Quarter 1
Q4 2025 Earnings Call — March 2, 2026
Sebastian Petty (JP Morgan): Hi, everyone. Thank you for taking the question. Hi, Charlie, Hamid, and team. Charlie or Hamid, I want to see if you could update us on how you're thinking about passive versus active investments within Echo Star Capital and notwithstanding your prepared remarks. Is that still the right avenue or how you're kind of thinking about it? And within that context, given the anticipated IPO of SpaceX, would increasing your or Echo Star's stake within SpaceX be something you would be considering? And then, Charlie, big picture question. Echo Star did have an announcement about a D2D constellation, which obviously you will not be pursuing. But how do you see that ecosystem evolving, having spent decades around the industry, particularly the convergence of wireless and satellite? I think you have a unique perspective. So, just love to hear your thoughts. Do you see this as complimentary? Do you see this as a threat to the incumbents having experience trying to be a fourth player yourself? Thank you both.
Charlie Ergen (Executive Chairman): I will try to answer the first few questions that are all wrapped in one. Look, EncoStar Capital, as I mentioned, we are looking at every possibility for utilization of the liquidity and cash when it arrives. We're looking at short-term options, traditional return to the shareholders to the best means. Obviously, we're looking at the long horizon for creating value, all of this in the context of taxation and how the net return to the shareholders may be. We're obviously looking at our opportunities every single day and judging that against what other options may be available. So it's a long answer to a short question, but honestly, that is the case. It would be foolish to do anything other than that. We don't actually, until the closing, we don't have actually the SpaceX equity, so that is not something that we can make any plans on to. We actually get the equity, we have a right to it, but we actually don't have that equity yet, so we'll see how that plays out.
IPO may happen, obviously will happen independent of our plans, but we'll make sure that we maximize our options around the timing whenever that shows up and what options you might have. In terms of holding, the size of the equity we have from SpaceX, I think we're very happy with that at this point. I don't think we are actively looking necessarily to make any transactions at this point based on that, so that remains on our balance sheet until we get it, and then after that we'll decide how to proceed depending on the conditions at that time. I am looking at both active and passive investments, again, depending on the return. So we'll keep you posted as soon as we get to the point that we actually have that cash at hand and ready to make some transactions.
Charlie Ergen (Executive Chairman): Yeah, so on direct-to-device, I mean, obviously we're disappointed that we weren't able to continue with something we'd built over 17 years. And I think we're proud of the fact that we've helped create an ecosystem for direct advice. And I think that, you know, we're also pleased that we've made our bet, and that's with SpaceX and Starlink. We see them as the most viable company to do that. And with their tremendous technology and launch capabilities, they're, you know, well-positioned to certainly be a leader in that. And we're... as we publicly discussed, we already have an agreement with them to provide that to our customers. Obviously, Mobile World Congress is going on now. I expect there'll be quite a few announcements there. There'll be other players in the marketplace, but I don't think you're going to see too much from anybody except SpaceX in their term, or Starlink in their term, and I think that based on our experience, that's the company we think will be the leader. Thank you both.
Brent Penter (Raymond James): Hey, good morning, everyone. Thanks for taking the questions. First one for me, a follow-up on Sebastiano's question on SpaceX. So based on the deals, I think you all were supposed to get around a 2.8% stake which at the time was valued at $400 billion. As you mentioned, those deals haven't closed yet, but they've since announced the merger with XAI. So how does that XAI deal affect your ownership in terms of percentage, and how can you think about any kind of mark-to-market associated with that deal?
Charlie Ergen (Executive Chairman): Yes, this is Charlie. I don't think we know. I mean, I think we're not privy to what that IPO – If an IPO happens or what it would happen, what it looked like, I think the merger appeared publicly to be something like 80-20 between XAI and Starlink. So that probably gives you a feel for what our investment might look like. But we just don't have any internal information on that today.
Brent Penter (Raymond James): Okay. That makes sense. And then the power companies, the tower companies have announced that you all stopped paying them and you all talked about the litigation and your 10 K. Um, last quarter you had said you believed that you were relieved of these payments, but now you've actually stopped paying them. So I'm just wondering what actually went into the decision to take that next step and stop paying.
