DISH Network Corp (DISH) 2019 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the DISH Network, DISH Network Corporation Q2 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I'll turn the conference over to Jason Kiser. Please go ahead.

Well, thanks, Keith.

Thanks for joining us, everybody. I'm joined today by Charlie Ergen Chairman; Tom Cullen, EVP, Corporate Development. Erik Carlson, our CEO; Biran Neylon, President of DISH; Warren Schlichting, President of Sling; Paul Orban, our CFO; and Tim Messner, our General Counsel.

Before we have some opening remarks from Erik, Paul, and I think Charlie, we need to do our safe harbor disclosures. So for that, we'll turn it over to Tim.

All right. Thanks, Jason.

Statements we make during this call that are not statements of historical fact constitute forward-looking statements that are subject to risks, uncertainties and other factors that could cause our actual results to differ from historical results and/or from our forecast. For more information, please refer to the risks, uncertainties and other factors discussed in our SEC filings.

All cautionary statements that we make during this call are applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks, uncertainties and other factors discussed in our SEC filings. Do not place undue reliance on forward-looking statements which we assume no responsibility for updating.

With that, I'd like to turn it over to Erik Carlson, our CEO.

Thanks, Tim, and welcome, everyone, and thanks for joining at the last minute.

Given all the news, we've got a few short remarks today about the results of our wireless news and then leave plenty of time for questions.

First, I'd like to share my thanks to the DISH team for all the work that made these wireless developments possible. These are transformative days for us, and we look forward to sharing our progress as these deals advance.

Let me speak briefly to the quarter, and Paul will have a bit more color. And we've -- we are committed to our long-term strategy of delivering the best service, technology and value for our customers. It's the path we have to take if we're to stand out in a challenging Pay TV environment and succeed in the future. The second quarter results demonstrate that our continued focus on attracting loyal, high-quality and profitable subscribers continues to work in our favor. Customer profitability is near all-time highs. Our efforts to find the right prospects in the right areas with the right credit and turn those prospects into customers are bearing fruit.

As a proof point, we saw a sequential and year-over-year growth, subscriber growth in DISH TV. In the second quarter, we added 348,000 subscribers compared to 243,000 in the last quarter and 278,000 in the year ago period. In terms of our overall Pay TV subscriber trends, we saw a net decline of 31,000 compared to a loss of 259,000 in the first quarter and a loss of 151,000 subscribers in the year ago period.

This quarter, I'm pleased to report that we achieved a near-record churn at 1.48%. This is attributed to the focus we placed on our long-term goals, goals that include a data-driven approach to acquisition and a call for operational discipline from teams across the business.

Touching on Wireless & Company, you all understand the contours of the transactions that we announced Friday. Let me offer you a little color. These agreements and commitments set us in a clear course to become the fourth provider -- wireless provider to the nation, and it's going to happen quickly. The agreements accelerate our entry into the market as a facilities-based 5G broadband wireless provider. June 14, 2023, is now our deadline to provide 70% of the nation's population access to our 5G broadband network. Look, we have lots of work ahead of us to land Boost and to the begin the 5G work build-out, and I'm confident in our grasp for the fundamentals, and I'm certainly confident in our ability to execute.

Next week is my 24th year at DISH. I joined the company just a few months ahead of our EchoStar One launch. At that time, we had no DBS customers, and today, we serve millions. We launched Sling TV in February of 2015, and today, we have millions of customers, and we continue to lead in the live OTT category. We've got a top-flight team that manages 3 high-profile national brands in DISH TV, Sling TV and DishLATINO. And we support a dealer network that's 1,000 strong, and we have a vital direct sales operations.

Our people and systems support hundreds of thousands of customer interactions a day, and we do these things well. DISH is prepared to support the Boost and Virgin subscribers with excellent service, excellent technology at excellent value. And we are well positioned to develop, market and support, and service-based on the nation's first standalone 5G broadband network.

Paul, take it away.

Thank you, Erik.

As we've been talking about for the past several quarters and to echo Erik, our core Pay-TV business continues to focus on acquiring and retaining high-quality subscribers who are profitable to us over the long term. We believe that we're ahead of the curve compared to most of our competitors.

As Erik said, we achieved near record-low churn and increased growth -- DISH gross additions with all-time high credit scores. We also saw positive subscriber growth on Sling as we continue to improve the platform and user experience. This quarter, we added 48,000 net Sling subscribers, up 7,000 from last year.

And looking at the P&L, our operating income and EBITDA are both down compared to last year primarily due to a lower subscriber base and higher SAC. For revenue, the lower subscriber base was partially offset by higher ARPU due to price increases and improved revenue in ad sales at both DISH and Sling. These increases were impacted by a higher percentage of Sling TV subscribers present in the overall Pay TV subscriber base.

We also saw a decrease in premium channel revenue, mainly related to the removal of HBO. For subscriber expenses, our margins had been relatively stable. However, we continue to face long-term pressure from programmers who want higher and higher rates even in the face of declining viewership. Programming expenses were positively impacted by the HBO channel removal.

Turning to subscriber acquisition costs. Investments in more subscribers in the quarter had a negative impact on operating income and EBITDA. With that said, we believe that the investments we are making in acquiring high-quality subscribers will pay off over the long term.

DISH TV SAC increased to $786 per activation, up from $763 last year. The increase in DISH TV SAC was due to higher hardware and advertising cost per activation. Note that we continue to supply a higher percentage of our new customers with higher-priced Hopper receivers. While this impacts SAC, we believe offering our best equipment influences loyalty over the long term by delivering a better customer experience.

G&A expenses were up this quarter as a result of costs to support our wireless initiatives and legal fees. In the first half of the year, we've generated over $600 million in free cash flow despite increases in wireless CapEx. We ended the second quarter with $2.7 billion of cash and investments. This will be more than adequate to redeem the $1.3 billion remaining on our September debt maturity.

With respect to Boost, we feel confident in our ability to pay the $1.4 billion purchase price with cash on hand when the transaction closes. As we've said before, we'll be opportunistic in accessing the capital markets.

Finally, during the quarter, we announced an agreement to acquire the majority of the EchoStar Satellite Services segment as well as certain real estate in exchange for our stock. Upon closing, this transaction should significantly reduce our satellite and transmission expenses, and as a result, we should see improvement in both free cash flow and EBITDA.

With that, I'll turn it over to Charlie for a few brief comments.

Thanks, Paul.

Just -- normally, I wouldn't comment, but I just want to briefly set the stage for your some of your questions. Let's talk about what's changed. And of course, obviously, a big change in that -- with the agreement with T-Mobile and Sprint and the acquisition of the Boost brand and their customers and the Virgin customers and the Sprint -- and the prepaid Sprint customers.

