EchoStar Corporation (SATS) Q4 2024 Earnings Report, Transcript and Summary

Welcome, everyone. Thank you for joining us today. This past year marked the beginning of a transformation for EchoStar Corporation as we continue to strengthen our business to compete at a larger scale in the global telecommunications market. At the beginning of 2024, we brought two great companies together, EchoStar Corporation and Dish Network. The merger combined Dish Network satellite technology video services, retail wireless business, and nationwide terrestrial 5G network, with EchoStar Corporation's premier satellite communications enterprise Google market capabilities, US-based manufacturing, creating one company with the broadest portfolio of assets in the telecom media and the space verticals. Integrating and leveraging these valuable assets allows us to provide unique solutions like direct mobile phone to satellite connectivity, under one entity. Over the past year, we enacted a plan to improve our capital structure, leverage synergies across business units, reset Boost Mobile, continue to expand and optimize Boost's state-of-the-art, open RAN 5G wireless network, and drive value for our shareholders. I'm pleased with the dedication and resiliency of our teams in executing against this plan and managing costs across the board to create shareholder value. As for our operating results, the Pay TV segment improved over prior year results on most key metrics, including churn, ARPU, and SAC. Our Hughes business includes both HughesNet, our consumer brand, and the Hughes enterprise business. Among other assets, both leverage the most sophisticated commercial satellite in the world, Jupiter 3, which delivers more than 500 gigabits per second of broadband capacity. As we increased our focus on the enterprise markets, teams worked to make further inroads with in-flight aviation products and services, DOD contracts, and growth in our managed services arm for which we were named for the second year in a row a leader in the Gartner Magic Quadrant. Boost Mobile made steady progress throughout the year. Excluding the impact of ACP, our efforts resulted in consecutive quarter-over-quarter net positive subscriber growth since Q1 of 2024. Boost Mobile also saw improved churn and achieved significant lift in ARPU. These gains are a bellwether of things to come. We continue to enhance our network and met our 80% F coverage commitments by the end of the year. In addition, Boost Mobile Network was recognized last month as the number one mobile network in New York City by a third-party industry benchmarking expert. This is a testament to the hard work of our network engineering teams and the excellence of our technical infrastructure. Drawing upon two of our exceptional assets, EchoStar Corporation is uniquely positioned as both a satellite mobile service provider to develop solutions with a global impact. Our portfolio of products and our unique spectrum assets put us in the advantageous position to offer such solutions as direct satellite to device connectivity, a service we have in operation since 2023 through partners in certain international markets. We are already hard at work on the most capable offering of this technology and we look forward to keeping you updated on our progress in this exciting space. Collectively, for the year, we made progress towards our goals while realigning the business, addressing financial needs, establishing a firm foundation. For 2025, we are focused on maximizing the use of our available resources to gain market share and accelerate value creation. I would like to turn it over to Paul Orban for commentary and color on the numbers.

Hey, thank you, Hamid. At the end of the fourth quarter, our total cash and marketable securities was $5.7 billion, reflecting an increase of $3 billion compared to the prior quarter. This improvement was primarily driven by a series of financing transactions that raised $5.6 billion in net proceeds, partially offset by the repayment of approximately $2 billion of DISCBS senior notes in November. In addition, we recognized a $689 million gain on debt extinguishment, the successful exchange of $4.7 billion of our convertible notes, and extended those maturities to 2030. EchoStar Corporation generated positive operating free cash flow in 2024, defined as free cash flow before debt service payments and non-operating CapEx, which was in line with our expectations. Looking to 2025, we expect to maintain positive operating free cash flow as we remain disciplined in managing our operating cost structure while continuing to grow our wireless business. Free cash flow, including debt service, in 2024, was a negative $1.2 billion. That's an improvement of approximately $500 million compared to the prior year. We reduced CapEx excluding capitalized interest by over 50% in 2024, $1.5 million, which is in line with our prior guidance. We expect CapEx will decline in 2025 as our SCC build-out deadlines were extended. Let's review our financial performance for the fourth quarter and for the full year of 2024. Revenue was approximately $4 billion in the fourth quarter, down 5% year-over-year primarily due to fewer subscribers at PayTV, and Hughes compared to the prior year. OIBDA was $397 million in the fourth quarter, an increase of $9 million year-over-year adjusted for the 2023 noncash asset impairment charge. Improvement was driven by more efficient Boost Mobile Marketing, partially offset by a slight decline in PayTV OIBDA due to fewer subscribers. For the full year 2024, consolidated revenue was $15.8 billion. It's down 7% year-over-year due to subscriber declines in each of our segments. OIBDA was $1.6 billion in 2024, down from $2.1 billion in 2023, excluding last year's noncash impairment charges. The reduction in OIBDA was driven by lower average subscribers and higher wireless network spend, partially offset by a reduction in SaaS and cost savings from G&A. Lastly, I'd like to provide a brief update on our segment structure. Historically, we have reported four segments: ATV, retail wireless, 5G network deployment, and broadband and satellite services. To align with how we view and manage the business, we combine the retail wireless and 5G network deployment segments into a single segment now called wireless. This change reflects a more integrated approach to how we operate and manage these businesses and is in line with industry practices. With that, I'd like to turn it over to Gary to discuss video services.

