DISH Network Corp (DISH) 2022 Q2 法說會逐字稿

Good day, and welcome to the DISH Network Corporation Q2 2022 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tim Messner. Please go ahead.

All right. Thanks, Kristina, and good morning, everyone. Thanks for joining us. We're joined on the call this morning by Charlie Ergen, our Chairman; Erik Carlson, our CEO; Paul Orban, our CFO; Tom Cullen, EVP of Corporate Development; Dave Mayo, EVP of Network Development; Stephen Stokols, EVP of Boost Mobile; and John Swieringa, President and COO of Wireless.

Before we start, our safe harbors. During this call, we may make forward-looking statements, which are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from historical results or from our forecast. We assume no responsibility for updating forward-looking statements. For more information on factors that may affect future results, please refer to our SEC filings.

We filed an application to potentially participate as a bidder in FCC Auction 108. Because of the FCC's anti-collusion rules, we're not able to discuss that auction, and we won't be answering any questions on it during the call today. We don't have opening remarks this morning so we'll go straight to questions. Kristina, let's start with the analysts. Thank you.

And we will now take questions from the analyst community. (Operator Instructions) We'll take our first question from Phil Cusick with JPMorgan.

I wonder if you can talk about, Charlie, funding requirements. You have a maturity in March and some others in '24 while your CapEx is still ramping. Can you talk about that? Can you give us a little bit of an overview as well on the credit back in the first quarter -- from the first quarter on the T-Mobile contract? And then just talk about the competitive environment in wireless overall.

Did you -- I didn't hear the third question. Did you...

Phil, we didn't get that third question. Could you repeat it?

(inaudible) the competitive environment.

I'll take the first part and Paul will take the second part. So obviously, we've disclosed the last couple of quarters that we will need to raise capital. We have $1.5 billion of debt coming due in March of next year, so obviously, that's a focus for ours. And we believe that the markets, while they're choppy, are available to us today, obviously more expensive than we'd like today. We'll continue to monitor that, as we have over the years, for the right spot and the right strategy for that. On the accounting question, Paul?

Yes, sure. Good question there. We did book the Q1 impacts from the new T-Mobile deal into Q2. The deal was effective 1/22, so you see about a little over 5 months of that. If you look at the 6 months run rate that's disclosed in the Q, that will give you a sense of what that may look like. Do keep in mind, though, that the Q2 numbers for the 6 months do have a negative impact of the CDMA migration costs in it.

Paul, can you quantify at all for us what that number might look like going forward, just to help us model a bit?

We don't disclose that. We don't disclose that, okay. But if you look at the 6 months...

And if I can on that -- okay. If I can ask another question.

Yes, what was the third question? I didn't quite hear it.

I'm sorry, I -- just trying to think about how you think about the competitive environment in Wireless, whether that's the prepaid business you've been in for a long time or the postpaid business you're evolving into. And then any update on the handsets that are supposed to be coming in October to ramp up Europe?

Okay, thanks. The competitive environment is kind of interesting. The -- certainly, one of our focuses is -- the prepaid business is a low-margin business with higher churn. As a financial -- a former financial analyst, I always scratch my head a little bit on how the industry actually gives somebody without credit many times a better deal than somebody with credit. We're probably the only country in the world where prepaid is actually less expensive than postpaid.

And I think that that's a place that as people -- as inflation and people look and start thinking about raising prices, which we've seen a little bit in the industry, that's a place that probably could be a bit more profitable than it is. And I think people will look at that.

We're excited about -- the competitive environment is good. I mean, the big picture is phone's a necessity and your wireless connection is a necessity. So it's -- after food and water and shelter, it's just about next in line. So it's a -- and we're the fourth biggest player there and we're the ones that have the room to grow. So we like that part of the business.

Now we've got many things we have to do to get there but we've done a lot of them already. And we actually had a really good quarter in terms of the things that we accomplished that we needed to on our side to get to that spot. One of our problems, as you correctly point out, has been that we haven't had devices with our Band 70, which is unique to DISH in those devices. And those devices, and John could talk in more detail about this but for purpose of this answer, those devices start to show up in the third quarter and every quarter we get more devices, which help us be more competitive there.

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

You guys signed a new MVNO agreement with T-Mo in the quarter. Could you just talk about that and the sort of contrast that with the existing agreement you have with AT&T and how that may change how you guys go to market either from a network standpoint or a pricing standpoint? And -- so that's number one. And then any other color you can give us on the launch of Boost Infinite and the strategy on the postpaid side for later this fall?

I'll let Stephen talk about the second question. The first question is, first, let's look at the big picture. We had an unhealthy relationship with T-Mobile. For them, they're under consent decree from the Justice Department, which doesn't work for them very well. And so the good news, I think, for both companies was that -- and we obviously had a big controversy in CDMA shut-off, which was very negative for DISH through the end of this quarter, end of last quarter. That was a bigger negative than the market probably appreciated. And we certainly did our best to warn people about that and try to lessen the effect of that, but we were fairly unsuccessful in that.

