DISH Network Q3 2022 Earnings Call Transcript

Participants

Corporate Executives

• Timothy A. Messner, Executive Vice President and General Counsel
• Charlie Ergen, Co-Founder and Chairman of the Board
• John Swieringa, President and Chief Operating Officer, DISH Wireless
• Stephen Bye, Executive Vice President, Chief Commercial Officer
• W. Erik Carlson, President and Chief Executive Officer

Analysts

• David Barden, Bank of America Merrill Lynch
• John Hodulik, UBS Group AG
• Phil Cusick, J.P. Morgan Chase & Co.
• Ric Prentiss, Raymond James & Associates
• Kannan Venkateshwar, Barclays PLC
• Michael Rollins, Smith Barney Citigroup
• Craig Moffett, MoffettNathanson
• Jonathan Chaplin, New Street Research
• Scott Moritz, Bloomberg
• John Celentano, Inside Towers

Presentation

[Operator]

Good day, and welcome to the DISH Network Corporation Q3 2022 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Tim Messner. Please go ahead.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

All right. Thanks, Justin. Good morning, everyone. Thanks for joining us. We are joined on the call this morning by Charlie Ergen, our Chairman; Erik Carlson, our CEO; and Paul Orban, our CFO. And on the Wireless side, we have Tom Cullen, our EVP of Corporate Development; John Swieringa, the President and COO of Wireless; and Stephen Bye, EVP and Chief Commercial Officer.

Before we start, I need to remind you of our safe harbor. During this call, we will 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 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. That's it. We do not have any opening remarks this morning.

So operator, we'll open it up to questions starting with the analysts, please.

Questions and Answers

[Operator]

Thank you. [Operator Instructions] We'll go ahead and take the first caller.

[David Barden, Analyst at Bank of America Merrill Lynch]

Hi guys. It's David Barden from Bank of America. Thanks for taking the questions. Lots to go through today, so I'll let other people kind of touch on a lot of stuff. First would be, could we talk about the spectrum secured bond that's in the market right now? And I think I'm most interested in understanding kind of how you think about loan-to-value, collateralization, and what this exercise will tell us about using spectrum as a funding vehicle on a go-forward basis for the business?

I guess the second thing I'd like to talk about, if Jason is on the line or Charlie with respect to the SPAC and the process that you were maybe investigating with respect to the prepaid business sale. I guess I understand that the pack is likely to unwind for the most part based on the shareholder vote on the 31st. Is the prepaid business still for sale? And if you could kind of describe a little bit about the thought process on why it might be or it might not be? Thank you so much.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

David, this is Charlie. Unfortunately, I'm not going to be able to answer a lot of what you asked other good questions for legal reasons when you have an offering in The Street. But let me just take a chance to maybe reset some things and then try to address what I can say about the questions that you asked. It was another really good quarter for us in terms of us doing a lot of things in a relatively short period of time. As we said last quarter, one of our goals was to stabilize the Retail Wireless business.

And while from an EBITDA perspective, we didn't do as well as we'd like to. We needed to stabilize that business, and we were successful in doing that and going from instead of losing over 100,000 subscribers each quarter to a very, very small gain, and that doesn't count the 139,000 customers we got from T-Mobile. So that was important for us to get our process in place to do that. We actually did have a bit unexpectedly with some growth in linear TV was certainly led by SLING, but one of the few companies in linear TV, maybe the only company that actually had growth.

Importantly, to a lot of people on this call, we had -- we continued to build our success to get with over 10,000 towers now constructed that can reach over 35% of the population. So we're still continued focus on that on the next milestone of 70%. And I think one thing that's not quite understood everybody is we're building 600 megahertz out. It includes all our frequencies when we're building these towers out. So we're pretty far down the path on 600 megahertz towards the final milestone of 75%, which only -- which affects the 600 megahertz milestone so I mean 600 megahertz frequency.

So that -- we continue to -- and we continue on that 1,000, approximately 1,000 tower pace per month. We're now poised for -- we are -- we've launched Boost Infinite internally, and we still have a lot of operational issues to make sure we're buttoned up on and you only get one chance to do it right for the consumer. But for our customers that we've launched internally, it's still a pretty good experience, but we've got some work to do. So that's going to want, but we're poised now to launch that in the first quarter, and we're launching that and John, maybe talk about this in a minute, but we're launching that on our own OSS/BSS system.

So today, we're on T-Mobile's system and so that's a misunderstood how important it is to get on to your own system there. And finally, we're in the market, to your question, we're in the market for funding today for the network. It's a $2 billion offering. And because that is limited to qualified investors, I can't go into details about that, but it obviously is funding for the network going forward. On the SPAC, I can't say a lot about that but the -- I think it would -- the SPAC did have high redemptions but is still intact and still a public company.

