EchoStar Corporation Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Transactions: Completed $2.5B financing, exchange offer for convertible notes, $400M equity via pipe, and agreed to sell Video Services to DIRECTV. Removed going concern disclosure.
• Video Services: DISH TV had ~5.9M subscribers with lower Q3 churn; Sling TV grew to over 2.1M subscribers, named best live TV streaming service.
• Broadband and Satellite: Focus on acquiring high-value HughesNet customers, enterprise wins, progress on direct-to-device technology.
• Retail Wireless: Operational enhancements, expanded partnerships, improved churn and ARPU.

Segment Performance

• Video Services: Sold to DIRECTV, reducing EchoStar's consolidated debt by approximately $11.7 billion. Expected to close in late 2025.
• Broadband and Satellite Services: HughesNet consumer had ~912,000 subscribers; enterprise business shipped over 10,000 user terminals; in-flight entertainment growing; awarded DoD contracts; working on direct-to-device technology.
• Retail Wireless (Boost Mobile): Finished Q3 with 6.98 million wireless subscribers, expanded portfolio, partnership with Apple, 29% improvement in churn, and over 50% of new device sales on own network.

Guidance

• CapEx for 2024 expected to be roughly half of 2023.
• Sale of Video Services to DIRECTV expected to close in late 2025.
• Confident in operating and growing business independent of DBS exchange outcome.

Risks

• Uncertainty around DBS exchange offer success.
• Competitive dynamics in wireless and Pay-TV markets.
• Risks related to forward-looking statements and potential material differences from actual results.

Question and Answer

• Q: Impact of ACP on Hughes and future ACP churn?

A: Most ACP-related churn hit in Q3, few left, better path forward.

• Q: Go-to-market strategy for retail wireless growth?

A: Leverage modern network, AI optimization, profitability focus.

• Q: Deal impact if DBS exchange doesn't close?

A: Continue operating business, cash from other sources supports growth.

• Q: Wholesale partnerships for wireless network?

A: Evaluate options, undervalued assets, potential partnerships.

• Q: Progress on private networks and spectrum value?

A: Private 5G networks growing, spectrum value vast, wholesale business takes time but has potential.

• Q: Retail wireless EBITDA and 5G revenue transfer pricing?

A: Subsidy and intercompany charges drive EBITDA variances, margins expected to improve.

• Q: MSSA view and direct device chip go-to-market?

A: No need to join MSSA, focus on 3GPP standards for chipset development.

• Q: Retail wireless payments to AT&T?

A: On track with minimum commitments, healthy relationships, leveraging networks for profitability.