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DISH Network Corp. (DISH) Q1 2021 Earnings Call Transcript

DISH Earnings Call - Final Transcript

DISH Network Corp. (NASDAQ: DISH) Q1 2021 earnings call dated Apr. 29, 2021

Corporate Participants:

Timothy A. Messner — Executive Vice President and General Counsel

Charlie Ergen — Co-founder and Chairman of the Board

Marc Rouanne — Executive Vice President and Chief Network Officer

Stephen Bye — Executive Vice President, Chief Commercial Officer

Tom Cullen — Executive Vice President, Corporate Development

John Swieringa — Executive Vice President and Group President, Retail Wireless and Chief Operating Officer

W. Erik Carlson — President and Chief Executive Officer

Paul W. Orban — Executive Vice President and Chief Financial Officer

Analysts:

Ric Prentiss — Raymond James — Analyst

David Barden — Bank of America Merrill Lynch — Analyst

John Hodulik — UBS — Analyst

Philip Cusick — JP Morgan — Analyst

Michael Rollins — Citi — Analyst

Doug Mitchelson — Credit Suisse — Analyst

Jonathan Chaplin — New Street Research — Analyst

Kannan Venkateshwar — Barclays — Analyst

Rich Greenfield — LightShed — Analyst

Scott Moritz — Bloomberg — Analyst

Andrew Fitzgerald — WSJ — Analyst

Mike Dano — Light Reading — Analyst

Presentation:

Operator

Good day, and welcome to the DISH Network Corporation Q1 2021 Earnings Conference Call. Today’s conference is being recorded. And at this time, I would like to turn the conference over to Tim Messner. Please go ahead, sir.

Timothy A. Messner — Executive Vice President and General Counsel

Hi, good morning everyone, thanks for joining us. We are joined on the call this morning by Charlie Ergen, our Chairman; Erik Carlson, our CEO; Tom Cullen, our EVP of Corporate Development; Paul Orban, our CFO; and then on the Wireless side we have, Stephen Bye, our Chief Commercial Officer; Marc Rouanne, our Chief Network Officer, and also John Swieringa, EVP and Group President of our Retail Wireless Business.

Before we start, I need to remind you all the statements we make during this call that are not statements of historical fact, constitute forward-looking statements. Those are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from historical results and/or from our forecasts. We assume no responsibility for updating forward-looking statements. For more information, please refer to the risks, uncertainties and other factors discussed in our SEC filings.

We’re not going to be making any opening remarks this morning. So, operator, we’ll go straight to questions.

Questions and Answers:

Operator

[Operator Instructions] We’ll go ahead and start with our first analyst question from Ric Prentiss with Raymond James.

Ric Prentiss — Raymond James — Analyst

Thanks, good morning guys. Two questions if I could, on the 5G side of things. First, so many other operators out there have suggested there could be some supply chain issues possibly and then you guys have a fairly unique network build. Can you talk to a little bit about how you’re seeing the supply chain, any concerns in the rollout schedule?

Charlie Ergen — Co-founder and Chairman of the Board

As I said, unfortunately — this is Charlie. We didn’t have Dave Mayo today but supply chain issues, we are seeing an Erik might speak to it but we’re seeing those issues across the board, whether it be in our set-top boxes or traditional DISH TV to handsets and semiconductor. So we’re — but we’ll work through that and in business, you always have obstacles and this is just one more of them. And it’s of course in the backdrop of a pandemic that didn’t help things but we focus on what our task is at hand and we make management, we adjust our management decisions with the conditions. And so I think there is going to — I think as a result of the pandemic and shortages and exit and increased demand, I think you’re going to see that for a while.

Ric Prentiss — Raymond James — Analyst

Makes sense. A second question on the 5G side is, we think the enterprise-wholesale side of the business could be actually fairly exciting and significant opportunity. Help us understand what you’re hearing from customers as far as what do they need to see from you guys before they could make commitments or contracts? Is it Vegas up and working? Is it a nationwide network? What are the customers want to see from you before they certainly can commitments and if I am right that wholesale enterprise could be significant?

Charlie Ergen — Co-founder and Chairman of the Board

So just — this is Charlie. I’m going to hand it over to Stephen Bye who kind of runs that side of the business for us. But in the context of it is that, first of all, I think it’s a big, it’s a general statement, it’s a big business, I think it will be good for all carriers because it’s a very nascent business today and you can see — and once you — once you can get in the enterprise business and do it a little bit different way but it requires a different architecture to do it correctly. And so maybe I am going to turn it over to Marc real quick, and just give you a little architectural tutorial on why, what we’re doing is different there. And then maybe goes to Steve and I talk about the business opportunity.

Marc Rouanne — Executive Vice President and Chief Network Officer

Yeah, the way to think of our cloud native network is a network of networks, that’s the way it’s architected. So when a customer comes to us, it’s easy for us to offer one sub network, which we can call it private network and there are techniques behind that like slicing, like automation, like software defined, so I’m not going to go into the techniques, but natively the way to think of it is really this network of networks. Right. And then, as Stephen, you’ve seen that you plan this to the postpaid customers and telling you how they would shake lose sub networks. Right.

