Q2 2019 Earnings Call
All right. Thanks.
Thanks for joining us everybody I'm joined today by Tom We're going our chairman, Tom Cullen EVP of corporate development.
Eric Carlson, our CEO and President this works with being present honestly, Paul Orban, our CFO and Tim Dugan, Our general counsel before we have some opening remarks from Eric Paul and I think Charlie.
You are safe Harbor disclosure, so for that we'll turn it over.
All right. Thanks, Jason statements, we make during this call that are not statements of historical fact constitute forward looking statements that are subject to risks uncertainties and other factors that could cause our actual results to differ from historical results.
<unk> or from our forecast.
More information please refer to the risks uncertainties and other factors discussed under FCC volumes.
Oh cautionary statements that we make during this call are applicable to any forward looking statements. We make wherever they appear you should carefully consider the risks uncertainties.
Other factors discussed in resi filings.
Do not place undue reliance on forward looking statements, which we assume no responsibility for updating that I'd like to turn it over to Eric Carlson our CEO .
Thanks, Sam and welcome everyone and thanks for joining at the last minute.
Given all the news we're gonna have a few short remarks today about the result at our wireless news and then leave plenty of time for questions.
Oh first what's your my thanks to the dish team for all the work that's a baby's wireless developments all possible.
Peter or transformative days for us and we look forward to sharing our progress.
These deals advance let me speak briefly to the quarter and Paul will have a bit more color.
Yeah, we have a we are committed to our long term strategy of delivering the best service technology and value for our customers. It's the path we have to take it forward to stand out in a challenging pay TV environments.
And succeed in the future.
Second quarter results demonstrate that our continued focus on attracting loyal high quality and profitable subscribers continues to work in our favor.
Customer profitability is near all time highs our efforts to find the right prospects in the right areas with the right credit.
As it turned those prospects into customers are bearing fruit.
The proof point.
We saw sequential and year over year gross subscriber growth in dish TV.
In the second quarter, we had a 340000 subscribers compared to 243000 in the last quarter.
278000, a year ago period in terms of our overall pay TV subscriber trends, we saw that decline 31000 compared to a loss of 259000 in the first quarter and a loss of 151000 subscribers as a year ago period.
This quarter I'm pleased to report that we achieved a near record churn at 1.48%.
This is a tribute to the focus weve placed on our long term goals goals that included data driven approach to acquisition at a call for operational discipline from teams across the business.
Touching on wireless and company you all understand the contours the transactions that we announced Friday, let me offer you a little color.
These agreements and commitments set us on a clear course to become the fourth provide wireless provider to the nation.
And it's going to happen quickly.
The agreement to accelerate our entry into the market as a facilities based fiveg broadband wireless provider.
June 14th 2023 is now our deadline to provide 70% of the nations population access to our Fiveg broadband networks look we have lots of work ahead of us to land boosting to begin the fiveg will fill out and I'm confident in our graph to the fundamentals and Im certainly confident in our ability to execute.
Next week as my 24th year, a dish I joined the company just a few months ahead of our Echostar one launch.
At that time, we had no DBS customers and today, we serve millions.
We launched sling TV in February of 2015, and today, we have millions of customers. We continue to lead in the Lygo TG category.
We've got a top flight team that manages three high profile national brands and dish TV Sling TV additional Tito.
We support a dealer network that thousand strong and we have a vital direct sales operation.
Our people and system support hundreds of thousands of customer interactions today, and we do these things well.
This was prepared to support the boost in Bergen subscribers with excellent service excellent technology at excellent value.
And we are well positioned to develop marketing support and service based on the nation's first standalone Fiveg broadband network Paul take away. Thank you Eric as we've been talking about for the past several quarters and to Echo Eric our core pay TV business continues to focus on acquiring and retaining high quality subscribers.
Who are profitable to us over the long term.
We believe that we are ahead of the curve compared to most of our competitors.
As Eric said, we achieved near record low churn and increase growth. This gross additions with all time high credit scores.
We also saw positive subscriber growth on sling as we continue to improve the platform and user experience.
This quarter, we added 48000 net slaying subscribers up 7000 from last year.
And looking at the piano, our operating income and EBITDA are both down compared to last year, primarily due to a lower subscriber base and higher sac.
For revenue the lower subscriber base was partially offset by higher ARPU due to price increases and improved revenue in AD sales at both dish and sling.
These increases were impacted by a higher percentage of sling TV subscribers present in the overall pay TV subscriber base.
We also saw a decrease in premium channel revenue mainly related to the removal of HBIO.
For subscriber expenses, our margins have been relatively stable. However, we continue to face long term pressure from programmers, who want higher and higher rates, even in the face of declining viewership.
Programming expenses were positively impacted by the HBIO channel removal.
Turning to subscriber acquisition costs investments in more subscribers in the quarter had a negative impact on operating income and EBITDA.
With that said, we believe that the investments we are making in acquiring high quality subscribers will pay off over the long term.
Does TV Soc increased to $786 per activation up from 763 last year.
The increase in the dish TV Sac was due to higher to higher hardware and advertising costs per activation.
Note that we continue to supply a higher percentage of our new customers with higher price Hopper receivers.
While this impact Sac, we believe offering our best equipment influences loyalty over the long term by delivering a better customer experience.
Gene expenses are up this quarter as a result of cost to support our wireless initiatives and legal fees.
In the first half of the year, we generated over 600 million in free cash flow despite increases in wireless capex.
We ended the second quarter with $2.7 billion of cash and investments.
This will be more than adequate to redeem the 1.3 billion remaining on our September debt maturity.
With with respect to boost we feel confident in our ability to pay the 1.4 billion dollar purchase price with cash on hand, when the transaction closes.
As we said before we'll be opportunistic and accessing the capital markets.
Finally during the quarter, we announced agreement to acquire the majority of the Echostar satellite services segment as well as certain real estate in exchange for our stock.
Upon closing this transaction should significantly reduce our satellite and transmission expenses and as a result.
We should see improvement in both free cash flow and EBITDA.
With that I will turn it over to Charlie for a few brief comments.
Thanks, Paul just normally I wouldn't comment, but just I just wanted to briefly sets the stage for all of your questions.
Let's talk about what's changed and of course, obviously, a big change in that and that was the agreement with.
With T mobile and sprint.
And the acquisition of the of the boost brand and their customers and the Virgin.
Customers and the Sprint Cup and the.
Prepaid sprint customers, we're able to enter the marketplace in a very timely manner.
With just over 9 million subscribers something that we Didnt think we thought we'd have to build the company from build the retail side of the business from scratch now we get a key ingredient accrete business to to.
To move forward from there really just jumpstarts us to get into the business.
We're also required seven year NVNO deal a very competitive NVNO deal.
But also for seven years, but up so that we get the provision on the two new Tivo will network, which obviously is going to become even better network as they build out.