We're able to enter the marketplace in a very timely manner with just over 9 million subscribers, something that we -- didn't think we thought we'd have to build the company -- build the retail side of the business from scratch. Now we get a key ingredient, a key business to move forward from and really just jump-starts us to get into the business.

We're also acquiring a 7-year MVNO deal, a very competitive MVNO deal. But also for 7 years -- so that we get the provision on the new T-Mobile network, which obviously is going to become an even better network as they build out and -- the Sprint spectrum. And -- but more importantly, something that's not understood is that we, of course, get to build our own network out and we get to provision customers on our own network, but then we get to roam on the T-Mobile network, which allows us to build on a market-by-market basis, which is materially different than we had envisioned where we believe we had to build the whole country at one time. Now we can be in business as soon as we build our first market with our own owner economics. And I'm sure you'll have more questions about that.

Additionally, the DISH and FCC, where we have been going -- where we had been going in kind of opposite directions, where we were building based on our license, the flexible use license, a narrowband IoT network to met our build-out requirements. We're now more in alignment with where the FCC wants to go, which is they want to see 5G mobile broadband built out. And as a result of this transaction, we're now totally aligned with that, where we are -- have voluntarily changed our flexible use licenses to mobile broadband licenses in return for realistic that -- we have 2023 before we can build 70% of the country out. So -- but we're now in alignment with where I think the country wants to go, where I think -- I know the FCC wants to go, I know we want to go, I think where the administration and the Congress wants to go.

As a result, our NB-IoT, narrowband IoT, resources will be redeployed in the short term for that 5G network because our MVNO deal on T-Mobile allows us to use their nationwide NB-IoT that's already built out. So there's no reason to duplicate that network, particularly with some non-standard frequencies.

What's not new is that we still plan on building our network out and spend about $10 billion to do that. Having said that, with the MVNO deal with T-Mobile, we're able to extend our build-out for some of the less-profitable areas longer term. So our initial cap at least will actually be less than we had envisioned, short term. And as a result, our OpEx will actually be less than we had ultimately envisioned. But the $10 billion investment is still in the cards.

And then what's not news, we're going to need help. We're going to need help from people to help us build our network just like we needed help back when we started to launch satellites. So there's people that have many of the things that we need, whether it be backhaul, whether it be towers, whether it be mobile edge compute, whether it be hardware or software, whether it be distribution and marketing. All those things are things that we're going to need. Where our philosophy really is where somebody else has some of those things, we don't intend to reinvent it and rebuild it if they want to work with us. If they don't want to work with us, then obviously, then we'll do it ourselves. And when we did satellite way back when, there were many times -- most times people had things in place and wanted to work with us, but there are a few cases where people didn't believe in us or didn't think we'd be successful, and we ended up having to build those things ourselves.

So with that, I think we'll take questions.

(Operator Instructions) We'll take our first question from David Barden with Bank of America.

I guess, a couple. First would be, could you guys give us the shape of the EBITDA of the business that you're acquiring from the Sprint/T-Mobile divestiture? Obviously, they've got one number. You've got a different number. Based on your relationship, it'd be helpful to get an understanding of what that is. And then, I guess, second, Charlie, when you say you need help from people, I think one of the biggest things that's going to be getting the money to kind of build this plan out, The Wall Street Journal reported that you spent like 3 weeks putting the plan together. What is the plan to bring the funding to bear and the shape of the plan? If you could kind of give us a little bit of color on tat, it'd super helpful.

Yes, this is Charlie. I'll try to take it. In terms of EBITDA of the existing Sprint business, that's really -- we'll probably leave out to them to talk about what their profitability is. Obviously, the way they would look at it internally and the way we would look at it would be a little bit different because we know that in the short term, we're paying for the new T-Mobile network, different economics than perhaps on the old Sprint network. And then, obviously, as we build out our own network, our economics change materially different.

So having said that, I think maybe just to give you some kind of guidance, like a track phone, who we believe we have a very competitive deal compared to their deals and look at kind of their financials to give you a feel for what a -- the base case would be where you're using somebody else's network in terms of what their profit would be? And then, obviously, as we use our own -- as we build our own network, we use our own towers to get owner economics, that materially changes in a positive way.

As far as where will we get the money to move the network forward, a lot of different places. So we obviously have cash on hand in the business. We obviously are generating cash flow, which has been an excess of $1 billion for a lot of years in terms of our existing business. We believe that the Boost and our entry into the marketplace will be a positive from a cash flow perspective. The marketplaces are open to us certainly today, and there's opportunistic things. And I certainly want to put more money into this company, if that's what it takes, too.

So -- and then finally, one of the things in this agreement is our 600 megahertz spectrum, which today is -- as we wait for the broadcasters to clear the spectrum, and which T-mobile's taken an aggressive stance there. Some of that spectrum is fallow today. In fact, all of our spectrum today is fallow, and Department of Justice is requiring both companies to use good faith efforts on a market-based deal for them to lease that capacity until such time as we use it.

So -- and to give you an example, we have moved our build-up schedule out by 4 years from 2029 to 2025 as part. So we've accelerated the availability of 600, but all of our 600 is not going to be built out until 2025. So it gives you a feel for some possible revenue opportunities there as well.

As a follow-up, just real quick, As a gambling man, what would you put the odds that the state AGs are going to win or lose in their efforts to block this deal?

The first of all, to set the record straight, I'm not a gambler. So a gamble -- when you gamble, that means that you don't know the odds, right? And that means that when you gamble -- in fact, if you play in Vegas other than blackjack, and only certain times blackjack, the odds are against you. So that would be a gamble. But when you actually understand, like blackjack and count cards, it's not a gamble because the odds in your favor. So I'm not really a gambler, but -- from that perspective.

But look, I think -- I think as the -- to the credit of the FCC, in particular, the Justice Department, I think they've structured this agreement so that we feel very competitive -- we feel very good about our ability to compete as a fourth entrant into this marketplace, both in the short term, particularly -- obviously, in the long term.

I do think that the states played a role. I think that the states had -- in my personal opinion, had big influence on T-Mobile and Sprint and their willingness to be more aggressive to give us the kind of things that we needed to be competitive that they otherwise might not have, and obviously, DoJ for some of those issues. But I think you have to give some credit to the states as well. So when you look at all that, I think that I would rather have the Department of Justice case than not.