Thanks, Paul. In Q4 and throughout 2024, our Pay TV businesses fared well despite industry headwinds. In 2024, we achieved a year-over-year ARPU increase of 4.2% across Pay TV. Our cost optimization work continues, and we yielded year-over-year SG&A and variable cost savings, and these efforts drove substantial increases in OIBDA per subgroup versus the prior year. Across both services, we also leveraged our native proprietary AI and ML capability to better identify, attract, and retain quality customers, leading to a reduced marketing stack and significant churn reductions. For DISH TV, we finished the year with approximately 5.7 million subscribers with 2024 churn at 1.46%, a 23 basis point improvement versus last year. SAC per activation also improved 10.5% year-over-year, driven by increased marketing efficiencies. Our lower year-over-year churn is really attributable to our data-driven retention efforts, our improved DISH TV Hopper UX that we launched, our bundled Netflix offer for DISH TV customers, and our lack of programmer blackouts. We also drove incremental ARPU via the introduction of our disconnected set-top box programmatic advertising capability last year. On the Sling side, we finished the year with approximately 2.1 million subscribers, a year-over-year increase of almost 40,000 customers. We saw a churn improvement of 141 basis points year-over-year. That's our lowest level since the pandemic. And lower year-over-year SAC and increased our marketing ROI. In 2024, on Sling, we launched many new product features, including freestream DVR, arcade, and our rewards program. And late in Q4, we launched our unlimited storage DVR replay feature, which provides consumers with unparalleled access to the best of live TV on their own schedule. These differentiated product features and our focus on quality resulted in 21 straight months of viewership growth and extended our lead in live TV streaming quality. We are especially proud that we were recognized as the best live TV streaming service by both US News and World Report and Tom's Guide. We're well positioned for 2025. Our main focus in 2025 is to better integrate and cross-sell our products with the Boost Mobile and Hughes product portfolios. Our first effort is the recent launch of Sling within our Boost mobile app, providing our wireless customers added value with free content, and we'll continue to more deeply integrate our content experiences into Boost Mobile to help support wireless growth. I'll now turn it over to Paul Gaske, who will cover broadband and satellite services.

Thank you, Gary. Our broadband and satellite services segment operates in the consumer, enterprise, aero, and government markets. Our HughesNet consumer business continues to add subscribers on our Jupiter 3 satellite, offering affordable high-speed unlimited data service plans to new customers, while simultaneously providing high-value upgrades to existing customers. We closed 2024 with approximately 880,000 subscribers. Our satisfaction surveys continue to show that customers like our new plans, confirming that our Jupiter 3 satellite and platform are delivering a quality experience. Our focus remains as in previous quarters on acquiring and retaining high-value customers for HughesNet. Our North American enterprise managed services business signed several major contracts to upgrade network infrastructure, provide managed Wi-Fi access, offer network management, and launch our latest cybersecurity services. Hughes was selected over larger competitors because of our superior support and service offerings. Additionally, our Hughes managed LEO business has now shipped over 15,000 Hughes manufactured user terminals. Feedback from our customers continues to be very positive. Our in-flight connectivity business signed an expanded contract with Delta Airlines to provide in-flight connectivity for future new deliveries of select A350 and A321neo aircraft. This expanded contract features the Hughes Fusion multi-orbit in-flight connectivity solutions, an industry-first technology tailored for commercial aviation that simultaneously blends LEO and GEO satellite capacity at Ka and Ku frequency bands. The multi-orbit and multi-band capability allows Delta to utilize worldwide capacity to deliver an industry-leading passenger experience. Our unique network architecture for inflight connectivity is experiencing increased interest from airlines around the world. In our government and defense business, we continue to execute on our contracts with the DOD for 5G open RAN networks and DoD installations with the US Navy, and Whitby Island and Hawaii, as well as with the US Army at Fort Bliss, Texas. These awards add to the growing number of US military installations the capabilities Hughes can provide including program and network management, alongside Boost Mobile's leading-edge 5G technology and network. In 2024, Hughes was the only satellite connectivity and telecom business recognized as a leader in the Gartner Magic Quadrant for Managed Network Services. This is the second year in a row for Hughes to win this award, which is a testament to our capabilities. Additionally, Hughes was also named the 2024 Managed Security Service Provider of the Year by cybersecurity breakthrough. The award recognized Hughes as a leader in providing businesses of all sizes with managed network and security solutions. Our international managed services business recently earned several multi-million dollar contracts in India and Brazil, providing connectivity for more than 3,000 schools and multiple energy companies. Increasingly, international business customers are selecting Hughes for managed services in addition to capacity. Globally, we see continued interest in our Jupiter ground system with new contracts expected throughout 2025. With that, I will turn it back to Hamid for an update on Boost Mobile.