Stephen Bye — Executive Vice President, Chief Commercial Officer

Absolutely, yeah. No, I think we’ve talked to a number of customers across multiple verticals in different industry segments and is an increasing appetite in demand for the kind of network that we’re building, which is really to enable them to have more security, more control and also more visibility into the data that’s coming off the devices, so that they can control their business more effectively. So we’re seeing a terrific demand. And the network architecture, we’re putting in place actually enables and unlocks that opportunity for those enterprise customers and it’s again not restricted to any specific vertical.

We’re touching a lot of different companies and a lot of different vertical segments across the country and the other aspect of the opportunity that we see for ourselves is that while we build out a nationwide network, we are in the process of working with customers and prospective customers on private networks that are not limited by the geography of our national footprint. So we can deploy those within their environments to support their business operations as well. So the demand we’re seeing is terrific and we’re already engaged with a number of customers today.

Ric Prentiss — Raymond James — Analyst

And they don’t need nationwide to place some of these contract and commitments for some of these opportunities.

Stephen Bye — Executive Vice President, Chief Commercial Officer

Exactly.

Ric Prentiss — Raymond James — Analyst

Okay, thanks guys.

Operator

Thank you. [Operator Instructions] The next question is from David Barden with Bank of America. Please go ahead.

David Barden — Bank of America Merrill Lynch — Analyst

Hi guys, thanks so much for taking the questions. I guess two, Charlie, you saw your stock price move on the AWS client partnership announcement. I was wondering if you could — or would be willing to opine on what you think the significance of that relationship is? Is it, is it just a business partnership? Is it the beginning of something bigger? And then I know we don’t have Dave on but Stephen maybe on the Las Vegas build, could you talk to us about what does that build look like? What do you, what are you going to do? When is it going to happen? What are you trying to get out of that in terms of showing people what this network is capable of? Thank you.

Charlie Ergen — Co-founder and Chairman of the Board

Okay. This is Charlie, on AWS. Thanks for the question. As we’ve said for, gosh as long as I’ve been doing conference calls we do partnerships maybe a little bit different way than other people do, but it’s really, it’s really we want to work with committed companies that share our vision and that are helpful in making our company better and in return, we’re going to make their company better.

So AWS — but we started in any — we started in any partnership, particularly when it comes to technology and building a network, you have to start with best-in-class technology, so you would never compromise somebody else’s multi-billion dollar investment and take the second and take a secondary network. So we may analyze for — I’ve been working on for five years. Marc was a lot more expert than I was but over the last 18 months, we’ve really been with all the cloud providers, big customers and the good news is they’re are all very good, and the United States is very lucky, there is no question that the United States leads and cloud technology, but at the end of the day Amazon had too big of a head start, they jumped in really early, they wanted to get in Telco space, it was strategic for them.

The cloud infrastructure as it existed a couple of years ago, really didn’t handle telco very well, there has been a lot of R&D and investment that they’ve had to make to transform their network into something that where a telco can operate in the cloud, because it’s a little bit different than their traditional IT infrastructure. And then today they are, they were best in class room for what we needed and whether it be their APIs and the documentation and discipline and vendor at the — community that supports them and their — the developers and then of course obviously reach into the enterprise business. So it was — so that’s the first and foremost.

And then the second thing I think is, is the company committed? I’m not going to put words in Amazon’s mouth, I’ll let them talk to their commitment, but they’ve done a lot of work for us to help us without knowing where they have the deal or not and very appreciative that it. I think it’s helpful that Andy will become the CEO because he’s owned this project from the start and he can — he will be able to move all the pieces within Amazon to focus on this. And so I think at the end of the day, I think we’re going to be their largest customer in cloud and I think they’re going to — they may be the largest customer in our network. I mean, but we have to build a network and prove it, and they have to build and prove it. I think that all other carriers around the world will, including the United States will look at Amazon as a real leader here because we’re just doing something different.

So, the simple — I say this, a simplest example. You got to look at it, we’re building a Netflix and a Blockbuster world. So Netflix — all Netflix did was put video on the cloud. Instead of going to a physical store, you put it in the cloud. Right. All the business plans in the world, all the numbers, all the thought if they just did something simple they put it in the cloud and the technology was they were a little ahead of the technology but the technology got there. All we’re doing is taking all those towers that you see as you drive down the highway, we basically put them in the cloud. And so instead of driving to physical store and rent a movie, you’re going to get all your data and information and automation everything from the cloud. And so it’s a dramatic paradigm shift in the way network is built and it should and it’s an advantage over legacy carriers who have 30-year-old architecture.

