EchoStar Corp Q4 2024 Earnings Call Transcript

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

Question: Ric Prentiss - Raymond James - Analyst : Thanks. Good morning, everybody. A couple of quick questions. I appreciate the details, particularly on the 5G network, 23,000 sites on air, heading to 25,000 by the June '25 deadline. Is there a number out there as far as what you want to hit the year end '26 extended deadlines?

Question: Ric Prentiss - Raymond James - Analyst : On the Boost Mobile side, speaking of which, it sounds like a lot of cross selling then from the video side to the Boost side. Should we think of this kind of all what we've seen with the cable operators kind of as they try and bundle things together? And what kind of share of gross adds should we think Boost is targeting, if I'm right about that, kind of bundling video and mobile together?

Question: Ric Prentiss - Raymond James - Analyst : Last one for me is to touch on that satellite connectivity you led with, obviously, the direct-to device market has gotten a lot of excitement out there. How do you view that market, the uniqueness that you bring to the table with the spectrum? But also we get the question a lot, is this going to be a replacement for terrestrial? So maybe if you could just kind of expand a little bit on the direct-to-device opportunities. And it's a fairly crowded marketplace, at least with a lot of people talking about it.

Question: Ric Prentiss - Raymond James - Analyst : Yes, I appreciate it. Thanks, Hamid. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 4:00PM, SATS.OQ - Q4 2024 EchoStar Corp Earnings Call

Question: Michael Rollins - Citi - Analyst : Thanks and good morning. You referenced earlier that wireless ARPU is growing. I'm curious if you could discuss some of the details on what you're seeing on intake ARPU versus what the average currently is to better appreciate where that may be going over time? And then second, just as you're looking at growth in the wireless business, can you expand pace of quarterly customer growth while also reducing the EBITDA burn at the same time, or are you in a situation where you need to pay for these customers first, keep investing in the marketing engine and then work on that EBITDA burn in future years? Thanks.

Question: Michael Rollins - Citi - Analyst : I mean, if you're going to ramp customer acquisition significantly, to your point, you pay for that upfront as you're describing and then you get the benefits potentially, right, over that customer lifetime. And I was just kind of curious, as you look at 2025 in terms of the exit rate of EBITDA burning '24, how you balance those factors of trying to increase the pace of acquisition and aim for that relative to scaling that business over time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 4:00PM, SATS.OQ - Q4 2024 EchoStar Corp Earnings Call

Question: Walter Piecyk - LightShed - Analyst : Thanks. Just on the sub growth. I mean, I just -- I think what's noticeable to me at least the gross adds being up 13.5%. It seems like a pretty major inflection. Obviously, service revenue grew sequentially. Rick was implying that you were getting this from bundling? Did I miss something in the prepared comments? And if not, why are customers all of a sudden kind of signing up to the network? And I don't know if you're planning on breaking out the traditional prepaid versus, I guess, what we would consider to be postpaid. Just if you could just give a little bit more color on what's happening in that business and how sustainable is that going to be going to '25?

Question: Walter Piecyk - LightShed - Analyst : You're not going to break that out and we're not going to get some sense of kind of what the inflection was on the growth more recently, like which part of the business? I guess I'm on the postpaid side, mine works pretty good. Like are there more me people coming on or is it the traditional prepaid guys that are driving this growth?

Question: Walter Piecyk - LightShed - Analyst : Can you -- I'm on the network but I'm not on the network because I got the alert to change my SIM, I guess, to get on your network. I'm like a Boost one customer, I guess you call me, I forgot our Boost on ultimate, I'll forget what your branding is, but nevertheless. Can you give us some sense of like how many people, how many subs amount of traffic, whatever it is that are on the network that you built versus your roaming partners? And then how is that -- how are those roaming partnering relationships kind of playing out? Like where are you sending more traffic? How does that evolve over time, because that's obviously a cost component that's impacting you on the cash side?

Question: Walter Piecyk - LightShed - Analyst : Got it. Thank you.