Regulators pretty much did not take a position other than California, so that was disappointing. But we're through that now. And we were able to solidify our relationship with T-Mobile. As people on this call know, they have -- they universally are acclaimed to have the best 5G network in the United States. But the reality of it is that AT&T has more coverage than does T-Mobile. So in a funny sort of way, we have the best of both worlds to use both our partners, both of our MVNO partners in different ways, obviously, and arbitrage that in different ways. The contracts have different sets of economics in some cases.

And so there are -- when a customer -- we have a customer, the first place we're going to want to put them is in our network. But then depending on the customer, there may be -- we have a little bit of machine learning that says, let's put this person on T-Mobile or AT&T, that's the right place for them, or perhaps this customer is going to be roaming and based on roaming, this is where we might put them.

So it's a factor that's not understood by the Street. Obviously, we can't disclose our contracts. But strategically, we're in an interesting position there with owner economics coming and a really good coverage company with a really good network that is consistent and has broad coverage. And the up-and-coming network, which is not an up-and-coming network anymore but a technically elite network and 5G in T-Mobile. So that's -- I think we're in a position to succeed here. With that, I'll turn it over to Stephen on the Boost Infinite question.

Yes. So for Infinite, we're not going to talk too much about what we're specifically doing on the proposition side today. More will come out later in the year. But it is exciting. I mean, it's a big focus. It's a more aggressive expansion into postpaid for us.

Two points I will highlight. Obviously, it's opportunity to come in fresh and do things in a slightly different way and in a more aggressive way. And two, it's on our own platform. So unlike what we've been doing with Boost, where we're tied to a vesicle T-Mobile platform with limited capabilities, the ankles around our weights, we are now operating on our own platform Infinite launch, our own digital-centric platform that allows us to be far more aggressive, nimble and flexible, which translates into competitiveness as well.

So Boost Infinite is a big focus internally. There'll be more coming out on that later in the year. And then Charlie alluded to some of the network economics that allow us to be also competitive as well.

Yes, and I want to just highlight the economics. I mean, postpaid is -- you guys always put a bigger value, correctly, on postpaid. But if you're talking about 1% churn versus 4% churn in prepaid, higher ARPUs, it's materially different in terms of economics. So we haven't been able to play in the red zone part of the field to score touchdowns. In prepaid, you're likely to kick a field goal once in a while. And I think we're going to be able to start scoring some touchdowns when it comes to economics of that.

We'll go to our next question from Doug Mitchelson with Credit Suisse.

I've got a few, hopefully, brief questions. So I always ask them one at a time. Just Charlie and Dave, how is the network build going and how well is the network working, Charlie?

So build is going really well. I no doubt saw that we completed our 20% milestone on June 14, and we're marching on towards the milestone for the middle of 2023. We're at about 5,000 sites deployed and on air, and we're on a pace of about 1,000 sites a month and we'll continue on that rate for the balance of the year and into next year.

In terms of quality, I think we're pretty happy with the data experience. I think we continue to have work to do on the VoNR experience. As does the rest of the industry, we're not unique in that respect. I reflect back to VoLTE launches, it's been close to a decade ago now. And it took some time to get VoLTE working so that you could use it as a stand-alone service. And even with VoLTE, the carriers had a circuit switch fallback. And we don't have that but we will have a VoNR network that is stand-alone and will operate well. And that will -- we'll launch VoNR when we have that capability fully optimized and available and working really well for our customers. We've got the MVNO deals to support us until we get to that point.

Yes. And I'll just add some color to what Dave said. So we had -- our milestone for next year is 15,000 towers, so we're 1/3 of the way there. We'll be 2/3 of the way there by the end of the year. We're on a cadence to do that. And that -- you get a lot of economies of scale when you can actually have a cadence like we do on that. We had a strategic decision on voice, whether we did -- whether we put a bunch of legacy in there that we're going to live with forever that -- or just go with the better voice of VoNR.

That has been an unexpected negative in the sense that, that has taken longer that many people in the industry expected to have VoNR in their systems by the beginning of this year. T-Mobile and DISH are the farthest along. T-Mobiles in 2 markets today. Obviously, we're in hundreds of -- over 100 markets with it. But it is not good enough, in my opinion, for the customer experience that you have to have in voice. And so it is hampering our ability to put users on our network unless they're data users.

So we're a lot more of a data-centric network. And while we have voice, we had to go through some extra steps to make that work. And it's a little bit clunky and we're looking forward to doing that. On the positive side, a real positive side, while our vendors are helping us with VoNR, the addition of Samsung as a vendor in the quarter. But true O-RAN was kind of a [threefer] for us. First of all, they gave us a second supply of radio so we weren't single-sourced to Fujitsu.

Second is they have devices. They are a large device manufacturer. And so they are very attuned to VoNR and Band 70. That helps us with probably the 2 biggest negatives we have, which is how to get the bands and how to get VoNR to work. So you've got a real technology leader that's taken some of the system integration off our shoulders. They're just better at it on those particular issues than we are, along with Mavenir. And those guys -- those companies are doing great work to solidify those parts of our business. So that was a huge positive for us that probably not appreciated by the Street.