Thank you, Paul. Regarding Boost Mobile, we made significant progress in 2024 toward our goals of optimizing marketing and acquisition techniques, simplified and differentiated consumer offers, and a strengthening device parity all while increasing un-net usage to take advantage of owner economics. The new Boost Mobile has made steady progress since its launch midyear with a host of prepaid and postpaid plans under one cohesive brand. Also launched differentiated offerings like the one free year of service with the purchase of a qualified device and a 30-day money-back guarantee risk-free. Strengthening product parity was an important objective for us this year. Through the introduction of more devices that are compatible with Boost Mobile network, our product portfolio continues to expand allowing for increased customer profitability. Additionally, we increased our distribution through an expanded relationship with Apple with customers now able to purchase and activate Boost Mobile service through Apple retail channels alongside the nationwide incumbents. We plan to further invest and grow our distribution footprint in 2025. Excluding the impact of ACP, our efforts resulted in consecutive quarter-over-quarter net positive subscriber growth since the first quarter of 2024. We finished 2024 with approximately 7 million wireless subscribers with a growth of 90,000 net subscribers in the fourth quarter. In addition to these promising subscriber trends, Boost Mobile is acquiring higher quality customers as evidenced by our 28% improvement in churn year-over-year and increase in take rates for autopay and the highest ARPU across the wireless prepaid market. We will continue to build upon this momentum, capitalize on operational improvements, and leverage our new go-to-market approach in 2025. Let me now hand the call to John to cover our network deployment progress.

Thank you, Hamid. We are the world leader in developing and operationalizing a cloud-native open RAN 5G network. In 2024, we further expanded our leadership and innovation in this space, as we've proven our American-led open RAN architecture provides competitive wireless services for consumers and businesses. Our software-defined, scalable architecture allows us to continually improve the performance and efficiency of our network and rapidly deploy new solutions. Additionally, our Boost Mobile network architecture is well-positioned to support Gen AI use cases and workloads. In 2024, we invested $1.1 billion in CapEx for network deployment, in addition to the $2.6 billion in 2023. And continue to be disciplined in our approach as we transition from building our network to running, optimizing, and monetizing it. During the fourth quarter, we met our latest FCC milestone, by extending our 5G broadband coverage to over 80% of Americans, which is more than 268 million people. With this achievement, we now have over 23,000 sites on air. We also added to our 5G voice coverage, now offering Bonner to more than 220 million Americans in over 100 markets with successful network launches in Boston, Seattle, and Pittsburgh. We've already deployed 3GPP Release 17 across our network, and we're well on our way to achieving 24,000 sites on air by June 14, 2025. In alignment with our new FCC framework, which allows us to more efficiently build out our network and increase competition. Highly populated areas. Along with the expansion of our network, we are also observing increasingly competitive network performance metrics. And in many markets, our network is already outperforming our competitors. Recently, the Boost Mobile Network was awarded by a key third-party benchmark survey the best overall mobile network in New York City. And we anticipate highlighting more head-to-head wins in the future. Regarding our on-net customers, they receive pure 5G on the Boost Mobile network. Have extended coverage through our network partnerships. With wireless coverage totaling 99% of the US. Today, we have over 1 million customers on-net and are loading more than 75% of compatible devices on our network in the accelerated As Hamid mentioned earlier, are focused on activating a growing percentage of new customers directly onto our network. As well as upgrading existing customers to Boost Mobile network compatible devices. This will continue to be a key priority as we work to further leverage owner economics. For 2025, plan to continue optimizing the Boost Mobile network increasing our network's footprint based on consumer needs and in accordance with meeting our FCC milestones. Additionally, look forward to working with the FCC to increase CBRS power levels a key step towards improving spectral efficiency, increased utilization of this band aligning the US with the rest of the world. I'd like to turn it back to Hamid for a few short closing comments.

Thank you, John. Based on the momentum of 2024, we have a good starting point for the current year. EchoStar Corporation is positioned to deliver further operational improvements in 2025. We will continue to run our business with fiscal and operational discipline. And focused on value creation by serving our customers with exceptional experiences. With that, we will open it for Q&A from the analysts' community. Operator, please give the instructions.

Thank you. It may be necessary to pick up the handset before pressing the star keys. One moment please for our first question.

Thank you.

The first question today is from the line of Ric Prentiss with Raymond James. Please proceed with your questions.

Hi. Good morning, everybody. Alright. I'm ready. Appoint. Thanks. Hey. A couple quick questions. Appreciate the details, particularly in 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 wanna hit the year-end 26 extended deadlines? Thank you for the question, Ric. John, would you like to take that question?