Charlie Ergen (Executive Chairman): Well, yeah, thanks for the question. The first thing most important to us was of course, to make sure that all of our customers on our network were not disenfranchised by the existential threat that we got when the FCC informed us of an investigation to take our spectrum. We believe that without question is a force majeure event, but we wanted to first and foremost take care of our customers, which we did, and we've moved successfully all our customers. Last year, in the fourth quarter, we moved all our customers off of our network. At that time, given the force majeure event and the FCC's action, obviously we have a network that generates no income. We informed all of our vendors that we had had a force majeure event as we have per our contracts. As you know, since that time, several companies have commenced litigation against our independent DISH wireless entity, which is party to the relevant tower agreements. And I'm disappointed in that because by contrast, those companies who haven't litigated, we've had good open-faith negotiations and we've settled hundreds of contracts.
And most recently we signed a settlement agreement with a large tower company who didn't commence litigation because at that point principals can talk to principals. When the other companies, it's lawyers. And so you can expect, you know, my experience has been that that will be protracted litigation because the lawyers talk to the lawyers and they don't typically in a hurry to get anything done, you know. And it's just different than when business people talk to business people. I wish we weren't here. You know, I wish, you know, it's an ongoing and evolving situation, but we'll continue to appropriately respond to any litigation that's been commenced. You know, we'll assess all of our available steps in front of any courts or venues, and we'll engage with more tower companies to seek a consensual solution, and we'll consider all our alternatives available to the company, to the company that's party to the tower contracts to resolve these matters.
But it's obviously for the entire companies in conventional litigation, that's all public, and that likely, typically the wheels of justice don't move very quick, and that'll probably take some time before we actually know all the results of that. But we don't believe, just to be clear, we don't believe we owe any money. And I think it shows our good faith that we've settled with a lot when people don't pick litigation.
Brent Penter (Raymond James): Okay. Can you remind us what assets exactly are held at that DISH wireless entity?
Paul (Executive): Yeah, sure. In general, it's the 5G network build. So it's all the assets that were deployed to build a network and have it operational. So antennas, servers, computers, anything you would need. Radios. Radios, so forth and so on. So, yeah. So, kind of the other segment that you're now reporting.
Brent Penter (Raymond James): Correct.
David Barden (New Street Research): Hey, guys. Thanks so much for the questions. Two, if I could. First would be just, I mean, you know, could you talk about how the approach to the vendor payment situation impacted fourth quarter results in the wireless segment from an EBITDA perspective? And how, when you do reach a settlement, how does that all run through? I guess we're not going to be able to predict it, but it would be fun to know how it's all working. And then I guess second, Charlie, just to confirm, you don't have an anti-dilution provision, it sounds like. But when you see Elon kind of plucking a trillion dollars of valuation for SpaceX out of the air when it was $400 billion in June and $250 billion for XAI, as a large shareholder where a large part of your stock value is this holding, how much credence do you put in that? What do you really think it's worth? Or do you really believe that it's worth $1.25 trillion put together? Thanks.
Charlie Ergen (Executive Chairman): Let me take the first part. I'm going to generally answer the second part, and I'll generally answer the first part and turn it over to Paul. But, again, I think that, again, having spent decades on directed device and space, it's our belief that SpaceX is a one-of-a-kind company. And I can't speak to the valuations. The markets are up and down. But space is going to be an increasingly important aspect commercially, but obviously you're seeing it militarily and other things as well. And direct-to-device, when you can connect, it's not just phones. It's IoT. It's cars. It's anything mobility. When you connect any square inch of the planet, that's just a big business. I can only say it this way, that SpaceX is a company. And I'm not talking about just Elon. I'm talking about the company and the management of that company. They've been the best company I've ever worked with in 45 years. They're just responsive. They're creative. They move at a pace that most companies don't. So I don't think any amount of valuation is probably crazy there.
Obviously, we're not privy to their numbers, so we invested on faith, and we invest in people, and we felt that the best people we could invest in. So I'm anxious to see if they do, in fact, do an IPO. Obviously, there'll be a lot of things to look at. I'm anxious to look at that. But we don't know what the value is, right, other than we believed in the transaction that we did. We thought that initially we weren't getting the value for our spectrum. We thought with the growth of SpaceX that we likely could see that we could get to the value that we thought that our spectrum held, and it remains to be seen.