And on that Band 70, I think at the Analyst Day, there's some discussion that the same antenna form factor that's already in phones for adjacent bands could add Band 70 at no additional input cost for the phone manufacturers, so that would lead to a very broad set of handset availability for DISH. Is that effectively, Charlie or John, the right way to think about -- you talked about Samsung helping you with Band 70. Is Band 70 going to effectively be in most phones in relatively short order because it doesn't cost more to put it in?

Doug, it's John. So we talked about this a little bit on the last quarterly call. I'd say we're on track to get Band 70 into the devices with a broad range of manufacturers. Charlie mentioned, we start receiving devices in Q3. We'll start distributing in the fourth quarter broadly across all of our markets.

But certainly, as Dave said, as we get VoNR tuned up and running in each market, we'll focus having Band 70 devices with VoNR loading on our network as those markets open up. The key is that Band 70 plus VoNR is important, right? There are some Band 70 devices that exist today where we haven't quite gotten to the VoNR software certification yet. So we really need to get both of those things right and we'll be bringing those devices in, starting with an expanded Android lineup later this year.

And on the cost side, I don't want to speak for the handset manufacturers, but to the extent there is a cost, I would say it's immaterial.

That's correct, they're all immaterial.

All right. And lastly, I'm just curious if there was working capital headwinds in the first half of this year, does that continue? And is that related to the way you're running prepaid or just the build-out of 5G in some form? And then, Charlie, just any further comments you have on financing needs and ability to finance and options to finance. Certainly, one of the things I think the market is most worried about is a lot of maturities in the next few years and DISH's sort of sources of capital to roll those over.

Why don't you take the...

Yes. As it relates to working capital, we did have some headwinds in the first half of the year. Both should level out in the second half of the year. So hopefully, it won't have as much of a drag. But it has to do with, obviously, the 5G build is costly. The timing of the payments does cause the drag that you saw in the first half of the year.

And then on the financing stuff, I don't have a lot of color to add to what I said. I mean -- but I guess I may give it generally. The markets are choppy. They're not -- they're certainly not at the same level they were a year ago. Having said that, you can raise -- the market -- there's a lot of liquidity in the marketplace. So that's -- and you can raise capital with a good business plan and I think we have a great business plan.

And I think we have a variety of things that we could do in terms of raising capital. And it -- obviously, our Board and our advisers are heavily involved in that. And like anything else, I think it's going to -- I think it will be obvious where we need to go internally. I think as we go through the different options and as the market moves around, I think that's the case.

But from a -- when you look at the quarter, we accomplished probably more in the last quarter than we historically have ever come close to. We made a build-out milestone that many people didn't think we can make in the backdrop of COVID and supply chain was an A-plus. I mean, it's just -- very few companies could have done what we did there. We're able to build a strong relationship with T-Mobile that was unhealthy before and now is a healthy relationship. We got the CDMA, a huge negative, and got it behind us in terms of the CDMA shutoff.

And our phones were jammed with people about upgrades and why did they lose their service and our marketing money had to go to convert people. And now our marketing money gets to go to new customers, talk to people on the phone, it's about becoming a customer, not about how they -- their phone is going to be shut off. So it makes a big difference. And then we strengthened probably our biggest weakness which was on the supply side and on the technology side with Samsung.

So those are really big things for us. And then because we know we're raising -- so if you look at the next half of the year, what are we focused on? We're really good at focusing on things and accomplishing them. So we do need to raise capital. And obviously, you'll read about it when we raise capital, I guess, is what I'd say. And we realize that that's an overhang and we realize that there's many out there that don't have confidence in our ability to do that. So we're certainly aware of that.

Obviously, we're going to significantly expand postpaid. It's a much more profitable business for us. There's a lot more customers in postpaid. There are avenues in postpaid that we think we can compete in that aren't available to us in prepaid. We have to -- we have another milestone. Dave and his team are focused on that. We're going to make that build-out and improve the network as we go along.

And then we're finally in a position, second half of the year is to deploy our own digital marketing and billing platform. You guys don't have visibility to this, but all of that is done today by T-Mobile. And we have a department -- to change something, we have to go through the Department of Justice. And when we change something, it takes months and months and months. If you want to change a program for the consumer, it takes months and you can't be competitive in that environment.

With our own platform, we can change in hours. So it's -- there's just a lot of things going on. We still have 2 headwinds out there other than raising capital, which I'd put in that category, certainly VoNR and making sure technically VoNR works and our vendors are helping us with that. And we have made VoNR work so I don't want to discount that, but we're just not making it work as well as LTE -- as current voice. We just got to get better and obviously get bigger supply devices and some lower-cost devices.

And so we're -- I don't know that we exactly have to know the date we're going to make all those things work but we know we have devices in the second half of the year and we're confident we can make VoNR work. So that's kind of where we are. And behind all that, it's a pretty good business -- pretty good -- it's a really good business plan that I think we can raise capital off of.

We'll take our next question from David Barden with Bank of America.

