EchoStar Corporation

Greetings, and welcome to the ECHO Star Corporation third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Dean Manson, Chief Legal Officer.

Thank you, Joe. Welcome everyone to Echostar's third quarter 2025 earnings call. We will begin with opening remarks from Hamid Akhavan, president and CEO of Echostar Capital, followed by Charlie Ergen, CEO and chairman of Echostar. We are also joined by other members of the leadership team. We request that any participant producing a report not identify other participants or their firms in such reports. We also do not allow audio recording, which we ask that you respect. All statements we make during this call, other than statements of historical fact, constitute forward-looking statements made pursuant to the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements 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 for the fiscal year ended December 31, 2024, filed on February 27, 2025, and our subsequent filings made with the SEC. This information and supplemental materials related to today's call will be posted on our Investor Relations website. 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 reports and should not place any undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. We refer to OIBDA and free cash flow during this call. The comparable measure and a reconciliation for OIBDA is presented in our earnings release and in the case of free cash flow in our Form 10-Q as filed with the SEC today. With that, I'll turn it over to Hamid.

Thank you, Dean. Welcome, everyone, and thank you for joining us today. I would like to start by addressing the change in our call format this morning in that we have Charlie Ergen, our founder and chairman here with us today. Charlie and I will provide some updates on our business, our recent transactions, and discuss some changes within our organization. As you know, we recently announced the signing of a series of major transactions, one with AT&T at the end of August and another with SpaceX in September. valued at approximately $23 billion and $19 billion, respectively. These transactions were instrumental in resolving the FCC's review of the company's spectrum utilization. Just this morning, we announced an amended definitive agreement with SpaceX, which builds up on the agreement the companies entered into in September to sell EchoStars unpaired AWS3 Spectrum license for approximately $2.6 billion in SpaceX stock. Once these transactions close, we will have the capital runway necessary to continue to expand our existing operations as well as the freedom to pursue new opportunities. This focus on new growth avenues significantly broadens the aperture of our business going forward. In light of this increase in the scope of responsibilities for the company, Charlie and I have decided to create a new division focused primarily on capital management and M&A. Going forward, I will lead this new division as the CEO of EchoStar Capital. I will also continue to manage Hughes Network Systems. Charlie will take on the position of EchoStar CEO in addition to his role as chairman. Managing our video and wireless operating business units, these changes are effective immediately. Building up on a 45-year operating heritage across communications, media, and technology infrastructure, EcoStar Capital will be a great steward of our resources, a vision and thesis-driven and strategic investment-oriented operation with a global perspective and a proven track record of value creation. Our institutional knowledge and experience uniquely positions us in the marketplace to create superior and lasting value through innovation, execution, and integration. allowing us to invest in operating businesses. We can expand our capabilities and market reach and focus on initiatives that generate sustainable shareholder value. I'm incredibly excited about this opportunity and ability to usher in this new phase for Echostar. I will now hand off to Charlie for a few comments.

Well, it's good to be back on the call, and it's in some funny kind of way, but I just have a couple comments. And to you, my style is just to take questions because I never know what's on your mind and I made and I will do that and team one housekeeping issue is is We agree with the president in the sense that we think corporations should only file have to file twice a year Instead of quarterly because it just takes it by the time you finish the quarter You're almost starting to to work on the next one. It takes an enormous amount of time but since that has but Hasn't changed, you know, obviously we'll still continue to file quarterly, but we we may I from time to time not do quarterly conference calls like this because we'll try to stay focused on our business. We will do a call next quarter for year end and obviously we'll have a lot of things changing between now and then, but after that we may be sporadic in terms of how we do these calls. So with that, let's take questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And the first question comes from the line of John Hodulik with UBS. Please proceed.

Great, thanks. Good morning, guys. Maybe first on EcoStar Capital. Charlie, could you talk about, you know, how it'll be capitalized? Will all the proceeds from the spectrum sales go into EcoStar Capital? Or just any of you could tell us about those proceeds would be great. And just what areas do you expect to invest in? And then lastly, if I could, you know, you still have the AWS3. spectrum. Any update you can give us on the potential sale of that block? And just how do you think of relative value for the paired versus the unpaired transaction we just saw? Thanks.