Yes, this is Tom. We're not in the business of handicapping that outcome. But as Charlie said, the way the remedy was structured allows us to effectively compete on both price and packaging day 1. And so the news just came out on Friday. So I think now the states are in a position where they have to objectively analyze and evaluate the remedy. And our hope is that they will look at it with a different perspective.

We'll take our next question from Jason Bazinet with Citi.

I heard you on the $10 billion number not changing, but my question is pretty simple. If you have a pile of cash, either from cash flow and new funding, how -- based on the MVNO terms that you got from T-Mobile and the sort of -- the cost to deploy your own network in these selective cities, how should we think about the use of that cash? In other words, will you toggle most of your cash flows getting more gross additions and running it on this MVNO? Will you toggle all of it towards standing up a network, and we really shouldn't expect a bunch of incremental gross additions on the wireless side coming in? Or is there some sort of balance between those 2 in terms of how you see this playing out? Any color would be helpful.

It's the latter. It will be balanced because we plan to aggressively grow the Boost business as well as begin building out the 5G network as soon as possible.

In fact, an RFI and an RFP was released today by DISH regarding the 5G network. It's a very cloud-centric approach. It embraces the [ORAM] mentality of virtualization from the ground up. And so we believe that the CapEx and OpEx that we'll get to in a cloud-native 5G stand-alone network will be very attractive.

However, in the meantime, we have every motivation to grow the Boost space. And we not only want to expand the Boost distribution because we're moving -- one of the conditions of closing is that we have to be able to provision new subs on T-Mobile's network. So we're not going to provision any new Boost customers on the Sprint network. And since the T-Mobile network is far superior to the Sprint network, particularly in terms of coverage, it opens up new geographically diverse markets for us. So we could not only work with the Boost current distribution to expand their footprint, but we'll also be able to use the current DISH distribution and retail presence throughout the country because you're going to be able to make the service available in a much broader geographic footprint.

Our next question is from Doug Mitchelson with Credit Suisse.

Charlie, I was hoping you could talk about your go-to-market strategy, your vision. I sort of thought you were thinking about wholesaling capacity on DISH as you build out a 5G network. Now you're squarely in retail and talking about getting into postpaid sort of as quickly as possible. So as you transition to your own sort of cloud-based, efficient 5G network with all the capacity that you'll have, I was just curious how you plan to sort of differentiate the service and go to market. And then I've got a follow-up.

Yes. So one of the nice things about a virtualized network with the architecture that we're using, it's completely different with -- than the incumbent legacy networks is that we'll be able to slice our network in any number of ways. You might look at it as if one of the slice -- one of the big slices of our network will be our own retail business to consumers to compete against the incumbents, right? And we didn't know whether we'd be able to do that on a very timely basis, but now we know that we can. In fact, we know that's how we're going to enter the marketplace.

Having said that, when you look at DISH's wireless portfolios, and now, with approximately 14 megahertz of 800 megahertz, we're well over 100 megahertz of spectrum that we're able to utilize. And with that -- and obviously, more downlink than uplink. So we actually have more downlink, mid- -- low and mid-band spectrum than Verizon, as an example. And I think they have had over 120 million customers on their network.

And in the 5G virtualized architecture, that might only take 30% of your -- so you can put 120 million customers. From where they are today, that might like take 30% of your network -- so -- of our network. So we think we can do both, which is we still -- in this particular thing, we have the ability to lease out 35% of our network. We're going to probably use about the same amount if we get 120 million subscribers. And I'm sure all of you in this call believe that we're going to get 120 million subscribers. And we still have room for where 5G really needs to go, whether it be precision agriculture or health care or robotics or smart cities or smart grid or blockchain, artificial intelligence, or autonomous vehicles. All those things still need a network.

So I think we're going to -- I think we're in a very good position to put our network where it's best used, and we have a lot of flexibility in doing that. But certainly, the end result is we have plenty of spectrum for -- to go in the consumer business and still do some of the things in a network that's architected where the other incumbents are going to have a tougher time to get there.

And I think last quarter, you talked about it being difficult to raise financing given the uncertainty on the FCC side in terms of perfecting the licenses on an IoT network build-out, and that uncertainty is now off the table? Do you think it's going to be easier to have these financing conversations now that there's sort of certainty around what the business plan is and the FCC strategy around your spectrum licenses?

I think there's no question that the elimination of the uncertainty at the FCC is big. But equally as big, we can enter the marketplace in a short period of time and start getting return on investment and actually start cash flow in the business. So look, the markets are open. You guys are on the business. A good business plan can raise money almost any time. But times are good for raising money, and we don't have a good business plan. We're going to have a great business plan.

Our next question is from Brett Feldman with Goldman Sachs.

Congratulations, by the way, in getting this done. Once the deal closes, the new company is basically going to be a holding company that has a video distribution business and a wireless services business. And I'm curious to hear your thoughts on whether you think there is operating synergy between them or if the intent is going to be to start having separate operating structures, separate capital structures and maybe even separate ownership structures to the point where you could consider spinning out or selling the DBS business?

I'll take a shot at, it, and then Erik, and Paul, if you want to jump in here. But we have a lot of flexibility in our structure. Obviously, it's certainly going to be enhanced. As we get these satellite assets, we need to run our DBS business over into DISH, but there -- the plan is not to duplicate with a completely new sandbox where we have customer service. We have call centers today. There's no reason to have different call centers for wireless and Boost than we do for our video business. We just have to do different training. We already bill. We already understand security. We already have -- we have sales and marketing. We have distribution. We have an in-home service with trucks that can go in and do things in-home in terms of smart homes and connectivity and delivery of products.

So we've got an awful lot of infrastructure in place for -- and Boost is a really, really similar business to ours. They use independent retailers. We started with independent retailers. We're still with independent retailers who are a big part of our business. They -- is a customer-facing product that there's billing and collection to cap money each month. But probably the biggest difference is that we get to sell something that the cost of goods sold is not going up every year. It's going down. And people are using more, not less.

So in the TV business, people are watching some of the channels less, but those channels want more money. That's not -- we're the first company to talk about that in a conference call, and we were probably 3 years ahead than anybody else talking about it, right? And people finally caught up to that notion.

But in this case, we're selling something to people using more, but the cost is going down. And as we build our own network, the costs go down materially. Did you want to comment maybe, Erik, to fill in the gaps there?

I'm not sure there's a lot of gaps to fill in there, Charlie. I think, obviously, there's a business that over the past 20-odd years that we built a certain number of capabilities, whether it's like Charlie said, with an independent distribution or marketing or digital assets or to be able to go to somebody's home, be able to provide security, understand procurement, et cetera that we'll continue to leverage -- like we leverage for Sling, that we'll continue to leverage for the wireless business.

