EchoStar Corp Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ric Prentiss - Raymond James & Associates Inc - Analyst : Hi, everybody. Couple of a couple of quick questions from me. The first area, obviously you're in constructive discussions, but I think actually you can help us when do you need/want to have the cash on hand? And related to that, can you remind us how much unencumbered spectrum you have and is that securitization market open.

Question: Ric Prentiss - Raymond James & Associates Inc - Analyst : And the unencumbered spectrum and securitization market? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 4:00PM, SATS.OQ - Q2 2024 EchoStar Corp Earnings Call

Question: Ric Prentiss - Raymond James & Associates Inc - Analyst : Okay. And then operationally on the wireless side, help us understand what's the path to positive net adds? Obviously, you had some XHTP but more importantly, what's the path and timing to getting the retail wireless business to producing positive EBITDA.

Question: Ric Prentiss - Raymond James & Associates Inc - Analyst : And then just last one for me is any update on 5G private networks? That was obviously a big part of the best use of the spectrum in the network. You're building any update on how that market is starting to gel? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 4:00PM, SATS.OQ - Q2 2024 EchoStar Corp Earnings Call

Question: Ric Prentiss - Raymond James & Associates Inc - Analyst : Makes sense. Thanks, guys.

Question: Sebastiano Petti - JPMorgan Chase & Co - Analyst : Hi, thanks for taking the question. I mean, you sounded very positive on the retail wireless efforts. Obviously second quarter ex ACP, it would have been positive, and it seems as though we are with the Boost Mobile rebrand, that should persist. But I think last quarter you did mention that you would you anticipated retail wireless net additions to be positive for the year. Obviously, you have a little bit of ACP noise in there in the second quarter and uncertainty on that in the back half. Should we still expect that to be the case maybe strip out any potential ACP losses that you're -- you still feel confident in hitting that goal? And then on the wireless network, I think you mentioned, but the number of subscribers served on your network had doubled quarter on quarter. Is that the right way to perhaps think about maybe you're on-net versus off-net traffic as we kind of think about you know, the ability and the cost save opportunity on a go-forward basis. Any color around that to the extent you would like to share would be great. Thank you.

Question: Sebastiano Petti - JPMorgan Chase & Co - Analyst : If I could ask one quick follow-up. Can you guys maybe I missed that on when does that device compatibility issue and maybe normalize? And then one other quick question. I think in the queue related to just your overall network spend, I think you know, obviously, I think Paul mentioned rate CapEx would be down year on year, but in the queue. I think it does say the as you prepare for the next build-out requirements in 25, you do expect CapEx to increase as you kind of approach those deadlines. How just help on maybe thinking about the phasing of CapEx here on the wireless side would be helpful. Thank you.

Question: Sebastiano Petti - JPMorgan Chase & Co - Analyst : Thanks, John.

Question: Walter Piecyk - LightShed Partners LLC - Analyst : Thanks. I want to go back to the prepared comments, I think you referred to the spectrum being 90% of the carrying value. I assume that's not necessarily 90% of the total spectrum owned just based on how you're valuing maybe city POPs versus rural POP. Can you kind of give a little bit more color on what you would -- like what you are funded for in terms of those build-out requirements in terms of maybe percentage of megahertz-POP, are there certain bands that you'd be willing to kind of not meet in that scenario versus other bands that are more important? And then I guess the overriding on this is, in the discussion with the bondholders, is it given that this is an underlying asset overall, that's extremely important to the company is obtaining the funding to get to 100%, a critical item to come into some resolution, at least in terms of this first maturity that you're hitting.

Question: Walter Piecyk - LightShed Partners LLC - Analyst : I don't -- sorry, I don't understand. You're saying -- I think the comments you were saying was, you're going to hit 90%, no problem, and then you're just going to need incremental financing to get the last 10%. Is it -- did I understand that prepared comments correctly, is that...

Question: Walter Piecyk - LightShed Partners LLC - Analyst : So I guess my question is -- I get 90% is carrying value. I'm saying like in terms of -- is it kind of comparable to POPs owned? Because it could be 90% of the value but 50% of the POP's coverage, right, to exaggerate, obviously. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2024 / 4:00PM, SATS.OQ - Q2 2024 EchoStar Corp Earnings Call

Question: Walter Piecyk - LightShed Partners LLC - Analyst : Understood. And then you can obviously rely on the wholesale agreements for the rest, which kind of goes into the second question, which is do you need -- I know you're talking about securitization, there's another potential way to monetize rather than using the spectrum to borrow against, it's just selling it. I understand that maybe under existing regulations, that's not possible, but we have a potential administration change coming up. Do you need all of the spectrum that you currently own in order to operate on your mobile business plan?

Question: Walter Piecyk - LightShed Partners LLC - Analyst : Okay. And then just one last one. The language in the 10-Q basically says having enough cash for future cash flows or the maturity, it's not and so when I look at your free cash flow, especially given the asset sale that's going to be completed in the third quarter. I assume you don't have a big working capital need coming up, you should be able to have cash going into next year. So is there -- are there things -- are there working capital payments that are required between now and end of year that you can highlight for us, if any?

Question: Walter Piecyk - LightShed Partners LLC - Analyst : It says or though, meaning like I get it like if you don't have $2 billion unless it's refied, but or implies both as opposed to combined would otherwise be and, no? Maybe I'm overreading that, but...

Question: Walter Piecyk - LightShed Partners LLC - Analyst : Okay. Can I just give one operational one. I mean the gross adds for wireless that seems to be the thing that you're obviously -- turn a trajectory in the right direction. But what -- I guess, what are the major friction items? You're an early company. Obviously, everyone's got their early learnings dealing with Amazon, whatever it is. What are the major friction items that are preventing your gross adds from ramping? And what are the plans specifically, I guess, to get rid of that friction in order for you to get to this positive growth by the end of the year?

Question: Walter Piecyk - LightShed Partners LLC - Analyst : Thank you.

Question: Jonathan Chaplin - New Street - Analyst : Thanks guys. Hamid, first, just a quick process question on the lawsuit. So it looks like the trustee has amended the complaint. Do you have to refile a motion to dismiss, and if so, can that be sort of filed and decided on before November. And I'm wondering how the potential to get that result quickly may be impacting your discussions on refinancing? And then I was really curious about your comment about there being nothing more dangerous than an empty network. Last quarter it sort of suggested the potential for something really disruptive on the pricing front and the new plants that you guys launched on July 17. Look, the pricing looks pretty similar to the price you had in the market already, not that disruptive. I'm wondering if there could be something more disruptive on the way.

Question: Marilyn Pereira - BofA Securities - Analyst : Hi, thank you for taking the questions. Just a quick one on your working capital. It looks like your trade payables increased about $85 million. So I'm just curious how, one, we should think about EchoStar's working capital, give us a sense of the seasonality within that? And can you continue to extend payables. Just some color on how we think about that. And also if you can provide maybe perhaps some of your larger vendors?

Question: Marilyn Pereira - BofA Securities - Analyst : Got it. And I'm sorry, in terms of any seasonality?

Question: Marilyn Pereira - BofA Securities - Analyst : Got it. And I mean, can you just give us a sense of where you think working capital will kind of shake out for the full year?

Question: Marilyn Pereira - BofA Securities - Analyst : Got it. Thank you. That's all I have.