Charlie, at the risk of antagonizing you with another financing question, the March '23 paper has a 5% coupon. If you want to refinance it 5 years out, it's 15% coupon right now for DISH. So you've got kind of 2 options. One is to try to take down the '23, '24, '25 and clear the decks and make sure your business plan is funded based on the strength of what you've executed on to date, or you can maybe simply kind of chip away at it, hitting singles, hoping that the rate market improves. I was wondering if you could at least share your thinking on that.

And then if I got to ask a second question, which would be when we were at the Analyst Day, we kind of held up Vegas as the flagship market. Could you tell us a little bit about what's happened in Vegas? What's the retail strategy? How many subscribers? How fast is the network? What's the uptime? What can we look forward to as we continue to get the build deployed?

Okay. The -- so obviously, the -- we have to raise capital to be a bit more -- it's going to be more expensive than the 5% no matter what, probably given today's market. Having said that, that's unsecured paper. It's a little bit different. There's other opportunities to raise capital besides that I wouldn't expect it. I never -- I don't -- I wouldn't expect it to be 15%, right?

Obviously, it depends on the markets as to whether you're hitting singles, doubles or home runs. Again, we're confident as management when it comes to looking at the different financing options and making the right choice for this company long term.

As far as the Vegas market, the number of subscribers, we're not obviously disclosing that. But most of the customers we have, not all, but most of the customers are our data customers and they're not material to our business yet.

We'll go to our next question from Jonathan Chaplin with New Street.

So again, at risk of antagonizing with another financing question, Charlie, I wonder if you can give us a sense of where you're thinking of raising capital? Would it be at DBS or at Networks? And then a more important question. With the new MVNOs that you got with AT&T and T-Mobile that allow in-market roaming, I think that allows for a much more capital-efficient network build than you were initially planning. And with some of the other benefits from the lower rates on the MVNO, I would imagine that's helped cash flow. So is the funding gap at networks to get you through to your build-out requirement still at $10 billion or is it something lower than that now?

Well, nobody is going to be mad at us if we come in below $10 billion. So I think we're looking at the -- we're looking to build that -- maybe this is misunderstood, but we're looking to build that cost through 2025, which is our final milestone. So obviously, when you get to more rural America, there's costs there that you don't have for the next milestone.

I think you did a report that probably was in the ballpark of funding. But maybe not everything in there was completely accurate but you're in the ballpark, give or take, in terms of where we'd go. You're correct that the new deal with T-Mobile and other things make our business, from a profitability perspective, in better shape than it otherwise was before. And certainly, in-market roaming is good for us for a variety of reasons.

And we have that both with AT&T we didn't have that in the T-Mobile before. So there's just -- there's things around the edges that have improved. But again -- and then when it comes to funding, we look at all of the options, Jonathan. So there's nothing that we don't look at. So we look at every business we have. We look at it structurally and we look at every kind of financing that can be out there.

And I mean, I guess, people on the call will have confidence one way or the other, right? But assuming the marketplace doesn't get materially worse than today, then we're going to get our network built. We're going to -- the only guidance I gave you, we gave you at Analyst Day, we're going to become a Fortune 100 company. And that means we're twice as big and twice as profitable as we are today. I don't have a time line on that. Wish that was tomorrow, but that's where we're headed.

We'll go to our next question from Walter Piecyk with LightShed.

Charlie, earlier, you were talking about touchdowns and field goals in postpaid and prepaid. And I'm just -- I'm curious, I think there was a DOJ or maybe FCC requirement that said you had to basically sell some service to customers. Now that you're offering service on postpaid, do you continue to have to own Boost? Or is this something that, since it's only scoring field goals in a division where you got the chief putting up a lot of touchdowns, can you just punt that and just go with the postpaid business?

I guess -- that really antagonizes me. No, I'm kidding. I'm kidding.

Yes. (inaudible) question is worried about antagonizing a CEO, that's for sure.

Well, most people don't even take your questions because you've already antagonized.

That's true. (inaudible) a tough question.

Yes. I've been married for 40 years so it's tough to antagonize me. The answer is it's -- anything is possible. We look at everything, right? And so -- and if you look at a list of options, owning all of Boost prepaid is not a necessity. I think there's a lot of synergies in owning that.

But the real value of our company is our network, right, and all the things that we could come on in that network. Again, we've said that we're in the wholesale business. So our capacity can be sold to others in the industry. So it's -- we're not trying to monopolize our network, right? And so I guess the answer is it's not a necessity but we believe it belongs -- today, we'd prefer that it belongs with us. And the division got a lot more competitive.

More touchdowns, please. So at the Analyst Day, I think Stephen did a good job of kind of talking about -- I think actually the whole technical team did, in talking about the power of having kind of an open network, network slicing, all that kind of stuff. How long is the enterprise sales cycle? And when do you anticipate maybe having some kind of, I don't know what the term is, maybe flagship customers could demonstrate why the flexibility of your network might offer something unique compared to what's in the market today?