Question: Jonathan Chaplin - New Street Research - Analyst : Thanks, guys. I'm wondering if you can give us a sense of how the enterprise and wholesale revenue line is progressing? It's difficult to sort of see that within the way you've reconstituted results. And how -- where do you think that revenue line could be by the end of the year? And then a housekeeping question for Paul. Spectrum amortization, does it start when the spectrum goes into service or when you purchase the spectrum? And then going back to the direct-to-device comments for you, Hamid is do you need to launch, do you need to use a LEO satellite to really do direct-to-device effectively or rather a LEO constellation? And if so, is that something you would do yourself or would you partner? And who would be the ideal partners for that?

Question: Jonathan Chaplin - New Street Research - Analyst : Got it. Thanks.

Question: Bryan Kraft - Deutsche Bank - Analyst : Hi, good morning. I had -- I guess, I wanted to ask you, Hamid, with the financing transactions completed in the fall, can you talk about how much room the company now has to pursue wireless and the other growth opportunities in front of you like enterprise and direct-to-device, particularly just given the capital needed for wireless subsidies and marketing, and the maturity wall that is coming up in two years? And just related to that, are you still actively working to improve the balance sheet and extend maturities or even raise equity capital? Will we see any more positive developments on this front in 2025? Thank you.

Question: Benjamin Swinburne - Morgan Stanley - Analyst : Thanks. Good morning. Two questions, one for Paul Orban, and then I want to ask Paul Gaske about Starlink and satellite broadband. Paul Orban, on the cash flow front, you said you delivered positive operating free cash flow in '24, which was your guidance. Do you have the dollar number you can share just to make sure we're looking at it the way you guys are as we think about 25? And you mentioned the $1.2 billion burn in '24 and CapEx coming down this year. Is it fair then to assume that the burn -- the total free cash burn should improve, should reduce in '25 versus '24?

Question: Benjamin Swinburne - Morgan Stanley - Analyst : Okay, fair enough. And Paul, just a request from all of us out here in the sell side and buy side if you're willing to provide a trending schedule with the new wireless segment coming back into the '24 quarters, we'd all be appreciated, I figure, at least throw that out there. Paul Gaske on -- there's a lot of noise, obviously, around Starlink. T-Mobile Super Bowl ad got a lot of attention. Can you just talk a little bit about Hughesnet's position, the technology of JUPITER 3 and how it compares to Starlink? And we're seeing these overall sub declines. But is it your expectation that over time we should see growth in that business? And do you view Starlink as a competitor in REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 4:00PM, SATS.OQ - Q4 2024 EchoStar Corp Earnings Call the enterprise and government space, which is obviously meaningful to the Hughes business, in general? I would love to hear your thoughts there. Thanks.

Question: Benjamin Swinburne - Morgan Stanley - Analyst : Thank you very much.

Question: Timothy Horan - Oppenheimer - Analyst : Can you give any more real-world qualitative maybe color on the advantages of the cloud kind of RAN network that you're operating? And

Question: Timothy Horan - Oppenheimer - Analyst : Yes, that's really helpful. I missed what you said about AI. Did you say the AI ready or yes --

Question: Timothy Horan - Oppenheimer - Analyst : Got it. And just on the go-to-market. New York, it looks like you have a hyper localized and targeted marketing blitz. Can you talk about how cost effective that is and is that the model you're going to be going out with nationwide?

Question: Adam Rhodes - Octus - Analyst : Hey guys, thanks for taking my question. I appreciate you squeezing me in here. With the FCC moving towards the re-auction of its AWS-3 spectrum inventory, I want to hear how you guys might think about approaching that auction. And relatedly, I noticed in your 10-K that an appraisal of your AWS-3 and AWS-4 spectrum came in at $33 billion. Since this appraisal provides you with roughly $3 billion of additional perispectrum secured note capacity. Do you think you might look to this as a source to participate in the re-auction? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 4:00PM, SATS.OQ - Q4 2024 EchoStar Corp Earnings Call

Question: Adam Rhodes - Octus - Analyst : Okay. That's helpful. And then I guess any consideration on how you might potentially look to use that additional capacity that you have?

Question: Adam Rhodes - Octus - Analyst : Great. Thanks a lot.