EchoStar Corp (SATS) 2012 Q3 法說會逐字稿

Good afternoon, my name is Nicole and I'll be your conference operator for today. At this time I would like to welcome everyone to the Q3 2012 earnings call for EchoStar Corporation. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you. Mr. Dutt, you may begin the conference.

Thank your operator and good day everyone. Welcome to EchoStar's third quarter 2012 earnings call. I'm joined today by Mike Dugan, our CEO; Ken Carroll, CFO; Pradman Kaul, President of Hughes; Mark Jackson, President of EchoStar Technologies; Anders Johnson, President of EchoStar Satellite Services; Grant Barber, CFO of Hughes; Dean Manson, Executive Vice President, General Counsel, and Secretary. As you know we invite media to participate in listen-only mode on the call and ask that you not identify participants or their firms in your reports. We also do not allow audio taping, which we ask that you respect. Let me now turn this over to Dean Manson for the Safe Harbor disclosure. Dean?

Thank you Deepak, and hello everyone. All statements we make during this call that are not statements of historical fact constitute forward-looking statements which involve known and unknown risks, uncertainties, and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by such forward-looking statements. For a list of those factors and risks please refer to our annual report on Form 10-K and our quarterly report on Form 10-Q. All cautionary statement that we make during this call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our reports and should not place undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. I'll now turn it back to Deepak.

Thank you Dean. With start with comments by Mike Dugan. Mike?

Thanks Deepak, and welcome everybody to our third quarter 2012 earnings call. The executive staff is pleased to have delivered a solid quarter and I would like to highlight some important events. First a few financial highlights. Third quarter 2012 revenue was $765 million compared to $863 million in the third quarter of 2011. The decline was driven primarily by lower set top box shipments as a result of the strong shipments in the first half and the resulting high inventories at our customers.

EBITDA in the third quarter 2012 was $164 million, an increase of 7% over third quarter of 2011. Net income attributable to EchoStar shareholders in the third quarter of 2012 was $22.6 million compared to a net loss of $19.1 million in the third quarter of 2011. A reconciliation of EBITDA to GAAP net income is available on our Form 10-Q for the third quarter of 2012 filed with the SEC and posted on our website, www.echostar.com/investors. Earnings per share on a fully diluted basis rose to $0.26 in the third quarter of 2012 from a loss of $0.22 in the third quarter of 2011. Cash from operating activities in the third quarter, a loss of $0.22 in the third quarter of -- I'm sorry, 2012 was $166 million, a 33% increase over the third quarter in 2011. From a liquidity perspective we once again ended the quarter in strong financial shape with approximately $1.6 billion in cash and marketable securities.

Now for some recent highlights from our different business units. First, you may recall that EchoStar 17, previously known as JUPITER our KA band High-Throughput satellite built by Space Systems/Loral was successfully launched by Arianespace on July 5 from Europe's Spaceport in French Guiana. It was successfully placed into its permanent geosynchronous orbit at 107.1 degrees west longitude and completed all in orbit tests successfully and ahead of schedule. By the end of September we had build our 14 gateways and October 1 we launched our HughesNet Gen4 service with our retail use sales channels, and wholesale service distribution partners, DISH Network and Frontier Communication.

The satellite with JUPITER High-Throughput Technology is expected to dramatically increase Internet browsing performance and support high bandwidth applications such as video and music. HughesNet Gen4 customers are able to obtain faster speeds of up to 16 megabits per second, and significantly larger download capacity so they can experience internet access at its fullest. Initial sales volumes from all channels are very encouraging and we are receiving very positive reactions from our early customers.

Second, Hughes new order input from enterprise customers continued at a strong pace in Q3 with $349 million of orders, a 40% of increase over third quarter 2011. Significant orders in our North American enterprise business include Row 44, Xplorenet, Social Security Administration, the Government Education and Training Network, Wyndham, Galaxy Broadband, Halliburton, and a new government classified contract. Key orders in the International business were received from Camelot in the UK, Telmar and Holba in Brazil, Avante [and Sodbrick]. This strong order activity results in a healthy non-consumer order backlog of just over $1 billion in the end of third quarter of 2012. Hughes also ended the quarter with approximately 616,000 subscribers. We continue to work on our negotiations on a joint venture agreement with a potential Brazilian partner to provide DTH service in Brazil. The satellite would be located in the 45-degree west orbital slot that our Brazilian subsidiary was awarded by Anatel, the Brazilian regulatory agency. We look forward to expanding our business in one of the fastest growing regions in the world soon.