Yeah. Thanks, John. I'm going to take the second part of your question. I'm going to have, I think, Amit, the better person to answer the EchoStar Capital question. But on AWS 3, the big picture is the sale to SpaceX is timely. I think it's because the We still owned the pair AWS3, and we sold from Spectrum to AT&T. The unpaired was, for us, somewhat orphaned Spectrum. But in SpaceX's hands, it gives them a lot of flexibility of combining uplink and downlink, and it gives them a lot of flexibility for where Spectrum might come in the future. So for them, obviously, it went for a lower price, but they're going to be able to make obviously much better use of it than we can in today's terms. And so, and we're pleased to get SpaceX stock because, you know, we think that's the, Nameet will talk about this maybe later, but that's obviously kind of the first place Equinostar Capital is going with the equity interest in SpaceX. And we can talk more about why we think that's an excellent investment. The paired spectrum is, we still have. Obviously, we would transact if there was a meaningful transaction. AWS 3 is quite a bit more valuable. For us, and I think the other carriers look at it the same way, when you look at spectrum, value comes really from three sources. One is, is it in phones? Is it in devices? That was one of the biggest problems we had in building our own network was getting some of our spectrum in devices, but Our AWS 3 paired spectrum has always been in devices for as long as I can remember. I doubt there may not be any phones in the United States that have AWS 3 spectrum in it. So it's already valuable in that sense because you don't have a bunch of extra cost on devices. The second thing is who uses AWS 3? And the three major carriers all use AWS 3 spectrum. It's a very wide band, 70 by 90 spectrum. megahertz. It's a very wide band. And all three of them use it. And in most cases, they're adjacent to our spectrum. And that brings up the third thing is, where does it cost you to deploy the spectrum? And in most cases, it's my understanding that the radios that are out there today all can take our AWS3 spectrum without having to climb the tower and put new radios in for the most part. So it's a very valuable spectrum in that sense. We'll get a We'll get a sense of that, obviously, as the auction comes up next year for some of the spectrum from a smaller swath of spectrum. But we're very comfortable with that spectrum, and we'll work with the FCC in terms of the auction rules and how that might all take place. But I think it's the most valuable piece of the spectrum we have, and we'll see where that goes. Amit?

Yeah, thank you. I'll answer the question regarding the proceeds from the sales. Our intention is that all of that would be within the EcoStar Capital. And EcoStar Capital will, I believe our shareholders would be remiss if we didn't take advantage of 45 years of our institutional heritage and thesis-driven innovation and execution in the broad fields that that EchoStar has been involved in to maximize the value that they can get for that capital that comes into the company. I can't see too many companies that have the strategic understanding and the breadth that EchoStar brings to the table across telco, space, aero, defense, and all the fields that the portfolio families of EchoStar have been leading and involved in. Now, obviously, we always will be great stewards of capital and will maximize the use of the capital. And if distribution of capital is necessary, we'll do that in an optimized way to our shareholders as necessary. So the roadmap is not 100% laid out at the moment, depending on how we see the market and opportunities come to us. We'll try to take advantage of every opportunity the best way and as i said um i i can't imagine too many companies out there with the breath and the knowledge that echo star has has gathered over the past 45 years that's our plan at the moment obviously as time goes on we will be more specific about how and where we deploy that capital or any sort of distribution that could be decided in the future but to start we need to get all of that in place um the money is not here yet so we have time to um organize ourselves around how we would maximize the use of that capital.

Great. And one more follow-up, if I can. Just, Charlie, any update on negotiations with the tower companies? And what happens to the entity, the DISH network that has the deals with the towers? Will that entity sort of stay in place?

Well, the, you know, obviously, we had to some unprecedented kind of curveballs on us when the FCC informed us that they were going to investigate and take the structure. So, you know, obviously we believe that's a force majeure event. And so we're happy to, we'll work with all our vendors. Obviously we're the biggest company that got affected by that, but obviously we also have other vendors and people we've worked with for a long time that are affected by that. and we'll work with them to the extent that they want to work with us to try to resolve those issues. Unfortunately, one company has already commenced litigation, and that kind of sours some of the ability to talk to people because once things go into litigation, it's lawyers talking to lawyers, and it's not business people talking to business people. And so that's a bit unfortunate, but the... The network is obviously an independent company. When we did it, it's still an independent company. And it will obviously handle this through that entity. It will handle all these negotiations through that entity. So we'll see where that shakes out. We hope that everything can, you know, other than the current litigation, we hope that those things can be resolved and we're open to have those discussions.