And still capable of doing -- nothing's really changed strategically there because in the SPAC world today, you're going to have to have a pipe and no matter what you do, you're going to have to other secured funding. So it may be a different set of shareholders. But there's still opportunity. One of those opportunities that's public is that there have been preliminary discussions with DISH. Let me take this back cat off and talk about DISH. Obviously, one of the things we've talked about is we like each sector of our business to be a self-funding as it possibly can be.

DBS obviously has been self-funding in the marketplace for Network to move in that direction. And we think that Retail Wireless is a unique position to do that as well as we enter the more of postpaid business because it doesn't have any debt, it doesn't have any capex and it's got 8 million subscribers. So it's a pretty interesting business and one that's got a lot of growth ahead of it. So I know I didn't answer everything that you wanted, but that maybe gives you kind of a reset of big picture.

[David Barden, Analyst at Bank of America Merrill Lynch]

Thanks Charlie for that. Appreciate it.

[Operator]

And we'll take the next question.

[John Hodulik, Analyst at UBS Group]

Great. Thanks. It's John Hodulik from UBS. I guess just some follow-up to David's question. First, Charlie, anything you could say about the Boost sale in terms of timing or the process that we have from here? And then following up on the comments on Boost Infinite just any additional details on the timing of the launch, maybe you said about pricing or distribution or what some of those issues are that you guys are trying to get over to launch on your own OSS and BSS? Great, thanks.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

I'm going to let John answer Boost infinite. And I don't -- I didn't quite catch the first part. It was about -- is Boost -- some of that Boost for sale or Boost?

[John Hodulik, Analyst at UBS Group]

Yeah. Just the prepaid sale and then the SPAC and just sort of timing or process you guys got to go through?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

No, that -- I guess the press kind of got that one wrong that there's some preliminary discussions between a SPAC and DISH Retail Wireless that would be -- potentially would be a sale of a very small portion of the Retail Wireless business. We think at DISH that Retail Wireless belongs in what we're doing, right? We think it's not impossible that you could sell a company, but we -- but today, it would be more likely that you would sell a portion of the company. It certainly wouldn't be limited.

The Board of Directors is going to look at everything. And when they look at Retail Wireless, they've had some preliminary discussions with the SPAC, but they've also looked at a lot of other things that they could do with Retail Wireless. And it's a pretty clean company doesn't have huge financing needs, but it certainly has a clean balance sheet and a real business. So that's kind of I think you're -- I think everybody's ahead of their skis on maybe the SPAC discussions. But with that, I'll turn it over to John.

[John Swieringa, President and Chief Operating Officer, DISH Wireless at DISH Network]

Yeah, hi John, it's John Swieringa. Regarding Boost Infinite, we've been sharing all along that we plan to move into postpaid. We want to move our Retail Wireless business upmarket. We have gone ahead and launched Boost Infinite here internally. It's a full postpaid business with retail credit qualifications, device financing, full assortment of iconic down to mid-tier devices. You'll see us come out sort of after some of the holiday rush with the competition and be in market in the first quarter. You'll see us largely focus on the transition initially into digital, and then later, you'll see us into national retail and pockets of branded distribution.

But big focus on that business here, we believe that's a great path to building enterprise value for the retail segment. Underpinning that, there has been a lot of work to get our own sort of operational and technology shops in order. We're just now transitioning off of the T-Mobile transition services agreements, not only for Boost, but we're launching who's infinite at the same time. As everybody sees, there's a little bit of OIBDA pressure in the quarter. A lot of that can be attributed to steps we're taking to get boost into that regular role and also the transition activities for Boost Mobile, which are fairly significant.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Just to add to what John, this is Charlie. I said this on conference call after conference call, but the Wireless business as an outsider coming in and looking at it, the postpaid customer is way more profitable than the prepaid customer. And the pre-K customer is actually getting a much better deal. United States is really the only market that I know of or prepaid is cheaper than postpaid and so you can be really, really, really good in the prepaid business as an MVNO. And you're talking about 10% margins and that kind of thing. And obviously, we know in the postpaid business, people are north of 50% margin. So you can get a feel for the investment in the postpaid customers, you're going to get a much better return. And we haven't had that luxury to do that.

And the -- competitively, the postpaid business is not really as competitive as the prepaid business. It's not even close. And so there's just a bigger opportunity there and we -- I wish we could have started 6 months ago, but we're excited to get going and we're going to have a great product and with great network partners in our own network. So we're uniquely been for coverage in terms of nobody really could match our coverage as we use multiple networks and we'll be competitive. As a new entrant you're going to have to be a lower price but a lower price with a better service is a good business. And we found that add in DBS, right? We had a better product and we had a lower price. And if you can do both those things, you can be successful.

[John Hodulik, Analyst at UBS Group]

Great. Thanks guys.