I'm excited to announce that we introduced two new Slingbox models into our retail channel. The Slingbox 350 with 1080P HD streaming and the Slingbox 500 with HDMI integrated Wi-Fi and 1080 HD streaming and personal media play box. All SlingPlayers, Web and mobile, were refreshed, reviews in the press have been positive with many four-star ratings for the apps and all the new Slingbox features. You may recall that in second quarter we were informed by International Launch Service that an abnormality occurred with the Proton launch of two Russian satellites. As a result we expect a delay in the launch of EchoStar 16. I am pleased to inform you that the spacecraft has since been transported to the launch site in Baikonur, with the launch expected in late November aboard a Proton M vehicle.

Our EchoStar 18 program commenced -- EchoStar 18 is a CONUS spot hybrid satellite that will support future DISH Network operations at the 110 or 61.5-degree orbital location. It's currently in the design phase and estimated to ship by mid 2015. EchoStar 18 will be a DISH owned asset that EchoStar will manage and provide TT&C see services for. Family, our ESS business secured new additional and renewed order from Americom Government Services, ARTEL, Harris, CapRock Government Services and RiteNet.

This brings a contractor backlog our satellite services business from satellites in orbit and under construction to over $1.8 billion as of the end of third quarter. Thus continuing our strong visibility into future revenues. These exciting technology and service announcements position us very well for revenue and margin expansion in the near and the long-term. I think we're now ready for question-and-answer part of the call and I will turn the call over to the operator to conduct the question-and-answers.

(Operator Instructions)

Jason Bazinet.

Just had two quick questions. Since you're one of the few companies in our coverage universe with some government exposure do we need to be worried at all about sequestration? Is that something that could impact your revenues if the government ends up going down that path? And then second, I know there's a lot of litigation around the Joey and Hopper, but it seems like Sling has gotten swirled in with some of this litigation with the broadcast networks. How should we think about potential legal implications of that to the extent the lawsuit goes against you? I just don't know how the liabilities, if there are any, will be partitioned between DISH and EchoStar.

Let me take the first question. I think we feel very confident about the heritage that the Sling has had in the marketplace for a very long time. We believe the technology is extremely legal, let's say. Although it has been certainly brought in as an aspect of the ad skipping activities on broadcast litigation, we are pretty confident that Sling has a long history of not causing problems in the way a customer utilizes Sling is to access content that they already own. We're not too worried about the Sling stuff, but obviously, we cannot predict the legal recourse of any litigation. If I've learned anything over the last couple of years. (laughter) I'm pretty poor at predicting the kind of outcomes you expect. But obviously Sling has been in the market a very long time without any challenge and hopefully that will persevere. Second question, I'll let Anders Johnson talk to that.

At this time it is too hard to tell whether those automatic cuts as they kick in to the Pentagon budget how they will cascade through the various programs. Right now we don't foresee any particularly severe event on the government consumption of satellite bandwidth in that market sector.

I would just add while we do have government activity both on the Hughes side and on the Satellite Services side, we are well diversified amongst the consumer and general commercial markets as well. So, again, I don't see the risk being that great.

Okay, next question?

Amy Yong.

This is Andrew for Amy. I just had a question on the JUPITER side. How is that progressing? I'm sorry, EchoStar XVII, just on the roll out. And what is the total addressable market for satellite broadband in the US? If you could comment on that.

First will I think within the Company we constantly refer to JUPITER as XVII and XVII as JUPITER so that's not a problem at all. Second, I'll let Pradman speak to how well his business is going on Gen4.

The initial rollout has been very promising. As Mike mentioned in his earlier remarks we are very pleased with the new orders that we have received to date for JUPITER and the number of sites we have activated, and we see that trend continuing strong.

As you may recall, many times in the road show and other presentations, we have indicated that the market in the United States for unserved and underserved households is about 14 million, of which about 1 million of them have been penetrated by wire, sat, and us. So, the penetration is about 7%, so it's very little, so we still see a very robust market over the next four or five years.

Okay, and if I could ask a question on the -- what is going on in Mexico and Brazil. I know there were reports that you were in talks with several operators in Brazil in particular. Could you maybe expand on that?