Thank you both. The next question comes from the line of Brent Penter with Raymond James.

Please proceed.

Hey, good morning, everyone. Thanks for taking the questions. A couple follow-ups on some of John's questions. So you clearly are excited about the SpaceX stake that's now getting bigger. As you bring in some of this net cash, how do you think about that as an additional area to deploy capital? And as SpaceX raises additional capital, do you have rights in terms of maintaining or potentially growing your stake? Just help us think about that SpaceX stake and then where you might put your capital.

First of all, we are very excited about having that equity on our balance sheet. We consider that our first investment in Echo Star Capital. We believe that equity has tremendous growth opportunities just by the fact that it's SpaceX. has such a significant lead in the technology within the space. And the space is becoming the next infrastructure in the world as launch capabilities and cost has become economical. And also global security and communication has become more important in the age of AI. So we see that as being a strategic holding. We obviously will keep our balance sheet excited about having the additional $2.6 billion that joins it. We certainly look to have additional investments of similar strategic nature. As I mentioned, there's a number of areas, a number of industries that we have a heritage and a deep thesis about understanding of those trends within the industry. We'll be very careful about investments that are synergistic with our thesis and understanding. Very excited about that opportunity. I can't comment about us getting more SpaceX equity or some other transaction. As I said, this is the first day of our announcement about how we're going to go forward. But we will be diversified. We'll certainly have, we'll be great stewards of capital. And as time goes on, we'll be more specific about the transactions. Good news is that we still have a few more months before we even have the capital on our balance sheet. So we do have the time to do a proper job of planning and communicating with you where we're heading.

I'm just going to follow up a little bit with the This will give you some insight, I think, to the way Hamid and Echostar will think about, Echostar Capital will think about things, but SpaceX, in terms of we're excited about that as an investment, and what things we look at, first thing we look at is management. And SpaceX management, we've gotten to know over the last 10 years because we've launched on them, and they really have been the best vendor that we've worked with in space. solved very complex problems for us, moved very quickly. And then we've worked a lot closer, obviously, as we've gone through these deals. And so they don't brag about themselves. They're pretty understated, but they are doing, based on my experience, they are doing incredible things with space, whether it be launching or satellites or services. So the second thing you look at is, obviously, is this a place that, over the next decades, there's going to be business. And as Amit said, space is going to continue to grow. Particularly, you see governments with Golden Dome and security, but it's also the consumer. And the ability to do broadband from satellite and also connect to devices, those two things fit together. There's a lot of synergy between those two things in one company. And the third thing is, who's going to be the winners and losers? And We look at other industries, you know, I don't know who the winner in AI is going to be. One thing I'm sure of, there will be winners and there will be losers. I just don't know which ones will be winners and which ones will be losers. But in space, I think it's pretty obvious that while there's some companies doing some very interesting and creative things, SpaceX is going to be the leader for the foreseeable future because they have the most efficient launch capability and satellite manufacturing capability, in my opinion. that I've seen. When you add all that together and then I think when we built for 17 years this ability to technically be able to go satellite device and regulatory wise and the spectrum and all those kind of things that's now in SpaceX hands or will be in SpaceX hands and we know that worldwide capability in the same frequency we know that We would have built a good system, but they're going to build even a greater system in a faster period of time. So that's going to grow their business by itself is going to be a huge part of where they grow that's not probably in people's calculations of their value today. So that gives you a feel how we think about things.

Okay, great. Appreciate all the detail there. And then a follow-up on the tower side. Since you all feel that you're relieved of those tower payments, what would actually cause you to stop making your payments to the tower companies? And then just any update on the timing of when we might have a resolution as we think about litigation and negotiations with them?

Yeah, I just don't think we would get into that. I mean, the only thing I would say is litigation is not positive. Okay.

Thanks, guys.

The next question comes from the line of David Barden with New Street Research. Please proceed.

