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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Good day, ladies and gentlemen, and welcome to the DISH Network Corporation Q2 2019 Earnings Conference Call. Today's conference is being recorded.
At this time, I’d like to turn the conference over to Jason Kiser. Please go ahead.
Thanks for joining us, everybody. I am joined today by Charlie Ergen, our Chairman; Tom Cullen, EVP, Corporate Development; Erik Carlson, our CEO; Brian Neylon, President of DISH; Warren Schlichting, the President of Sling, Paul Orban, our CFO; and Tim Messner, our General Counsel.
Before we have opening remarks from Erik, Paul and I think Charlie, we need to do our Safe Harbor disclosure. So for that, I will turn it over to Tim.
All right. Thanks, Jason.
Statements we make during this call that are not statements of historical facts 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.
Thank you, Tim, and welcome, everyone. And thanks for joining us at the last minute. Given all the news, we're going to have a few short remarks today about the results and 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’s 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. 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 it forward to stand out in our 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 gross subscriber growth in DISH TV. In the second quarter, we added 348,000 subscribers compared to 243,000 the last quarter and 278,000 a 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 acquisitions and a call for operational discipline from teams across the business.
Touching on wireless, I’m confident 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 a fourth wireless providers of 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. But, we have lots of work ahead of us to land Boost and begin the 5G build out. And I’m confident in our grafted 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 I launch. At that time, we had DBS customers, and today we serve millions. We launched Sling TV in February of 2015 and today we have millions of customers where we continue to lead in the live OTT category. We’ve got a top-flight team that manages three high-profile national brands in DISH TV, Sling TV and DishLATINO in support of dealer network that’s thousand strong and we have a vital direct sales operation. Our people and systems support hundreds of thousands 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 and excellent value. And we are well-positioned to develop market and support and service, based on the nation's first 5G standalone broadband network.
Paul, take it away.
Thank you, Erik.
As we’ve been talking about for the past several quarters and to eco 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 are ahead of the curve compared to most of our competitors.
As Erik said, we achieve near-record low churn and increased DISH gross additions with all-time high credit scores. We also saw positive subscriber growth on Sling, 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 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 have 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 $786 per activation, up from $763 last year. The increase in DISH TV SAC was due to higher hardware and advertising costs 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 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 said before, we'll be opportunistic in accessing the capital markets.
Finally, during the quarter, we announced 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.
Normally, I wouldn’t comment, but I just wanted to briefly set the stage for your questions.
Let's talk about what's changed and of course obviously a big change with the agreement with the T-Mobile and Sprint, and the acquisition of the Boost brand and the customers, and the Virgin customers and the Sprint -- and the three big Sprint customers. We were able to enter the marketplace in a very timely manner with just over 9 million subscriber, something that we -- I didn’t think that we’d have to build the company from -- 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 jumpstarts us to get into the business.
We're also acquiring a seven-year MVNO deal, a very competitive MVNO deal, but also for -- seven years, but -- so that we get the provision on the new T-Mobile network, which obviously is going to become even better network as they build out -- and the Sprint spectrum. 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 run own a T-Mobile network, which allows us to build on a market by market basis, which is materially different than we envisioned where we believed 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 owner economics. And I'm sure you will have more questions about that.
Additionally, the DISH FCC where we have been going -- where we had been going in kind of opposite directions, where we’re building based on our license, the flexible use license and narrowband IoT network to meet our build out requirements. We’re now more in alignment 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 have voluntarily changed our flexible use licenses to mobile broadband licenses in return for realistic -- 2023 before we can build 70% of the country out.
But, we're now in alignment where I think the country wants to go, where I think -- I know the FCC wants to go, where I know we want to go, I think where the administration and the Congress wants to go. As result, our NB-IoT, narrowband IoT resources will be redeployed in the short-term for that 5G network because MVNO deal on T-Mobile allows us to use their nationwide NB-IoT that’s already built out. So, there is no reason to duplicate that network, particularly with some nonstandard frequencies.
What's not new is that we still plan on building a network out and spending 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 [indiscernible] will actually be less than we had envisioned short-term, and as a result our OpEx should be less than we had ultimately envisioned. But the $10 billion investment is still in the cards.