[Operator]

And moving on to the next question.

[Phil Cusick, Analyst at J.P. Morgan Chase & Co.]

Hi guys. Thanks. It's Phil Cusick. So two things here. One, can you talk about maybe, John, the better prepaid churn in wireless that you saw this quarter? And the -- I assume that new handsets you'll be launching on Boost Infinite will all run to AT&T. What's the path of moving existing subs over to AT&T? And then second of all, Charlie, maybe talk about the DIRECTV combination.

You've sort of talked about this a couple of times in the past. You talked about it as being inevitable. Do you think that a political environment will let that go through? And with the linear market accelerating to the downside, what are the synergies look like of doing something like that going forward? Thanks very much.

[John Swieringa, President and Chief Operating Officer, DISH Wireless at DISH Network]

Thanks, Phil. It's John. I'll take the first part. So with respect to Boost Infinite, you will see us launch that business as an MVNO with AT&T. You will, however, also start to see Band 70 devices in that portfolio as well as with Boost Mobile. And certainly, we'll be in a position as we launch VoNR commercially in our deployed cities, you'll start to see us activate a mix of the devices on to our own MNO. That will be the same for Boost Mobile as well. So devices that are fielded. I mean, certainly, as you all know, we have some experience now with network transitions.

We feel like we have a pretty good playbook to move our customers across as we feel confident in doing so. And then as Charlie pointed out, I'll just double-click on it. Once we're on our MVNO, we've got access to three networks, our own DISH 5G network as well as two partner networks. So we -- obviously, we can do some things there to make sure we're providing a great customer experience, and it's also a good setup for us to be competitive.

On the prepaid churn part that you asked about, we certainly expected that number to go down a little bit and it has, still a very competitive marketplace and prepaid, as Charlie mentioned. We're doing what we can there. certainly have a lot of focus on continuing to get the right handsets into our customers' hands, and we're now in the business of doing that with Band 70 devices as we start for preload Band 70 on or capable devices into our base, and that's going to be a big effort as we head into '23.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. And I think -- this is Charlie, just to add that the there's not a necessity to move Boost prepaid customers to AT&T. Some will, but that's not a big conversion thing like the CDM shutoff was. It's more -- the more interesting part is when you move Boost customer prepaid to our network. And then obviously, you get owner economics. So that's a more logical path in terms of your thinking because T-Mobile network works great. And people that are on the T-Mobile network are happy, and there's not a need to move them, except from an economic point of view, and that's the biggest economics would be when we have our own network.

On the question about DIRECTV, a couple of things. One, I think politically, obviously, there's three parties. I can't speak for anybody else. I've always said I thought it was inevitable. I haven't changed my opinion on that. I do think the political environment, when an election is going on, you don't really want to -- you're hesitant to be a political football for somebody to complain about big companies or whatever in an election cycle, but that election cycle is over next week. And then you have a window where I think all companies are looking in M&A. You're probably going to see some increased activity in that sense. And you're not really in the political arena from an election point of view for another 15 months or so.

So if there was a timing -- the timing was right, it would be in the near term, not the longer term. There's still material synergies or significant synergies. I won't go into detail of what we believe those are but we believe that those are still material. They're not what they were five years ago or two years ago, but they're still material. And certainly, in a declining industry, taking advantage of synergies is a rational strategy. So -- and I think on the political side in terms of a legal objection to a merger, that's been diminished by time, and obviously, the degradation of the Linear TV business and competition from dozens of companies in the OTT business and the proliferation of broadband today.

So there's not a home in America today that can't get broadband, not one. If you want to buy a SpaceX or provides that or use, right? So there's not anybody that can't get broadband and the government spending, I think, now up to $80 billion to enhance broadband. So they're going to cover unless they just -- unless the government waste the money, they're going to cover every man, woman and child with broadband in the next several years.

[Phil Cusick, Analyst at J.P. Morgan Chase & Co.]

Charlie, can I follow up on the wireless side? Just one thing. Are you able to move a Boost customer with a T-Mobile handset to look at your network, for example, in Vegas, where that exists already or is that something we have to wait until you sort of swap those handsets out? Thank you.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

You could, but you wouldn't have Band 70. And so the more rational approach would be that particular customer, which at some -- you would move and upgrade them, which you have a little bit of cost to do that, but you'd also have the benefit of a -- you would do that for longer-term customers. You would do that with customers that we're in an upgrade cycle anyway, and you do that with customers that have Band 70 so that you got owner economics, which would more than pay for the cost to do that. But there certainly is a portion of your current customers today that you're just not going to move. You're going to lose them from churn, and you're going to lose them because they don't have a handset that's upgradable. I don't know John, did I get that right? I hesitate to.