Hey, guys. Thanks so much for taking the questions. Appreciate it. I guess my first question, Charlie, you know, there weren't many numbers in the press release today about the SpaceX AWS 3 Unpaired deal. But one of those numbers was that you pay or you invested at a $212 price. So could you, for the public side investors, tell us what information do you have? What information can you share to support, you know, what apparently is your belief that 212 is an appropriate valuation for this SpaceX company today? And then I guess my second question is maybe for Hamid or maybe you also, Charlie. The taxes on the asset sales. Joe, what the taxes would be would be helpful, kind of given all the different moving parts on depreciation and capitalized interest, but also there's a theory out there that if your frustration of purpose argument works with respect to the towers, that you have access to the 1033 stepped up basis on these spectrum sales and that the taxes could be far less than maybe the market imagines. I wonder if you could kind of opine on that. Thank you so much.

Yeah, so I really, in terms of valuation of SpaceX, I would just say that I think I'm always repeating myself that we don't, you know, we have a pretty good feel of what they're doing and where they are. I think they just publicly announced 8 million customers and And in broadband, I think you could overlay their growth in broadband and then overlay a device growth and look along that same curve, and you would see a much greater valuation than the $400 million. And again, as I said, the management team is excellent and understated, in my opinion, in terms of what they do. They have a pretty big moat around their business. You have 90% of the launch business, and they've launched the new generation of satellites, which is at least twice as big as anything else out there, maybe even bigger. They've launched it 12 times, and they've caught it, returned it back. And other people, unfortunately, are struggling to get their first ones up. So I think their lead is actually growing. Their biggest competitor is China. probably, but China, I don't know, has even successfully landed rockets. So their lead is big and growing. So if you had to pick a winner in an industry, from my opinion, you know, I could be wrong on this, of course, and while they'll face competition and there's creative things going on in their space, they're the most obvious of any industry that I know of, they're the most kind of obvious winner, right, in terms of, you know, every other industry is You've just got, you know, a lot of people that you just don't know who hopefully ends up on top. And, of course, SpaceX still has challenges to get through, and there's still risks there. But that's the way we think about it. That's the way we'll think about things at Echo Star Capital, you know, who has those characteristics. On the tax side of it, We're well aware of 1033, but maybe I turn it over to Paul, or do you want to take that?

I'll make a comment on that, then we'll go to Paul. First of all, I absolutely endorse Charlie's statements on SpaceX, but first we want to mention that we are not insiders to SpaceX, so we have no inside knowledge of SpaceX, and Charlie and I's views are 100% aligned and common on how great SpaceX is, but that's just our personal views based on what we have seen. you should rely on SpaceX's statements on what they see about the valuation of the business. We are excited about having that equity. Just as Charlie said, we see all the trends in a space being good and SpaceX being a leader in there. Naturally, we think that this is a good place for us to hold. Now on taxes, we have not broken out the taxes separately from our other liabilities in the towers and others that we just referenced. As we have previously said, we've not sharpened our numbers since the last time we spoke in Paris. We still believe that somewhere in the range of $7 to $10 billion is the combination of our unoptimized taxes and unoptimized value of our liabilities. So that range is what we essentially think we have. Now, can 1033 provide additional benefit and reduce that number? I'll ask Paul. He might have some knowledge in terms of how applicable that may be. Paul, Maybe you can comment on that.

Thanks. So, you know, there's a lot of puts and takes there. Obviously, the AT&T transaction is going to close in 26. The SpaceX transaction is expected to close in 27. We have NOLs that play into the mix. And we're going to do everything we possibly can to mitigate the exposure. We're working on that currently. But the range that Hamid gave that includes both decommissioning costs and tax of $7 to $10 billion is still currently our best estimate.

So just to follow up real quick, the 1033 is not in the 7 to 10, but it's a possibility. Is it contingent on kind of how these litigations go and whether you're successful in making this frustration of purpose argument, which would allow you to kind of move up the basis and shift assets to another class?

I'll just say, it's been used, I think, some of the 600 megahertz broadcasters When they put a spectrum in auction, I think they used 1033 in some cases successfully. So we're aware of it. And obviously, there seem to be a lot of similarities between how it's been used in the past. But everything is specific. And we'll look at that as part of our strategy. And I don't think it's contingent.

Yeah, I would just add to what Charlie said. It's not contingent on what happened with the litigation. Those are totally independent concepts.