Yeah. Hi, Ric. Thanks for the questions. Just to correct one thing you said, it's 24,000 sites on air. By June 14th of this year is what's required under the new FCC framework. But we're in 2025, we're obviously focused on hitting the commitments that we've made. As we look to the future, obviously, we'll be back into construction mode. We have to put sites on air. To hit our future deadlines. And we're not really sharing numbers on exactly the number of sites we would have. I think some of that's gonna be success-based. A good amount of the work that we're doing is driven by customer experience. In the major markets where we operate in addition to what our FCC requirements are. So think we're gonna try to value steer our deployment capital towards the right outcomes based upon how my mother things, Boost Mobile business is doing. At a market level. So obviously, we'll try to provide some trail markers as we go, but we're not gonna give concrete numbers on year-end on-site numbers and the extent that we don't have from FCC's commitments around those things and then we'll take the licenses, it's not a metric we'll look to ship overly share obviously, as we're looking to compete.

Okay. 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 starting a share of gross ad should we think Boost is targeting if I'm right about that? Kind of bundling video and mobile together?

Ric, you know, thanks for the question. Listen, we have just begun, honestly, just begun scratching the surface of what we can bundle. We are already cross-bundling, you know, our pay TV business with Hughes, consumer connectivity business. That's something we have been doing through the year. And very good results. We're happy with what's there. We have integrated Sling service inside of our mobile app already on Boost Mobile app. So, you know, some of these things are already to be seen. Early indications that the usage and adaptation by the customers are increasing. But I don't want to set any expectation that this is part of the growth plan we have for the year. This is part of things that we're developing this year. I think you will see the result of this clearly. As I mentioned, we are uniquely positioned with two or four different assets. Nobody else in our immediate industries have. We have satellite connectivity, we have content great content experience. We do have a great 5G and cloud-based experience. We're just beginning to get through the point where we tie these things together. We talked about an example of Direct to Satellite. I think 2025 for us should be a year. There's some of these things become very tangible. In terms of market offerings. They're most of these things under development. You're gonna hear from us as the year goes on. I think the mobile companies have I'm sorry. The cable have been doing that to some degree. You know, they've selling their broadband connectivity with content. We think that's in the market. We do the version of that with Hughes between Hughes and Dish. But as I said, that's just a couple of small examples. We expect a lot more to happen this year.

Great. Last one for me is to touch on that satellite connectivity. You led with obviously, the direct to device market's 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 gonna be a replacement for terrestrial? Maybe you could just kind of expand a little bit on the direct to device opportunities. It's a fairly crowded marketplace, at least with a lot of people talking about it.

Yes. We believe we are very uniquely positioned. I'll talk about that in a second. I think it really is not as crowded as it seems. It's crowded from announcement where but not crowded from the reality of what is possible. I think it's only a couple of different companies that can possibly do this properly. First of all, we have been in service offering Direct to device messaging. In international markets, and we could easily do that in the United States. There's nothing special about the market that we're offering to. We have been doing this for the past couple of years. In commercial service. So people are just announcing that as a novelty we have been in the market. We are working on the next generation of connectivity, which is far beyond messaging connectivity. We expect to have broadband connectivity, which provides natural use as you can have voice video just everything the same as you would have on your standard mobile phone, your iPhone or your Android phone, you would have the same and you would have it everywhere in the world. We have the highest IT rights coming back to what makes us special. So first of all, we have the most important ITU rights to offer this, and I think that's and a spectrum asset to the United States to offer that. And that's that in itself is probably the biggest endowment, but we also happen to be a company that is Terry? Capable both in satellite and space as we use as a long heritage and global supplier to many, many satellite systems, including LEO systems such as OneWeb. So our experience, our institutional knowledge, our technical capability and acumen in that space is unparalleled. Very few others have it. And then we also have a mobile system, you know, you know, a they're don't know anybody else that is both in a satellite and a terrestrial mobile company. So you tie the two together. I mean, we think that equally important is not just about having expertise in one or the other. Just I think these are equally challenging and equally important skill sets in addition to the ITU rights and spectrum ownership in the United States, we just don't see anybody else on the radar that has all of that in one hand. So we are hard at work to make sure of that becomes a reality. Again, also July and experience our experience that we have in providing messaging service to this athlete for the past couple of years. So it's not nothing new to us. Hope that answers your question. It was a long answer, but I think you had a few angles that you touched on.

Yep. Well, I appreciate it. Thanks, Hamid.

Our next question is from the line of Michael Rollins with Citi. Please proceed with your question.

Thanks, and good morning. You referenced earlier that wireless ARPU is growing. I'm curious if you could discuss some of the details what you're seeing on intake ARPU versus, you know, 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 the 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.