And.
The spread spectrum and but more importantly, some of that is not understood is that we of course get to build our own network out and we get to provision.
Customers on our own network, but then we get to wrong.
On the.
T Mobile network, which allows us to build on a market by market basis, which is materially different than when vision, where we believe we had to build the whole country. At one time that we can now we can be in business as we build our first market.
With their own owner economics, and I'm sure you'll have more questions about that.
Additionally, The addition addition, FCC where we have been going on where we had come and go and kind of opposite directions, where we are building based on our license the flexible use license a narrow band LTE network to meet our Buildout requirements.
We're now more in alignment with where the where the FCC wants to go.
Which is they want they want to see Fiveg mobile broadband build out and as a result of this transaction. We're now totally aligned with that where we are our have voluntarily changed our flexible use licenses to mobile broadband licenses and returned four realistic that we would 2023 before we can build 7% of the country out so.
Finally, but we're now in line with where I think the country wants to go well I think I know the FCC wants to go I know, we want to go I think where the administration the Congress wants to go.
As a result, our MB Aiotv narrowband LTE.
Resources will be redeployed in the short term.
For that Fiveg network.
Because.
Hi, ambient audio on T mobile allows us to use their in their nationwide in both parties. It's already built out. So there's no reason to duplicate that network, particularly with some non standard frequencies.
Well, it's not new.
Is that.
We still plan on building, our network evidenced and spend about $10 billion.
To do that having said that.
With the NVNO deal with T mobile, we're able to extend.
Our build out.
For some of the less profitable areas.
Longer term so our initial cap outlays will actually be less.
Than we had envisioned short term.
And our as a result, our opex will actually be less.
We ultimately envision, but but the $10 billion investment is still.
Yes, and the cards.
And then what's not news, we are going to need help we're going to need Hill.
Our people to help us build out we're just like we needed help back when we started the launch satellites. So theres people that have many of the things that we need whether it be backhaul whether be towers, whether it be.
Ed mobile edge can view, whether it be hardware software.
Whether it be distribution and marketing all those things are things that we're going to need where our philosophy really is where somebody else has some of those things we don't intend to reinvent rebuild it.
If they want to work with us if they don't want to work with us and obviously.
Then, we'll we'll do it ourselves and then when we did satellite way back when there are many times.
Most times people had things in place we want to work with us, but there are a few cases, where people didn't believe in us or I didn't think we'd be successful and we ended up having to build those things are so.
So with that I think we'll take questions.
Thank you, ladies and gentlemen, if you would like to ask a question. Please signal by pressing star one on your telephone keypad using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again. Please press star one to ask a question, we'll pause for just a moment hello, everyone an opportunity to signal for questions.
[laughter].
Well take our first question from David Barden with Bank of America.
Hey, guys. Thanks, so much for taking the questions I really appreciate it.
I guess a couple.
First would be.
Could you guys give us a.
Shape of the EBITDA.
The business that you're acquiring.
From.
The sprint T mobile divestiture.
Obviously theyve got one number you're going have a different number based on your relationship there will be.
Helpful to get an understanding what that is.
And then I guess second.
Charlie can you say.
You need help from people I think one of the biggest things is going to be.
Getting the money to kind of field. This planned out the Wall Street Journal reported that you spent three weeks, putting the plan together.
What is the plan to bring the funding to bear.
And the shape of the plan, if you could kind of give us a little bit color on there would be super helpful. Thank you.
Yes. This is Jerry I'll try to take it in terms in terms of EBITDA the existing sprint business Thats early but probably leave it up to them to talk about what what their profitability is.
Obviously the way they would look at it internally in the way we would look at would be a little bit different because we know that in the short term, we're paying for the new T Mobile network.
Different economics than perhaps on the old Sprint network.
And then obviously as we as we build out our own network, our use our economics change materially different.
So having said that I think maybe just to give you some kind of guidance you might look to tracfone.
Who we believe we have a.
Very competitive deal compared to their deals and.
Look at kind of their financials to give you a feel for what.
The the base case would be where you're using somebody else's network.
In terms of what their profitability.
B would be in and obviously as we use our own.
As we use our own as we build our own that would use our own towers get owner economics that materially changes in a positive way.
As far as far as where it when we get the money to.
The move the network forward.
A lot of different places.
So we obviously have cash on hand, the business. We also obviously, you're generating cash flow, which has been in excess of a billion dollars for lot of years.
In terms of in terms of the existing business, we believe that the boost.
And our entry into marketplace will be a positive from a cash flow perspective.
The marketplaces are open to us and certainly today and there's opportunistic things and.
Hi, I, certainly am willing to put more money in this company Thats what it takes to do so and then finally one of the things in this and this.
In this.
The agreement is our 600 megahertz spectrum, which today.
Yeah, as we wait for the broadcasters to clear spectrum.
Which T mobile's taken aggressive stance there.
Some of that spectrum is fallow today affect all of our spectrum today as fellow.
And department of Justice is requiring both companies to use good faith efforts on a market based deal for them to lease that capacity until such time as we use it so.
And to give you. An example, we have moved our buildup schedule out by four years from 2029 to 2025 is parts that we've accelerated or build out of 600, but all of our 600 is not going to be built out to 2025. So it gives you a feel for for some possible revenue opportunities there as well.
Thank you so much Charlie is a follow up just real quick as a gambling man what would you put the odds that the state agencies are going to win or lose.
In their efforts to block this deal.
Well first of all to set the record straight I'm not a gambler. So for example, when you gamble that means that you don't know the off right and that means that when you gamble.
In fact, if you play in Vegas.
Other than others, blackjack, and only certain times and logic odds are against you so that would be a gamble.
But when you.
When you actually understand like Blackjack and camp guards, that's not a gamble because the odds are in your favor so I'm not really a gambler.
But.
From that perspective, but but look I think that I think is the I think the to the credit of the FCC and particularly the Justice Department I think they they structured disagreement.
So that we feel very competitive we feel very good about our ability to compete as a as a fourth entrant in this marketplace. Both in the short term, particularly obviously in the long term.
I do think that the states played a role and I think that the states.
Hi, Ed.
Personal opinion that big influence on on chemo in sprint in their willingness to.
Two.
To to to be more aggressive to give us the kind of things that we needed to be competitive that they might have otherwise might not have an obviously del Deo Jay.
For some of those issues, but I think you have to give some credit.
To the states as well so.
When you look at all that.
I think that the.
I would rather have the department of Justice case than not.
Yes. This is Tom if we're not in the business of handicapping that outcome, but as Charlie said the way the remedy was structured.
That allows us to effectively compete on both price and packaging day, one and so the news just came out on Friday. So I think now the states are in a position where they have to objective Lee.
Analyze and.