I don't think we really have anything of substance to share at this time. It is true we are in negotiations and we are excited about the opportunity in Brazil, but we certainly don't have anything that can be brought to the public at this moment in time. I'm sorry about that. But that's the reality of the situation.

That's okay. And lastly on the set-top box business, there's obviously some weakness year-over-year. I'm just curious, is this due with the cost structure that you have an agreement with DISH, or is this something else?

I think, Mark can talk to it, but the reality is Mark has brought a very cost-effective design structure in place with Hopper and the Joeys, which allows DISH some major advantages. But on the other hand, Mark has reduced our revenue because they did such a good job. Let Mark talk to that.

Yes, I think Mike is absolutely right. That is our biggest hitter right now is that we've just cost reduced the product. We are trying to add cost with features as you see with the Hopper and as our customers take higher end technologies we hope to either slow that trend down or turn it around. But for sure we are delivering a much lower cost solution to the marketplace. And the other thing is we are somewhat dependent on how the overall market is doing for getting sub base in the US. We're dependent on DISH and our other customers in Canada and Mexico and how the overall economy is doing and how they're sub ads are doing in general to sell to them.

Right, if I could clarify, you said that if you add features it potentially could increase revenue or margins or both?

Basically revenue overall. We are adding lots more features and functionality as you saw with the Hopper product and our last generation. We have a new product come market [soon] which will have a lot more features and again its cost will be higher.

That and a lot more EchoStar technology. I think that the key thing is we are servicing a lot more TVs for DISH with a much lower cost and that reflects into the ETC revenue stream at this time, but we've got a lot of exciting things coming including the refresh of Slingbox on some of the additional customers Mark has on the horizon. So although I can't say we are overly pleased by the quarter's performance in that specific small area of the business, it is certainly something that we are focused on.

Great, thank you very much.

Chris Quilty.

Thanks I wanted to stick with the ETG segment and specifically you had mentioned high inventory with customers. Do have a sense of how long it might take to work through that? And is it inventory of the new Hopper/Joey or older product that they are working through?

I think it is both. There's certainly a transition going on right now in all the customer bases where more HD product, more HD centric product, and certainly the Hopper/Joey configuration is a very cost-effective way to get two or three or four HD TV's serviced. The inventory situation has been managed very effectively by the customers and we don't see anything but a positive outlook going forward. We are not in direct control of their inventory requirements.

I understand. And can you talk a little bit about the customer expansion efforts, either domestically or in Europe respectively? And I think one of your customers, Liberty, just started taking deliveries of a competitive product from Samsung. Can you talk about your product portfolio and how it stacks up and whether that impacts your market share or growth opportunities with that particular customer?

In regards to Liberty, we are actually very focused on them because as they integrate Europe they will be potentially bigger and bigger customer. I think we've done a good job for them but they did roll out a new extremely high end product based on an Intel system and we will have to see how that performs in the field. I hear mixed messages about its performance in the field, but Liberty will have to make that determination of how they do.

We are excited by Brazil, we hope that will be a big growth market for us. We're doing some interesting things in Mexico to help with their growth, and hopefully, with whoever we partnership in Latin America will lead to some other opportunities for us and growth in the set-top box business.

We are pretty confident that the Hopper/Joey architecture that we brought in is very effective. The ability to do primetime anytime, if you notice some of the competitors are quickly trying to figure that out and do something similar. So we think we have a jump there. Mark is hard at work at staying ahead of the rest of the competitors with a sliding set of new features that will come out early next year, and we can't control people's decisions to source product but we know we've got a great product set and our customers so far really love the Hopper and the Joey and all the functionality, and we hope to build a stronger business off of that.

Great, thank you. On the Services side of the business you had a sequential revenue decline. Which I don't think I've seen that in your historical pattern. Was there something specifically you would attribute to the decline?

Not at -- this is Ken. I don't think there is anything specific going on there. I would have to look at it more closely.

Grant, do you have any comments on that?

Not on the Hughes side, the two pieces, as you know that we have Chris, are both the enterprise business domestic and international. Those are continuing to trends that you have seen in the past, that they are up based on the domestic business plus our European side, and the consumer -- we continue to provide service. Clearly we launched the Gen4 service, as Pradman mentioned, October 1, so you won't see any of that new service offering in the third quarter and we will report on that next quarter.

Right, I guess my question was specifically to EchoStar Satellite Services where it declined sequentially from 71.4% down to 65.7%

You're talking about the segment revenue?