[John Swieringa, President and Chief Operating Officer, DISH Wireless at DISH Network]

Yeah, I think you're good, Charlie. I mean, there's really two components. There's the spectrum bands and the device. And then in some cases, phones aren't able to operate in 5G stand-alone.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. So the 5G voice VoNR was the other piece of it. So that would be the reason you wouldn't do it. So you can look at like anything else the Boost transition is probably a two- or three-year transition.

[Operator]

And our next question will come from Ric Prentiss with Raymond James.

[Ric Prentiss, Analyst at Raymond James & Associates]

Yeah, thanks. Ric Prentiss, Raymond James. I appreciate some of the clarity on the Connect transaction. But I just want to clarify some of the other folks keep calling it a prepaid. Charlie, you keep referring to it as maybe a portion of retail. Should we assume Boost prepaid and Boost Infinite postpaid would be on the table if you wanted to do something with a portion of Retail Wireless?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. I think you should assume that Retail Wireless at Boost includes both prepaid and postpaid. And because there's not really that much difference between prepaid and postpaid one customer has credit and they get billed post activation and a prepaid customer gets billed, it usually doesn't pass a qualifying credit, maybe doesn't have a bank account, maybe doesn't have a credit card, and they pay at time of activation. That's the difference.

In the marketplace, there's a difference because typically, a prepaid customer can get a subsidized phone, doesn't have a contract, doesn't necessarily have a monthly fee on their phone. And really -- and the churn is higher. So you guys are smart run net present values on that. That's a much -- that's a lower return on investment customer. It's still a positive return, but a lower return on investment. And incumbents -- you see incumbents doing a couple of things. They have extra bandwidth so they would enter the prepaid business for that group of customers because not every customer has credit. So there's no reason to not play in that field.

And now they're doing some stuff with fixed wireless where they actually take excess capacity and compete against cable on the fixed wireless side, right? Both of those are relatively -- are good uses of the network because they're they've got excess capacity so if they don't use it, they lose it, but they're not huge returns on investment. I don't believe. I'm not privy to all their fixed wireless stuff, but they're not as big of returns as the postpaid business.

[Ric Prentiss, Analyst at Raymond James & Associates]

Right. And that kind of begs the question on Retail Wireless, will you someday expect to report enterprise wholesale as a business segment? And how is that going to what Stephen Bye is working on?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Well, we'll let Stephen answer that. I mean I think when the segment gets big enough, Paul, you report them as a segment. Is that fair? So far -- and I expect it will get big enough that, that will happen. But perhaps that's a good opening for Stephen is up today on enterprise.

[Stephen Bye, Executive Vice President, Chief Commercial Officer at DISH Network]

Thanks, Charlie, and thanks, Ric, for the question. As we talked about in the Analyst Day, we started out with sort of private 5G and we're sort of evolving that product into a private 5G as a service solution. We talked about the early success we had with DoD. We continue to win more projects and take on more opportunity with the Department of Defense. It's very exciting projects. Unfortunately, I can't go into a lot of details specifically about those projects.

But we're also very active in several other verticals and industry sectors, not the least of which includes hospitality, given the DISH business from the video side of the business, we are actively engaged with different hotel groups for private networks. Also industrial manufacturing, we're spending to more and more RFPs in that space as companies look how do they invest in more sophisticated solutions to take cost out of the manufacturing facility in the plant.

So we're actively engaged in responding to a number of RFPs there, and we're seeing more and more RFP flow coming to us, which is very encouraging. And then we're also active with utilities. And you've seen different stuff being published recently about utilities and their activity in sort of the private space, and we see movement there in a very positive direction, and we're actively engaged in those conversations.

I think the point that I would leave you with is we've got some really strong proof points in '22. We're seeing growing momentum as we step into '23. We expect that deal flow to continue to grow, and we're excited about that opportunity. I think on the projects we have won, we're very focused on the execution and gains of those projects. It's very important for us to deliver against those commitments, execution is key. As we've done on the macro network, we're shifting that focus on to the enterprise side. As it relates to differentiation, this is really not a -- this is not as competitive as other spaces. And the point that I want to get across here is in order to build these networks, it is absolutely vital to have access to the license spectrum.

We're running into different players in the space who were offering CBRS solutions, using GAA or Wi-Fi. And what we're hearing more and more from customers is that just doesn't cut the grade. They need to access the license spectrum, and it's not sufficient to have one band. It's actually very important to have access to a combination of 3-5, using our powers, but also low band spectrum is a vital ingredient with these networks.