So in terms of Outlook, like, that one first and then OIBDA I'll take my best shot at it because I'm not sure what I one hundred percent understood question, but let me start with you, ARPU. I mean, like, generally, we are lifting the quality of our customer base. And the reason the ARPU is the primary reason the ARPU is rising is because we are people adopting higher price plans. And so we are moving up in terms of what price plans we sell, continue. We are bundled offers, and so that and you're gonna see that trend essentially positioning Boost, a combined Boost now the two brands at a more premium placement in the market and evidenced by the fact that every metric is not just the ARPU, every metric has improved. You know, we have improved churn. You know, we've improved customer ads and, you know, you've seen that. We think that trend will continue. Now in terms of OIBDA, you know, this is the good you know, OIBDA obviously goes down when you get more customers. I mean, I'm giving you a statement in the obvious. I hope that I'm not missing a nuance on your question. But on a basics of it, you know, any customer acquisition any customer acquisition has an upfront investment of OIBDA and often even CapEx. For you to get the customer and you pay that back during the through the customer lifetime value. And we do a better job today than we have ever done in terms of value steering. Taking a look at which price plans, which devices, you know, which geographies, in terms of markets, you know, provide us which actions, whether it be upgrades, whether it be device offerings. We look at every angle to see how we can maximize, you know, our customer lifetime value relative to what we spent to acquire that customer. And lastly, we, you know, are putting more and more people on that. Which I think will improve our own economics. All of the metrics that I just talked about get even better we bring the customer on net. So there's a lot at play, but a simple answer to a question is OIBDA will go down usually when you have faster growth. But then you'll get paid for that, obviously, over time. And that's how the mobile business works. If I missed a part of your question or nuance to your question, I'm happy to answer it.

No. That's helpful. I mean, you know, if you're gonna ramp customer acquisition significantly to your point, you pay for that upfront. As you're describing, and then you get the benefits potentially right. You know, over that customer lifetime, and was just kinda curious as you looked at 2025, in terms of the exit rate of EBITDA burning 2024, you know, how you balance those factors of trying to increase the pace of acquisition and paying for that, you know, relative to, you know, scaling that business over time.

Look. I think that at the moment, I won't be able to give you an exact number, but I just wanna say that we will focus on acquisition profitable acquisition. Profitable acquisition. I would not walk away from a profitable acquisition. We don't have a shortage of cash right now. I don't have a limitation that prevents me from growing the business profitably, and we certainly get paid for that investment. Now I hope I hope I get more customers than is on my budget, and I'm happy to have a decline in my EBITDA as a result of that. That is a solid investment that I get paid for. I get a return on that. At the moment, I don't have a limitation on the spending or capital at hand. We are sitting on a significant amount of capital at hand I'd like to put to use. So hopefully, we'll get, you know, more customers than we have planned. So long way of saying, our primary focus is growth, profitable growth. Again, I wanna underline profitable growth because in that case, spending EBITDA is actually a good thing.

Thanks. Our next question is from the line of Walter Piecyk with Lightshed. Please proceed with your question.

Thanks. Just on the sub growth, I mean, I just I think what's noticeable to me at least that gross adds being up 13.5% seems like a pretty major inflection. Obviously, service revenue grew sequentially, Ric was implying that you were getting this from bundling. Did I miss something in prepared comments? And if not, can like, why 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, you know, the traditional prepaid versus, I guess, what we would consider to be postpaid. Yeah. Just if you could just get a little bit more color on what's happening in that business and how sustainable is that gonna be going to 2025?

Yes. So our growth of subscribers is not from bundling. It is from the thousand actions we have taken last year to improve the customer experience, the network experience, of Boost Mobile, and we think that's a sustainable improvement. You know? In I have been saying internally and, obviously, generalizing saying that, you know, there's not a single, you know, process we had at the beginning of 2024 that we had the same at the end of 2024, you know, we brought the two brands together. We redesigned practically every workflow impacted the customers, whether it be from acquisition, to, you know, activations, to billing, to customer care. I think if you, you know, RxBee and you have you've seen the result of I don't wanna repeat the fact that in every metric, we've improved. And I think customers are recognizing that you know, we have a fresh network. It's got incredibly good experience in terms of service experience. I think we make it much easier to adopt. We have been much more focused on making sure that the experience is really polished. So I won't put it into bundling, and I wouldn't say this was a, you know, one-time effect. That we worked on. We are no. As it comes to prepaid, postpaid, I think the market has been too for in our view, and over time, we'll talk more about this, I think the market has been too focused on, you know, formal payment as being the differentiator. I we don't see it that way. We no other industry in the world whether it's auto industry or housing industry or any other industry that finances a customer they're not talking about, you know, segregating the customers who pay cash versus non-cash. You go buy a house, you first, you know, for choice of payment of bought by a car, no car dealer asks to if you just wanna pay installments or cash go to another store, whereas in the US and in the mobile market, that happens. We wanna serve everything of one hand. For us, look at our profitability, and our prepaid customers are incredibly profitable for us. And we are not in any way disappointed to be a leader in our market today and taking more share than anybody else and being the highest, you know, prepaid ARPU. You know, there are postpaid customers that are very profitable, but I think that we're not hung by a notion of only one set of is profitable. We look at every customer a profitability basis we're very happy with the progress we have made on the customers we have gotten this year. We continue to focus on our growth.