Yes, I'm sorry.

Okay. I think a couple things going on. One is that we have been -- we have held [CAT] Sat out again in from a strategic standpoint to make sure we have an asset available for the Brazil 45 degree orbital slot. So we've got to wait until -- certainly until Echo XVI launches before we can do anything with that. That is one primary area where we probably slipped a little there. And then again, we will see a little bit because of the Echo XVI launch, the launch delay, we had originally -- probably a year ago it was scheduled for June and has since slipped to September and now it's in November.

Okay. But there weren't any transponder -- I didn't look through the Q with a fine toothed comb, any transponders or satellites that were removed from service?

No.

No. And we have had -- in the Q you will see that there have been additional satellite anomalies on AMC XVI and I believe Echo XII, but neither of those have really affected the ability to sell services into the market place at this point in time.

Okay, and final round of questions here on the Hughes business. Still reported in the current quarter it looks like another net loss of subscribers. Do you expect, Pradman, that going into Q4 with the Gen4 service that you should be able to turn positive or are you going to be dealing with customer churn issues on the Spaceway platform that will keep the subscriber growth flat or down for a while?

We're obviously -- as I mentioned earlier, feeling good about the initial take on the Gen4. And that should make it turn positive obviously and we are hopeful of -- that in Q4 we will have positive subscriber growth.

And are there -- is there anything you are doing differently with respect to transition plans, either subsidizing hardware for customers that want to step up, or actively swapping out customers that would differ from what you did back a couple of years ago from the KU band to the Spaceway transition?

Yes, we have a pretty attractive upgrade plan for existing subs. And those plans are on the web if you want to take a look at it Chris. Unlike the last time when we went from KU to Spaceway we were not encouraging upgrades as aggressively. So I think that's different this time.

Okay. And I forgot, one final question, switching back to the Technologies group, can you explain the significance of the HDMI port on the new Slingbox 500? What feature set that enables?

Basically Chris it is a one connection to the box for certain content, it is just to make the install easier and it also gives you access to a lot of the new modern TVs.

But it also simplifies the user experience because Mark's team's got it down to the place where there's not a lot of requirement for you to change the input on the TV set to access the various parts, it can all come through the Slingbox. Your set-top box and so on and so forth. It's a significant improvement, both in picture quality, but usability of the system.

Great, thank you very much.

Craig [Mann].

Hello guys thanks for taking my questions. I have a couple of quick strategic questions. First, according to the 10-Q filed today you have only about $71 million of future obligations related to Echo XVI and XVII and since have no additional satellites under construction you're going to start generating a pretty significant amount of free cash flow above which you are already generating. Could you walk through your current capital allocation plans and priorities? And I have one follow-up after that.

First of all I think Anders was clear, in fact, I think we disclosed we do have an additional satellite contract that we started to execute on, we are obviously looking at a couple more so I wouldn't assume that we are done building satellites or spending capital funds on satellite construction and builds. I'm not sure we're ready to disclose any additional breakdown on how we are going to spend our capital the next years. I think you can historically -- we don't see a huge difference in the way we are going to work in the future from the way the two companies worked in the past, I think you could use that as guidance, but I don't think I'm going to give you any more information than that right now.

Okay, and the satellite that you have disclosed I didn't catch it in the Q. What is that related to?

That is Echo XVIII, which is actually -- it will be up primarily -- the build will be primarily funded by DISH. We will provide satellite build and management and then we will also fly the bird. To Mike's point, obviously, we are working on a joint venture in Brazil. We're looking at other alternatives. We've got the new Gen4 service that has come up, that clearly requires [Shack] on the retail versus wholesale customer base. Those clearly would be priorities as we move forward.

Okay. And then I know you guys and MVS don't give out exact numbers for DISH Mexico subscribers but our estimates have you guys north of 2.5 million subs now. Depending on which analyst you look at, you are sitting somewhere around $5 to $7 per share of un-monetized value. Could you just walk through how you think about DISH Mexico from a strategic standpoint and how you plan to return some of that value you've created with your 50% stake there?

Obviously, we've got a good business going down there, I will not comment on the actual number of subscribers. We treat it as an equity investment. We believe the partnership has worked well. We are able to provide a number of additional services to that joint venture from up linking to set-top box sales and activities. We're going to continue to work -- to support the JV, and grow that business as quick as we can. There's opportunities there that from a competitive standpoint, if you look at the offerings that they have versus the other DTH providers in Mexico have, if we can garner some additional channels in that market, it should give us -- it should give the JV a fair amount of upside.

