DISH Network Corporation

Good day, and welcome to the DISH Network Q1 2022 conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Messner. Please go ahead, sir.

All right. Thanks, Justin. Good morning, everyone, and thanks for joining us. We're joined on the call today by Charlie Ergen, our chairman, Eric Carlson, our CEO, and Paul Rubin, our CFO. On the wireless side, we've got Tom Cullen, EVP of Corporate Development. Stephen By, our Chief Commercial Officer, and we have John Soringa, President and COO of Wireless. And as always, before we start, I need to remind you of our safe harbors. During this call, we may make forward-looking statements which are subject to risks, uncertainties, and other factors that could cause our actual results to differ from historical results or from our forecast. We assume no responsibility for updating forward-looking statements. For more information on factors that may affect future results, please refer to our SEC filings. And with that, I'd like to turn it over to Eric for opening remarks.

Thank you, Tim, and welcome, everyone, and thanks for being here today. As many of you are aware, we have an analyst day on Tuesday, May 10th, where we're going to go into more depth on our wireless plans, and a link to watch the live webcast will be on our investor relations website. As for today, we're going to try to keep it short, but I'm going to begin with a few brief comments before opening it up to your questions. In regard to subscribers for all of our brands, we simply didn't execute according to our expectations. However, we did exercise good financial discipline. We continue to make progress on other fronts, and I'm pleased to report that our wireless network build is on track. In the first quarter, DISH TV lost roughly 228,000 subscribers. This is driven by several factors, including our local programming dispute with Tegna. As I discussed during our earnings call last quarter, we signed a new agreement with them in the first quarter and now have that largely behind us. In addition, our price increase is now in effect for customers impacted by that dispute, which will make a positive impact on our bottom line this year. You know, DISH TV continues to be profitable. It generates significant free cash flow thanks to our financial discipline and strategic marketing investments. We do remain focused on acquiring and retaining long-term profitable customers, and we continue to play where we're strongest in rural America with higher credit quality subscribers. Turning to Sling for a minute, in the quarter we lost approximately 234,000 subscribers. We had higher than expected customer attrition following the football season, but the bottom line is we simply didn't execute to the level we expected. In the second half of the year, we did finalize the reengineering of the platform and user interface. Look, we had a tough quarter, but we're optimistic that we can leverage the platform, our messaging, high-value products, and great experience to reach customers who overall video content bills are too high but still want the excitement of live TV. We also strengthened our leadership team in Sling. We hired Gary Shandman as our new EVP and group president of Sling TV. Gary's got an excellent track record, not only in the pay TV industry, but streaming. He, along with new and existing Sling leaders, will be focused on increasing market share and driving profitable growth for the business. Switching gears a bit, our wireless business continues to make progress. Our retail wireless business has lost approximately 343,000 subs in the quarter. We're still committed to our disciplined operational approach and driving profitable growth in the segment. It's important to note that our retail wireless results have been impacted by our acceleration of the CDMA shutdown, which continues into Q2, albeit to a lesser extent. However, during the first quarter of 2022, we and T-Mobile reached a proposed settlement and amendment, which, among other things, settled all open disputes, including CDMA matters, and contained favorable terms to us. Before we and T-Mobile can enter into this proposed settlement and amendment, we're required to obtain the approval of the Department of Justice, which has been reviewing it since February 22nd of 2022. The CDMA shutdown, along with the delay in approval, has materially negatively impacted our ability to compete. This includes our acquisition and retention efforts and our results of operations. We hope to hear from the DOJ soon and are optimistic that the settlement and amendment with T-Mobile will be approved. Our wireless network team has made significant progress, and we're well on our way to meeting our commitments, including our upcoming deadline of covering 20% of the population by June 14th. Our build-out shows in our free cash flow for the quarter. For the first time in many years, we're in the negative, but that's because of the investment we're making in our network. For some context, CapEx was $597 million in Q1 for that wireless segment. We expect our quarterly wireless network, OpEx and CapEx, to be consistent with Q1 for the remainder of 2022. It's important to note that we have the necessary capital fund portions of the bill happening this year. We are excited to be entering the next phase of our deployment. On Wednesday of this week, we commercially launched Project Genesis in Las Vegas. I want to take a moment to congratulate the entire team. This is a major accomplishment, but look, it's just the beginning as we prepare to launch in additional markets as discussed on our last earnings call. We also just announced a new partnership with Samsung that will help our network expansion. and provide greater flexibility to deploy our cloud-native network. Look, it's going to be a remarkable year as we execute our vision to change the way the world communicates. Our best days are certainly ahead of us here. We'll share more details regarding our wireless plans next Tuesday in Las Vegas at our analyst day, and we'll look forward to seeing many of you there. Now I'd like to open it up to Q&A.