You're not gonna break that out, and we're not gonna get some sense of kind of what the inflection was on the growth. In turn, you know, more recently. Like, which part of the business? Because I'm on the I guess I'm on the postpaid side, mine works pretty good. Like, is are there more me people coming on, or is it the traditional prepaid guys that are driving this growth?

You know, we're not actually, we're not going to break. They'll because we actually try to merge the experience to be one. And I can tell you that, you know, if you look at if you look at, you know, many postpaid plans, if you don't have to finance a device, you end up with a much, you know, easier shorter payback than, you know, it did it postpaid customer. There used to be a time that there used to be a time that the difference between postpaid and prepaid was incredibly large. In terms of monthly payments, services cost, service pricing. It used to be very different in terms of churn in, you know, those metrics those those assumptions are no longer real. Those assumptions have changed over time, and I think the market is just still hanging on. We look at every customer based on customer lifetime value and profitability. So we're not going to break down postpaid versus prepaid because we think the industry ultimately merged the two.

You know, 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 the I'm like a Boost One customer. I guess you call me. I forget our Boost Ultimate. I 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 kinda playing out? Like, where are you sending more traffic? How does that evolve over time? Because that's obviously a cost component, you know, that's impacting you on the cash side.

Sure. John, fantastic. Hey, Walt. This is John. Glad you're enjoying the experience on the network. In my opening comments, I shared we're over a million on NetNow, and that's so those are customers on our core, on our RAN, enjoying their use of the service. I also said, look. When we have a compatible device, that's in one of our open markets, our goal is to put that customer onto our own 5G network. Now when you think about how that interplays with our roaming and MVNO partners, obviously, we able to use both of those relationships as we've discussed in past calls for in market, now to market. They work a little differently. We have a little bit of focus on do we make sure we own the customer. And then based upon where people work, live, and play, we can make sure that they're connecting to the right RAM. But we've been generally been very happy with how the technology is working. And it's really a big advantage for us to really have access to more RAN sites than anybody. So we think about that in terms of how we bring customers onto the network. I think one of the major differentiating factors continues to be whether or not the device itself can support 5G SA and Bonner. We've talked about that in the past as well, and I remember talking to you on a call a couple years ago where we had literally one certified device. Right? And I think we've now completely flipped over where we have, like, only one device that we're selling that isn't compatible with our network. So Ecosystem supported us. You know, we've got a little bit of head of the industry in terms of the type of device technology we to run the network, but that's now all come back into balance. And so and look, I'd also be remiss not to point out we do have some commitments around loading onto our network between now and June, and we have every intention to hitting those. And we're pleased with the performance we're seeing on that as a result of that.

Got it. Thank you.

Next questions are from the line of Jonathan Chaplin with New Street Research. Please proceed with your questions.

Thanks, guys. I'm wondering if you can give us a sense of how the enterprise and wholesale sale revenue line is progressing. It's difficult to sort of see that within the way you've reconstituted results. And how you know, where 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? Then going back to the direct device comments for you, Hamid, is do you need to launch do you need to use a LEO satellite to really do direct 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?

Look, we have we thank you. Three quick questions. Let me start with the enterprise. You may know that, you know, we have Hughes as a company that one of our entities that has a significant presence in the enterprise market. In fact, not only do you have a presence in the enterprise market, we are among all of the competitors that you can name for us. We are the only one who is in the leader box of the Gartner's quadrant. None of the other competitors we have none. Not a single one is anywhere near it. And so we are very respected in the enterprise market, serving hundreds of brands and governments. And we are now beginning to use those relationships to put Boost and our 5G network into the enterprises space. And you have seen examples of that. You saw the Fort Bliss example, and Paul Gaske talked about a few of those things. And we bring in those relationships that are very trusted in long term within users' enterprise domain. As a starting point of our enterprise. Just remember that the in enterprises place sales cycles are long. And but once you get the customers, they last a very long time. So we're not it's a different go-to-market motion. We are probably not going to break down any specific enterprise numbers now or put any sort of forecast out there. We are loaded with opportunities. We just can't address every single one right now. Each line of business is primarily focused on their own, getting up, but then but the enterprise segment is one of those cross segments that I think we have great hopes for, but you have to be patient till all of those things become coming to fruition. I'll answer the second, third question before I pass it to Paul related to Spectrum. I'll talk about the direct to device. That's another example of where Boost and 5G networking and mobile business ties to user satellite business. I wanna say that already have, as you know, as I mentioned, we already have. We've had a service that directed device messaging, direct to satellite messaging for a couple of years. We have not been beating our chest on it. Other people are very proud of the first experiments. We have been selling it commercially in international markets, and we certainly can do that in the US as well. But we don't think that's end of the game, and I think that's not even beginning of the game. We started that game many years ago. We tested five or six years ago. But I think the real game is Leo. You know, so I'm bringing it to your question. Yes. It's a Leo-based solution. The LEO-based solutions will be low latency and provide can provide our solution can provide natural use case where you can't really tell the difference whether your phone is connected to the, you know, a ground-based, you know, mobile station, cell site, or is it connected to the satellite? You know, that's just being distinguishable from a consumer's perspective. And we're not gonna do everything in-house. We'd certainly have technology to do a part of that. Based on the capabilities we have at Hughes and we have Boost. Think we have some critical technologies and institutional knowledge that we're gonna bring to table. But we are going to use partner manufacturer and technology companies give us that best experience. Paul, would you like to talk about the Spectrum?