Okay, and then last one if I may. Given the high visibility you have with the Echo Sat Services and the Hughes segments which now account for roughly 85% of your total EBITDA, could you just walk through strategically how Echo Technology fits in with the rest of the business? If you look at the other FSS and Hughes comps, your are effectively seemingly getting no value, or even negative value for the Echo Technologies business.

I don't disagree with your assessment. Certainly it's the subject of discussion a lot internally. I don't know if Ken has a better suggestion.

No, I think as we move forward, I think there's between the engineering at both Hughes and at ETC, I think there is opportunity to create some convergence there. I think the ETC group continues to develop leading-edge applications that are primarily used at this point in time by DISH, but as we, for example, again move to the -- hopefully or in the near-term, successful on the Brazilian JV, we will be able to take some of those applications and introduce those into those markets, and who knows where that goes. I think there's upside, but again, the set-top box market or industry in general is a tough business that has slim margins.

Got it, okay, thank you guys very much.

[Joe Rosen].

Hello guys, thanks for taking my question. Just a couple. Pradman, on the big uptick on the enterprise side at Hughes, can you just give a little color of what is driving that? Is it a go to market strategy, or are there any other solutions that you are offering now that you haven't in the past? Maybe just some use cases of what the new customers are taking.

Sure. If you look at our enterprise business, we obviously have our enterprise business in North America and then we have an enterprise business internationally. In North America over the last couple of years, we have done a significant transformation of the business from just providing connectivity via satellite to a managed network service offering. We have been able to go to the major corporations in the United States and offer them a managed network service where the access technology for each branch is optimized based on the location of their branch. We're not limiting the access technology to only satellites or VSATs but also to DSL, cable, or wireless.

And that has made us very competitive in this managed network services marketplace, because we pick the optimal access technology for each branch. And then we bring onto it all our value added offerings in the different services that we provide. Internationally, we have three service companies in Europe, Brazil, and India, and all of them are addressing the enterprise market in their regions and doing a very good job of capitalizing on our technology and our network service offerings that we have developed in the United States. Between the two of them, both are growing this year. And we're very pleased with the progress we have made this year in the enterprise business.

Thank you.

Also, I think I would like to take the opportunity to point out this terrible event on the East Coast -- Hurricane Sandy and so on has brought to the forefront again if somebody has a generator and they turn their generator on, all of a sudden they've got their broadband back if you have satellite capability.

And that has been a big asset to a number of business owners, and Pradman and his team have worked very closely with the emergency services to help provide improved broadband service with getting them systems and so on where the infrastructure has been damaged. That is somewhat of a nice feedback on all of the activities out of a horrible event. And we're going to plan to focus on that with the more and more natural disasters that we are suffering. We're going to make sure that we are ready to step in and help when necessary. I would like to commend the Hughes guys for what they are up to there.

Great. And just on the consumer side, on Gen4. Any more color you can give us on the mix of wholesale, retail, how DISH has been in terms of their bundled offering? ARPU you are getting? Just any color that you can offer.

The customer acceptance has been great, the partner acceptance has been great. I think we're all very thankful we had a safe launch and that the technology is working as well as it could be, and all the gateways are up and everything. It's been a very, very successful launch. I promise you we will give you clear information on the next call, but we've got to be, as you know, we've got to be really careful about being too forward reaching. But the bottom line is I am excited by the product, I think its doing great, and I think you will be pleased.

Great. And then just lastly on the balance sheet, you obviously have a massive amount of cash and marketable securities. How do you think about having the most efficient balance sheet, which this really isn't. Are there large, are there opportunities that are still out there? How do you think about distributing the cash or paying that debt, or how do you think about maximizing that?

I think strategically yes, we do have a lot of cash on the balance sheet and we've got, obviously a couple of things we are working on. I mentioned earlier as it relates to CapEx priority. I would say we're always interested in looking at strategic alternatives that make -- that would make this business a better, more effective Company. So, we will continue to look in the marketplace and see what strategic opportunities there are out there. I think really that's about all I can say as it relates to that.

Okay. Thanks for taking my questions.