So their synergy, we're going to be a lower overhead -- we're going to be in a lower overhead situation than perhaps Boost was within Sprint, as an example. Even though they were the same company. We'll do better than that.

If you don't mind a follow-up because it has been a topic of discussion on prior calls about the merits of considering a combination with your largest satellite TV peer. It sounds like because you do see synergy between the video business and the wireless business, does that mean that you're not maybe interested in that anymore? Or is it just the bar is higher because you'd actually have these synergies if you decided to consider something strategic?

I'd say it's a little bit simpler, but we just don't have a relationship with AT&T.

We'll take our next question from Philip Cusick with JPMorgan.

One for Charlie and one for Erik, if I can. Understanding that the designated entities aren't part of this deal, Charlie, do you think we can expect some movement from the FCC around those? And then second, Erik, I see this is the first quarter of satellite gross add growth in 5 years. What changed in the business to drive that? And did that have something to do with the AT&T promotional roll off or is that all internal?

Yes, Phil, I'll start off, and then I'll let Charlie handle the DE question. Look, we've been talking on the calls for a good many years now about kind of our focused effort on really doing what it takes to acquire profitable customers that we think will be with us long term, that are in the right areas and really providing superior service, technology and value. And I think this Q2 is probably the first quarter where you're seeing that all come together.

Obviously, as we talked last year, there was some overhang on the business with both Univision and HBO. And really, that overhang is not going. And so you're kind of seeing Q2 as, let's call it, a cleaner quarter without channel removals. And so kind of the fruits of our labor and the discipline and the focus that we've had over the past few years has come to fruition.

We're -- obviously, you mentioned AT&T, and maybe they're going through something similar that we went through many years ago. I can tell you, though that our profitability and our credit scores on new customers are near all-time highs. And so we feel really good about the customers that we are attracting, both from a geographic perspective and a credit quality perspective.

And I might just add that Game of Thrones, I think the largest viewing that HBO ever had, we still were able to -- to Erik and his team, kudos, because they were able to get through that. I think -- I don't know if that's good news for HBO, but that certainly was a headwind during the quarter.

On the DEs, the DEs didn't -- as you know might -- is a restricted proceeding, so it did not come up as part of this transaction. Having said that, I think now that the FCC and DISH are aligned -- both totally aligned to do 5G mobile broadband, I would hope that -- one of the things that is disappointing -- and look, there's good arguments on both sides of this issue, but the fact is that some spectrum is lying fallow that nobody can do anything about yet until this is resolved. And at this point, it's on the -- in the FCC's court, not in ours. We -- I think it's been 6 or 7, 8 months since we've responded. So I'm hopeful about it.

Ultimately, between the FCC and DISH and the DEs that we can get everything moving in the right direction. But no guarantees of that, but we're certainly willing to try.

Erik, if I could follow-up, was any of the -- or any substantial portion of the customers who came back this quarter more like a returns after some of the Hispanic issues have been cleaned up?

I wouldn't necessarily categorize it that way, phil. I mean, obviously, we're making good progress now with our partnership with Univision and think we can kind of get back to growing that business. But I wouldn't over-emphasize your point there.

We'll take our next question from Kannan Venkateshwar with Barclays.

So I guess Charlie, one question on the MVNO agreement. You mentioned the ability to license 35% of the capacity in your own network, but the language around the ability to do so using the MVNO agreement was less clear. So if you could just clarify if there is any ability that you have near term to use some of the capacity that you're getting to license that to potential third parties?

And the second question, I guess, is more from the perspective of the states. Obviously, there's been pushback there. And one of the issues that seems to have come up is DISH is not in the wireless business, and therefore, is it a credible fourth player. So is there any conversation with the states in terms of what they want, from a DISH perspective, rather than a T-Mobile/Sprint perspective?

Yes. So on the MVNO deal -- the MVNO deal is to DISH, so the -- is to DISH, and the brand is DISH brand, and DISH will -- to be -- I think you should look at us similar to Netflix, where Netflix has a lot of forms of distribution. That might -- I think they're -- Amazon sells them, cable sells them, DISH sells them, DirecTV sells them. So there's a lot of forms of distribution. But the fact of the matter is you're getting your bill from Netflix, and they control the consumer relationship.

So we don't have any restrictions on how we market as long as it's a DISH part. But we -- but it would be unlikely that we could sell capacity to some -- to a third-party on the T-Mobile. That wouldn't make any sense.

Having said that, the beauty is, is that as we build our own network out and realize we're going to have a both -- we're going to have both postpaid, build our own core within the next year -- or within a year of closing, we're also going to build our first cities pretty quickly.

And since we build a city, when you're in our city, you're on our network. But as soon as you leave our city -- the interconnect agreement is really a first of a kind in the United States as far as I can tell. But when you -- as you go outside of our footprint, you would seamlessly roam onto T-Mobile network. And in fact, you won't even drop your session or your phone call. So that's unique, and it hasn't been done. And we're excited about the help that the Justice and -- played a role there. And so -- and obviously, we have our own network that we can do obviously -- there's nothing to prevent us long term from doing MVNO deals with other people and so forth as we build our own network.

So we have a lot of incentives to build our own network. I think it would be -- and not the least of which are severe penalties if we don't. But regardless -- irregardless of that, we're going to build this network out. And it's -- it's really -- I think it's really hard for people who haven't studied the wireless business on the inside and have really studied it to the degree that this company has. And to understand the -- you read about 5G, and everything you get is what the incumbent say about 5G and how they're going to do 5G. But the reality is that 5G can do so much more.

And just as important as the 5G technology is the architecture and how you build the network. And so all the incumbents have built networks that were primarily designed for voice and were built, designed, architected in the '80s. But we're -- this is 2019. And we don't want yesterday's network. And architectures today that everybody wants to get to are open architectures where you're not relying on just one equipment supplier, and that equipment becomes off-the-shelf where it's interchangeable and the majority of your network works on software, which allows you to do -- your network to do so many more things at a lower cost. And so we have the ability to do that.

I mean, I'm probably bad at analogies here, but you can imagine, these guys are building an internal combustion engine, and we're driving electric cars. Except we're not in a situation where electric cars are going to be half-priced. They're going to be 50% cheaper than the cars they're building. And better yet, you don't have to plug it in to charge it. It's just going to be charged because we do the software. So you don't have to plug it in.

So if you can imagine if somebody was building an electric car today that was superior in every way, went faster, so it's more robust, had better user features, cost half as much money and you didn't have to wait in line to fill it up, that's what we're going to have. And the other guys are going to get there, but the other guys have to tear their networks down. And then they've got to rebuild them.