Sure. Thanks for the question there. Just to level set, for book purposes, we do not amortize the spectrum, but for tax, we do. I believe is what your question is, and we do start to amortize that upon purchase.

Got it. Thanks, guys.

Our next question from the line of Bryan Kraft with Deutsche Bank. Please proceed with your questions.

Hi. Good morning. I had a 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, you know, 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.

A number of questions you want. First of all, I think we are at the moment, obviously, we try to maximize our market opportunities. We will, you know, address, you know, in multiple fronts, we are working on, you know, financial and growth improvements. You know, as I said, Boost Mobile and Hughes, everywhere. We are any opportunity in front of us, we won't ignore it. Simply because of, you know, but potential limitation of capital. I mean, we are limited on resources and it's not just capital. You know, we are a start-up in many ways. You know, we are a company of $15 billion revenue, but start-up in every many ways. We are a challenger position. So we can only address so many opportunities given the, you know, capital that human resources we have. But at the moment, I'm not looking at missing any opportunities because we don't have the cash at hand to finance it or develop it. Your second part of the question was, you know, obviously, in and are we concerned or are we focused on in any way to increase our liquidity, you know, over a longer horizon. The answer is we always look at that. I mean, that's not we're not we're focused at the long term. We understand our obligations that are ahead of us. We are, you know, just like we did in 2024, we understood our obligations. We met our obligations. We found solutions that put us in a position to gain and win, create shareholder value. And we have done that. And we will continue to operate with the same fiscal discipline and, you know, mindset of, you know, shareholder value creation. We are cognizant of what, you know, financial needs we have in the future, and we do intend to stay ahead of our needs. With whatever means we have.

Thank you, Hamid.

Thank you. The next questions are from the line of Ben Swinburne with Morgan Stanley. Please proceed with your question.

Thanks. Good morning. Two questions. One for Paul Orban, and then I wanna 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 2024 which was your guidance. Do you have a dollar number you can share just to make sure we're looking at it the way you guys are as we think about 2025? And you mentioned the $1.2 billion burn in 2024 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 2025 versus 2024? Thanks.

So let me address the first question or second question first. So we don't give guidance on free cash flow or cash burn. What I will say though is if you take a look at our disclosures there, you'll see that we have about a little more than $500 million more in interest payments in 2025 versus 2024, which will then be a drag on free cash flow. As it relates to giving numbers for operating free cash flow, we don't disclose those, but it was better than our expectations. That we've had to start the year. So it was a good number, and we're very pleased. That the operational efficiencies that we put in place actually came to fruition, and we saw the benefit of it.

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 going back into the 2024 quarters, we would all be appreciated. I figured I'd at least throw that out there. Paul Gaske on Starlink, there's a lot of noise, obviously, around Starlink. T-Mobile's Super Bowl ad got a lot of attention. Can you just talk a little bit about HughesNet's position, you know, the technology of JUPITA 3 and how it compares to Starlink and we're seeing these overall sub declines, but is it your expectation over time we should see growth in that business? And do you view Starlight as a competitor in the enterprise and government space, which is obviously meaningful to the Hughes business, in general. Would love to hear your thoughts there. Thanks.

Sure. Well, let me first say that the TV ad you're referring to actually was a direct to device advertisement to Starlink T-Mobile. Right? So that's really, you know, not in the broadband space. But if you look at the broadband space, a couple of things going on there. Obviously, they have a huge fleet that's, you know, addressing a lot of markets worldwide. But if we look at our Jupiter GEO service, you know, we're focused primarily on customers that we see want video services. If you look at the typical consumer, you know, you can break them up in different categories, but an awful lot of them just wanna watch their streaming videos nowadays. So we've repurposed our positioning to provide an economical satellite solution for rural America where they can get their video services and, of course, interactive is included. But we're focused on the customers that are trying to get the good video experience. So we see that as a natural fit for us. If I look across broader markets, I think this answer would be similar. We're looking at ways we can be in a differentiated position relative to a Starlink. You know, we have some LEO products and offerings that we provide, and those, again, we look to, you know, to provide special service parameters for our customers, special SLAs, and so on. So in all cases, we look at the differentiation of that. So those are it's that differentiation which will drive our long-term future.