And so we're obviously in a very good position with the spectrum portfolio we have today. We talked a little bit about that on Analyst Day, but that also limits sort of the competitive playing field for those who have access to that kind of spectrum. We continue to work with our partners. We have very good partners that are working with us on the technology side, both on the network side but also in the private 5G space. We talked about Dell and Cisco, JMA. We work very closely with Hughes as assist the company as we work with the Department of Defense, and we continue to work on those RFPs. So it's a good business to be in, and we expect that momentum to pick up as we go into '23.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

And this is Charlie. And I know it's a bit frustrating because it's a kind of a new concept for private networks, and it's really people -- everybody has a different definition about it, but -- and obviously, take the sales cycle is a little bit longer, but it's a long-term customer, you're going to have virtually no churn in it and it's big contracts. A lot of them will be big contracts when you want them. So it's going to be a big part of our business. Our business was designed to be an open wholesale network where if you could if you're in the private enterprise business and you can think of a need that you have because we're software-based, and we're in the cloud, you can add an API, you can write code that can do that for you, and it's a big differentiator between legacy networks.

Having said that, you can argue whether the business is a $30 billion business or $100 billion business, whatever it is, but it's unquestionable that there's really only four companies that can participate in a large degree in the private network business that has Spectrum, private Spectrum license Spectrum portfolios. We think everybody is at the same starting line. We think the incumbents are going to get a lot of business there. They're going to get their fair share of that business. But it would be realistic that with a better network and something that's architected that we have an ability to get 25% of that business. And that's going to be a very profitable business.

And we get it two ways, right? We get one way that where we're the integrator and that's -- we're going to go to places in rural America where we're strong. We're going to go to places like in hospitality, where we're strong and already have relationships. But then working with our partners, integrated partners where they may go in and do the integration, we just may be a network supplier spectrum or some connectivity. And that's just at least of spectrum, so to speak. And while the revenue is not as high, it's not a lot of work on our part. It monetizes our spectrum in a way that's not visible today. And it's obviously very profitable.

[Ric Prentiss, Analyst at Raymond James & Associates]

Thanks guys.

[Operator]

And our next question will come from Kannan Venkateshwar with Barclays.

[Kannan Venkateshwar, Analyst at Barclays]

Thank you. Charlie, I mean, I think you implied that part of the Wireless business, if you contemplate that transaction would move to CONX. But I wanted to understand, I mean, is there any constraint under the DOJ consent decree for you to have wireless move completely away in CRE outside of DISH and run an independent wholesale business? And if that is possible, then why don't go down that path and keep a capital-light model at DISH versus a more retail model at another entity?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. The DOJ question, I don't know the answer if you could do what you're saying. That really hasn't been contemplated. So I don't know the answer to that. But obviously, the DOJ, there's a consent decree but everything is -- everything -- you would go to everything as whether it was competitive or not competitive, and the well financed retail business would be more competitive, people will probably look at that.

But the retail business is relatively capital light. So I'm not sure you gain anything by that. So -- but that's -- our Board looks at that. We got a talented board. We've got people that have a lot of experience in this. And all I can say is that strategically, we like DBS to fund DBS, we'd like network to fund network and we'd like retail to fund retail. And we think that, that's doable.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

And Kannan, just to clarify. In the scenarios that we're looking at, DISH would always retain control of the entity. It would just be looking at vehicles that would attract growth capital into the Retail Wireless segment.

[Kannan Venkateshwar, Analyst at Barclays]

Got it. And I guess.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

I'm unaware of anybody in the Retail Wireless segment that's got a debt-free balance sheet like Boost does today. So -- there might be, but I'm not aware of.

[Kannan Venkateshwar, Analyst at Barclays]

Yeah. If I could just follow up on the capital question. I guess you do have the debt issue in the market right now. But then as the wireless retail business scales, there's probably going to be some working capital needs as well. And the degree to which you can scale the Wireless business in some ways, becomes a function of that working capital management process. So if you could just help us think through beyond the debt issue, how you're thinking about capital raise cadence because that, in some ways, would inform how fast you plan to scale the business as well?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. I think that's a valid question/point. We went through this with DBS, where we had this great product and a great competitive price, but we had to scale the business and did take some working capital, not as much as people would have thought because we were pretty good stewards of capital, and we were able to do some things to lessen those needs.

Obviously, in postpaid, the customers are so profitable that you probably want to grow as fast as you could without -- but then obviously, being without just trying to gain market share for the sake of market share. And so that might take some working capital, but I think a debt-free Retail Wireless business today is probably capable of raising that capital. And obviously, the Board of DISH is looking at multiple areas. The only one that's public is that they had some preliminary discussions with the SPAC. But you can assume that that's not all they would look at.

[Kannan Venkateshwar, Analyst at Barclays]

Good. Thanks Charlie.

[Operator]

And our next question will come from Michael Rollins with Citi.