And what’s not news, we’re going to need help. We’re going to need help from people to help us better [ph] network, just like we needed help back when we decided to launch satellite. So, there is 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’d be hardware or software, whether it’d be distribution and marketing, all those things are things that we're going to need.
Our philosophy really is where somebody else has some of those things, we don't intend to reinvent it, 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 were few cases where people didn't believe in us or I didn’t think we would be successful when we end up having to build those things ourselves.
So, with that I think, we will take questions.
[Operator instructions] We’ll take our first question from David Barden with Bank of America.
He, guys. Thanks so much for taking my questions. I really appreciate it. I guess, a couple. First would be, could you guys give us the shape of the EBITDA of the business that you are acquiring from the Sprint, T-Mobile divestiture? Obviously, they’ve got one number, you’ve got a different number based on your relationship. It will be helpful to get an understanding what that is. And then, I guess, second, Charlie, when you say you need help from people, I think, one of the biggest things is going to be getting the money to kind of build this plan out. The Wall Street Journal reported that you spent like three 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 that would be super helpful. Thanks.
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 it up to them to talk about what their probability is. Obviously, the way they would look at it internally and the way we would look at it would be 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 TracFone, who we believe we have a very competitive deal compared to their deals, and look at their financials to give you a feel for 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, use our own tower to get owner economics, that materially changes in a positive way.
As far as where 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 in excess of $1 billion for a lot of years. In terms of our existing business, where we believe that the Boost and our entry into marketplace will be a positive from a cash flow perspective. The marketplaces are open to us and certainly today and there is opportunistic things. And I certainly am willing to put more money in this company because that’s what it takes to.
And then, finally, the one of the things in this agreement is our 600 megahertz spectrum, which today is as we wait for the broadcaster spectrum at which T-Mobile has taken 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 base deal for them to leave their capacity until such time as we use it.
So, to give you an example, we have moved our build up schedule out by four years from 2029 to 2025 as part. So, we have accelerated our build out of 600 but all of our 600 is not going to be built out in 2025. So, it gives you a feel for some possible revenue opportunities there as well.
Thank you so much, Charlie. As a follow-up, just real quick. As a gambling man, what would you put the odds that the state AGs [ph] are going to win or lose in their efforts to block this deal?
First of all, I’m not a gambler. So, when you gamble, that means that you don’t know the odds, and that means that when you gamble -- in fact, if you play in Vegas, other than blackjack, in only certain times at 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 are in your favor. So, I’m not really a gambler, but -- from that perspective. But, look, I think as the -- I think to the credit of the FCC, in particular the Justice Department, I think, they’ve structured this agreement so that we feel very good about our ability to compete as a fourth entrant to this marketplace, both in the short term, particularly and obviously in the long term. I do think that the states played a role and I think that the states, had -- my person opinion is that big influence on T-Mobile and Sprint, their willingness to be more aggressive, to give us the of kind things that we needed to be competitive that they otherwise might not have an obviously DoJ forced some of those issues, but I think you have to get some credit to the states as well. So, when you look at all of 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 one. 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 will take our next question from Jason Bazinet with Citi.
I heard you on the $10 billion number not changing, but my questions is pretty simple. If you have a pile of cash, either from cash flow or 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 the selected cities, how should we think about the use of that cash? In other words, will you toggle most of your cash towards getting more gross additions and running it on this MVNO, will you toggle all of it for standing up a network and we really shouldn’t expect a bunch of incremental gross additions on a wireless side coming in, or is there some sort of balance between those two in terms of how you see this playing out? Any color would be helpful. Thanks.
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 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 standalone network will be very attractive. However, in the meantime, we have every motivation to grow the Boost base. And we not only want to expand the Boost distribution, because removing -- 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 can 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. Please go ahead.
Charlie, I was hoping if you could talk about your go to market strategy or 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 gain 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 have, are you -- just curious how you plan to differentiate the service and go to market. Then, I’ve got a follow-up.