Evaluate the remedy and our hope is that they will look at it with a different perspective.
Thank you.
Well take our next question from Jason Bazinet with Citi.
Oh, thanks, so much.
I heard you on the $10 billion number not changing so my question is pretty simple if you have a pile of cash from cash flow or new funding.
How based on the India No terms that you got from T mobile and sort of.
The cost to deploy your own network in these selective cities how should we think about the use of that cash in other words will you.
I'll go most of your cash towards getting more gross additions and running it on this NVNO.
We toggle all of it towards standing up the network and we really shouldn't expect a bunch of incremental gross additions on the wireless side coming in or is there some sort of balance between those two in terms of how you see this playing out.
Any color would be helpful. Thanks.
It's the latter it'll be balance because we plan to aggressively grow the boost business.
As well as.
Begin building out the Fiveg network as soon as possible infected RF buy in an RFP was released today by dish regarding the Fiveg network, it's very cloud centric approach it embraces the overran mentality of virtualization from the ground up.
And so we believe that the capex and Opex that will get to in a in a.
Cloud Native Fiveg Standalone network will be very attractive. However in the meantime, we have every motivation to grow the boost base.
And we not only want to expand the boost distribution because we're moving.
One of the conditions of closing is that we have to be able to provision new subs on T. Mobile's network. So we're not going to provision any new boost customers on the sprint network and since the T. Mobile network is far superior to the sprint network, particularly in terms of coverage. It opens up new geographically diverse markets for us. So we could not only work with the boost current distribution to expand their footprint, but we'll also be able to use the current dish distribution and retail presence throughout the country, because you're going to be able to make the service available in a much broader geographic footprint.
Great. Thank you very much.
Our next question is from Doug Mitchelson with Credit Suisse. Please go ahead.
Oh, thanks, so much for your Charlie I was hoping you could talk about your go to market strategy revision I sort of thought you were thinking about wholesaling capacity on on dish as you build out a fiveg network now you are squarely in retail and talking about getting into postpaid sort of as quickly as possible. So as you transition to your own sort of cloud based efficient Fiveg network with all the capacity that you'll have.
I was just curious how you plan to sort of differentiate the service and go to market and then I've got a follow up.
Yeah, So Doug one of the nice things about a virtualized network, but the but the architecture that are using the bully different what think the incumbent legacy networks is that we'll be able to slice our network.
And any any number any number of ways you might look at it as if one of the slides one of the big slices of our network will be our own retail business.
To consumers to compete again to compete against incumbents, right and and we didn't know whether we'd be able to do that.
On a very timely basis.
But now we know that we can in fact, we know that's how we're going to enter the marketplace.
Having said that when you look at.
Dishes.
Wireless portfolios and now with the approximately 14 megahertz of 800 megahertz, we're well over 100 megahertz of spectrum that.
That we're able to utilize.
And with that and obviously, a more downlink and uplink. So we actually have more down like mid low and mid band spectrum and Verizon as an example, I think they have or have over 120 million customers on their network.
And then a fiveg.
Virtualized architecture that model I take that finally take 30% of your ticket put 120 million customers for where they are today that might take 30% of your network. So our network. So we think we can we can we can do both which is we still in this particular thing we have the ability to lease out 35% of our network, we're going to probably use about the same amount if we get 120 million subscribers and I'm sure. All of you on this call believe that we're going to be 120 million subscribers.
And we still have room for for for where Fiveg. It really needs to go whether they'd be precision agriculture, or healthcare robotics or smart cities are smart grid or block chain artificial intelligence are Thomas vehicles, all those things still need a network. So.
So I think I think we're going to I think we're in a very good position to put our network, where it's important it's best best use and we have a lot of flexibility in doing that but certainly the end result is we have plenty of spectrum for <expletive> on the consumer business and still do some of the things in a network that is architected where are the other income is going to have a tougher time to get there.
And I think last quarter, you talked about it being difficult to raise financing given the uncertainty on the FCC side in terms of professional licenses on an aiotv never filled out in that uncertainty is now off the table do you think it's going to be easier.
They have these financing conversations now that there's sort of certainty around what the business plan is and the FCC strategy around your spectrum licenses.
I think there's I think there's no question that the the elimination of the uncertainty.
At the FCC as big but it's but equally as big as we can in the marketplace.
In short, we return time and start getting return on investment.
And.
And actually start cash flow in the business. So.
Yes look the markets are open you guys are on the business.
A good business plan.
Can raise.
Money almost any time.
But the times are are are good for raising money and we don't have good business plan, we are going to have a great business plan.
All right. Thank you.
Our next question is from Brett Feldman with Goldman Sachs. Please go ahead.
Hi, Thanks for taking the question.
And congratulations on getting this done you know once the deal closes the new company is basically going to be a holding company that has a video distribution business in a wireless services business and I'm curious to hear your thoughts on whether you think there is operating synergy between them or if the intent is going to be to start having separate operating structures separate capital structures and maybe even separate ownership structures to the point, where you could consider spinning out or selling the DBS business. Thanks.
I'll take a shot at amount of Eric Paul you want to jump in here, but but look we have a lot effects flexible manner in our in our structure. Obviously, it's certainly going to be enhanced as we get the satellite assets, we need to run our our DBS business.
Over over into dish, but but there but the plan is not to duplicate what was a completely new sandbox, where we have.
Customer we have customer service, we have call centers today, there's no reason to a different call centers differ for wireless and boost that we do for our video business. We just had to do different training.
We already Bill we already understand security we arty.
Have distribution, we are we have sales and marketing we have distribution, we have an in home service with trucks. It can go in and do things at home.
In terms of smart homes, and conductivity and delivery of product so.
We've been awful lot of infrastructure in place.
And boost is a really really similar business to ours. They use independent retailers. We we started with independent retailers were still with independent retailers for the for a big part of our business.
They is the customer facing product.
That theres billing.
That collection to get money each month.
The probably the biggest differences that we get to sell.
Something that.
The cost of goods sold is not going up every year, it's gone down.
And people are using more not less so in the TV business people are watching people are watching some of the channels last but those channels want more money.
Thats not a worthy.
We are the first company talk about that in the conference call. We were probably three years ahead anybody else talking about it right. Now people are finally caught up to that to that notion but in this case, we're selling something that people are using more but cost is going down and as we build our own network costs go down materially do you want to comment maybe or.
The only gets sick care im not sure theres lot of gaps to fill in there Charlie I think you know obviously there is a.
Theres a business over the past.
20 odd years that that we've built a certain number of capabilities.
Whether it's like Charlie said with independent distribution or marketing or digital assets or be able to go to somebody's FFO.
I will be able to provide security.
Understand procurement et cetera that that will continue to leverage.
Like we leveraged for sling that we'll continue to leverage for.
For the for the wireless business.