And so just a long-winded answer, but some of the people Tim talked about, whether we have a hosting agreement. Hosting agreement doesn't make sense for us because a hosting agreement means we would have internal combustion cars. We just -- they would host our spectrum on -- and we'd look just like they would look like. And so customers have 1 or 4 choices, they all look pretty much the same. They all make a phone call, they all surf the web, they're all pretty much the same.

But our network and our phones will be different because we architect it, so we can take advantage of massive MIMO. So our tower placement is different than the incumbent's tower placement. We get to use things like [eSIM] or even our cable structuring, and protocol is different, right? It means that we do things -- that big shed you see at the bottom of the towers today, that's going to be in the cloud, right? So all that's different, and all that's different. We get the best of both worlds, which is we get to use the old as long as we need to, but we get to build the new. And someday, when we get a chance to show you the economics of that, that's powerful. That's powerful. We get to -- we get -- and our build-out will be where the towers are used, where people are -- where people are using data. That's where we're going to build out first. And so we get to build out very highly efficient, deployed towers, right? And longer term, we'll build out in the more rural areas where you're in the middle of Montana driving down the road, and there's you and the cows out there, not a lot of people are using that tower. But we'll get to use that tower until we need to build it out, which we will, but we get to defer that CapEx/OpEx. So it's a very good economic model for us, and we'll be very competitive.

I'll make a couple of follow-up points. One, the agreement, as Charlie said, does not allow us to wholesale their capacity, and nobody really expected that would be the case. However, we do have flexibility in creating new brands on to the network. As I said earlier, we intend to continue to grow the Boost brand and presence, but we do have the capability to create new brands as well as bundle that with third-party products and cross-market with third-party partners. So we do have new avenues of growth beyond that. The second point I'd make is, while we're starting with attractive economics on the MVNO deal, there's also a mechanism in the agreement that enables those cost to drop at specific periods of time. But at the end of the day, it's always going to be more cost effective for us to be on our own network, so the incentive to build around where the traffic and capacity is being consumed today goes up every month.

And if you could just help with the question on the states and the lawsuit there.

Okay. What was the question? Well, I forgot the question, so could you repeat that?

Yes, the question was mainly about any conversation with the states around the credibility of DISH as a fourth player and any solution they might need in order break through.

Yes, this is Charlie. I'm insulted when somebody says there's a credibility -- when you're talking about a company, in '19 -- I can remember, 1991, when we first sold digital compression, and we started building our satellites then -- and we still have a digital compression lab. And we said we think digital compression is going to work. That's the new architecture of how video is going to be delivered. Everybody in cable, everybody in broadcast, everybody in -- there was the so-called export, every analyst said digital compression can't work. Trust me, I was there, right? Now by 1994 -- '93, the same people, the exact same people said, "Oh, yes, we always knew digital compression could work," because DIRECTTV and us started using that, right? And of course, the cable company took 10 or 12 years to upgrade their plant and equipment to digital because they were analog. So here we are with 5G, 5G architecture, the people in the know that know where this has gone, they're not discounting what DISH is saying. And by the way, DISH became the third largest MVNO. So DISH just wasn't -- DISH became bigger than Cox. DISH became bigger than Charter. DISH that became better than Time Warner. DISH became bigger than -- what was the name of the company in New York before it was Altice?

Cablevision.

Cablevision. DISH became bigger than Cablevision, right? We didn't become bigger than Comcast or DIRECTV, so we still got room to go, right? But -- and I can remember, we did -- thank god, Bennett Goodman was around because we -- our first money was 12 and 7/8s with warrants for $400 million, right? Because we didn't have any money, we never built the satellite, we never built the set-top box, we never interfaced with the customer, have never taken a call and never built an uplink center, never done encryption in our life. And yet, we're able to do all that, right? And this project is certainly challenging, but we have so much more infrastructure in place. And the ability to -- and we know what we're up against. It's not our first rodeo. And I think we'll be a competitive threat in this business.

And regarding discussions with the States, obviously, that is confidential and not something we can discuss.

We'll take our next question from Rick Prentiss with Raymond James.

Obviously, an interesting, complicated settlement, good to get it this far. Really intrigued by the option to acquire decommissioned Sprint locations and retail stores. How many do you think might those towers be in the right place that you were just referring to? And how soon could you actually start using locations and stores? And how complicated would it be to help your plan?

Well, I think -- thanks for the question. I think T-Mo indicated on their call that their Sprint-T-mo transition is likely to be in the 2- to 3-year time frame. But there are notification periods in the agreement where they have to give us adequate notice of what -- which towers will be decommissioned in what time frame. So we'll have enough time from our own RF planning efforts to determine which towers would fit into the right footprint at the right time. But that being said, we'll have our own independent relationships with T2 tower companies. Some towers may have assignable leases. But if they're not assignable, we'll have an agreement with the tower company, but we'll know where the rad center is being vacated. And so that's important for us as we apply that to our -- the RF plan that we'll have in place at the time. As for stores, it's similar. We'll look opportunistically where the locations are relative to where we have strengths or holds. And again, not all the leases will be assignable, but we get first look.

Yes. I mean the net effect is it's going to be a positive. We probably don't know the scale of that. But certainly, it will help us in our build-out and our retail presence.

Yes. And then Charlie, you mentioned on the narrow band, you would kind of redeploy your efforts in the short term. I noticed in the language, the FCC has been tolled, T-O-L-L-E-D, as far as the time line for the March 2020 deadline. Would we think that you should be stopping that like almost immediately then because obviously you don't want to keep throwing up, looking at your narrowband IoT network? But how fast could you actually stop that effort and redirect it?

I'm going to start -- I'm going to stop throwing up yesterday. But it is tolled -- and just to be clear, it's tolled when and if the FCC approves the merger, then it will be tolled day for day. And obviously, to the extent that there was going to be a trial or something, we'd have plenty of time to -- we have time to start back up. But look, it's probably one of the things I'm personally most excited about. I was never -- the narrowband IoT network, we got great experience. We've put up a lot of towers. We know how to RF plant a network. We know how to get permits. We know how to get zoning. We know how to climb towers. We know how to provision. So those are all things we probably wouldn't have known, and now we just have to expand, to scale of that. So it's really, really, really good education for us.