So, Doug, one of the nice things about a virtualized network with the architecture that we’re using, it’s completely different than the incumbent legacy networks. So, we’ll 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 at 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, low and mid band spectrum and Verizon is example and I think they have over 120 million customers on their network. And in a 5G virtualized architecture that might only take 30% -- to put on 20 million customers for where they are today, that might only take 30% of your network -- 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’d be precision agriculture or healthcare, robotics or smart cities or smart grid, or Blockchain, artificial intelligence, autonomous vehicles, all those things still need a network. So, 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 into consumer business and still do some of the things in a network that’s architected where other incumbents are going to have a tougher time to get there.
I think, last quarter, you talked about it being difficult to raise financing given the uncertainty on the FCC side in terms of protecting 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 certainty around what the business plan is and the FCC strategy around your spectrum licenses?
I think, there is no question that -- the elimination of the uncertainty at the FCC is big, but it’s equally as big we can enter the marketplace in the short period of time, we start to gain return our investment and actually start cash from the business. So, look, the markets are open, you guys are on the business -- a good business plan can raise money almost anytime, 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. Please go ahead.
Yes. Thanks for taking the question, and congratulations filing and 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 DDS business? Thanks.
I’ll take a shot at it. I don’t know if Erik or Paul, you want to jump in here. But, look, we have a lot of flexibility in our structure. Obviously, it’s certainly going to be enhanced as we get to satellite assets, we need to run our DBS business over into DISH. But, the plan is not to duplicate with a completely new sandbox where we have customer service. We have call centers today. There is no reason to have different call centers, different for wireless and Boost that we do for our video business. We just have to do different training. We already build -- we already understand security, we already have -- we have sales and marketing, we have distribution, we have an in home service with trucks, 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. 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 for a big part of our business. It is a customer-facing product that there's billing and collection to capital money each month. Probably the biggest differences that we get to sell something that the cost of goods sold is not going up but it’s going down. And people using more, not less.
So, in 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 the conference call, and we’re probably three years ahead of anybody else talking about it. And people finally caught up to that notion.
But in this case, we’re selling something people are using more but the cost is going down. And as we build our own network, the cost goes down materially. Do you want to comment, maybe Erik, to fill the gaps there?
I’m not sure there is a lot of gaps to fill in there, Charlie. I think, obviously, there is a business over the past 20 odd years that we’ve built for certain number of capabilities. Just like Charlie said, with independent distribution or marketing or digital assets or being able to go to somebody's home, being able to provide security, understand procurement, et cetera that will continue to leverage, like we leverage for Sling that we’ll continue to leverage for the wireless business.
So, we're going to be in a lower overhead situation than perhaps Boost was within spring as an example, even though they would already. We will do better than that.
Go it. 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 it’s just the bar is higher because you’d actually have dissynergies if you decided to consider something strategic?
I would say it’s little bit simpler. We just don’t have a relationship with AT&T.
We will take our next question from Philip Cusick with JP Morgan. Please go ahead.
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 five 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? Thanks.
Yes, Phil. I’ll start off and then I will let Charlie handle the DE question. Look, we've been talking on the calls for 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’ve seen 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 now gone. So, you are 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, the focus that we’ve had over the past few years has come to fruition.
We -- obviously, you’ve mentioned AT&T and maybe they are going through something similar that we went through many years ago. I can tell you know all that -- our profitability and our credit scores, our 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 -- Erik and his team kudos, because they were able to get through that. I don’t know if that’s a good news for HBO but that certainly was a headwind during the quarter.
On the DEs, Des didn’t -- as you know is restricted preceding, so it did not come 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, 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 FCC’s court, not in ours. I think it’s been six or seven, eight months since we have responded. So, I’m hopeful that ultimately between the FCC and in addition the DEs that we can get everything moving in the right direction. But, no guarantees with that, but we’re certainly able to drive.
Erik, if I can follow up. Was any of the -- or any substantial portion of the customers you came back this quarter more like a returns after some of the Hispanic issues have been cleaned up?
I wouldn’t necessarily categorize that way, Phil. I mean, obviously, we're making good progress now with our partnership with Univision and think we can get back to grow in that business. But, I wouldn't overemphasize your point there.
We will take our next question from Kannan Venkateshwar from Barclays. Please go ahead.
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. The second question, I guess, is more from the perspective of the states. Obviously, there has been pushbacks 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 incredible 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 prospective? Thank you.