So I mean, there is synergy we're going to we're going to be a lower and we're going to be a lower overhead.
We're going to be in a lower overhead situation and perhaps a boost was within sprint as an example, even though they were the same company will do better than that.
Got it if you if you don't mind, a follow up because it has been a topic of discussion on prior calls about the merits of considering a combination with your largest satellite TV peer it sounds like because you do see synergy between the video business in the wireless business does that mean that you're not may be interested in anymore or is just the bar is higher because you'd actually have dis synergies, if you decided to consider something strategic.
Well I'd say, it's a little bit simpler, we just don't have a relationship with activity.
Got it well thank you for taking the questions.
We'll take our next question from Philip Cusick with Jpmorgan. Please go ahead.
Hey, Thanks, guys, one for Charlie and one for Eric if I can.
Understanding that the designated entities aren't part of this deal Charlie do you think we can expect some movement from the FCC around those.
And then second Eric I see this is the first quarter of satellite gross asset growth in five years.
What changed in the business to drive that and did that have something to do with the 18 t. promotional roll off or is that all internal thanks.
Yes, Phil.
I'll start off and then I'll, let Charlie handle that question.
You know look we have been talking on the calls for.
For good many years now about kind of our focused effort on really.
Doing what it takes to acquire profitable customers that we think will be with us long term that are in the right areas and really providing.
Superiors.
Service.
Technology and value and I think this Q2 is probably the first quarter, where you're seeing that all come together.
Obviously, as we talked last year.
There was some overhang on the business with both Univision.
And Hcl and really that that overhang.
It is now gone and so you're kind of seeing.
Q2.
As let's call it a cleaner quarter without channel removals, and so kind of the fruits of our labor and the discipline and the focus that we've had over the past.
Few years.
It's come to fruition, we are you know.
Obviously.
You mentioned 18, T. and maybe they are going through something.
Similar that we went through many years ago.
I can tell you, though that you know.
Our profitability and our credit scores on new customers are near all time highs and so we still feel really good about the customers that we are attracting both from a geographic perspective, and a credit quality perspective.
And I might just add the game of Thrones I think the largest.
Viewing HBIO overhead.
We still are able to.
Eric and his team kudos, because they were able to get through that I think I don't that's good news for HBIO, but certainly.
Was it was a headwind.
During the quarter.
The.
On the deals that do use Didnt is as you know might be is a restricted proceeding. So it did not come up as part of this.
Transaction.
Having said that.
I think now that the FCC and dish or line tote, both totally line to do Fiveg mobile broadband.
I would hope that one of the things that is disappointing.
Look there's good arguments on both sides of this issue but.
But.
The fact is that that some spectrum is is is lying fallow that nobody can do anything about yet until this is resolved and and at this point. It's on the in the Fccs court not not in ours. We I think it's been six or seven or eight months. Since Weve responded so I'm hopeful that ultimately.
Between the FCC and additionally to ease that that we can get everything moving in the right direction.
But no guarantees that but were certainly relative to dry.
Eric if I can follow up was any of the or any substantial portion of the customers who came back this quarter more like returns after after some of the the Hispanic issues have been cleaned up.
I wouldn't necessarily categorize it that way Phil I mean, obviously, we're we're making good progress now with our partnership with Univision.
And think we can kind of get back to to grow that business, but I wouldn't I wouldn't overemphasize your point there.
Thank you again.
Well take our next question from Ken and Rick Swartz with Barclays. Please go ahead.
So I guess, Charlie one question on the Indian agreement, you mentioned the ability to license, 35% of the capacity any add on network, but.
The language it down the ability to do so using the MB an agreement was less clear. So if you could just clarify if.
It is any ability that you have near term.
To use some of the capacity that you are getting.
The license is that the potential third parties.
And the second question I guess is more from the perspective of the states obviously, there's been pushed back there.
And one of the issues that seems to have come up is that dish is not in the wireless business and therefore it is it a credible for FLIR. So is there any conversation with the states in terms of would be one from a demand perspective, rather than a T mobile sprint perspective. Thank you.
Yes, so on the.
Deal NVNO deal is to dish so the.
Is to dish and the brand is the dish brand addition will will be I think you should look at us similar to Netflix where Netflix as a lot of forms of distribution that might impact that I think theyre Amazon sales on cable sales windisch seldom Directv sales.
So a lot of forms of distribution, but the fact of matter is you're getting your bill from Netflix.
And and they control the the consumer relationships. So we don't have any restrictions on how we market as long as it's.
This product, but we but it would be like unlikely that we could sell capacity to some.
Third party on the T mobile network that would.
Make any sense.
Having said that the beauty is that as we build our own.
Network out and realize we're going to.
We're going to have a boat we're going to have both postpaid builder on core.
Within the next year.
Are you within the year closing, we're also kind of build build our first cities.
Pretty quickly.
That assumes we build a city.
When you are in our city, you're on our network.
But as soon as you leave our city. The interconnect agreement is really a first of a kind in the United States as far as I can tell but when you leave as you go outside of our footprint you would seamlessly.
Roam onto the team on mobile network and in fact, you won't even joking, we won't drop your session or your phone call. So that's that's that's unique and hasn't been done.
And we're excited about the help that the justice and yes.
Played a role there and though and so.
And obviously when we have our own network that we can do.
Obviously, there's nothing to prevent us from long term from doing deals with other people and so forth as we build our own networks, we have a lot of incentives to build our own network.
I think it would be.
And not the least of which are our.
Severe penalties if we don't.
But regardless, but irregardless of that we're going to mix, we're going to build this network out and it's.
Hey, it's hard I think it's really hard for people who haven't studied the wireless business are on the inside hemorrhage study to the degree that this company has and to understand that the.
You read about Fiveg and that everything you get is what the incumbent say about fiveg and how they're going to do fiveg.
But the reality is that Fiveg you can do so much more and just as important as the Fiveg technology is the is the architecture and how you build the network and so all the incumbents have built networks.
They were primarily designed for voice.
And were built designed architected in the eighties.
But we're this is 2019.
And we don't want you know.
Yesterday's network.
And architectures today that everybody wants to get to.
Our open architectures, where you're not relying on just one.
Equipment supplier that equipment becomes off the shelf words interchangeable and the majority of your.
Your network works on software, which allows you to do your network to do so many more things at lower cost and so now we have the ability to do that I mean the.
I'm, probably bad analogy here, but you can imagine that these guys are building internal combustion engine and work on electric cars, except we're not in a situation or electric cars are going to be half price that can be 50% cheaper than the.
The cars, they're building and better yet you don't have to plug it in to to charge. It is just going to be charge because we did the software. So you don't have to plug. It in so you can imagine if somebody was built on electric cars today that was that was superior in every way went faster.
So as more robust at better user features cost half as much money and you didnt have to wait in line to fill it up.