Stephen Bye would be the right guy to answer that. He's on a well-deserved vacation today. And I don't know, John, if you want to jump in here. But the build-out -- the sales cycle is pretty long -- is longer on that because you're talking to companies that are making long-term pretty large commitments, in some case, and they have to see how it saves them money. They have to see how it makes their product better. They have to see how to make their product safer, et cetera.

So we have really 2 strategies there that I think Stephen talked about. One is there are places where we think we probably could be the system integrator and add the greatest value. And maybe example might be in hospitality, where we're already delivering videos so our customers have a relationship. There's a few others. But there's also a lot of areas that we probably don't have as much expertise or connections.

And the 3 largest players in the enterprise business today are people like Cisco and Amazon and Dell for hardware and optical and Wi-Fi and cloud. And so we have an opportunity to partner with them as a, what I would call, a subcontractor, where they already have sales forces and relationships. So it's a way for us to get into businesses as they get into business. And those companies want to move beyond Wi-Fi into more licensed spectrum and more secure spectrum and more control of their spectrum.

So the sales cycles are longer than we like but the deals are big. And we continue to have continued increased interest in what we're doing there. And we're a little bit -- we now are up for air a little bit after the first milestone and we're able to spend more time on those deals. But they're not imminent and they're not in the second half of this year.

Got it. And then lastly, could you just give us any update on whether you plan on purchasing the 800-megahertz spectrum and same thing on DIRECTV. I mean, I ask this kind of every quarter. It just feels like TPG is not AT&T, meaning that I think it's a company that can be effective at cutting costs. Therefore, it potentially reduces some of the synergy potential. Just curious what holds back you guys from proactively trying to pursue coming to some agreement to take to regulators on that deal.

Yes. So on DIRECTV, I'd say the same thing. We think that's inevitable, but I do think you're close enough to the election today that I think regulatory is your biggest risk. And I think you'd wait and see which way the wind is blowing, and you're going to know that in the next couple of months. What was the other question? 800 megahertz.

800.

We essentially have an option to buy that so obviously, that's going to depend on how we are financially. We like the spectrum. We think there's a lot of good uses for the spectrum. We're building out the spectrum in terms of our network. So it's in our radios. We had a potential fine from the FCC, but because we believe we've met our first milestone, that's off the table. There is a payment to T-Mobile. If we weren't to purchase it, I think it's around $72 million. So it's not a must-have for us. It will depend on where we are, but it's a nice-to-have for sure.

And we'll go to our next question from Rick Prentiss with Raymond James.

A couple of follow-up questions. Charlie, you touched on it a couple of times today, the irritant of the CDMA shutdown. Help us understand how much productivity was maybe lost with that effort. Is there dollars that come back in or is it just dollars get refocused actually being productive as you think about where you head now that you're through that pain?

Yes. I mean, the hard cost was over $500 million. The indirect cost was probably another $1 billion. I mean, just -- I mean it's -- I guess the way I'd say it is, we've been playing defense for 2 years. And every day we come in now, we get to think about offense. And that's a whole different mindset, and it's a heck of a lot more fun to play offense than defense.

And when you're playing defense, maybe you'll intercept a pass but you don't score a lot of points on defense as many as you do in offense. And so -- and then what you hope to do is just like the University of Tennessee, get to hurry up offense, many score more points. So I get to hurry up some of this management team here. They're -- I got to hurry them up a little bit and give them some more coffee, I don't know.

But another interesting area has been fixed wireless, right? People going on the offense to take share from cable operators and broadband. What do you all -- one, do you see an opportunity for DISH with fixed wireless access? And what do you need to kind of go after that market?

The answer is yes, we do see fixed access on a number of fronts. And the best use of our network is going to be -- the best -- most profitable side is probably enterprise first, postpaid customer second. Probably fixed wire is third and prepaid fourth, right? And we'll kind of stack rank in there.

A lot depends on how -- we're obviously watching what T-Mobile and Verizon are doing with that. I think there's some interesting things we could do with fixed wireless, particularly as you get more into rural America where we have distribution. And obviously, there's government funding there and other things. That government funding goes to your competitor. You don't have the right set of economics to play.

If there's no government funding, we're probably pretty competitive. And obviously, to the extent we have government funding, we're obviously really competitive. So it's a bit of an unclear market how it shakes out, but certainly, our network is capable of it. In fact, our network is capable of it today. And in fact, many of our customers are, in a funny sort of way, fixed wireless.

And last one for me is, I think your SPAC is coming up on the November date. Any updated things you can share with us on the DISH call about what's going on with the SPAC company?

No, I can't. There's a CEO there you can always call.

Any updates you get an IR team so you can quit being antagonized by all of us?

What's that?

Any update on an IR team so you can quit being antagonized by all of us?

Oh, an IR?

Yes.

Well, I think we realize that we have to be more communicative and responsive to the Street. Obviously, one of the ways you -- the most logical step is that you've got somebody in charge of IR. We obviously piecemeal together. Sometimes you talk to people in the company or Paul or whatever. But we also need the right person, right?