Yes. So, on the MVNO deal, the MVNO deal is to DISH and the brand is the DISH brand and DISH will -- I think you should look at us similar to Netflix, where Netflix has a lot of forms of distribution that -- I think Amazon sells, when cable sells, and DISH sells, and Direct TV sales them. So, there is a lot of forms of distribution, but the fact of 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 product. But, we -- it would be unlikely that we could sell capacity to some -- to third-party on the T-Mobile network, that wouldn’t make any sense.
Having said that, the beauty is that as we build our own network out and realize we're going to have both postpaid, build our own core within the next year, within a year closing, we're also going to build our first cities pretty quickly. Since we build our city, when you're in our city, you're in 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, as you go outside of our footprint, you would seamlessly roam onto the T-Mobile network and in fact, you won’t even drop your session on your phone call. So, that's unique and has been done, and we’re excited about the help, the justice and play the role there.
And obviously, when we have our own network that we can do, obviously there is nothing to prevent us from 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 network. I think, it would be -- and not the least of which are severe penalties, if we don't. But regardless of that we're going to build this network out. And it's really hard for people who haven't studied the wireless business on the inside, haven’t studied to degree that this company has and to understand -- you read about 5G and everything you get is what incumbents say about 5G and how they are 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 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 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 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 internal combustion engine and we’re building electric cars, except we’re not in a situation -- our electric cars are going to be half priced, they’re going to be 50% cheaper than the cars they are building. And better yet, you don't have to plug it in to charge it. It’s just going to be charged because we did the software. So, you don’t have to plug it in. So, you’d imagine if somebody was building electric car today that was superior in every way, went faster, more robust, better user features, costs 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 who are going to get there -- the other guys have to tear their networks down and they’ve got rebuild them.
So just long-winded answer, but some of the people have talked about whether we’d have a hosting agreement. Hosting agreement doesn’t make sense for us because a hosting agreement means we would have internal combustion cars, they would host our spectrum and we would look like just they would look like. So, customers have one to four choices, they all look pretty much the same, they all make a phone call, they'll surf the web, they're all pretty much the same. But our network and our phones will be different because we architect it. We could take advantage of massive MIMOs, our tower placement is different than incumbents’ tower placement. We get to use things like [indiscernible] our cable structuring and protocol is different. 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. So, all that’s different. And if 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 chance to show the economics of that that’s powerful, that’s powerful. And our build out will be where the towers are used, where more people are using data. That’s when we're going to build our first.
And so, we get to build out very highly efficient deployed towers. And longer-term, we will build out the more rural areas where you’re middle of Montana driving down the road, and you and the cows out there, not a lot of people using that tower but we’ll get to use that tower until we need to build it out which we well, but we get to defer that CapEx or OpEx. So, it’s a very good economic model for us and we will be very competitive.
I’ll make a couple of follow-up points. One, the agreement, as Charlie said, does not allow us to wholesale the capacity, nobody really expected that would be the case. However, we do have flexibility in creating new brands onto the network -- as I said earlier, we intend to continue to grow the Boost brand in 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 newer avenues of growth beyond that.
The second point I’d make is while we're starting with attractive economics on the MVNO deal, there is also a mechanism in the agreement that enables those costs 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 our own network. So, the incentive to build around where the traffic and capacities being consumed today, goes up every month.
Thank you. And if you could just help the question on the states and the lawsuit there?
I didn’t get the question. Could you repeat?
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 to get to…
This is Charlie. I’m insulted when somebody says the credibility. When you're talking about a company in 19 -- I can remember, in 1991, when we first saw digital compression and we started building our satellites then. And we saw digital compression lab and we said we think digital compression is going is work, that’s the new architecture of how video is going to be delivered. Everybody in cable, everybody in broadcast, everybody in -- that was the so called expert, 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 directly we started to use that. And of course, the cable companies took 10 or 12 years to upgrade their plan equipment to digital because they were analog. So, here we with 5G, 5G architecture. The people want to know that nowhere 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 bigger than Cox, DISH became bigger than Charge, DISH became bigger than Time Warner, DISH became bigger than -- what was the name of the company in New York before it was Altice? DISH became bigger than Cablevision. Right? We didn’t become bigger than Comcast or DirecTV. So, we’ve still got a room to go.
