Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the EchoStar Earnings Conference Call for First Quarter of 2019. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Deepak Dutt, Vice President of Investor Relations, you may begin your conference.

Thank you, and good morning, everybody. Welcome to our earnings call for the first quarter of 2019. I’m joined today by Mike Dugan our CEO, Dave Rayner, COO and CFO, Pradman Kaul, President of Hughes, Anders Johnson, Chief Strategy Officer and President of EchoStar Satellite Services, and Joe Torres, Associate General Counsel. As usual, we invite media to participate in a listen-only mode on the call and ask that you not identify participants or their firms in your report. We also do not allow audio recording, which we ask that you respect. Let me now turn this call over to Joe for the Safe Harbor disclosure. Joe?

Thank you, Deepak. All statements we make during this call, other than statements of historical facts, constitute forward-looking statements that involve known and unknown risks, uncertainties, and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by the forward-looking statements. For a list of those factors and risks, please refer to our Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC. All cautionary statements we make during the call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our report and should not place any undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. I’ll now turn the call over to Mike Dugan.

Thank you, Joe. Good morning, everyone, and welcome to our call. We had another strong quarter financially with Hughes once again leading the way. We also announced a number of exciting initiatives recently that you will be interested in as we continue to deliver on our global expansion plans. So now let me turn it over to Anders, who will talk about ESS, Pradman will follow with Hughes update, and then Dave will provide a financial overview. Anders?

Thanks, Mike. Good morning. Q1 ESS revenue was $81 million compared to $97 million last year and adjusted EBITDA was $69 million versus $64 million last year. Although we are still seeing a difficult FSS environment and pressure on rates for both commercial and U.S. government service opportunities, as expected throughout 2019, we were able to renew several of these services at their existing rates. The continued 2019 focus of the EchoStar Mobile team is on expanding MSS operations across the EU, bringing innovative MSS products to market, and preparing to build out our next-generation hybrid network for IoT and 5G services in the European Union. Last week we announced an agreement between EchoStar Mobile Limited and RigNet, a provider of ultra-secure intelligent networking solutions, for Rignet to promote and distribute IP-based MSS for voice and data to its European customer base. Equipment for that mobile network will be designed and manufactured by Hughes. I’m truly excited about this partnership with a world-class leader in digital transformation and look forward to a positive impact on our financial results due to this initiative. EchoStar Mobile distribution partners have expressed substantial interest in the lower cost mobile terminal optimized for M2M and IoT services that is in development for launch later this year. And we’re also made progress in the expansion, new platforms and services which empower our distribution partners to rapidly grow their offerings in the same verticals, longer-term projects for the EchoStar Mobile team includes developing new technologies to integrate S-band satellite services into 5G networks and dramatically reduce the cost of satellite IoT Services and leveraging technology developed by our affiliate DISH network that will enable exciting new hybrid services using our CGC authorization. Over time we expect that EchoStar Mobile products and services will be integrated into a new global hybrid network that will leverage satellite and terrestrial technologies. I’ll now turn it over to Pradman.

Thank you, Anders. It’s been a long time since we’ve seen so much excitement about the space industry. In a recent report, Morgan Stanley estimates that the global space industry could exceed $1.1 trillion or more in revenue in the year 2040, and that the most significant short- and medium-term opportunities may come from satellite broadband Internet access. And that satellite broadband represents 50% of the projected growth. Satellite broadband is precisely the sweet spot that we operate in. At Hughes, our business is growing at a healthy rate because these opportunities exist in every market sector: consumer, enterprise, and government. And while much headroom for growth exists, I’m proud to say that we are the largest satellite-based Internet service provider in the world and as COMSYS reports, we continue to be the number one global VSAT provider. Our award winning JUPITER system is the world’s most deployed satellite networking platforms powering services we operate in the Americas, Europe, and India, as well as those leading operators around the world from enterprise and government networks, the community Wi-Fi Hotspots, to cellular backhaul. So let me elaborate on these in relation to our performance in Q1 2019. First, I’m very pleased to report that Hughes had a strong first quarter. Revenue was up 11% and adjusted EBITDA was up 18% over the same quarter last year. Our adjusted EBITDA margin in Q1 of 2019 grew to 36%, a 200 basis points increase over the same quarter last year. Now let me talk about our consumer Internet service business. We continue to grow revenue and earnings despite many beams on JUPITER 1 and 2 filling up. We ended Q1 of 2019 with approximately 1.388 million subscribers, an increase of 121,000 over the same quarter last year and 28,000 sequentially over Q4 of…