Got it. All right. Thank you so much, guys. Really appreciate it.

The next question comes from the line of Walter Piecek with LightShed. Please proceed.

Walt, we can hear you if you were there. Can you hear me now?

Can you hear me now?

Oh, yeah, we can hear you. Yes, yes.

Sorry about that.

I know. I hate when I say it that way. On SASCAP, I assume all the cash from all the spectrum sales is going into there. Does that keep it away from DBS shareholders and any OPEX obligations, meaning like the tower companies. And then, Hamid, you kind of like danced around returning the capital, saying if it's necessary to do it. I don't know when it's ever like required that you distribute cash. But can you give us a little bit more color on kind of at what point you say, hey, we've used our 45 years of experience. We've looked around. There's not enough interesting stuff. And we're going to send cash to the shareholders.

Let me take that piece first. First of all, comment of dancing around. First of all, Walt, it's a little early for me to give you an exact formula or recipe or roadmap for how we're going to utilize the cash. But as you would expect, as any great company that has institutional knowledge and heritage within certain verticals, the best ability, the best option usually is to use that knowledge to deploy the capital because they're strategic. They're the insiders to an industry that a financial investor from outside will never, never get that insight, right? So we would be remiss not to take advantage of all that institutional knowledge and return the capital to shareholders that would now they have to deploy that capital in a way that they would not take advantage of this disability. I think the shareholders that have been with us, and we have great ones around the table right here, Charlie himself, would certainly want us to maximize the value. Now, there's a limit to that. If I had $2 trillion, I couldn't use all of it. How much institutional knowledge I have, I probably couldn't use enough because the industry just doesn't have that ability or just the opportunity is not there because the market is not good or the industries that we're focused on are out of favor or just don't have enough great opportunities for us. Then we obviously, as great stewards of capital, we figured out how we would distribute that capital back to the shareholders in a tax-optimized way. You know, we are not novices in this, and certainly we're not walking into this without a full understanding of the options ahead. The only thing I can say is that we have deep heritage. This company has proven it can return value by the fact that you have seen for the past year the thesis that Charlie had put in place decades ago has come into play. There's much more we could do there. But if at the end of the day we have excess capital beyond what we can properly use, strategically use, we certainly will not sit on it in an unoptimized way. Very, very early stage for me to make any further detail on that, even if you're mature for me to say that, just trust us that we'd be great stewards of capital. We manage it like our own capital, as it is our own capital, primarily.

And then just, is this protected from DBSD and the tower companies? And then just really a follow-up on that. Can you at least say that you're not going to like build a network or something of that ilk? These are really more passive investments that you're giving, that you're using your years of expertise to look at?

Yeah, no, just Charlie, I'll take, maybe Paul will jump in there, but the You know, obviously, our capital structure is well known, and there are obviously separate independent entities for specialized purposes. You know, one thing that is clear for the AT&T transaction is, you know, we will be paying the DBS. The DBS will receive about $2.8 billion for Tronch B, which is the C-band spectrum that we're selling to that's collateral there. So the one thing you can say is that there will be capital moving into DBS at least $2.8 billion.

And just on the types of investments, I assume these are not operational. These are all passive, like, hey, we're investing in great new things that maybe SpaceX gives us access to?

So, well, we certainly don't intend to be purely passive investors. We don't intend to do that because obviously we do not want to be, and it's not in our best interest, our shareholders, to become a 40-act regulated company, investment company. We will have to manage this according to those rules, which means we'll make a combination of active and passive investments. And even when we make a passive investment, it will be strategic for us. It will be A thesis-driven investment, it will not be just, we're not wealth managers. We don't view ourselves as just broadly deflowing capital in the marketplace. We only focus on areas where we understand. Now, in some cases, that investment cannot be a controlled investment or significant influence investment, as is the case for SpaceX. The valuation of that company is very high. We would not be able to provide enough, and we would not have access to enough equity to make that one a control or significant influence as defined by the 40 Act. But we will balance that with other investments that we will have control and we will have operating influence to the point that we manage around any sort of regulation that would be in front of us. We will be much more precise in all of this as time goes on. Great questions for today, but we are aware of how we need to manage that and we are not going to become a passive investment company we like to rely on our heritage of operations. As I mentioned, we think we can, combination of our understanding of technology, our ability to execute, and our heritage of innovation will give us a very good platform to create, you know, great value.