But I can remember -- thank God, Benny Goodman was around because our first money was 12.875 with warrants for $400 million. We didn’t have any money. We never built a satellite. We never built a set-top box. We never interfaced with customers, never taken a call, 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 - and we know what we're up against. It’s not our first road yet. 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 will take our next question from Ric Prentiss with Raymond James.
Obviously, an interesting complicated settlement, good to get it this far. Really intrigued by the option to acquire decommission 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 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 two to three-year time frame. But, there are notification periods in the agreement that where they have to give us adequate notice of 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 each of the tower companies. Some towers may have assignable leases. But if they're not assignable, we will have an agreement with the tower company, we’ll know where the RAD center’s 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 will look at opportunistically where the locations are relative to where we have strengths or hold. And again, not all the leases will be assignable but we get first look.
I mean, that effect is going to be a positive. We probably don't know the scale of that, but certainly will help us in our build out and in our retail presence.
And then, Charlie, you mentioned on the narrowband you would kind of redeploy your efforts in the short-term. I noticed in the language, the FCC's said it's been told to LLOED [ph] as far as the timeline for the March 2020 deadline. Would we think that you should be starting that like almost a main event 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 stop throwing up yesterday. But, it is told -- and just to be clear, it’s told when and if the FCC approves the merger, then it will be told day for day. And obviously the extent it was going to be a trial or some, we have plenty of time to -- we have time to start back up. But, it’s probably one of the things I’m personally most excited about. I was never -- narrowband IT, never we get great experience. We put up a lot of towers. We know how to buy a plan in the network. We know how to get permit. 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 the scale of that. So, it’s really, really, good education for us. But it’s not -- I agree with the FCC and some of the commissioners, it wasn’t the network to be proud of, compared to what we could do, compared to what the country needs. And now, we get to build that.
Again, my soapbox is, there is only one other country, there is only one other country that’s building the standalone 5G network and that's China. And the only company in United States that’s doing it is [technical difficulty]. 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 not that I would say anything nice about T-Mobile, but they also with the acquisition of Sprint will be in a position to decommission the Sprint network and build it back as 5G. So, what the FCC and justice have done is have taken, Sprint who was challenged to build a 5G network and enhanced Sprint -- 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 a new entrant that can build the new architecture, the more modern way to build a network, so that we -- and net of that is that obviously T-Mo -- I mean, AT&T and Verizon are doing wonderful things in 5G. So, 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.
Any update on the ESS, PSS closing timeframe?
No. We're still waiting some regulatory approvals from outside the U.S., and it’s probably a couple of months out.
Our next question is from Craig Moffett with MoffettNathanson. Please go ahead.
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 two networks, just given that it’s obviously -- it hasn’t been possible to do any field testing of that yet? Second, are we just thinking of someone like Rakuten as possibly the best analogy to what it is you plan to build. And I wonder if you could 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?
And the last on, we’ve we already answered, we indicated that the $1.4 billion would be paid off of cash on hand.
From cash on hand. Okay, thanks…
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 I said. On the Rakuten is really building a 4G virtualized network and they’ve taken -- their 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 lot of similarities. For example, they also have an MVNO deal. So, their initial build out is few cities in Japan. So, they’re not building the whole country once.
Their nationwide MVNO with KDDI.
Yes. So, they have some of the similar benefits that we have. I think that -- 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 are others, by learning the lessons from them. But, they have -- one of the really cool things, we 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 forgot the other point.
eSIM.
Oh, eSIM, in this particular transaction, both us and T-Mobile have to support eSIM. There are a few restrictions, if you are financing a handset. But, you can imagine that we like eSIM because you when you don’t have many customers, 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 in the phone, it’s little. Obviously, customers will -- you have to be really good, you have 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 who are 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 is -- 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 eSIM workaround, it’s instead embedded in the MVNO agreement that you have with T-Mobile?
That’s true.
Thank you. That helps clarify it. I appreciate that.
Yes. It’s more of a convenience for consumers. It also can be a convince for people like Apple that have eSIM in their watch and tablet. There is going to be bunch of other effects,. maybe we don’t know all the effects but it’s going to be positive, but consumer is 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 a 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 will 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 will have all the customer and 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 things they call the N26 interface that when we’re moving -- a customer would be moving from our network, our boundary on to the T-Mobile network, it would seamlessly transfer the call, because the two cores are interconnected.