[Michael Rollins, Analyst at Smith Barney Citigroup]

Thanks and good morning. Two questions, if I could. First, back on the network, the 10-Q referenced $2 billion needed to hit the 70% target mid of next year for population coverage. Is that premised on this ongoing 1,000 sites per month ramp so you'd be ahead of the 15,000 that has also been discussed? And are there some other things in that $2 billion that we should be mindful of? And then just separately on the video performance, can you talk a little bit about the strength of SLING net adds, and if there's a more deliberate effort to try to migrate the satellite subscriptions to streaming over time?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Erik, you take SLING and I'll go back to the network.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Got you. Yeah, Michael, this is Erik. So a couple of things there. And we've talked a little bit about it in the past. I mean, obviously, SLING had a -- Pay TV strong quarter driven by some of the seasonality in SLING with college football and NFL. You've seen that kind of year-over-year. And I think that we showed up in the right place to take advantage in a disciplined manner of customers that we think not only will be profitable there, but also longer term, right?

I mean it's -- as you see the OTT landscape, obviously, churn can be spiky and engagement can be spiky. And so we have to have a product that meets the customers' needs and keep customers invest too much in customers that want kind of a seasonal type product, which, by the way, SLING is very good for to complement other SVOD type services. As we've talked about over the past many years on the DISH side, we've really been focused on a more rural profile, whole home type solution and an older demographic.

Now where customers have a need for SVOD or OTT type products, we meet them halfway or all the way there with our hopper platform in having apps like Netflix, Amazon and YouTube right in the interface and along with launching our Android TV product. But your question is a good one, and it's one that we look at where customers that have a need to transition kind of away from more traditional linear service into an OTT service, we're obviously opportunistic with that customer relationship that we have with DISH.

And how else we can monetize or keep that customer within the overall DISH ecosystem. And that could be a SLING product that could obviously be a Boost Infinite whose product obviously, Boost and DISH don't go as well together. But you'll see us start to monetize our customer relationships and retain them in a strategic way. Hence, your question about a rollout DISH to SLING.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. So I think the short answer is not a lot of -- there is not a lot of roll from DISH to SLING other than adding apps to our platform, which they can do, and then they get it in the guide and they can search for it and so forth and so on. And so it becomes a whole home experience for people that want to add Netflix to or Prime to DISH.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

And I think the big difference there, Charlie, and Michael is obviously SLING is very light on broadcast locals. And as that -- as the viewership on broadcast continues to decline. SLING 's a really good choice to match up with a Peacock or a Paramount and a Netflix depending when you need that. If you just need it for a free trial or if you if you use it for a couple of months, I mean, the in and outs of SVOD and the TV ecosystem with OTT are changing. So our DISH customers definitely like broadcast TV. It's one of the reasons they choose DISH along with kind of all the additional features and functions that the Hopper platform brings.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

And then on the network side, the $2 billion or $2 billion would bring DISH to 70% -- from a capital expenditure would bring deployment perspective would bring us over 70% of deployment to meet our milestone the next FCC milestone. But in addition to that, which we haven't articulated very well, so I take an opportunity to do that. Because we're building 600 megahertz at the same time, it also gets you -- and because we are more urban-based -- and we actually go into the 80s and 90% coverage in urban areas to meet the 70% population.

In fact, as part of that, we go a long way, not all the way, but we go a long way to the 75% 2025 milestone for 600 megahertz. So where we'll be within spending distance of that milestone and in many cases, way early, maybe even a couple of years early on some of those milestones as well. So that's a huge positive that we ever haven't articulated very well, but that's a huge positive in terms of the build-out schedule. And then what happens, and you didn't ask this question, but I'll reiterate this one. Then what happens is you start building what I call success-based capital deployment.

So because you have roaming arrangements with two of the big providers, you look at every tower and when you pay more for roaming, then you could have for the owner economics, you would build that tower. But to the extent that roaming is less expensive, you wouldn't have to build that tower. And of course, a great example might be that I think Dave who's traveling today gave as a stadium where you might have 100 customers in the stands, they're using it 6 times a year or 8 times a year doesn't make sense to spend tens of millions of dollars to deploy capital in that stadium when the customers can run.

And so it's just a math exercise. So it's a unique position for us where I think people are going to get more confident in our total build-out of $10 billion, which includes a lot of success-based capital, by the way. But the latter half of that is success-based capital. I think that starts to be -- people starting to get their arms around that. That's a realistic number where I think people didn't think that was a realizer early on. So we have a lot of advantages in what we're doing. We have to go ahead and prove it. We have to go ahead and show it. It will start showing up in the numbers. It will start showing up in the margins. You'll start to see those kind of things.

[Michael Rollins, Analyst at Smith Barney Citigroup]

Thanks for all those details.

[Operator]

And our next question will come from Craig Moffett with MoffettNathanson.