And we have ideas in mind of what we think that looks like. And we've struck out a few times and it's on our list. It's probably not our highest priority, but it's -- I'd rather get the build-out done. I'd rather get some other things done. But it's on the list of things we're looking at. And anybody on this call that really wants to be -- work really hard, make no money and talk to all of you guys on a daily basis, give us a call.

Make no money until we make money, I should say. You're going to make a lot of money. It's just going to make -- it's not going to be -- it's not a freebie.

Delayed gratification.

It's delayed gratification. Shawshank Redemption at this company.

We'll take our next question from Craig Moffett with MoffettNathanson.

So I'm not going to antagonize you with financing questions anymore. I think we've learned what we can learn. So let me ask you what your network is going to look like. Now that you have the in-region roaming agreement that was talked about before, your -- one way to think about sort of meeting your network requirements is sort of a high canopy of macro cell sites that sort of meets the coverage requirement.

But for enterprise customers, presumably, what they're looking for is kind of higher speed and greater density in more concentrated areas. How do you think you deploy your capital going forward? Is it first, just check the box for coverage and then it's sort of spending your money on small cells and density? Or is it at the base of the tower because the mobile edge compute is going to be a focus of your business? I'm just wondering kind of where you think about allocating capital in the network itself.

Yes, it's a good question. So it's much more nuanced than that. So we're certainly building a macro network, primarily because that's most of the traffic that will go to our retail customers. But where our retail customer might go, i.e., a tunnel, that might be -- or subway or something that would be very expensive for us to build without a lot of customers.

Beyond our build-out, we'll continue to build. Our build-out milestones, we'll continue to build but we'll build on a success-based basis. So you can appreciate this, Craig, in the sense that once you reach a certain amount of roaming charges, it will be more advantageous to have owner economics, right? And we'll have -- we'll see that long enough in advance and see the trends long in advance to build that.

The same holds true for our commercial customers. The commercial customers where they might want more density, think about a college campus. Well, that's going to be success-based for the most part. You have a contract, you're going to go build it out because they want more density. But many cut many of the -- and what they really want is something that our competition has a tougher time with, which is they want a slice of the network that they control and our architecture allows them to do it. And then there are some advantages based on whether we architect it for edge compute, right? There are some advantages that we have in terms of how we do that.

So it's a lot more nuanced. It's a lot more detailed than we're prepared to go with the Street on how we're doing it. But our -- but the answer is our networks, for the consumer, it's going to look as good or better than anybody else. But for other people, it's going to be better in a lot of ways. There'll be some disadvantages in it and we just won't market to that. But as we deploy capital beyond the $10 billion, it will be success-based. So we know we're going to get a return on it. We're not building it just to build it. Dave, I don't know if you want to add something to that.

I think you did -- you got it, Charlie. I mean, I think the roaming deals really, Craig, give us an opportunity to really not build some -- I think about all the venues. I mean, one of the first conversations Charlie and I had was about building SoFi. And the cost to build SoFi, that's just something that we won't need to do because of the agreements that we have in place.

Yes. SoFi is a good example. So you, for example, would say, you're probably not going to prioritize arenas and stadiums and things like that, which is more retail. But have you learned, for example, from Las Vegas and talking to customers in a specific market that their demand is indeed airports and for commuters and the executives of a corporation? Or is it purely the data functions of the back office? I'm just -- I'm trying to get more of a sense of how you match network topology to where the market opportunity is going to be for you guys.

I think it really comes down, Craig, to what it costs to build versus what it costs to roam. And those places where you can create a customer experience that is contained and you think about a stadium, you walk into the stadium and you use your phone in the stadium. You're not -- there's not a lot of handover traffic in and out of the stadium, and you're actually captive for a long period of time. That's a great example of where a network within a network, we could lever with somebody else's network to provide that coverage. That's probably the most profound example I can think of because you're captive as a customer for a very long period of time.

The customer doesn't have a -- the customer is going to get the best of T-Mobile or AT&T in that case. Sometimes, T-Mobile is not in the arena but AT&T is or vice versa, or both of them are in there and then we'd go with the better deal. And the customer doesn't notice that. That's not a -- there's no customer but we save capital.

So if you were to look at what I look at from a financial point of view, you'd say, wow, DISH has got a set of economics when it comes to network build and operation based on architecture and agreements in place that can allow them to be very, very competitive. And it will be difficult for people to match our cost in this marketplace long term as we continue to build. And we're literally 10 months away from the next milestone. So -- and that's a pretty big milestone.

So look, we got headwinds on the financing side, as everybody has correctly pointed out today, but we have to get through those things. But if you're on the inside and you see this -- it's -- I don't know. It's compelling, right? But we'll see. We have to prove it. And the way we focus the team every day is to build a great product. And we believe if we build a great product, that we will be financially successful. And that's the way we approach it. And that allows us to take long term, have a long-term vision, take long -- do it right the first time, think long term about it. And as long as we get from here to there the next year, then I think hopefully I believe our shareholders will be rewarded. But look, it's not 100% guarantee in life. But we believe that's where we get to.

All right, operator. We have time for one more from the analyst community.

We will now take our final question from the analyst community. (Operator Instructions) We will begin the media portion of this call following the answer to this final analyst question. And our final analyst question comes from Michael Rollins with Citi.