That's what we're going to have and the other guys are going to get there, but the other guys have to tear their networks down.
And then they got to rebuild.
And so.
Im just long winded answer but.
Some of the people have talked about whether we'd have a.
The hosting agreement hosting agreement doesn't make sense for us because.
Hosting agreement means we would have internal question cars, we just they would host our spectrum on and we'd look just like they would look like and so customers have one or four choices. They all look pretty much the same they all they all make a phone call. They all surf the web.
They are all pretty much the same but our network and our phones will be different.
Because we architect its we could take advantage of massive mimo. So our tower placement is different than Incumbence tower placement, we get to use things like east at breakeven or cable structuring and protocol is different.
Right. It means that we do things that that big shed you see at the bottom of the towers today, that's going to be in the cloud right. So so.
So all that's different and if all that is different we get the best of both worlds, which as we get to use the old as long as we need to.
When we get to build the new.
And.
Someday when we get a chance to show the economics of that Thats powerful that's powerful we get we get and our Buildout will be where the towers are you where people are making where people are using data.
That's where we're going to build out first.
And so we get to build out very highly efficient deployed.
Towers.
Right and longer term, we'll build out the more rural areas where were your mill.
You know.
Your middle of Montana, driving down the road you in the cows out there not a lot of people using that tower.
But we'll get to use that to our until until we need to build out, which we will but we get to defer that that capex opex. So it's a very good economic model for us it will be very competitive.
I'll make a couple of.
Follow up 0.1, the agreement as Charlie said does not.
Allow us to wholesale their capacity and nobody really expected that would be the case. However, we do have flexibility and creating new brands.
Onto the network.
I said earlier, we intend to continue to grow the boost brand and presence, but we do have the capability to create new brands.
As well as bundled that with third party products and cross market with third party partners. So we do have new avenues of growth beyond that the second point I'd make is well, we're starting with attractive economics on the NVNO deal Theres also a mechanism in the agreement that.
That enables those.
Cost to drop at specific periods of time.
But at the end of the day, it's always going to be more cost effective for us to be on our own network. So the incentive to build around where the traffic and capacity is being consumed today goes up every month.
Thank you and if you could just help with a question on the states and the losses there.
Yes.
Yes, the question States could you repeat.
Yeah. The question was made them, but mainly about.
Any conversation with the states around the credibility of Bisha, the full split any solution they might need.
Yes. This is Charlie.
I'm I'm.
I'm insulted when somebody says.
So as the credibility.
When you're talking about a company in 19, I remember 1991, when we first of all digit compression.
And.
We started building our satellites then because we saw this compression lab and we said we think digital compression is going to work. That's the new architecture of how video is going to be delivered.
Everybody and cable everybody and broadcast everybody and that was the so-called expert every analyst said digital compression can't work.
Trust Me I was there right now by 1990 493, the same people. The exact same people said Oh, yes, we always knew digital compression could work because directv in us started using it.
Right and of course, the cable company.
10, or 12 years to.
To upgrade their planned equipment to digital because they ramp up.
So here, we are with Fiveg Fiveg architecture. The people in the know that nowhere this is gone.
They're not they're not discounting what dishes that and by the way. This became the third largest you know so just just wasn't just became bigger than cock traditionally game.
Bigger than than charge this became bigger than time Warner dish became bigger than.
What was the name of the company New York Reformers LT.
Cablevision this became bigger and cablevision right, we didnt become bigger than Comcast or our Directv. So we still got room to go right but.
But.
And.
I can remember we thank God Ben Goodman was around can we go to our first money was 12 and seven age with warrants.
400.
$400 million right, because we didn't have any money, we never built to satellite we never built a set top box.
We never interface with customers never taken a call never built an uplink center never done encryption.
And our life and yet we are able to do all that.
All right and this project is is certainly challenging.
But we have so much more infrastructure in place and the ability to.
We know what we're up against us not our first rodeo.
And I think I think will be a competitive.
Thank god will be a competitive threat.
In this business.
And regarding discussions with the states, obviously that is confidential.
No not something we can discuss.
Thank you.
Well take our next question from Rick Prentiss with Raymond James.
Thanks, Good afternoon, thanks for taking my questions.
Yes, obviously, an interesting complicated settlement good to get this far.
Really intrigued by the option to acquire.
Decommission sprint locations and retail stores.
How many do you think might those towers being in the right place that you were just referring to and.
How soon could you actually start using locations in stores and how complicated would it be to to help your plan.
Well I think.
Thanks for the question I think Timo indicated on their call that they are their sprint timo transition is likely to be in the two to three year timeframe, but there are there are notification periods in the agreement.
That where they have to give us adequate notice of what which towers will be decommissioned in what timeframe. So we will have enough time from our our own RF planning efforts to determine which towers would fit into the right footprint at the right time.
But that being said, we'll have our own independent relationships with each of the tower companies. Some towers may have.
Assignable leases, but if they're not assignable.
We'll have an agreement with the tower company, but we'll know where the Rad centers being vacated and so that's important for us as we apply that to our the RF plan that we will have in place at the time as for stores. It's similar we'll look at Oxford that Opportunistically, where the locations are relative to where we have strengths are holes and again not all the leases will be assignable, but we get first look.
I mean is that effect is going to be a positive.
Well, we don't know the scale of that but certainly will help us in our build out and in our retail presence.
Yes, and then Charlie mentioned on the narrow band you would kind of redeploy your efforts in the short term.
I noticed in the language.
Yeah, FCC said, it's been told.
As far as the timeline for the March 2020 deadline.
We think that you should be starting to like almost immediately then because.
Obviously, you don't want to keep throwing up looking narrowband LTE network, but how fast could you actually stopped that effort and redirected.
I'm going to start I'm going to stop growing up.
Yesterday.
But it is told admin and just to be clear its toll is told when and if the FCC.
Approves the.
The merger then it will be told a day per day.
And obviously the extent that there was going to be a trial or something we'd have plenty of time to we'd have time to start back up but but its probably the one of things I am personally most excited about those I was never that was never the narrowband whenever we get great experienced we put up a lot of towers. We know we know how to our plant network. We know how to get permits we know how to get zoning, we know how to climb to ours.
We need to.
Provision.
So those are all things we we.
Probably wouldn't unknown and now we just have to expand the scale has lifted.
Really really really really good education for us.
But its not I agree with the FCC and some of the commissioners it wasn't the network to be proud of.
Compared to what we could do compared to what the country needs and now we get to build that.
I'll get my Soapbox there is only one other countries is only one other country. That's built in the Standalone Fiveg network and Thats John .
And the only company United States is doing it.
And if we want to lead in Fiveg. If this country much leading fiveg dish is very very important to that effort and.
And I think that.
Not that I would say anything nice about T mobile, but but they also with the acquisition of sprint.