[Craig Moffett, Analyst at MoffettNathanson]

Hi, thank you. Maybe I stay with that same line of discussion, Charlie. It sounds like you really are describing more of a hybrid MVNO-MNO network than a pure MNO network, which is maybe a little different than the way you've described it in the past. How do you think about the amount of traffic with the number of cell sites that you'll have sort of 10 going to, call it, 20 versus, say, a Verizon or the peers that would have 80,000 or so towers?

How do you think about the percentage of traffic you think you can send over your own network versus over the MVNO agreement? And how does that sort of shape the product that you're offering where you've talked about some of the advantages of a native ORAN 5G network that obviously won't be ubiquitous in the hybrid network that you're describing?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Yeah. We look at it from a financial point of view, right? So just to frame it, maybe your 70% of our network gets built. And the last 30% cost as much as the first 70% to give you just -- it might even be more than that. So it might even more than double that. So a lot of towers are non-profitable for the current incumbents. In other words, that cord never ever even generates enough revenue to pay for the investment in the tower. We don't have to make that investment.

And while that -- we may roam on their 5G versus our 5G, you're going to you're not going to lose some of the benefits because you come back to our core. Steve, I'm looking at Steven here because he knows this a lot better than I do. But you're coming back to our stand-alone core. And once you're into our core, we kind of control that customer and we can control that surface. So for the most part, and there's probably some cases where there might be something we want to do that we can't do when we're roaming as opposed to one network. For the most part, we can offer that ubiquitous experience.

So it -- we deal with this every day, and this would take me the rest of the month to explain in detail because we've been looking at for years. But the economic advantage that DISH has is immense. And of course, that shows up in ability to pass along some of those savings to the customers, which gets you more competitive, which when you look around the world, and you see people who have not been in as good a position as we have, they typically get low double-digit kind of market share, which is why we've publicly stated that our goal is to hit 30 million subscribers in Retail Wireless, which would obviously well above breakeven on our capex than our opex and everything else that we do in our network.

But it's just math. And I guess I turn the question around why would you build 80,000 towers if we didn't have to and lose money on 40,000 of them. It doesn't make any sense. And our -- that's why the capex is so incredibly expensive for the incumbents. It's not all bad news for the incumbents because obviously, when we ride on their network, they're getting free money for an investment they've already made. And so it's actually, ironically, in some ways, is a good thing.

And this is just -- I personally see -- when you look at the marketplace, T-Mobile is running the way with the market. They're going 90 miles an hour and they're running away with things. And somebody correctly pointed out they have a higher market cap than Verizon and AT&T now. So they started out. I think they were number 4 when we first started talking with T-Mobile years ago. They're now number 1 and they're not even close. I mean and they continue to gain momentum in the marketplace. You've got two choices in management. You can let them run away at the market or you got to figure out another way to compete with them.

And one of the ways that people around the world compete is you start sharing resources, you start sharing capex and you start sharing spectrum and the technology is getting better and better and better to do that. And so you -- there's going to be opportunities for all the players in this market, but there's going to be good opportunity for us. I mean that's big high-level stuff. We run that math there every day is you don't have -- you don't have your agreement, so it's difficult for you to run that math. But it's -- you'll see it in the results over time.

[John Swieringa, President and Chief Operating Officer, DISH Wireless at DISH Network]

Operator, we'll have -- we'll take one more question from the analyst community.

[Operator]

Thank you. [Operator Instructions] We will begin the media portion of this call following the answer to this final analyst question. And we'll go to Jonathan Chaplin with New Street.

[Jonathan Chaplin, Reporter at DISH Network]

Thanks for taking my question, guys. Since it's the last one, I'll make an easy one. The do you still need to do funding at DBS to meet the March '23 maturity or will you have enough cash flow between now and then at DBS to meet that maturity or is there the potential for some of the funding that you're doing at networks to go down to DBS to pay off some of the intercompany learn there? And then just a quick one for John. I'm wondering if you can help us size the EBITDA impact at Boost that you sort of characterized as onetime associated with the transition to the new BSS off of the TSA? Thanks.

[W. Erik Carlson, President and Chief Executive Officer at DISH Network]

Do you want to take that one first?

[John Swieringa, President and Chief Operating Officer, DISH Wireless at DISH Network]

Yeah, I'll take that one first. So we've had our share of sort of large headwinds since buying Boost. The big one in front of us now is migrating off of all the legacy T-Mobile and Sprint systems. There's a few hundred people working on that. I think each month it's somewhere between $5 million to $10 million a month of incremental drag right now just based upon funding that program, which will take us through middle of next year. And then we'll have sort of our own singular platform from which we can operate all of our Retail Wireless businesses. In a funny way, it really kind of pays for itself because we'll be able to jettison more higher-priced transition services. So it's a good use of our dollars to do it, but there is a bit of a short-term impact.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

I mean the bottom line, Jonathan, is we're paying twice for services today. And obviously, one is for our own that we're building and one for somebody that we're using. So -- but we get speed and flexibility and ability to wholesale to other anybody on our network through our OSS/BSS, which we just don't have through T-Mobile or AT&T. So on your other question, the -- we don't -- with the funding in the marketplace today, we would not need to raise additional capital right. You never know what the marketplace will offer, you never know if there's opportunistic, but we wouldn't necessarily need to do that.