Got it. Thank you. Realize we own and run, you know, three different companies today, and Hughes and... and dish and sling and boost. And clearly, obviously, from a boost perspective, we think that's a business that should grow. And obviously, the video business is somewhat challenged, as it has been for a decade. But we still see those businesses lasting for a long time.

And we obviously have, both Charlie and I have extensive operating experience, not just domestically, but also globally. We have a very broad range and scope of places and domains and verticals that we can deploy the capital effectively.

Got it. Thank you. The next question comes from the line of Michael Rollins with Citi.

Please proceed.

Thanks, and good morning. Charlie, in your brief opening comments, you described the reasons that you were going to do an earnings call for the fourth quarter with the end of the year, and there's changes that could be coming between now and then. I was just curious if you could give us a little bit of a preview or roadmap of, you know, the range of potential changes that can continue to happen for EchoStar between now and your fourth quarter earnings call. And then secondly, just to follow up on kind of moving beyond being a wireless network operator, as you're selling the spectrum, at what point can you unplug the radios so that you're no longer meeting the minimum use requirements, but you're able to start saving money from doing that? Is it when these transactions close? Is it now that you've announced a few transactions and you have maybe some more possibly that you have to kind of figure things out for? Or what's the formula where you could just start unplugging?

On the second part of that, we really need to work with the regulators on that. Those discussions are ongoing, so it wouldn't be appropriate to discuss that, but obviously we'll have more cover on that early next year. I'm going to give you a general answer because it's a very good question about what might happen between now and February. You asked a good question. I think we pivot two pivots in our company. One is the pivot to being a capital-rich company, maybe more asset-light. But the other pivot is within EchoStar, where I'm going to be involved in the day-to-day operations now, is to pivot to long-term thinking. So we had to think about things short-term because we were putting all our capital into the build-out of our network. And we... had lots of requirements regulatory to do that, so we did that. So we had to think about things in the rest of our businesses in a short-term way. That historically is not the way we think as a company. One of our principles is to think long-term, and we can get back to that principle now. And so I think you'll see that by thinking about things long-term, maybe we'll take a little bit of a step backward, because when you go from short-term to long-term, there's a little bit of a step backward, but I think you'll see that in a general sort of way will be more competitive in terms of what we're doing in some of our businesses. We think about things in terms of long-term cash. We don't really think about it for EBITDA and those kind of metrics. We think about deploying capital where we get a return, and we think about strategically, particularly in wireless, where you're one of really five, you know, basically doing the same thing. How do we do some things differently and how do we look like a little bit different animal than what everybody else was doing? And so, you know, we were kind of going, we were building the highway and we were Uber and we were building the highway. Now we get to be Uber and we just rent the highway. And so for that, that puts us in a little bit different situation and I will say that the I don't think people truly understand the efficiency of what we call a hybrid M&O, where we rent the radios, but we have the core, basically the brain, the cloud, and how the system operates. So we can have a differentiated experience for our customers. We do get a lot of data from what we're doing with customers, so we can make that experience better and automate that experience. And yet we don't have the... burden of building and maintaining the towers, which normally wouldn't be a problem, but our scale is so small that that was a challenge for us. So I don't know that I totally answered your question, but from a big picture, we're going to be thinking a little bit longer term in the core business.

Thanks very much. The next question comes from the line of Ben Swindon with Morgan Stanley.

Please proceed.

Thank you. And Charlie, good to have you back on the call. Appreciate your time. I was curious if you could talk about any opportunity to sort of wrap the remaining AWS 3 spectrum that hasn't been sold with the upcoming auction where you are, as you know, on the hook for any shortfall with a multi-billion dollar liability. Is there any opportunity with the FCC to sort of combine those two to try to monetize the spectrum and also kind of de-risk the auction from an EchoStar perspective. I'd love any thoughts if you have any to share.