Paul (Executive): As far as, the question was about the cost of the network?
Charlie Ergen (Executive Chairman): Yeah. So let me address that. Thank you for the question. First of all, it's a little complicated. You have to go back to Q3 where we took the impairment charge that we recorded. In that impairment charge were costs related to any future commitments where we had contracts. So, for instance, the tower expenses would have been accrued for in that impairment charge. So you don't see those in the Q4 numbers. However, what you do see is just normal operating costs and accruals for normal operating costs that you have to run the network that's running through Q4. Hopefully that makes sense.
Brian Kraft (Deutsche Bank): Oh, hi. Good morning. Thanks for taking the question. I had a couple, if you don't mind. First, I wanted to ask what the path is to getting the wireless business to profitability on an EBITDA basis. Secondly, I just want to ask you, how quickly do those connectivity expenses in the other segment go away over the course of 2026? It looks like about 70% might have been gone in 4Q based on the math I did. I don't know if that's right. But trying to figure out, does that go to zero in 1Q or 2Q? And then the last part of my question is, is it still your expectation that total decommissioning costs will be in that $7 to $10 billion range? And is there any further granularity that you could share on the tax liability component of that? Thank you.
Paul (Executive): Yeah, so the first on the Q4 cost that you had for the other segments, what you're going to see is over time as we decommission all of our tower sites that that number will decline. As you pointed out, it's not down to zero yet, but you'll see big decrease in that in Q1 and Q2. One thing to keep in mind, though, those numbers do include that if you back into that number, it does include the non-cash accretion on the lease liability. So like we talked about in the Q3 earnings call, we discounted back to today's dollars the amounts that we owed on the lease and took that as an impairment charge. We need to accrete that up over time. And so that's probably about half of the number that you've seen going through the P&L there.
Paul (Executive): Okay. And then on how do we get this wireless positive, profitable... I've now been involved the last couple months in the day-to-day operations. It's disappointing where we are after four years, but we're very close to a break-even business there. I can tell you the way I look at it. The way I look at it is I look at the total cost of running that, including the hybrid core because that obviously has cost. It doesn't have as much cost as the network, but it obviously has cost. And then I look at it for every new customer we get, are they a profitable customer? In other words, I know we're making profit on the customers we have today. We've already invested in those customers. I've seen that we can do that. But every company that we have here has to stand on its own. And we're for-profit companies, and we have to make a profit in all our businesses. And so that will be the focus there. But we're close to being where we need to get to turn the corner, but we're not there yet.
Paul (Executive): And then there was one other question, which I didn't quite understand the other question. Is your expectation on the decommissioning cost, the $7 to $10 billion range that you had previously given, is that still what you expect? And is there any further update you could give on the tax liability on the Spectrum transactions?
Paul (Executive): Yeah, I think we've written off about $16 billion on the debt work decommissioning, which includes all the operational costs. And so it's a significant – I mean, we made a significant investment, and I think we wrote off about $16 billion. We think that in terms of taxes and further decommissioning, I think we believe that's in the $5 to $7 billion range today. And I think that's what we announced last quarter. But there's been no movement in our analysis of that yet. And obviously, given the litigation, it may take some time to get to the final answer. But it's in the $5 to $7 billion range is where we are today.
Brian Kraft (Deutsche Bank): So, sorry, 5 to 7 is your updated view versus the 7 to 10 previously?
Paul (Executive): No, I think our really initial reaction was 7 to 10, and I think when we were in Paris, maybe that number came out. But I think last quarter, I think there was a range even in Paris of 5 to 10. And I think we got that down to five to seven. That doesn't mean that's our best guess today, right, for taxes and decommissioning costs.
Paul (Executive): And to clarify, that's cash payments that we think we would make.
Charlie Ergen (Executive Chairman): Dynamic, as I mentioned in my opening remarks, taxes, liabilities, investments, everything else, value with SpaceX, everything else is interrelated. It's a dynamic picture. It's impossible, literally impossible to nail it down right now, given all the movements, some internal, some external, beyond our control. So anything we give you outside of the estimation that we have, even the estimation we have, is just an estimation. I mean, things are changing very rapidly, and it would be misleading for us to give you a very precise number that can change tomorrow afternoon. So that's the best we could do today, but obviously, as the variables get reduced over time, we can give you a much narrower range.
