For spectrum that has gone up in value.
We're building a world class network there is not another network in the world as advanced as ours. So we and again I've traveled the world. There is not another network as advanced as ours and its up and operating in 50 markets today and working so.
<unk>.
Okay.
<unk> based open ran.
Uh huh.
Voiceover new radio it just doesn't exist. So we have some advantages in the architecture and I think one of the people who run things people don't and we're getting a little lucky, which which is nice, but but you read a lot about AI.
And in AI, the most work needs data.
The most data rich places in wireless network, and if you want to access data you'd better be in the cloud and you better have a very sophisticated network that works more like an I T network that we've built on <unk> network. It kind of operates as a telco.
Our competition is a telco that has to start operating like a 19 network. That's that's a tough transition for them they'll get there it's going to take a decade to do it but we're already there and so if you think.
Yeah.
If you think AI is going to have an impact it's not going to have.
Probably the first place you're going to see it when you're talking to your phone because you're just asking the questions and now now now you have access to the world's information.
At your fingertips in a way that you didn't have before but you need a network to be able to do that so we haven't a lot of things going on from a half full perspective that you know from a short term wall Street perspective, obviously, it's probably not that relevant but when you look at strategy and your long term investor and your long term that we think that that we.
We that the.
Killer application ultimately will be AI, and all that goes with it and we're fortunate that we've designed the network to take advantage of that.
Right Alright, Thank you Rachel.
Rachel This is Tim will take one final analyst question here before I move on to the media.
Thank you.
I'll now 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 a question.
Begin the media portion of this call following the answer to this final analyst question.
And our question comes from Craig Moffett with SBB.
Please go ahead.
Yes, hi, Thank you Charlie I want to go back to something you said earlier in the Q&A session, where you said the debt markets looked like they were effectively closed and but you are asset rich.
Am I correct.
Reading that as you're saying that you would be open to selling some portion of your spectrum as a way to finance your build.
If so are you referring to the 800, if you exercise the option or.
Or are there other spectrum bands that you think of as.
As less critical for your build.
That you would be willing to consider an offer for if if they were available and I guess.
Hum.
Also thinking of you could you could presumably use spectrum as as collateral, but it sounds like since you already have done that that you were saying that that's not sufficient in saying the debt markets are closed am I reading that correctly.
Well I mean, I think that that our debt is trading for.
Literally 20% returns right the yield to maturity so.
It doesn't bode well for our ability to access in it.
Competitive way to the debt markets that could change, but that's the way it is today.
So when you look at you look at.
The financing that we need to do for.
Debt repayment and growing and growing our business I think there's levers that we have obviously, we have assets. Obviously anything is on the table when it comes to as a business person to get to where you where you want to get to run a successful business.
But we're certainly not going to go into strategies and all the levers that we would pull there I just think that it's that it's.
I think there's there's more opportunity for us than people realize let's put that way.
Alright, thank you.
Yeah. Thanks.
Yeah.
Thank you we will now take questions from members of the media.
If you are a member of the media and we'd like to ask a question. Please press star one now.
Thank you to ask questions.
Your line is open please announce yourself by name and affiliation before asking your question.
And we will take our question from the line of Scott Moritz with Bloomberg News. Please go ahead.
Yeah, Hi, It is Scott Bloomberg news.
Question about boost boost.
It sounds like there is it ramping going on towards.
A possible launch you have the iPhone coming in a few months.
Curious about the voice.
Over a new network and whether that's the gating factor here, but is there a date on the calendar, where you would call with a full launch.
Hey, Scott it's John .
So I'm going to interpret your question as meeting boost infinite, which would be our postpaid offering.
Uh huh.
Yes, so we're bringing iPhone to boost infinite.
We'll be looking to ramp our marketing distribution opportunities in the back half of the year.
Yeah, we certainly do have our own network on the way we've got.
Sort of more progress there.
With boost mobile.
Today, but we're looking to launch devices and competitive products with boost and put it on our own network as well.
And realize the iPhone is on boost mobile prepaid today.
It's just coming to postpaid.
And did you have a date for launch.
Well, we're not going to share a date right now I mean, we I mean, obviously, we are not willing to broadcast our strategy to our competition, but.
You'll see us significantly ramp activity in the back half of the year.
Our next question comes from the line of Paul Kirby with Ti Danny. Please go ahead.
Hi, Thanks for taking my call probably you said you were disappointed that the FCC plan to do in the 12 point to good grades are you surprised that they rejected.
Technical studies submitted by the folks who wanted to open it up for car T.
Well I mean I think.
Have you been having.
Being on the inside to talk with staff and look at Engineering studies.
I think look I think they did a thorough job.
Just them to do a thorough job obvious obviously.
And Spacex is doing a good job out there. So all I can do is congratulate them. We believe that it could have it we believe our studies were valid, but we didn't we didn't win we didn't win on that one so.
It's just disappointing, but it's not I don't think it's I don't think I would call a surprising.
And you know again, we're looking to see where they go with other frequencies and other things, but but that you know that was something that that you know.
That and also getting hot we haven't been able to get that the CVR as high power higher power CBER as a first.
First study that would be the other thing that we do.
But we're a little surprised that that hasn't.
Given that some of the commissioners have publicly talked about support for that to take a look at CVR asking trying to harmonize our C band in the United States. Because we're we're we're off Walker versus the rest of the world as a country. We have to compete we're the only country. That's got this low.
Low band kind of awkward CVR as in the middle of a C band spectrum bands that standardize around the world. So it's.
It is imperative that we take a look at that and get all the facts I don't know what the decision should be in terms of relation if they should do do something or nothing but I think it's imperative that the SEC to FCC take a look at that so that we can make the best country.
Make the best decision as a country and we will continue to fight for that.
And just to clarify when you talked earlier about the other band there looking at your map to 12 725 right.
Yeah, 12, seven to 13 familiar I assume I just had it wrong, but 12 seven to 13 25 to their credit they are to the credit. The FCC is looking at perhaps opening that band up again that is a band that debt that could be mobility.
And given.
Given that the 12 gig decision and given the fact that we paid for spectrum, a 12 gig two ways, we paid for DVS. When we required that the spectrum from news Corp that was auctioned and we also paid for auction of the terrestrial rights.
So the 12 gig.
Frequency by contrast, basic Spacex didn't pay anything for spectrum. So it's a funny situation, where you pay for spectrum.
And somebody who hasn't paid for it gets a priority so.
But they do a good job with it. So you know the FCC has got to look at the Big picture and look at the public interest and again I think all I can say is I respect their decision.
To me like they did a thorough analysis of that in.
We're just just just disappointed but you know that.
It is what it is.
Okay. Thank you.
All right everyone I think that's it for today. Thanks for joining thanks for your questions and we'll see you back here in roughly three months.
This concludes today's call. Thank you for your participation and you may now disconnect.
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