Yeah, Ben, it's a good question and I'm not going to answer it, but I'll talk around the edges of it. I mean, obviously this FCC put us in a difficult situation. We went kind of through the five stages of grief, of denial and anger and depression and You know, now we're at acceptance, of course. And that's the first thing from our perspective. The second thing is, you know, we really hadn't talked with the FCC folks for a couple years. And once we started having conversations, you know, we've gotten on the same path. And this FCC has quite the vision of – we didn't totally agree with it, but they want Spectrum to get used – more quickly and for the benefit of more Americans. And it's hard to argue with that vision. And once we've started communicating, you know, now we're in lockstep really with where the FCC wants to go. And it's our job to now work with them and make sure that all our assets get put to the best use for the American public. Part of that indirectly goes to your question, as you look at the AWS3 auction coming up, There potentially are ways to make that the most efficient option, and we're in the process of those discussions with the FCC, and they will obviously, others will have input into that as well. But we at least have a sounding board to say how can we share your vision, this FCC, to get this spectrum in use as quickly as possible and in the hands of people that will compete with it. One of the great things about the AT&T deal we did is because of our hybrid M&O deal with AT&T, we get to actually use the spectrum that we sold them. You can think about those things in a different way. This FCC, they have a vision of where they want to go. They're going to be the most influential FCC. that I've worked with ever, and so it's our job to help them get there where they want to go, and that's what we're going to do.

That's helpful. And just to follow up on the Boost business, now that you're running it, you know, the history of MVNOs, these are typically not great businesses, and I know this is a hybrid MVNO, but you sound excited about the opportunity. it's got revenue scale, at least to a degree, but it's still burning a lot of cash flow. I know you're going to start decommissioning. You've started decommissioning the network. Can you talk about, I guess, the strategic vision for the business? And then I don't know if there's any help you can give us on the path to getting this thing to cash flow positive now that you've switched models.

Yeah, so the strategy is simple. We have to do two things. Right, and if you look at any company that's the fourth or fifth player, this is what they have to do to be successful. You have to do two things. You have to use technology in a way to be different, and you have to do things that the other guys aren't doing or they could do but they won't do. It doesn't make sense for them to do it. So on the technology side, we've already made our first strategic move, which is an agreement with SpaceX for our boost customers to have worldwide connectivity to the handset, both for voice, text, and broadband. So I'm sure others will follow suit with SpaceX. But carriers now are, many carriers have some choice as to who they might sign up with. And so there's a wide variety of where those carriers are going. we are highly confident that we have aligned with which the company is going to have the best technology and we can do some things different than others. So we've already started that. That's two years away probably realistically, but that we've already started. How we do things differently, I think as far as our team to come up, I officially start like Monday, so we'll start having some teaching sessions about how we can think about how we do some things differently. I don't think it's a good path. I don't think we can be successful if we look just like the other guys. They just have too much scale.

And any help on just getting the business to profitability? I don't know how much of the expense base goes away when you fully convert? Anything like that?

Those of you who have been with us for 30 years as a public company know that we like to run things for cash and we don't like losing money. So... I don't have a, we'll have a lot more on that, but I think that as you move to long-term thinking, that becomes an easier path. And short-term is always difficult. But that's just the cards that we had to play short-term. Now we get to play a bit better. We're better as a company when we're thinking long-term. And we're definitely going to be, and again, I think we're, The nature of our hybrid M&O, it's underestimated by the market. People try to say it's an M&O or this or that. It's a different animal. And the AT&T network that we ride on is a great network. And with our spectrum, they're already putting our C-band to use, is my understanding, some of it. So that network's only going to get better. I just think we could be more competitive. We certainly would be more competitive than we have been in the past.

Yeah. So adding to that, one of the things that hopefully shortens the path to profitability is the reduction of the fixed cost of the business, which you can imagine is drastic. Certainly from a network side, you need a much greater scale to reach that profitability point to retire the fixed cost. Obviously not having that shortens the horizons. tremendously. And second, you know, having an MD&O deal with AT&T kind of makes our cost more valuable on a usage basis. So again, another way to create offering leverage for us as the more we sell, I mean, obviously, we don't need to have a large scale in order to re-scrub. So all this strategic thing that Charlie's talking about should get us to profitability in a much shorter horizon that you would have originally modeled. We're not going to give you that today, but obviously as time goes on, that information might become more available to you. Be excited about it. We're really excited about our ability to develop that business as the most scaled MVNO, hybrid MNO, MVNO in the marketplace with the benefit of having access to the space and having the great coverage of AT&T, which is using our spectrum now, will be the best coverage in Asia, in our view. Thank you. Next question, operator, please.