We will take our next question from John Hodulik with UBS.
Great. Maybe for some more detail on the $10 billion spend. Should we should think of the spending, as -- or the sort of timing of the spending as 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, clarification, is that $10 billion the 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, just 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, but before you’ve got any infrastructure up and running? And then, again, maybe for Tom, any rough numbers? You talked about the cost advantage that you are 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 in these areas you’ve built out? Thanks.
Hi, John. I’ll take a crack at some of them and then, Charlie, you might want to come in. But, yes, the CapEx is generally ratable with the expansion of coverage. As you pointed out, 11 upfront investment in core, for instance. But in on the grant scheme of things, a core is grounding area compared to the entire build. So, there will be some upfront investment but generally its ratable. As far as wireless pricing, yes, we do think we’d be disruptive, day one, as I said, not only because of attractive rates but also bundling capabilities that are addressed 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%.
And the OpEx savings, there’s some OpEx savings too?
Well, obviously, OpEx will be much reduced, if you virtualize things like you see in data centers or cloud service providers today.
But if you take the 15,000 towers that we are committed to the FCC and you took the $200,000 per tower, you get to…
The historic metric.
That’s a historic metric. You’d $3 billion. 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 a $1 billion in a narrow band IoT network by the end of 2020. We’ve spent a lot on the narrowband IoT network. But obviously, to 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 it, I think that’s still a pretty good number between now and 2020, in terms of what it will take to the core….
End of ‘20.
End of ‘20 to the core, launch some cities and invest in Boost. And then, we expect we’re going to be profitable into business once we get up and running. I'm not saying we will be day one, but want to get a legs on this -- we will be.
So, you’re doing all process you’re expected to -- profitable, you’re expecting to sort of continue to generate positive EBITDA throughout the process?
Again, I'm not saying that we’re going to do day one because maybe we don’t know what we don’t know yet. But, based on what we’re seeing 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, but we think we’ll be profitable. We think we’ll improve on their margins, and again, some of the things there doing with video, and a lot of things that at our disposal that maybe our competition doesn’t have. So, we’re not going to be just the 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 is an security 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 watches every day. And to the extent they have one of our competitors, some of them are very disappointed.
Got you, okay. Thanks, guys.
We’ll take our next question from Marci Ryvicker with Wolfe Research. Please go ahead.
Thanks. 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 -- yes, it does in a direct way, which is -- we have net cash on hand, we’ll have $1.4 billion of less cash. So, it has an impact on leverage, as you relate to that cash.
But, you’re also acquiring EBITDA. So, I guess, we’re trying to get where your leverage…
Yes. No, it’s -- the whole transaction is going to be positive. Let me put this way. I feel safe to say, it’ll be very positive, long term.
We’re only few days into this and we’re certainly building the models in here, but we certainly believe that that financial side that maybe some 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 and execution. Planning the network, building 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 channel. But, we’ve done it before and there’s an awful lot of people that -- there’s a lot of people have done a lot of similar things because most of our architecture looks more like a data center, 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 sit in your structure?
It will be the holding the company, Marci.
Okay. And then, the last question I have unrelated. Is there anything that you can say on the Arpson [ph] deal? We know you dropped the 22 Fox networks. Is the REIT or minimum guarantees or something else?
Marci, hey. This is Warren Schlichting. I don’t know how detail we’ll get. But, look, we offered a 30-day extension and we have tried incredibly 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’s just not a good deal. So, the recommendation is actually to leave those RSNs off service long term.
The frustrating thing is they are not very good economic deals for us, I mean, our customers are a little bit more rural; on the Sling slide, they are younger, they don’t watch as much as sports. We have yes on Sling, we don’t have yes on linear TV. So, we have real data that tells us that the channels are priced and Fox has 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 the ATSC 3.0 and 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.
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, I want to keep them. And my nose tells me, that's not the right thing to do. But once you take something down, 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 taxing the customers, you 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 will lose some customers. I hate it that we lose customers. But, I also feel really good about the fact that 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 saying it doesn't look good that the regional sports will ever be on DISH again.
We will take our next question from Ben Swinburne with Morgan Stanley. Please go ahead.