[Jonathan Chaplin, Reporter at DISH Network]

And Charlie is that because there's enough cash flow to DBS.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

I'll point out, that's a little bit different. When you read the 10-Q, it's a little bit different because we wrote the 10-Q at the end of the quarter, which we didn't have an offering in the marketplace so that -- it's a little bit confusing. So your question is well taken.

[Jonathan Chaplin, Reporter at DISH Network]

And Charlie is it because you'll have enough cash flow at DBS to pay off the $1.5 billion or because you'd use some of this and push it down to DBS?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

We have enough cash at DBS assuming we're not funding the network at it, which is what -- obviously, we've told The Street would be our preference.

[Jonathan Chaplin, Reporter at DISH Network]

Got it. That's great news. Thanks Charlie. I really appreciate it.

[Operator]

Thank you. [Operator Instructions] And we'll go to Scott Moritz with Bloomberg.

[Scott Moritz, Reporter at DISH Network]

Great. Charlie question. I wanted to just check in with you on the network build-out. When you first announced the opportunity it was this first mover advantage, you'd have a cloud-based, low latency kind of 5G network. Since then, we've seen the incumbents come in with kind of their plan, cloud-based virtual RAN, all those. Just curious, does this still have an edge that it used to have? Has the opportunity changed since then?

[Stephen Bye, Executive Vice President, Chief Commercial Officer at DISH Network]

Yeah. So Scott, this is Stephen. I'll respond first. I think they may put some, say, paint on the outside of the house, but it's still fundamentally not a cloud-native 5G network. We don't have any of the legacy infrastructure that they have. I'd like to sort of draw an analogy like adding an extension to the house and calling it sort of a 5G network, but it's really -- you're still stuck with the rest of the house. What we have is unique. It is the only cloud-native 5G open network that has been deployed at this scale anywhere in the world. And there are a lot of capabilities that we have with that infrastructure.

The other thing which I would add is as it relates to as BSS, while we don't talk a lot about that, what we have is a next generation OSS BSS system. And so we're not bringing the legacy those systems along with us, we had the opportunity to rebuild that. And in fact, that's the platform that we're moving our retail business to. But as Charlie alluded to in his earlier remarks, it also allows us to be able to bring enterprise and wholesale customers through that stack onto the network.

And so we're already exposing APIs within that platform through the cloud. They allow enterprises to be able to build applications into that space. So while the other guys who were competing with are talking about it, we actually have built it, and it's actually operational, and now we're sort of optimizing that and scaling it up. So we still have what we believe is advantage from an architecture perspective. And I think it will be some time that we maintain that advantage.

[Operator]

And our next question will come from John Celentano with Inside Towers.

[John Celentano, Reporter at DISH Network]

Hi. Thanks for taking the question. I saw an entry on the 10-Q referring to a cost setting called third-party integration. Can you elaborate on that a little bit? What is that? And who are the third-party integrators that are involved?

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

I don't think -- I'm looking -- I don't -- we don't -- you got to be more specific about that.

[John Swieringa, President and Chief Operating Officer, DISH Wireless at DISH Network]

Where in the Q are you seeing that?

[John Celentano, Reporter at DISH Network]

It was listed as a cost item.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

Cost side, third-party integrators. We use third-party integrators -- both on the revenue side and the cost side, obviously. But you'd have to read that paragraph because I just don't know the answer to that off the top of my head.

[John Celentano, Reporter at DISH Network]

I think the reference was to the 5G build.

[Stephen Bye, Executive Vice President, Chief Commercial Officer at DISH Network]

So maybe I'll just add some color. I mean, we work with a number of different partners as we put this infrastructure together, but we've often been asked like who is the systems integrator and it's DISH. We are the -- considered as the Uber integrator of this infrastructure, but we do work with a lot of different third parties that essentially subcontractors to us that are each responsible for their domain expertise, but overall, we're the systems integrator so -- but there isn't.

[Charlie Ergen, Co-Founder and Chairman of the Board at DISH Network]

I don't know that we answered your question, so we'll get back to you because I don't think we answered your question, right? That's the first time I've been stumped on the questions.

[John Celentano, Reporter at DISH Network]

I'm honored. Well, thanks. I look forward to your response.

[Timothy A. Messner, Executive Vice President and General Counsel at DISH Network]

Operator, I think that's the last one in queue. So thank you, everyone, for joining us, and we'll talk to you again next quarter.

[Operator]

[Operator Closing Remarks]