Two, if I could. First, just pivoting over to the video side of the business. Will the current macro environment accelerate linear and satellite cord-cutting? And can you give us an update on the opportunity to turn Sling into a much larger live streaming platform in terms of subscriptions?

And then the second topic or question is just on strategic partnerships. And Charlie, in the past, you talked about partnerships in a variety of different ways. And just curious if there's an update on the possible opportunity and timing for more strategic marketing or financial partners for the wireless strategy.

So Michael, this is Erik. I'll take the first question. I think that as we've discussed in the past, both on the DISH TV and the Sling TV business, I mean we really are heads down and you could see it and are slowing growth but also some of the profitability that we're focused on really still trying to acquire and retain customers that meet our targets for long-term and profitable growth.

There's no doubt, most of you have written adequately about it, that there is a decline in linear video. There's more competition than ever. Folks that we've had long-term relationships with on the content side are more on a frenemy bucket today. You're seeing us on the DISH TV side do unique things. And historically, it goes back quite some time like launching Netflix as an app on our service or Amazon or YouTube.

We've talked a little bit about our Android TV box will help us stem some of that from a retention perspective and help really integrate the customer experience as it relates to additional apps on the DISH TV platform. But the Pay-TV market is obviously in a bit of chaos and is -- definitely linear is declining a bit. It's up to us as management to stem that decline. And as you saw in our Q2 earnings, try to monetize the existing customer base as well as we can while keeping the customer experience at an all-time high. And I think the team has done a -- although our growth targets aren't exactly where we want them to be, I think the team has done a good job with their operational and financial discipline on that front.

On Sling, we're -- you talk about SVOD and you talk about the number of apps and opportunities, whether it's a Peacock, a Discovery Plus, an HBO, a Netflix, et cetera, et cetera, et cetera. A lot of changes in consumer behavior there. You're seeing, obviously, the effect on Netflix, the spend on content, obviously, stagnation in some of the providers. And you're spot on. I mean, we're not happy exactly where Sling growth is. We've spent a lot of time and effort in making the customer experience a top customer experience.

We now have to prove out that we can have value and we can earn a place in folks' homes. We're not the #1 subscription there but we can be very complementary with the best of cable and provide customers a great value experience for some content that they may not want to subscribe to from one of the SVOD folks. And as you see in the market today, it's a very spiky market, right? There's very -- there's a limited barrier to entry and there's a very easy way to cancel. And so one thing that we learned throughout the almost 27 years that I've been here is that we have to earn customers' business every day and we have to do a better job of that at Sling.

I'll just add, Erik, the Sling -- the OTT -- there'll be some fallout in that and some consolidation in that. So -- and we're profitable. So not everybody -- in fact, most people are not. So I think we're well positioned there for things that might happen. But we're smart enough not to chase customers who aren't going to be profitable.

So on strategic partnerships, obviously, I'm not going to talk about that in detail. The only thing I would say is that a 5G O-RAN cloud-native network is where telco has gone. And perhaps 10% of the people thought that a couple of years ago, maybe 50% of the people think that today. But it will be -- this time next year, it will be 100% of people that realize what I just said is true.

And it's a wonderful opportunity, particularly for our partners to grow their business in a way that they probably didn't have in their strategic plan a couple of years ago because -- that they are in our network, they work in our network. They work with our team and they can see where this goes around the world. The biggest growth for cloud providers is going to be telcos in the next decade, right, as an example.

So I think that we have good alignment there and we both have a lot to gain with each other. So that's the big picture but I'm obviously not talking about details.

All right. Operator, we'll move to the media now.

We will now take questions from members of the media. (Operator Instructions) Our first media question comes from Mike Dano with Light Reading.

I wondered if you could just talk about your plans to -- your phone plans and how you plan to sell phones, particularly as the fall comes around and you've got this Boost Infinite service that's launching for postpaid. Are you going to sell phones like the other carriers do, where they're essentially free to the customer and billed over 2 years or 3 years or whatever? Or is it going to be a bring-your-own-device model? I'm just wondering what the thoughts are around how you're going to sell phones.

I'll take that, Mike. So I think the answer is all of the above, right? We're going to be competitive. I think Boost, we're going to have options that cover all of the gamut. When we kind of segment -- I'm not going to get too much detail on our segmentation and how we're sort of launching our go-to-market strategy at this point. You and I have talked actually off-line a little bit so you have some background. But we're going to do all the above. We're going to be competitive in the market. So we'll be selling phones. We'll be selling SIMs for those who want to bring their own device, and we'll sell across the gamut, Android and iOS.

And we will take our next question from Scott Moritz with Bloomberg.

I don't know if I speak for everyone here, but I'm looking forward to the day when we can conduct this call on your futuristic new network instead of this old dial-in method. My question, can you give us some, Charlie, maybe some glimpse of what's ahead for Boost Infinite in terms of maybe what the pricing might be or the date of the launch or maybe even the cities that you will first target?