Chris (technical difficulty)

Hello guys. Two questions for you. Dish Mexico, the Satellite Service revenues were up, they basically doubled sequentially. Can you comment on what exactly, what the increased services were there? Were you giving them more capacity and is that ongoing? And then second question, you contributed $35 million or $36 million of assets to the DISH Digital LLC with DISH. Can you take us through what those assets were, number one. And then what's the operating strategy of that actual business? Thanks.

The first thing is DISH Mexico is expanding their offering, they needed additional transponder capacity, they're adding additional services as they try to move from being the very low-cost provider to actually attack other segments of the Mexican economy. And they are continuing to utilize our broadcast centers and our satellites to do that and that is really the reason for the uptake. So, I guess there's not a whole lot more to say.

And DISH Digital is a JV between us and DISH. We continue to focus on over-the-top content delivery because that is certainly something that is going to continue to grow in the US and in fact internationally, our contributions were from a technology standpoint. And I think whatever is out there in the public domain should explain that well enough. We're looking at the opportunity in that JV to attack international markets. And support some of our international DBS presence with additional capabilities as the markets are ready for them, and they are certainly continuing to work very closely on what is possible in the US. But I don't think we really have a lot more to say about that right now.

Is it fair to say that it is geared more towards software or patent angle versus a hardware angle or is that incorrect?

There is a lot of technology there. I think it is public knowledge that we contributed the move organization and a lot of that patent stuff, certainly the JV has the advantage -- the ability to take advantage of, and I wouldn't say it is just software. A lot of very experienced resources and so on that have become part of the JV, so I think it's a development team and an understanding of -- a very intimate understanding of what is required to be the best provider in the business, and I am confident that, that's going to be a great investment.

Thanks.

[Eric Cole].

Good afternoon gentlemen. Two-part question regarding the Gen4 service. If I was living in one of these rural areas in the US, what is going to make the service now compelling enough for me now that I am going to subscribe versus having not had broadband service before? And number two, for the families or households that do subscribe, can you explain to me which service -- Power, Power Pro, Power Max is most appropriate for them. I'm assuming that the number of maybe simultaneous PCs you have using or are trying to get access at the home might influence which of the three services is most appropriate.

Pradman, do you want to try to take that?

Right, in terms of one of the most appropriate, I think the driving factor is going to be the size of the data bucket you want. If you look at those three plans, each of them has a different amount of data that you can use per month. And depending on your applications and whether you are only doing browsing or you're doing video streaming and browsing, or a lot of video streaming, you will pick one of these three plans. And you obviously pay extra for the additional size of the big bucket. The speed, 10-megabits for the down to your home for Plan A and Plan B, and Plan C gets you to 15-megabits, but I think for most applications 10-megabits is pretty good. You'd only need 15-megabits if you were a very, very heavy user and did a lot of streaming et cetera. That's how I would differentiate the two but everybody has their own view on which plan is optimum for their use.

In terms of the compelling need, clearly everybody -- most people today want broadband access to the internet, and if you are in an unserved or underserved area your ability to get these kinds of speeds is limited. As I mentioned, we have 14 million households that don't have the ability to get broadband speeds -- to get access to the internet with those kinds of speeds so that becomes a compelling need why people are flocking to this an offering.

And before your service, how were they accessing broadband in these rural areas?

In these unserved areas primarily dial-up.

Okay. Thank you.

Richard Lee.

Thanks for taking the call. On Echo XVI and XVIII, is that replacement capacity or is there any incremental revenue opportunities there?

I think we typically always build the next generation spacecraft that provides higher power to the ground, which -- and additional spot beam capability and so on. So, it's a combination of in orbit capacity and then some expansion, additional spot beams, et cetera.

Okay is there --

On Echo 18, given it will be a satellite that is primarily funded by DISH, the revenue opportunities will be on management of the satellite build contract, and on the monthly TT&C applications. Echo XVI is a EchoStar built bird, so there would be incremental revenue opportunities on that bird.

And are those two satellites replacing any existing satellites in the fleet?

They will be taking over parts of some of the satellites' missions when they are in orbit, but it's premature to announce exactly what they are going to be doing.

Okay, thank you.

There are no further questions at the time. I'll turn the call back over to the presenters.

Okay, Deepak.

Yes, so this brings us to the end of the call since there are no more questions. Let me just thank you all for participating in today's session. Good day.

This concludes today's conference call. You may now disconnect.