Thank you, Pradman. Before I get to our financial results, I would like to mention a change that we made starting with this earnings release. ASC 321, which was adopted in Q1 of last year, requires that all equity investments, with some exceptions, be measured at fair value with changes recognized through earnings. This has resulted in significant volatility in our earnings. Many of you suggested that we present an adjusted EBITDA measurement that excludes those gains and losses and more closely represents our operating efficiency and financial performance. Accordingly, we introduced an adjusted EBITDA measurement this quarter in our press release, and I will utilize it in my comments going forward. Consolidated revenue in the first quarter was $531 million, a growth of 6% over the same period last year, driven primarily by Hughes consumer and international enterprise, offset partially by Hughes domestic enterprise and ESS. Adjusted EBITDA in the first quarter was $206 million compared to $202 million last year, the change being primarily from the revenue changes. Net income was $15 million in Q1 compared to a loss of $21 million last year, also driven primarily by the higher net gains on investments and a higher interest income offset by higher tax expense. Capital expenditures in the quarter was $120 million – was $112 million compared to $51 million in Q1 last year. The increase was primarily a result of $77 million payment that we received last year on Echo 105, offset partially by lower spending on consumer CPE and satellite infrastructure. Free cash flow defined as adjusted EBITDA minus CapEx was $94 million in Q1 this year compared to $151 million last year, primarily due to the payment received last year on Echo 105. Turning to the segments. Hughes revenue in Q1 was $445 million, an…

Thank you, Dave. Thank you, Pradman and Anders, too. To summarize the quarter, Hughes once again led the way in terms of strong earnings growth and we initiated creative solutions like community Wi-Fi, the partnership with Facebook, the joint ventures in Brazil and India, and the ESS agreement with RigNet for distributing IP-based mobile satellite services. These initiatives will undoubtedly position us much better for the future. We are now ready for the question-and-answer session. So let me turn it back over to the operator.

Thanks. Good morning, guys.

Good morning, Ric.

Hey. A couple questions. First, glad to see you guys providing the split between total Hughes subscribers and those in Latin America. Can you give us some color about how many Latin American subs you might have had a quarter ago or a year ago, just so we can gage the – looks to be nice ramping business there?

Ric, I will say we have less than what we have now. But the reality is the majority of the net growth that we had in Q1 was coming out of South America. We had growth in North America. You’ve got a lot of background noise going on.

Yes, I’m sorry.

Nice growth in North America, but largely offset by the continued wholesale arrangement we’ve got with DISH with those subs churning off.

That makes sense. Also really glad you guys made the EBITDA change, taking out the gains and losses in investments. Can you help us think through unconsolidated entities? You’ve done some more now with minority interest with Yahsat and Bharti on the other side where you’re consolidating. How should we think about that unconsolidated line? It seems to bounce all over the place modeling and since it is still in EBITDA?

Yes, I understand that’s tough. Obviously those are – we have influence over those subsidiaries, but we don’t have control. Some of it tends to be a little bit seasonal in some of the subsidiaries. Others – historically just given the timing of when we get financial statements, Q1 we tend to get adjustments from their year-end results. We don’t get them in time to incorporate into our year-end results. So Q1, frankly, sometime we get surprises from those subsidiaries. And certainly starting this quarter, we’ve got the Africa JV now starting to report. And given that it’s an early stage retail operation, it’s going to generate some losses for a period of time. So that’s going to have some negative impact to that line item on our financial statements. Obviously, we expect that to be hugely successful over time.

Right. I think we’re going to stay looking at Hughes and ESS and then kind of treat these minority interest maybe on a different way. Last one for me, we noticed the $7 million investment it looks like into new or expanded non-controlling interest. Was that maybe for the Tarana Wireless?

No. I believe what you’re talking about is we repurchased some minority interest, specifically in our Indian subsidiaries.

Okay. Thanks.

[Operator Instructions] And we have a question from the line of [indiscernible]. Please go ahead.

Hey, guys. Thanks for the color on the international subs. A question on followup to Ric’s on Tarana Wireless, I believe it was a much more substantial investment. I thought I heard it was $40 million. You have one of your senior executives go on to run the company and Charlie is going on to the board. Could you kind of expand a little bit? It’s my understanding that that technology is more of a suburban fixed wireless play that takes care of non-line-of-sight issues. And what I’m wondering is, is this potentially signaling an expansion of your addressable market for broadband in the U.S. and other markets, number one? And then secondly, could you see synergies between you guys using slice of DISH’s spectrum and that technology to again expand the overall broadband market? Thanks for your feedback.

First of all, we’re not going to comment on the number, but Tarana has some – It’s a start-up. They’ve got some exciting ideas. We did lend one of our most senior technology leader to them to help through it. We think it’s got great potential. Pradman and his guys continue to look at the way to take advantage of all their infrastructure, all their engineering, and so on and so forth and other areas of broadband other than satellite. So that’s why it made a lot of sense for us to get involved with Tarana. And if they’re successful in the initial trials and so on, we’re sure that equipment will help us around the world with some of the challenges that are out there. So that’s about all I’m going to say about it.

Thank you.

[Operator Instructions] And it looks like there are no further questions in the queue.

Okay. This brings us to the end of the call. Since there are no questions. So thank you everybody who participated and good day.

This concludes today’s conference call. You may now disconnect.