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 wireless business or is it more significant as a wholesaler? You’ve talked a lot in the past about all the tech companies that depend on conductivity and that was a pretty compelling message. And now you've got seemingly a path to build something pretty unique. Just wondering if you look at those two options and you can even throw the cable companies in the mix, long-term, which one of those do you as a bigger opportunity for you?
And secondly, I noticed you guys hired a new CTO, I think about 10 days ago, it was a background from Jio. I was wondering if -- may pronounce the name wrong, Kannan is going to be running the wireless network build out. 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 through 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’s still isn’t other capacity that can be wholesaled as we’ve talked about for the past couple of years, and that could be many different verticals as well as 5G enterprise applications. So, I don’t think they’re meaningfully exclusive and we’ll pursue both. As for Kannan, the new CTO, he is hired to replace the CTO that left the DISH network operation. And 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 on board.
Got it. And just on the satellite business. You guys have talked for a long time as you just did on the Fox RSN that sort of once you take the pain of letting a channel go dark, it’s now worth bringing them back. So, I was surprised Univision came back. I think it was off for like nine 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?
This is Charlie. That was painful for both companies. But believe, the deal they could have had and the deal they got were different. So, it’s economics for us and it’s not -- so it’s -- 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 MSNs and things like that in the industry. So, Univision was unique. It was kind of same situation, Univision was unique that the management changed. So, it took the new management -- the old management, there’s a reason why the old management went 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 probably -- which is not a good idea. And here, we are -- the problem Fox Sports is that -- Sinclair, but they’re still under the Disney umbrella and I think Disney’s got -- correct me if I'm wrong, but I think they have independent -- they’ve somebody else to negotiate. I don’t think we’re negotiating directly with them.
So, 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 with Sinclair, and we’re 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, you want to extend the contract long term at poor rates at the beginning of the baseball season next year, that’s not -- 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 the top ten 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 ten, it doesn’t make any sense. 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 from analyst community before moving on to the press.
Thank you. [Operator Instructions] We will begin the media portion of this call after we take our final analyst question. Our final analyst question is from Jonathan Chaplin with New Street Research. Please go ahead.
Thanks. 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 the T-Mobile wasn’t willing to give up? And then, is the deal that you 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, probably the 15,000 sites, does not equate to 50% of pops or 70% of pops? Thank you.
We negotiated deal with T-Mobile that we thought would be very competitive for us. It then went to DoJ, and I think with the pressure from the state, that deal got actually materially better for us on a lot of fronts. So, kudos to the Department of Justice, but also to the threat 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, it might be the 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 probably comes pretty close to 70% of the population.
But until we get a link budget in RF plan, we can’t finalize that.
But, we expect that we’re obviously going to build out as fast as we can so. So, if the FCC has got some good guardrails for us in terms of goalpost to where we need to get to, so we know, where the floor is, but it really depends on the economics as we grow and as we move forward. I would say just Jonathan -- and you by the way, congratulations, you are 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 use owner economics. But every Fortune 500 company, every Board of Directors either has or will, ask their management to have a 5G strategy. And if you are going to have a 5G strategy, then you’re going to have to understand what a network really can do. And there will be a lot of companies that can help companies with the 5G strategy. The one company will be in everybody's list is going to be DISH. And we're not going to do things for everybody but we're going to work with the companies that have a vision, the same vision that we do, and 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, 2.5, least and it was a bit complicated, and of course we knew it pretty well because we tried to buy Clearwater [ph] and then Sprint six years ago. So, it was something that we 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 frequencies, we might build inside out. We don't like the longer-term play for us was better there.
Thanks very much, guys, and congratulations.
Thanks. Okay, operator, we will move to media.
[Operator instructions] Our first media question comes from Scott Moritz with Bloomberg. Please go ahead.
On financing, Charlie, are you open to selling any of your spectrum at this point?
We prefer not. In fact, we have some restrictions on -- potentially restrictions, although it needs the FCC approval. So, it depends on what the spectrum was. I mean, if you looked at our portfolio that we believe we need to spectrum that we have to be competitive. Right. It is not to say, there is 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 will be in touch.
Thank you. Ladies and gentlemen, this does conclude today's conference. We appreciate your participation.