We will be in a position to decommission the sprint network and build it back as Fiveg, So what the FCC and and Justice have done is.
Taken.
Sprint, who was challenged to build a fiveg network and enhanced spreads timo visibility about a fiveg network in a shorter period of time, because they get available capacity to do it.
As they did commission that network and they brought a new entrant that can build.
The new architecture, the the more modern way to build a network. So that we and I think in the net net of that is that kind of obviously timo and.
18, Prajzner doing wonderful things in Fiveg. So.
Doing there with their own build out that this country is going to going to be the envy of the world.
And this transaction is getting a lot to do with.
Great any update on the S. Sbss closing.
Timeframe.
No.
We're still waiting some regulatory approvals from.
Outside the us and Thats probably.
A couple of months out.
Great. Thank you.
Our next question is from Craig Moffett with Moffettnathanson. Please go ahead.
Hi, Thank you a couple of questions if I could Charlie.
First time, I just want to be clear.
How confident are you that the same strategy that you described really does enable.
Operationally the full make versus buy transition from the two networks.
Just given that it's obviously it hasn't been possible to do any field testing of that yet.
Second it just is it are we to think of someone like record 10, as possibly the best analogy to what do you plan to build and I Wonder if you could just talk about what some of the.
Dave similarities and the differences are between.
Network and the network like that and then finally, just a technical question just with the financing of the $1.4 billion, which is the first payment. If you could just talk about.
Where and how that will be financed.
And the last one we've already answered we indicated that the $1.4 billion would be paid off of cash on hand.
From cash on hand, okay. Thanks, I said there are so many yet I think it's possible that we would be opportunistic to raise capital, but we do have the cash to close the transaction on hand.
And pay and pay our debt payment in September Thank Paul said.
On the.
The.
Rakuten Rocktenn is really building build a fourg virtualized network and they're taking their gone pretty far with virtualization will go we will go farther they have a path to fiveg and they and they have a path to fiveg, but there are a lot of similarities for example, they also have a.
An NVNO deal so theyre their initial build out as a few cities in Japan.
So not build the whole country wants.
Their nationwide NVNO with Katie.
So they have nation. So they have some of the similar benefits that we have I think the and we're fortunate because.
They are blaze and the path I mean, they're obviously.
It's a difficult engineering challenge for the first company to do it and we're going to benefit as are others.
Bye bye learning the lessons from them, but they have.
Really cool things, we've got a lot of American manufacturers involved in the Rockies and things. So you've got the Cisco This all public Cisco and Intel in LTL star and and others.
Red hat.
There is a lot of American vendors and what I think is really exciting.
About it is we don't have American hardware providers today and existing networks.
In terms of radios and things, we got a chance to do that.
In the future with that so I think rock dance a good one to watch I think it's a good question. It's a good it's a good company to watch and I forget the other decent OE Sam.
Tim.
It.
In this particular transaction, both us and to both us and T mobile have to support SM.
There are a few restrictions if you're financing.
Handset, but you can imagine that that we're all that we'd like them because when you don't have any customers. Many customers. It's that much it's that easier when a customer can port their phone number and their hardware without going into a store or physically put putting something in the end the phone.
It's a little bit obviously customers will.
You have to be really good you have to be good on customer service and customers can switch much more easily. So if you don't have a lot of customers.
That's an advantage if you have a lot of customers.
As you know from the marketplace. The incumbents were not in favor VCM and they have not been supportive of it so that that's a that's something in this merger. This that's probably overlooked and that is like my prediction will be the DSMB will be standard.
In several years in this country from all all the all the major players.
Based on this deal.
But to be clear, Charlie or your ability to transition customers from one network to the other is not dependent on the sort of the same work around its instead embedded in the.
Payment that you have with T mobile.
That's true.
Okay. Thank you that that helps clarified I appreciate that.
Yes, it's more it's more it's more of a convenience for consumers its.
Also going to make it means people like Apple that happy seminar watch.
Brian or their tablets.
Theres going to be a bunch of other effects, maybe we don't know all the.
All the effects, but its going to be positive for the consumer is going to be positive for people that use a network that relies on each of them.
And just to clarify some of the.
Perceptions around the NVNO, we start as an NVNO.
And have a path to pretty quickly get to an infrastructure NVNO, which then provides the guide path to being a standalone mobile network, operator, and the infrastructure NVNO is once we.
Implement our converged core.
Which will likely be mid 2020.
Then we'll be able to provision east I mean, im sorry Sims on our.
Our facilities, which also allows us to route traffic through our core.
And we'll have all the customer subscriber information.
On our equipment not in a traditional NVNO dnbi know is dependent on the hosts network to do those types of things and as a result, they don't get any visibility into traffic analytics and being able to set their own policies and so forth. So.
That's that's an important distinction of this versus a typical NVNO and clearly as we start rolling out the ran network becomes more and more important that it also allows because we're using the thing they called the end 26 interface.
That do when we're moving a customer would be moving from our network.
At our boundary onto the T mobile network it would seamlessly transfer the call because the two cores are interconnected.
That's helpful. Thank you.
Well take our next question from John Hodulik with CBS .
Great maybe for some more detail on the $10 billion spend should we should we think of it be spending as.
Or the sort of the timing of the spending is it sort of ratable with it with coverage targets or is there some more upfront spend.
Tom as you were talking about the sort of getting the converged core up and running.
By 2020, and then clarification is that 10 billion a capex number does include operating losses are working capital investment we may see in the wireless business.
Thats number one and then number two is just a question a general question on wireless pricing.
Can you talk about adding two subs pretty aggressively does the NVNO in your mind give you the ability to be disruptive terms of the prepaid or postpaid market.
Out of the gate, but before you've got any infrastructure up and running and then.
Then again, maybe for Tom any any rough numbers you talked about the cost advantage you're going to have with this virtualized network as you bring up each of these markets can you give us a sense on what the magnitude of the of the cost advantage you expect to have over sort of current carrier networks and in these areas you've built out thanks.
Hi, Joe I'll take a crack at some of them and then Charlie you might want to come in but yes. The capex is.
Generally ratable with the expansion of coverage you as you pointed out you will have an upfront.
No investment in core for instance, but in the Grand scheme and thing.
Core is a rounding error compared to the entire build so there will be some upfront investment, but generally it's ratable.
As far as wireless pricing, yes, we do think we can be disruptive day, one as I said, not only because of attractive rates, but also.
Bundling capabilities that are afforded to us in the deal.
In rough numbers in terms of Capex savings, we've had discussions with.
Rack, you Tan and Weve talked to.
Every vendor you can imagine.
But since the RF by in the RFP just went out today, it's a little premature to answer, but we're confident that the capex savings or at least 25%.
Yes, and the Opex and Theres, some opex savings well, obviously opex will be much reduced if you virtualized things like you see in Datacenters or cloud service providers today.