But it's not -- I agree with the FCC and some of the commissioners that it wasn't a network to be proud of compared to what we could do, compared to what the country needs. And now we get to build that. I'll get myself boxed here, there's only one other country that's building a stand-alone 5G network, and that's China. And the only company in the United States that's doing it is [us]. And if we want to lead in 5G, if this country wants to lead in 5G, DISH is very, very important to that effort. And I think that -- not that I would say anything nice about T-Mobile, but they also, with the acquisition of Sprint, we'll be in a position to decommission the Sprint network and build it back as 5G. So what the FCC and Justice have done is they have taken Sprint who was challenged to build a 5G network and enhanced T-Mobile's ability to build a 5G network in a shorter period of time because they get available capacity to do it as they decommission the network. And they brought in a new entrant that can build the new architecture, the new -- the more modern way to build a network. So that we -- and I think the net-net of that is there's that -- obviously, T-Mobile and -- I mean, AT&T and Verizon are doing wonderful things in 5G so doing their -- with their own build-out. This country is going to be the envy of the world. And this transaction has got a lot to do with it.

Great. Any update on the ESS-BSS closing time frame.

No, we're still waiting for some regulatory approvals outside the U.S., and it's probably a couple of months' out.

Our next question is from Craig Moffett with MoffettNathanson.

A couple of questions if I could, Charlie. First, I just want to be clear, how confident are you that the eSIM strategy that you described really does enable operationally the full make-versus-buy transition from the 2 networks just given that it's -- obviously, it hasn't been possible to do any field testing of that yet. Second, just -- are we just to think of someone like Rakuten as possibly the best analogy to what it is you plan to build? And I wonder if you can just talk about what some of the similarities and the differences are between your network and a network like that. And then finally, just a technical question. Just with the financing of the $1.4 billion, which is the first payment, if you could just talk about where and how that will be financed.

The last one we've already answered. We've indicated that the $1.4 billion would be paid off of cash on hand.

From cash on hand. Okay. I missed that, sorry.

It doesn't mean -- yes, I think -- it's possible that we would be opportunistic to raise capital, but we do have the cash to close the transaction on hand and pay our debt payment in September, I think Paul said. On the the Rakuten, Rakuten is really building a 4G virtualized network, and they're taking -- they're going pretty far with virtualization. We will go farther.

They have a path to 5G.

And they have a path to 5G, but there are a lot of similarities. For example, they also have an MVNO deal. So their initial build-out is a few cities in Japan, so not building a whole country at once their nationwide MVNO with KDDI. So they have nation -- so they have some of the similar benefits that we have. I think the -- and we're fortunate because they are blazing the path. I mean they're -- obviously, it's a difficult engineering challenge for the first company to do it, and we're going to benefit, as our others, by learning the lessons from them. But they have -- one of the really cool things, we got a lot of American manufacturers involved in the Rakuten thing. So you've got the Cisco -- this is all public -- Cisco and Intel and Altiostar and others, Red Hat, there's a lot of American vendors. And what I think is really exciting about it is we don't have American hardware providers today in the existing networks in terms of radios and things. We get a chance to do that in the future with that. So I think Rakuten is a good one to watch. I think it's a good question. It's a good company to watch. And I forget the other point.

eSim.

Oh, eSIM. eSIM, in this transaction, both, us and T-Mobile, have to support eSIM. There are a few restrictions if you're financing a handset. But you can imagine that we're all -- that we like eSIM because when you don't have many customers, it's that much -- it's that easier. When a customer can port their phone number and their hardware without going into a store or physically putting something in the phone, it's a little bit easy. Obviously, customers will -- you'll have to be really good, you had to be good on customer service, and customers can switch much more easily. So if you don't have a lot of customers, that's an advantage. You get a lot of customers, as you know, from the marketplace, the incumbents were not in favor of eSIM, and they have not been supportive of it. So that's something in this merger that's probably overlooked. And that -- look, my prediction will be that eSIM will be standard in several years in this country from all the major players based on this deal.

But to be clear, Charlie, your ability to transition customers from one network to the other is not dependent on the sort of eSIM workaround, it's instead embedded in the MVNO agreement that you have with T-Mobile.

That's true.

Okay. That helps clarify it. I appreciate that.

Yes, it's more of a convenience for consumers. It's -- it's also going to be a convenience to people like Apple that have eSIM in their watch, right, or in their tablets. There's going to be a bunch of other effects. Maybe we don't know all the effects, but it's going to be positive for the consumers, it's going to be positive for people that use a network that relies on eSIM.

And just to clarify some of the perceptions around the MVNO. We start as an MVNO and have a path to pretty quickly get to an infrastructure MVNO, which then provides the guide path to being a standalone mobile network operator. And the infrastructure MVNO is once we implement our converged core, which would likely be mid-2020, then we'll be able to provision eSIM -- I mean, I'm sorry, SIMs on our facilities, which also allows us to route traffic through our core, and we'll have all the customers' subscriber information on our equipment, not -- in a traditional MVNO, the MVNO is dependent on the host network to do those types of things. And as a result, they don't get any visibility into traffic analytics and being able to set their own policies and so forth. So that's an important distinction of this versus a typical MVNO. And clearly, as we start rolling out the RAN network, it becomes more and more important. It also allows, because we're using a thing they call the M26 interface that when we're moving -- a customer would be moving from our network at our boundary onto the T-Mobile network, it would seamlessly transfer the call because the 2 cores are interconnected.

We'll take our next question from John Hodulik with UBS.

Great. Maybe first, some more detail on the $10 billion spend. Should we think of it, the spending, as -- or the sort of timing of the spending is sort of ratable with the coverage targets? Or is there some more upfront spend, Tom, as you were talking about the sort of getting the converged core up and running by 2020? And then a clarification, is that $10 billion a CapEx number? Or does it include operating losses or working capital investment we may see in the wireless business? That's number one.

And then number two is just a question -- a general question on wireless pricing. Can you -- you talked about adding Boost subs pretty aggressively. Does the MVNO, in your mind, give you the ability to be disruptive in terms of the prepaid or postpaid market out of the gate before you've got any infrastructure up and running?

And then again maybe for Tom. Any rough numbers -- you talked about the cost advantage you're going to have with this virtualized network as you bring up each of these markets. Can you give us a sense on what the magnitude of the cost advantage you expect to have over sort of current carrier networks and these areas you built out?

John, I'll take a crack at some of them. And Charlie, you might want to come in. But yes, the CapEx is generally ratable with the expansion of coverage. As you pointed out, you'll have an upfront investment in core, for instance. But in the grand scheme of things, a core is a rounding error compared to the entire build. So there'll be some upfront investment, but generally, it's ratable. As far as wireless pricing, yes, we do think we can be disruptive day 1, as I said, not only because of attractive rates but also bundling capabilities that are afforded to us in the deal. And rough numbers in terms of CapEx savings, we've had discussions with Rakuten and we've talked to every vendor you can imagine, but since the RFI and the RFP just went out today, it's a little premature to answer. But we're confident that the CapEx savings are at least 25%.

