5/9/2023

speaker
Paul Gaske
President and CEO, Hughes Network Systems

to complete all the gateways in 2023 scheduled. As of the end of the first quarter of 2023, we have produced and shipped more than 16,000 subscriber, satellite subscriber core modules for inclusion in OneWeb user terminals. We are also seeing significant interest in our Hughes LEO terminal, which includes our electronically steered antenna, and we are very pleased to have been awarded another large contract from a customer for a version of this terminal. We will begin deliveries of terminal products later this year, also enabling sales of our managed LEO services to the enterprise and government markets featuring OneWeb connectivity. In our defense and government systems division, we secured numerous service renewals, including follow-on orders from Boeing for PTAS, the Navy for additional work on 5G, and one of our digital signage products for the Social Security Administration. We are pleased to participate in the ribbon-cutting ceremony for our standalone, open-RAN, secure 5G network deployment at Whitby Island Naval Air Station in Washington State on March 30th, which helped demonstrate the potential of 5G services in DoD applications. We look forward to growing our 5G capability at Whitby Island Naval Air Station, as well as on other DoD installations in the near future. Now to our international operations, we continue to allocate satellite capacity to address various enterprise applications in Latin America. As one great example of this effort, we announced a project with Star Group to provide sailor backhaul services to hundreds of locations in Mexico. In other parts of Latin America, we continue to develop enterprise opportunities and are running pilots with several operators. As for our HughesNet service in Latin America, we remain focused on adding high-value subscribers which is lowering churn and optimizing the yield in our existing Latin American capacity. In Brazil, we want a significant expansion of 800 vehicles for a fleet automation customer. In India, we received an initial order for cellular backhaul services in support of the operator's universal services obligation services. And we were recognized in India by the Economic Times as best managed service provider, a prestigious recognition of the role Hughes plays in the Indian market. In terms of the Jupiter system equipment sales, we continue to win orders around the world. This includes a significant number of remote terminals for deployment on the Eutelsat Connect VHTS satellite. Additionally, as we announced, Miasat selected the Jupiter system to enable broadband services on the Miasat 3D satellite, which will help connect the unconnected across Malaysia. And we announced that UziSat chose the Jupiter system to help bridge the digital divide in Uzbekistan. Now let me focus on Horizon 2 activities. These include our efforts to bring Jupiter 3 into service for expansion of our offerings in North and South America, as well as growing and diversifying our global enterprise business. I'm pleased to report that the Jupiter 3 satellite is in the final stages of assembly. Maxar continues to work diligently and expects to complete and ship the satellite to the launch site in June. We are coordinating with SpaceX to schedule the launch of Jupiter 3 at the first window that SpaceX can allocate to it, which is subject to preemption by certain higher priority government launches. Once launched, Jupiter 3 will deliver new broadband service in North and South America and quickly allow us to focus on growth by addressing the continued demand for high-speed broadband throughout the region. In preparation for the launch of Jupiter 3, the team is focused on developing service plans with higher speeds and more data, along with higher speed HughesNet fusion plans, creating the ultimate high-speed, low-latency satellite internet experience to rival any LEO satellite internet service. We believe the market is eager for these robust offerings, and we plan to have a highly competitive suite of services to meet a variety of our customers' needs. Horizon 2 also has a strong focus on expanding our global enterprise business, including the government sector. We plan to leverage our managed services portfolio, hybrid LEO-GEO business solutions, and our manufactured products to pursue growth. Nascent signs of Horizon 2 direction can be seen in the large enterprise orders and 5G activities reported here today. Increased participation in this vast market segment is a key element of our diversification strategy, as is improving our operational scale through potential small acquisitions, which we continue to explore. Now let me turn the call back over to Hamid.

speaker
Hamid Akhavan
President and CEO, EchoStar

Thank you, Paul. That was a good summary of our Horizon 1 and 2 activities from the first quarter of this year. I want to reiterate that while we are in Horizon 1, we are working on our other work streams, Horizon 2 and 3, in parallel. And to that end, we have had a busy quarter. Let me now focus on Horizon 3 and our longer-term strategy to expand into new markets through both organic innovation as well as potential acquisitions. While we continue to evolve acquisition opportunities, we are also evolving our S-band prospects. As we announced during the first quarter, we have begun construction of what we are calling the Echostar Lyra constellation of 28 LEO satellites. We are moving quickly to launch the first of these satellites to begin offering the store-and-forward Internet of Things machine-to-machine and other data services starting in 2024. At the same time, we are pursuing many avenues of exploration for our global S-band assets. For instance, we continue to bring on new customers in Europe for our Echostar mobile LoRa-enabled IoT service, and we have recently demonstrated our direct-to-smartphone capabilities in Europe using NTN IoT over our Echostar 21 satellite. We are testing similar services in North American markets using two DISH network satellites, and we are actively working to expand our services into additional global markets. With what we are learning from these deployments, we continue to refine our plans for bringing the Lyra constellation to market. These activities are not the only business development initiatives we have undertaken in service of bringing our global S-band network. We continue to actively engage with companies across the 5G NTN ecosystem to leverage the opportunities of the 3GPP Release 17 in developing a truly global 5G non-terrestrial network for real, anytime, anywhere device connectivity that is ubiquitous and transparent. Let me now turn it over to the operator to start the Q&A session.

speaker
Operator
Conference Call Operator

If you'd like to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Our first question comes from the line of Rick Prentice with Raymond James.

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