But if you take if you took the 15000 towers that were committed to the FCC and you took the $200000 per tower.
You know where you get to the historic Metro edge shorten met you you'd be.
$3 billion right. So it gives you a feel for.
That we have a lot of flex being the timing I think the way I would look at it John in terms of we mentioned, we would spend $500 billion to $1 billion.
Hi, inner narrowband Aiotv network.
By the end of 2020.
We spent we spent a lot on the narrowband LTE network, but obviously to extent that we're able to redeploy those resources, while I think we might be at the higher end of this range.
Right maybe slightly over.
I think thats still a pretty good number.
Between now and 2020 in terms of what it will take us through the core end of 2000, and a 22 the core launch some cities.
And and and.
Invest in boost.
Right and then you know we expect we're going to be we expect we're going to be profitable.
And the business once we get up and run and get her im not saying we will be day one.
But once we get our sea legs honest honest, we where we will be.
So Europe during the whole process. Your expected of you say profitable you're expecting to sort of continue to generate positive EBITDA throughout the process.
Again, I'm, not saying that we're going to day, one because maybe I don't know, what we don't know yet but.
Based on what we've seen from other Nviant knows that do not have anything like the breadth and scale that we're going to have.
We see some of them been being profitable on its not huge margins and we think but we think we'll be problem. We think will improve on their on their margins and again.
Some of the things Eric's doing with video and.
We have a lot of the things that at our disposal that maybe your competition.
It doesn't have a so it's.
We're not going to be just a one man band as a company well for instance in video as you know we have.
A lot of cross channel inventory in add add to bills that we can use to communicate to 12 million homes, which represents about 30 million handsets and we have.
Granted there is an opportunity cost there versus selling all of that time, but it's an easy way for us to communicate with a pretty large base I mean, we've got.
30 million handset users watch us every day.
So and there.
So to extent they have one of our competitors.
Some of them are very disappointed.
Got you okay. Thanks, guys.
Well take our next question from Marci Ryvicker with Wolfe Research. Please go ahead. Thanks I have a couple questions first I just want to confirm that the prepaid transaction has no impact on leverage 'cause it sounds like it does not just that became.
They won't have any you won't have any impact well it yet it doesn't happen in a direct way, which is net we had net cash on hand will have $1.4 billion less cash. So it has it has an impact on on leverage as it relates to net cash.
But you also acquiring EBITDA. So I guess, we're trying to get it to where your level, yes, yes, no. It did.
Oh transaction is going to be suit is going to be positive.
I mean, thats why I feel safe to say it will be very positive long term.
We're only a few days into this and were certainly building the models in here, but we certainly we certainly believe that that the financial side that maybe some people point to.
In terms of our ability to fund this or raise capital where we knew that that is not that's certainly not going to be our biggest issue. Our biggest issue is going to be.
Blocking and tackling execution.
Planet of the network build that network.
In a modern way thats, maybe quite a bit different than the way people have done in the past just like digital compression was quite a bit different than analog video.
That will be our biggest challenge and get everybody.
But we've done it before and there's an awful lot of people that.
There's a lot of people have done a lot of similar things because most of our architecture looks more like a data center.
Looks more like.
Cloud data center than it does.
A wireless network.
So most of what we need to do is already been done by Amazon, and Google and Facebook and Microsoft and Equinox It not equinox.
But data center company so.
We're not breaking a lot of ground there.
Where will the business hitting the org structure.
Okay.
It will be at the holding company level marketing.
Okay and then the last question I have and.
On a related is there anything you can say on the RF and deal. We know you dropped to 22 Fox network is the issue rate or a minimum guarantees or something else.
Well Marci Hey, this is Warren schlichting.
No I don't know how to begin to get but look we offered up 30 day extension.
And.
We we have tried you now incredibly hard.
And frankly, I think we said it in the past the model is broken.
We've got real data, we've got real viewership and it's an expensive.
Gamut for us so.
Frankly, I and my team.
Have made a recommendation to the chairman.
Now, we don't know exactly how the chairman might react to that.
But.
All right then they're just not a good deal.
So.
So the recommendation is actually too.
The leaders are us and service.
Long term.
Yes, well essentially essentially assuming on the bus airborne this is Charlie but the the frustrating thing is they're not very good economic deals for us and our customers are little bit more rural on the selling side, they're younger they don't watch as much as the sports we have real we have yes on slaying we don't have yes on linear TV. So we have real data that.
That tells us that the channels are overpriced and Fox had a lot of leverage to get people to overpay.
When they own them. So that's the nature of the Beast.
Having said that the new owner Sinclair, we think as a company we want to do business with we like a lot of what Sinclair is doing with the street auto and and there we entered.
Culturally I think we're pretty well aligned with them. So we hate to be in a position to.
To not be able to carrier product that they.
Our investing a large sum of money and having.
So that's why the chairman's, having a tough time with this one so I'm probably going to take this to our board this week and and.
Because I'm emotionally involved I want to keep them in and on my nose tells me that's not the right thing to do so.
But.
But once you take something down.
Got it.
A month from now we won't have anybody that wants a regional sports network and to put it back up when you've lost the customers that want it.
Makes no sense makes no sense and and all you're doing is paying for all you're doing is taxing the customers who don't watch it we clearly will lose some customers.
But it's very small fraction of our customers.
That are avid viewers of of.
Of the regional sports primarily baseball so it's kind of now and we'll lose some customers I hated that we lose customers.
But I also feel really good about the fact that maybe we maybe the vast majority of our customers can get a price break.
In a market in a marketplace, where you, it's getting more and more difficult to raise prices. So.
It doesn't.
Okay, I guess, the chairman say it doesn't look good the regional sports will ever be on this again.
Okay. Thank you.
Well take our next question from Ben Swinburne.
With Morgan Stanley . Please go ahead.
Thank you.
Charlie just a couple of questions following up on some of your wireless comments or Tom when you guys think about the opportunity in front of you.
You pay 20 billion for the spectrum, you've got another 10 as you mentioned plus this acquisition.
Is the bigger opportunity long term in sort of the retail business to build out a dish branded wireless business or is it more significant as a wholesaler you've talked a lot in the past about all the tech companies that depend on connectivity and that was a pretty compelling message and now you've got seemingly a path to build something pretty unique. So just wondering if you look at those two options and you can throw the cable companies in the mix long term, which one of those.
Do you see as a big opportunity for you.
And secondly, I noticed you guys hired a new CTO.
About 10 days ago.
That was a background from Geo.
Wondering if.
Splitter pronounce the name wrong Kannan is a is going to be running the wireless network build out or if theres more sort of executive hiring you plan at the top on this business.
Hey, Ben this is Tom.
So to answer the first one which Charlie already mentioned earlier.