The next question comes from the line of Brian Kraft with Deutsche Bank. Please proceed.

Hi, good morning. I had a few, if I could. First, as a follow-up on the tax side, I was wondering if you could confirm that there will be a tax benefit from the impairment charge that you're taking today, and is that benefit excluded from the $7 billion to $10 billion range that you cited? Secondly, just a follow-up on AWS 3 and the auction, does the timing of the auction matter? as it relates to you selling the paired AWS 3 licenses. You know, is it optimal to wait? Is it better to do it first? Just wondering how you're thinking about that. And then also the converts. I was wondering if ultimately you plan to settle those in cash or stock. And then lastly, we'd just love to hear your latest thoughts, Charlie, on a potential DBS merger with DirecTV at this point in time. Thank you.

Paul, you want to take it first? Yeah, this is Paul. Good question there. I'll take the tax question. As it relates to the impairment charge, some of the items have already been deducted. For instance, we take bonus depreciation on the network or amortize the FCC spectrum, so we won't get a benefit of that. But the other costs, we will. And to answer your question, is that included in the $7 to $10 billion range? Yes, that is.

And this is Charlie. In terms of AWS timing and so forth, again, that's I wish I could give you more information, but we're really working with the FCC to make that, A, to make sure this is the most successful option possible and that Spectrum gets used as quickly as possible. But again, it's a pretty valuable Spectrum, I'd say that. And as far as it converts, we'll make a decision at the time. that we can call those converts as to whether we call them or not? And if so, is it cash or stock or some combination of that? That would just be premature to speculate on that today. And Hamid, maybe I'll throw it over to you on DirecTV.

Yeah, certainly at Echo Star Capital, we look at every opportunity for value creation through inorganic transactions. You know, the DISH and DirecTV always have seemed like a natural opportunity combination and it's been an in-house combination. Our track record of making that work has not been great, so it's hard to predict how it might go, but certainly we will always look at any opportunity to take advantage of assets we have in-house with a transaction. I can't make any prediction right now about how that might go, but that item has always been on our radar and Charlie has been very vocal about the fact that the combination of the two companies would create significant or tremendous amount of value.

Operator, we'll have time for one more question.

And the last question will come from the line of Chris Filty with Filty Space. Please proceed.

Thanks. I was hoping you could possibly give a long-term update on the plans for one of those operating businesses, Hughes. You've obviously got downturns in the VSAT business and the consumer broadband. It looks like IFC is growing. Are there thoughts on either growing that business organically or non-organically, and what markets are you most focused on?

Okay, Chris, thank you. Regarding Hughes, as you know, we have been on a multi-year journey at Hughes these three years now. to transition that business more towards an enterprise business from a consumer business and purely from the realization and understanding that the consumer connectivity to satellite is not highly competitive given the SpaceX's offerings and perhaps in the future other LEO offerings such as Kuiper. We recognized years ago that We could not have a LEO system and a broadband side to compete with those, so we started shifting towards enterprise. My expectation is that as early as next year, we'll be crossing over the 50% mark on enterprise revenue. We have had significant progress in an era which we had almost no share on three years ago, and now we are only one of the couple of companies in the world that are growing on the Aero side. So there are some progress being made in there. We're happy with that. We still have a long journey to make Hughes a much larger scale in the enterprise. We are on the Gartner's leader quadrant as one of the few. In fact, in this industry, in their industry, in its industry, there is none other than Hughes on the Gartner's leader quadrant. So it shows the ability of Hughes to serve global brands across the world. We'll try to monetize and maximize that if there's any sort of M&A opportunity. As I mentioned on the list of areas, domains where we will be looking for additional M&A, you saw three or four of those actually fall within the users' purview. You know, that's Aero, there's Space. We talked about Enterprise Services. We talked about Defense and Domestic Manufacturing, which I think all of those are areas where we have green shoots and a good understanding of the trends and If there's an Echo Star Capital, if you find opportunities in any of those domains that would enhance users' position, we'll take advantage of that.

That concludes our call. Thanks for joining. Thanks, everybody. Thank you.