Thank you very much.

The next questions are from the line of Tim Horan with Oppenheimer. Proceed with your question.

Oh, thanks, Seth. Can you give any more real-world qualitative maybe color on the advantages of the cloud kind of brand network that you're operating and congratulations on the number one network in New York. And then I had a go-to-market question.

Hi, John. Yeah. Hi, Tim. It's John. And thanks for the question. Look, in top level, when you look at how we approached our detecting, building out the network, it looks a lot more like an IP system than a traditional wireless network. We're fully virtualized from the RAN to the core. It's a very flexible system in terms of our ability to deploy new features and software to really swap out pieces. A lot of traditional systems are very monolithic. In nature, and if you get your services from one or two big suppliers, we've got over thirty different key partners in the network. And we're reevaluating those and changing them all the time. In addition, I just we have a pretty advanced software development life cycle. In terms of the rate of which we deploy changes to the network, it's very similar to how hyperscalers run their own businesses. In terms of the types of things that we do there. And so as we look at what we have today, one of the biggest advantages we have by being more like an IT system is just really good access to all the data on how the network's performing, we're really using that to determine our next steps. So it's sort of like a game of money ball now. Because we just have a lot of advanced metrics to help us identify exactly where and how we're gonna invest. And that's very helpful as it relates to CapEx, very helpful as it relates to where the next dollar is gonna go. And from our perspective, it's really AI ready. And that we sort of got there. We got a little bit lucky on that one, but having a fully virtualized RAN is it really enables us to quickly address new advanced use cases, and we're having a lot of those discussions now across our partner ecosystem. I hope that helps.

Yeah. That's really helpful. Sorry. I missed what you said about AI. Did you say it's AI ready or?

Yeah. I think it comes down to the ultimate use case that you'd wanna discuss. I mean, ultimately, we have a virtualized RAM. So if you want, you could go down the path of saying, we'd like to put in Nvidia processors at the edge. We do have, for example, probably one of the largest distributed edge compute implementations in the world. Yes, I did say it's AI ready.

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

It's a bit too early to see how cost-effective it is till we actually see the take rate with New York. We are pleased with the initial results. We're quite pleased with what it has produced so far. We think the New York market is an incredibly important market. Just the scale of the market, in itself for us is very relevant in the density of the market is also very efficient for us. So we are very our Spectrum position is very advantageous. So we are good in New York. And it's too soon to tell. All indications that there is a good approach. You know, we will obviously, as I said, we value steer our focus. If the local marketing efforts produce better results, we'll continue focus on local marketing. So this is a year that you're gonna hear more about it, but local marketing for us is an important angle to focus our spending where we make the most returns.

Operator, we're at the top of the hour, so we'll take one more question.

Sure. The final question comes from Adam Rhodes with Octis.

Hey, guys. Thanks for taking my question. Appreciate you squeezing me in here. With the FCC moving towards a re-auction of its AWS-3 spectrum inventory, want to hear how you guys might think about approaching that option. 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 Perry Spectrum secured notes capacity, do you think you might look to this as a source to participate in the re-option?

Yes. So, you know, we support the FCC moving forward, the auction. And we do plan on participating there. I think AWS use Spectrum is a very valuable spectrum and much more valuable today in our view than it was in 2014. And, you know, it has not the spectrum is not distributing devices. It's widely adopted. You know, we think it's highly, highly desirable, the spectrum. We do plan on participating. We are confident that the spectrum will go for far above the $3.3 billion to our judgment. I think that's also good for the FCC obviously, anything above $3.3 billion will go towards reduction of deficit in helping the government and all the actions that the Trump administration is taking right now would be aligned with that, trying to do that. So we feel very good and bullish about the auction, so we stand in support of it.

Okay. That's helpful. And then, I guess, any consideration how you might potentially look to use that additional capacity. Do you have?

But the capacity would certainly, you know, be our aspirational growth in the company is our network is large. And when the spectrum is available, we certainly see that it gives us additional capacity and heads room to take market share and grow. You're talking about finance?

Yeah. Oh, finance from the based on the price.

Oh, based financing based on appraisal. Paul, if you wanna talk.

Yeah. So you're right. There's about $2.9 billion of additional capacity, which would be a first lien on that spectrum. And actually, we get to go up to 60% on second lien, which would get us about $10 billion of capacity in total. You know, we're gonna be opportunistic when it makes sense for us to take a look at that. Right now, as Hamid just pointed out, we are flush with cash at this point in time. But when that auction comes up, we will take a look at that and we have many levers that we can pull to help finance that if we need to.

Great. Thanks a lot.

Thank you, operator. Thank you, operator. Thanks, everyone.

Thank you.

This will conclude today's conference. Disconnect your lines at this time. Thank you for your participation. Have a wonderful day.