So I'm not sure. If you are on for the whole call, but we still envision the breadth of our spectrum being deployed in a wholesale sale manner.
Based on Fiveg virtualization, but you can see that is one of those significant slices will be committed to retail so envision it like dish bought one of the slices and Thats, where it will support boost and the boost growth in retail.
And and as I said potentially other brands, but that doesn't mean, there still is an other capacity that can be wholesaled as we've talked about for the past couple of years and that could be too many different verticals as well as fiveg enterprise applications. So I don't think they're mutually exclusive and we will pursue both.
As for canon the new CTO.
He was hired to replace the CTO that left the dish network operation. He happens to have wireless experience, but he is going to be primarily focused on.
The dish operations, but we value his experience and look forward to bringing them onboard.
Got it and just on the satellite business.
You guys have talked for a long time as you just did on the Fox artist and that sort of once you take the pain of letting a channel go dark.
It's not worth bringing them back. So I was surprised Univision came back I think it was off for like nine months you guys took a hit on the subscriber front do.
Maybe you could talk about your thought process in terms of bringing that programming back on.
Yeah. This is Charlie that was that was painful for both companies, but believe me the the.
The deal they could ahead in the deal they got word.
Different.
So.
Economics for us and it's not it's not right.
You know so.
Yes.
Yes, I mean regional sports.
Mike I might at a fraction of the cost down the road, but thats not going to be very attractive for anybody and obviously people have MF ends and things like that in the industry. So.
Univision.
Univision was unique well, it's kind of in the same situation Univision was unique that the management changed so it took the new management the old management, There's a reason why the old management, one there because they.
Didn't value dish as a customer and tried to charge us more money than anybody else, which is.
I mean, not the same I'm talking about more money than anybody else would right, which is not a good idea.
And here, we are with the problem with Fox sports as they are being sold.
Sinclair.
But there is still under the Disney umbrella and I think did these got it.
Correct me, if I'm wrong, but I think they have an independent they have somebody else negotiation I think when you renegotiate direct with.
With that so we have been logical what it would have been logical decision to extend the contract till Sinclair.
Tell Sinclair owned the asset and then.
Based on the overall relationship we have with Sinclair, particularly with Retrans and some other things that Sinclair and we're trying to do together there probably was the basis for a deal that worked for everybody but.
But if you're not going to extend the contract.
Are you want to kind of contract long term that for rates to beginning to baseball season next year that's not.
Look I'm from Tennessee, but I'm, just not that stupid and we're not going to say, we're not going to we're not going to do that so.
I have is I expect people to be logical, but they're not always logical.
And I have in the top 10.
Top 10, not so smart things that I've seen since I've been in business.
Fox not extending the regional sports contract is one of the top 10, it doesn't make any sense and.
But.
We also know that we are not in their shoes, and we may be missing something and we don't know contractually what they have and we don't know contractually what they can to can't do so we may be missing something but it doesn't make any sense for us but.
We've got a board meeting later this week and.
We'll make a final decision operator, we'll take one more from the analyst community before moving on to the press.
Thank you ladies and gentlemen.
Well you asked members of the media. Please press star now to it or is it going to ask a question. We will begin the media portion of this call. After we take our final analyst question. Our final analyst question is from Jonathan Chaplin with New Street Research. Please go ahead.
Thanks since I'm last I'm, just going to rattle off a few quick ones. So first of all Charlie I'm, what I'm curious why you went for 800 megahertz.
And not a big chunk of the 2005 was two to five.
Something the T mobile wasn't willing to give up.
And then if the deal that you can't at the moment. The best deal do you think you'll get or is there an opportunity for.
For you guys to get more value as T mobile goes into negotiate with the states and in court and then see the 15000 sites does that equate to 50%.
50% of Pops or to 70% of pumps. Thank you.
Yes.
A week.
I'll, let Jim we negotiate deal with sprint demo that we were that we thought would be very competitive for us. It then went to the DJ and then I think with with the pressure from the stage that deal got actually materially better for us than a lot of fronts and so.
Note that kudos to to the department of Justice.
But also to the the threat from the states that got a lot better.
And and.
I don't know, what's going to happen with the states. That's that's up that's up to T mobile and sprint as to whether they make further concessions and that they make or the concessions that might be the people other than this so.
The 15000 towers, probably come pretty close to 70%, depending on where you put them independent on the frequency use probably comes pretty close to to.
70% of the population, but until we get our link budget in RF plan, we cant finalize the yes, but we expected that.
We're obviously going to build out as fast as we can so it's.
Yes, the FCC has got some good guardrails for us in terms of goalpost of where we need to get through so we know kind of where the the floor is but it really depends on the economics as we grow and as we move forward.
Comp comp look I'd say distillates, Jonathan and by the way congratulations you're you're one of the year and analysts that that that has picked up on some things that maybe some others haven't in your model.
As you know our cost goes way down and we have usury owner economics, but but every fourg every fortune 500 company.
Every board directors either has or will.
Asked their management to have a fiveg strategy.
Right and if you're going to have a fiveg strategy.
Then you're going to have to understand what a network really can do and and.
There's been a lot of companies that can help companies with the Fiveg strategy, but one company will be in everybody's list is going to be dish and and it's going to we're not going to be able to do things for everybody.
And.
If.
But we're going to work with the companies that have a vision the same vision that we do.
I want to move in the same direction that we do are we get educated and we should go in a different direction.
The 800 megahertz well the two to 2.5 that the the sounds all that's at least and it was a bit complicated and of course, we knew it pretty well because we tried to buy Clearwire then spread six years ago.
So it was something that that.
We looked at different buckets, the 800 for us.
Given that we believe we're going to build macro towers from the outside in and that we believe additional frequencies will come on the market on CBR Aster C band or some other frequencies, we might build inside out.
We felt like the longer term play for US It was was better there.
Thank you very much guys and congratulations.
Thanks.
Okay, operator, we'll move to media.
Thank you, ladies and gentlemen, and members of the media if you'd like to ask a question. Please signal that pressing star one now to enter your question Q Star One from media. Our first media question comes from.
Moritz with Bloomberg. Please go ahead.
Hi, guys. Thanks.
Yes on financing.
Charlie are you open to selling any of your spectrum at this point.
Well, we prefer not.
In fact, we have some restrictions on potentially restrictions, although it needs FCC approval. So.
It depends on what the spectrum was I mean, if you look that if you looked at in our portfolio that we believe we need the spectrum that we have to be competitive.
Right, that's not to say there is not a piece here or there, but we believe we need that spectrum.
Thanks.
At this time, we have no further questions into queue I would like to turn the conference back to our speakers for any additional or closing remarks.
No. Thank you for your time and interest will be in touch.
Thank you ladies and gentlemen, this does conclude today's conference. We appreciate your participation.