Yes. I mean, I -- Stephen could -- obviously, we're capable of being nationwide. So although there are certainties that we've built out, that would have a priority for us because we have better economics there, obviously. I think the thing that maybe that we focus on is, obviously, price is an issue for customers but so is coverage. So there's really -- it's really only 2 things that I see customers when I talk to customers, it's price and coverage.

And they don't -- I'd say it's price 1, 2, 3, coverage 4, 5, 6 and maybe speed. They get speed or something else. But maybe they got a taco on Tuesday or something. Maybe something else down the list, but there's reasons why people buy and it's not always what's marketed. What we have to do ultimately is distinguish the user experience in a way that distinguishes us from other people, and that's what Steve and his team are focused on.

And we think with our network architecture and the things that we're doing, we have some ability to do that. And so it's no different than we got a satellite business and we had to distinguish ourself from cable and from our competitors. And it was things like interactive guides or DVR or skipping commercials automatically or being able to get Netflix out of the same box.

Erik and his team changed the customer experience, and therefore, we gained market share and churn went down. So that's a similar -- we don't have 120 million customers like the other guys so we have to be scrappier and more innovative and more entrepreneurial and that's the fun part of what we're doing. And I think you'll see Boost and Boost Infinite come up with creative things in the marketplace that are -- that both do things -- give customers things they don't know they want today and then improve on some of the pain points that they have. Did you want to add to that?

I'd just add 2 quick points on that. One is the -- Charlie alluded to it, but our network deals allow us to go nationwide out of the gate at competitive pricing, and we are going to come out with aggressive pricing. There's no point in coming out of with a [B2] play. And then two, and again, Charlie alluded to it but we do have -- we have 8 million out of 120 million customers. So from our perspective, we are not worried about losing customers or doing anything disruptive in the marketplace that could sort of shake up the current dynamics. We have a lot more to gain than we have to lose. So that puts us in a position where we can definitely play offense and take some big punts.

All right, operator, we'll take one more before wrapping up.

And our final media question will come from Andrew FitzGerald with WSJ.

It's Drew. Charlie, if you could go into a little more detail on fixed wireless and some of the lack of clarity that these upcoming government subsidy programs are providing. Do you have any sense of what you would like to see that would bring more clarity to the market? And once that happens, what -- would fixed wireless opportunities affect any of your decisions in building out your network, i.e. would it make your teams put some towers online or add capacity sooner in some markets rather than others, depending on what the opportunity to gain share in that fixed wireless market is?

I'm going to answer the question, start with a real broad answer, which is the government has allocated north of $60 billion for broadband. It is a necessity in the United States to bridge the digital divide. Every family, every child deserves access to education, health care and broadband, right?

That $60 billion, if properly spent, I'm very confident you get 99.8% of the customers broadband in the United States. It will become -- as long as you take the best technology for the particular situation, so in very, very rural areas, satellite would be the right answer. In very dense areas, I think it's a combination of kind of some of the things that T-Mobile and Verizon and the cable companies are doing. And then you've got some kind of areas that are kind of in the middle where maybe things like fixed wireless is not mobile, but fixed and also maybe some mobile and also maybe some cable fiber, those kind of things could all make sense and it's a bit and so forth.

What I worry about is the first step is you have to know where you don't have coverage. And so the current Chairwoman of the FCC is very focused on, on making sure we know accurately where people don't have broadband. And we didn't do a good job of that last time, in the last option for RDOF. So that's the first place you start.

And then I believe you had to be technology-neutral. So NTIA and the FCC needs to be technology-neutral, right? The third thing you got to do is you got to make sure that you're using all the resources. 12 gigs, as an example, is a resource that used terrestrially can far exceed the number of customers that you could do via satellite. We believe both technologies can exist together. But if you had to pick one for capacity and for the American consumer, you would pick terrestrial because when you need more customers, you put up another tower, satellites are, by their very nature, satellites are limited in the capacity that they can do.

So that's kind of where you start. The way I look at it is where there's a government subsidy, it is unlikely, and we're not the person receiving the government subsidy regardless of the technology that they're subsidizing, we're not likely to be competitive. So we're not going to go there. Where there's no subsidy, and it's a fair -- it's the best man wins, we feel pretty confident. And we're -- perhaps we are getting this subsidy, then obviously, we would have an advantage over everybody else.

So the government is going to be very involved in it. They will pick winners and losers, which we prefer they didn't do, but in this case, they're going to do. But I do think the current FCC, both Republican and Democratic side, are pretty focused on it. And I think they understand the issues in a way that maybe they haven't in the past. And so -- and I think NTIA will be very -- and I saw today that they had now, for the first time, actually have an agreement to work together, that's critical. That's really positive, really positive.

And so I think that fortunately or unfortunately, I think the government is going to decide where we go with fixed wireless and how we play there. But our goal as a company, regardless of whether we're the right company is how can we help bring broadband to every customer home, just like every customer home has electricity. That should be our goal as a country. That's where we'd like to help. And if we can help, we want to do it. If we can't help, then we'll do something else.

Well, thank you all for joining. We'll talk to you again next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.