Yes. And the OpEx, there's some OpEx savings, too.

Well -- and obviously, OpEx will be much reduced if you virtualize things like you see in data centers or cloud service providers today.

But if you took the 15,000 towers that were committed to the FCC, and you took the 200,000 per tower where you get the...

The historic metric.

The historic metric, so you'd be $3 billion, right? So it gives you a feel for -- that we have a lot of flexibility in the timing. I think the way I would look at it, John, in terms of -- we mentioned we would spend $500 million to $1 billion in our narrowband IoT network by the end of 2020. We -- we've spent a lot on the narrowband IoT network. But obviously, to the extent that we're able to redeploy those resources, while I think we might be at the higher end of this range, right, maybe slightly over, I think that's still a pretty good number between now and 2020 in terms of what it will take to do the core...

End of '20.

End of '20 to do the core launch in some cities and invest in Boost, right? And then we expect we're going to be profitable in the business once we get up and running and get our -- I'm not saying we will be at day 1, but once we get our sea legs on this, we will be.

So you're -- during the whole process, you're expecting to have -- when you say profitable, you're expecting to sort of continue to generate positive EBITDA throughout the process.

Again, I'm not saying that we're going do it at day 1 because maybe we don't know what we don't know yet. But based on what we see from other MVNOs that do not have anything like the breadth and scale that we're going to have, we see some of them being profitable. It's not huge margins, and we think -- but we think we'll be profitable, and we think we'll improve on their margins. And again, some of the things that Erik is doing with the video and we have a lot of things at our disposal that maybe our competition doesn't have. And so it's -- we're not going to be just a one-man band as a company.

Well, for instance, in video, as you know, we have a lot of cross-channel inventory in ad avails that we can use to communicate to 12 million homes, which represents about 30 million handsets. And we have -- granted there's an opportunity cost there versus selling all of that time, but it's an easy way for us to communicate with a pretty large base.

Yes. I mean we've got 30 million handset users that watch us every day. And they're -- to the extent they have one of our competitors, some of them are very disappointed.

We'll take our next question from Marci Ryvicker with Wolfe Research.

I have a couple of questions. First, I just want to confirm that the prepaid transaction has no impact on leverage because it sounds like it does not. So is that the case?

It won't have any impact -- well, yes, it does have in a direct way, which is net -- we have net cash on hand, we'll have $1.4 billion less net cash. So it has an impact on leverage as you relate to net cash.

But you're also acquiring EBITDA, so I guess we're trying to get at -- to what your leverage...

Yes. No, it -- the whole transaction is going to be positive. Let me put it this way, I feel safe to say that it'll be very positive long term. Again, we're only a few days into this, and we're certainly building the models in here. But we certainly believe that the financial side that maybe some people point to in terms of our ability to fund this or raise capital or renew, that is not -- that's certainly not going to be our biggest issue. Our biggest issue is going to be blocking and tackling on execution. Planning the network, build that network in a modern way, that's maybe quite a bit different than the way people have done in the past just like digital compression was quite a bit different than analog video. That will be our biggest challenge and get everybody -- but we've done it before, and there's lots and lots of people that -- there's a lot of people who have done a lot of similar things because most of our architecture looks more like a data center, it looks more like a cloud data center than it does a wireless network. So most of what we need to do has already been done by Amazon and Google and Facebook and Microsoft and Equinox -- not Equinox but data center companies, so we're not breaking a lot of ground there.

And where will the business fit in the org structure?

It will be at the holding company, Marci.

Okay. And then the last question I have, unrelated, is there anything that you can say on the RSN deal. We know you dropped the 22 Fox networks. Is the issue REIT or minimum guarantees or something else?

Well, Marci, hey, this is Warren Schlichting. I don't know how detailed we'll get, but we offered a 30-day extension. And we have tried fairly hard. And frankly, I think we said it in the past, the model is broken. We've got real data. We've got real viewership. And it's an expensive gamut for us. So frankly, I and my team have made a recommendation to the Chairman. Now we don't know exactly how the Chairman might react to that, but that -- RSNs are just not a good deal. So the recommendation is actually to leave those RSNs off the service long term.

Yes. Well, essentially, you threw me under the bus there, Warren, this is Charlie. But the frustrating thing is that they're not very good economic deals for us. I mean our customers are a little bit more rural. On the Sling side, they're younger. They don't watch as much sports. We have real -- we have Yes on Sling, we don't have Yes on linear TV. So we have real data that tells us that the channels overpriced. And Fox had a lot of leverage to get people to overpay when they own them, so that's the nature of the beast. Having said that, the new owner, Sinclair, we think, is a company we want to do business with. We like a lot of what Sinclair is doing with ATSC 3.0 and their -- culturally, I think we're pretty well aligned with them. So we hate to be in a position to not be able to carry a product that they are investing a large sum of money in having -- so that's why the Chairman is having a tough time with this one, so I'm probably going to take this to our Board this week and -- because I'm emotionally involved that I want to keep them, and my nose tells me that's not the right thing to do. So -- but once you take something down, it -- a month from now, we won't have anybody that wants a regional sports network. And to put it back up when you've lost the customers that want it makes no sense. Makes no sense. And all you're doing is paying for -- all you're doing is taxing the customers who don't watch it. We clearly will lose some customers, but it's a very small fraction of our customers that are avid viewers of the regional sports, primarily baseball, so it's kind of now. And we'll lose some customers. I hate it that we'll lose customers. But I also feel really good about the fact that maybe we can -- maybe the vast majority of our customers can get a price break in a marketplace where it's getting more and more difficult to raise prices. So it doesn't -- I guess, the Chairman is saying, it doesn't look that the regional sports will ever be on DISH again.

We'll take our next question from Ben Swinburne with Morgan Stanley.

Charlie, just a couple of questions, following up on some of your wireless comments, or Tom. When you guys think about the opportunity in front of you, you've paid $20 billion for the spectrum. You've got another $10 billion, as you mentioned, plus this acquisition. Is the bigger opportunity long term in sort of the retail business to build out a DISH brand in the wireless business? Or is it more significant as a wholesaler? I know you've talked a lot in the past about all the tech companies that depend on connectivity, and that was a pretty compelling message. And now you've got seemingly a path to build something pretty unique. So just wondering if you'll look at those 2 options and you can even throw the cable companies in the mix, long term, which one of those do you see as the bigger opportunity for you? And secondly, I noticed you guys hired a new CTO, I think, about 10 days ago, with a background from GEO. And I'm just wondering if -- I might pronounce the name wrong, Kannan, is going to be running the wireless network build-out or if there's more sort of executive hiring you plan at the top on this business.