John Holick (UBS): Great, thank you. A couple questions for Charlie, if I could. First, Charlie, any high-level thoughts on the Paramount, Warner Brothers deal, what that means for linear TV distribution and maybe do you think it will affect the industry's ability to offer skinny bundles going forward, which seem to be driving a lot of the improvement we've seen in cord cutting? And then number two, I don't know how much you can comment on this given the upcoming auction, but just anything you can say about further spectrum sales, maybe timing or whether we should expect them and sort of the value of your sort of remaining spectrum holdings. Thanks.
Charlie Ergen (Executive Chairman): Yeah. On Paramount and Warner Brothers, I'd say we've had good relationships with both those companies for a long, long time. Obviously, they're going to have a long regulatory process, so we'll have to see how that goes, but it's further concentration in an industry that is changing technically, and the I always worry when you're competing against your own distributors. I mean, when they have a direct line to the consumer and you're competing against that and they're a valued vendor, that obviously is something that we have to keep our eye on. But we'll wait for their filings, and they're both great companies and great management for both those two. So we'll see at the appropriate time whether we have any concerns.
Charlie Ergen (Executive Chairman): And then on, what was the second question? Spectrum sales.
Charlie Ergen (Executive Chairman): Oh, spectrum sales. Again, because of the auction, I'm going to be very careful here. But look, I think we agree with the leadership of the FCC, which is one of the things to do here is to get spectrum and get it used as quickly as we can and that's led to the kind of situation that we're in today, and I think our goal is to find the spectrum that we continue to have is find a home for that, make sure that that's going to get used in the quickest and fastest and the best way for consumers and for technical leadership in the United States. I hope maybe we play a part in that, but we may not. But it's still obviously a valuable asset that we have.
Charlie Ergen (Executive Chairman): I don't think we have any further questions, so I just want to make one thing. We don't plan today to have a conference call in a couple months after the first quarter. We certainly will have filings, but I don't think we'll have a lot to add to what we had today. I think we do plan to have a conference call after the second quarter. I think that hopefully regulatory and our company looks, you know, and Hamid's had time to get some structure around what he's doing, and I think we can give you a pretty good snapshot of where we're going, but obviously we're optimistic about what we have and our ability to compete, and so we look forward to August. If there's material changes in the marketplace or something, we could have a call, but at this point we believe it's going to be August or end of July or early August before we have another call unless something happens in the meantime, which we could have a call at any time if that was the case. So thanks, everybody, for joining.
Charlie Ergen (Executive Chairman): Thank you, everyone. This concludes today's conference. You may disconnect your lines
at this time, and we thank you for your participation.
Quarter 2
Q3 2025 Earnings Call — November 6, 2025
Analyst John Hodulik (UBS): 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.
Executive Charlie: 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 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 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?
Executive 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 can't imagine too many companies out there with the breadth and the knowledge that EchoStar 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.
Analyst John Hodulik (UBS): 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?
Executive Charlie: 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.
Analyst Brent Penter (Raymond James): 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.
Executive Charlie: 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. 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.
Executive Amit: 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. 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.
Analyst Brent Penter (Raymond James): 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?
Executive Charlie: Yeah, I just don't think we would get into that. I mean, the only thing I would say is litigation is not positive.
Analyst David Barden (New Street Research): 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.
Executive Charlie: 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 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?
Executive Hamid: 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.
Executive Paul: 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.
Analyst David Barden (New Street Research): 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?
Executive Paul: 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.
Executive Hamid: Yeah, I would just add to what Charlie said. It's not contingent on what happened with the litigation. Those are totally independent concepts.
Analyst Walter Piecek (LightShed): Walt, we can hear you if you were there. Can you hear me now?
Executive Charlie: 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.
Executive Hamid: 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.
Executive Charlie: 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?
Executive Hamid: 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.
Executive Charlie: 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?
Executive Hamid: 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.
Executive Charlie: 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.
Analyst Michael Rollins (Citi): 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?
Executive Charlie: 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.
Analyst Ben Swindon (Morgan Stanley): 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.
Executive Charlie: 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.