DISH Network Corporation

Welcome to the DISH Network Corporation first quarter 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tim Messner. Please go ahead.

All right. Thanks, Rachel. Good morning, everyone. Thanks for joining us. On the call today, we have Charlie Ergen, our chairman, Eric Carlson, our CEO, Paul Ergen, our CFO. On the wireless side, we have John Sweringa, president and CEO of Wireless, and Dave Mayo, EVP of Network Development. Before we start, I need to remind you of our safe harbors as usual. 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 materially from historical results or from our forecasts. We assume no responsibility for updating forward-looking statements. For more information on factors that may affect our 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 thank you for being here today. I'm going to begin with a few brief comments before opening it up to your questions. As most of you are aware, it's been a busy few months, some planned and some not. On our last earnings call, we announced we had experienced a network outage that affected our incident response and business continuity plans. Once we determined the outage was due to a cybersecurity incident, we promptly notified the appropriate law enforcement authorities. On February 28th, we further disclosed that certain data had been extracted from our IT systems as part of the incident. Our investigation to the extent of the incident is now substantially complete, and we have determined that our customer databases were not accessed in this incident. However, we have confirmed that certain employee-related records and a limited number of other records containing personal information were among the data extracted. We've taken steps to protect the affected records and personal information, and we have received confirmation that the extracted data has been deleted. While we have no evidence this data has been misused, we have started the process of notifying individuals whose data was extracted. We restored the systems affected by the cybersecurity incident. Our websites, customer care functions, self-service applications, and payment systems are operational and have been since March. Our customer care operations are up and running, and service times have normalized. Our DISH TV, Sling TV, Boost Mobile, and wireless services all remained up and running throughout the duration of the incident. We sincerely regret the inconvenience to our customers and team members, and certainly appreciate their patience while we work to restore systems and return our customer care operations to normal. Data security is extremely important to us. Our team, including third-party cybersecurity experts, has been working to enhance our cyber defenses and overall security posture. We've upgraded our endpoint detection response system, and we've taken other measures to further secure our data and systems. We've also refined and will continuously improve our business continuity and system restoration processes. Now, with respect to the financial impact of the incident, we disclosed in our 10Q today that we incurred about $30 million of expenses, mainly related to remediation, additional customer support, and consulting and IT costs. This amount is included in cost of sales and our financial statements. We also disclosed that the outages related to the incident negatively impacted our disconnects and churn for DISH TV. The outages did not materially affect our Boost Mobile or Sling TV subscribers. During the incident, we undertook extensive efforts to support and protect our customers and employees and to further enhance our cybersecurity practices. Due to the commendable efforts by our team at DISH, we do not expect any additional material future costs or further impacts to our subscriber base from the incident. Look, I want to thank our customers, employees, partners, suppliers, and vendors for their support, patience, and understanding. And with that, I'm going to hand it back to the operator to start taking questions from the analyst community. Operator, please open the phone lines.