Hey, Ben, this is Tom. So I'll answer the first one, which Charlie already mentioned earlier, so I'm not sure if you were on for the whole call. But we still envision the breadth of our spectrum being deployed in a wholesale manner based on 5G virtualization. But you can see that one of those significant slices will be committed to retail, so envision it like DISH bought one of the slices, and that's where we'll support Boost and the Boost growth in retail and, as I said, potentially other brands. That doesn't mean there still isn't other capacity that can be wholesaled as we've talked about for the past couple of years, and that could be to many different verticals as well as 5G enterprise applications. So I don't think they're mutually exclusive, and we'll pursue both. As for Kannan, the new CTO, he was hired to replace the CTO that left the DISH Network operation. He happens to have wireless experience. But he's going to be primarily focused on the DISH operations. But we value his experience and look forward to bringing him onboard.

Got it. And just on the satellite business, you guys have talked for a long time, as you just did on the FOX RSNs, that sort of once you take the pain of letting a channel go dark, it's not worth bringing them back. So I was surprise Univision came back. I think it was off for like 9 months, and you guys took a hit on the subscriber front. Maybe you could talk about your thought process in terms of bringing that programming back on.

Yes, this is Charlie. That was painful for both companies. But believe me, the deal they could have had and the deal they got was different. So it's economics for us. And it's not like -- so I mean regional sports might come out at a fraction of the cost down the road, but that's not going to be very attractive for anybody. And obviously, people have MFNs and things like that in the industry. So Univision was unique. Well, it's kind of the same situation. Univision was unique that the management changed. So we took the new management than the old management. There's a reason why the old management weren't there because they didn't value DISH as a customer and tried to charge us more money than anybody else, which is -- I mean not the same, I'm talking about more money than anybody else, which is not a good idea. And here we are with -- the problem with FOX Sports is they're being sold to Sinclair, but they're still under the Disney umbrella. And I think Disney's got a -- correct me if I'm wrong, but I think they have an independent -- they have somebody else negotiating. I don't think -- we negotiate directly with that. So it would have been logical. It would have been logical just to extend the contract till Sinclair owned the asset. And then based on the overall relationship we have with Sinclair, particularly with retrans and some other things at Sinclair and we are trying to do together, that there probably was a basis for a deal that works for everybody. But if you're not going to extend the contract or you want to extend the contract long term at poor rates at the beginning of the baseball season next year, that's not -- look, I'm from Tennessee but I'm just not that stupid, and we're not going to do that. So I have this -- I expect people to be logical, but they're not always logical. And in the top 10 not so smart things that I've seen since I've been in business, Fox not extending the regional sports contract is one of the top 10. It didn't make any sense. And -- but we also know that we're not in their shoes, and we may be missing something. And we don't know contractually what they have, and we don't know contractually what they can and can't do. So we may be missing something, but it doesn't make any sense for us. But we got a Board meeting later this week, and we'll make a final decision.

Operator, we'll take one more question from the analyst community before moving on to the press.

(Operator Instructions) Our final analyst question is from Jonathan Chaplin with New Street Research.

Since I'm last, I'm just going to rattle off a few quick ones. So first of all, Charlie, I'm curious why you went for 800 megahertz and not a big chunk of the 2.5. Was 2.5 something that T-Mobile wasn't willing to give up? And then is the deal that you've got at the moment the best deal you think you'll get? Or is there an opportunity for you guys to get more value as T-Mobile goes in to negotiate with the states and in court? And then the 15,000 sites, does that equate to 50% -- 50% of POPs or the 70% of POPs?

Yes, we -- I'll let you in on -- we negotiate deals with the Sprint/T-Mo that we thought would be very competitive for us. It then went to DOJ. And I think with the pressure from the states, that deal got actually materially better for us on a lot of fronts. And so kudos to the Department of Justice but also to the breadth from the states. That got a lot better. And I don't know what's going to happen with the states. That's up to T-Mobile and Sprint as to whether they make further concessions. And if they make further concessions, they might be to people other than DISH.

So the 15,000 towers probably come pretty close to 70%. Depending on where you put them and depending on the frequencies used, it probably comes pretty close to 70% of the population.

But until we get our link budget and RF plan, we can't finalize that.

Yes. But we expect that we're obviously going to build out as fast as we can. So the FCC has some good guardrails for us in terms of goalposts of where we need to get to, so we know kind of where the floor is. But it really depends on the economics as we grow. And as we move forward, we're confident. Look, I'd say it this way, Jonathan. And you -- by the way, congratulations, you're one of the -- you're an analyst that has picked up on some things that maybe some others haven't in your model. As you know, our cost goes way down when we have user -- owner economics. But every Fortune 500 company, every Board of Directors either has or will ask their management to have a 5G strategy, right? And if you're going to have a 5G strategy, then you're going to have to understand what a network really can do, and there'll be a lot of companies that can help companies with a 5G strategy. But one company that will be in everybody's list is going to be DISH. And it's going to -- we're not going to be able to do things for everybody and if -- but we're going to work with the companies that have a vision, the same vision that we do, and they want to move in the same direction that we do. Or we get educated and we should go in a different direction. The 800 megahertz, well, the 2.5, the -- so that's leased, it was a bit complicated. And of course, we know it pretty well because we try to buy Clearwire and then Sprint 6 years ago. So it was something that we've looked at different buckets, the 800 for us, given that we believe we're going to build macro towers from the outside in and that we believe additional frequencies will come on the market on CBRS or C-band or some other frequency where you might build inside out. We felt like the longer-term play for us was better there.

Congratulations.

Thanks.

Okay. Operator, we'll move to media.

(Operator Instructions) Our first media question comes from Scott Moritz with Bloomberg.

On financing, Charlie, are you open to selling any of your spectrum at this point?

Well, we prefer not. In fact, we have some restrictions on -- potentially restrictions, although it needs FCC approval, so it depends on what the spectrum was. I mean if you looked at our portfolio, we believe we need the spectrum that we have to be competitive, right? That's not to say there's not a piece here or there, but we believe we need that spectrum.

At this time, we have no further questions in the queue. I would like to turn the conference back to our speakers for any additional or closing remarks.

No, thank you for your time and interest. We'll be in touch.

Thank you. Ladies and gentlemen, that does conclude today's conference. We appreciate your participation.