So they will slowly get things in the cloud, they’ll put pieces of their network in the cloud, but they just can’t take it, they just can’t take a front-loader and move everything the cloud at one time. So with that I’ll turn it over to maybe to —

Stephen Bye — Executive Vice President, Chief Commercial Officer

Yeah. So just in terms of what the Las Vegas build looks like. I think there are several attributes that are really important to what we’re doing to build on Charlie’s comment. One is we are building a cloud native infrastructure. We are using an Open Radio Access architecture. But it’s also a 5G native network. We’re not trying to put 5G on top of 2G, 3G and 4G, the infrastructure that we’re deploying is optimized for 5G and the way we’ve designed the network from an RF perspective and a deployment perspective is to take advantage of the 5G architecture as well as the 5G platform. And so, what does that look like?

It’s basically a new network, it’s new infrastructure, it’s designed using all of the spectrum bands that we have and the RF is optimized to take advantage of that. So we’re on a path to launching that in the third quarter, but it’s one of a number of markets we have coming on. We just have announced those markets through the end of the year, but it’s the first, obviously a number that we have in flight today and we’ve got activity going on across the country to actually build out this network. So it will be the first one that people can touch and feel and get the experience, but it is really a 5G native network and we’ve proven that O-RAN from a technology perspective can work compared to that at the end of last year. Now we are in the execution phase, now we’re in the deployment phase and so you know Vegas will have to be the first one that it will be a fully deployed market that people will be able to touch and feel and experience.

David Barden — Bank of America Merrill Lynch — Analyst

And if I could, just a quick follow-up on that, just real quick, is this experience, is this going to be a business enterprise experience or consumer?

Stephen Bye — Executive Vice President, Chief Commercial Officer

It will be done in phases but the network is designed to support all customers across all segments.

David Barden — Bank of America Merrill Lynch — Analyst

Appreciate it. Thanks guys. Appreciate it.

Operator

Thank you. So the next question we’ve got is from John Hodulik with UBS. Please go ahead, John.

John Hodulik — UBS — Analyst

Yeah. Thank you. Maybe Charlie, just could you expand on the, on the comment you just made that Amazon will be — could potentially be your largest customer or talk about sort of the go-to-market plans that may evolve for you to sell services into the AWS customer base? And then again, back to the AWS deal, I mean obviously it’s got to help in terms of sort of time to market, capex or your overall sort of cost, total cost of service, say versus the incumbents. I mean, did the original plans that you laid out for sort of all these issues. Is that sort of can you build upon those benefits that we were seeing or was that all contemplated that you could strike a deal like this with AWS going forward. Thanks.

Charlie Ergen — Co-founder and Chairman of the Board

Your comments were correct that AWS does help us with time to market. They do help us with capex, a lot of material capex. Some of that does go to opex, right. So, but our opex is still going to be with automation, they are still going to be materially lower than it otherwise would have been. So, but they definitely and they help with expertise, I mean they have fabulous engineers that invented the Cloud and they’re now helping us invent the telco cloud. So all that’s good.

Yes, we anticipated a cloud native network from the beginning. So the $10 billion total build out costs that we announced a couple of years ago. I think people are probably still skeptical, some people are still skeptical, but you can see where we’re headed that most of your models will probably take — it probably take, well, several to a lot of capex off the board when you understand the architecture and we’re not going to go through all the architecture in this call, but it’s certainly has a material impact on capex.

Tom Cullen — Executive Vice President, Corporate Development

Hey John, this is Tom. I’d just say obviously they’ve made massive investments over the years in compute storage transport and edge, we’ll be sitting on top of that and as we tightly integrate telco into their infra, then we can expose APIs to their development community, which we think makes and enables third party products and services to have network connectivity as well as enterprise applications. And you can see how, if we were, if we were one of the three big incumbents, where you have scale, what we’re doing, might not might not make as much sense. But realize we’re starting with a very low customer base of $9 million. So on a variable cost, it just makes more sense.

But having said that, from that we’d still would do because the technology what we’re doing with the fact that — the fact that you have your data stored and you can now analyze it and the fact you can automate and use machine learning, artificial intelligence, and the fact that you can slice the network, those are — you know, a few people are writing about that now, a few people understand that. You’re starting to see a bit more visibility into why that makes sense. We’ve been a few years ahead of the curve, but O-RAN was pie in the sky a couple of years ago. We’ll prove that it works in Las Vegas cloud native architecture maybe was pie in the sky, couple of years ago.

We’re going to prove that it works and the rest of the world will follow. And you’re seeing that — you’re seeing O-RAN now been adopted around the world. The regulators understand it now where they didn’t have a great understanding a couple of years ago. So everything I think from an architectural point of view and Marc really is the architect here, I don’t know that you’ve spent a lot of time on. And you talked a lot of people I don’t know you change anything today.

Marc Rouanne — Executive Vice President and Chief Network Officer

No, absolutely, I mean the more, the more we play with it, the more we are impressed. When we are, of course, we have on-boarded a software, old telco software on the cloud. It’s fascinating of how fast it is, how we can make changes, how we can scale it, I mean just scaling it, telco network everything is frozen and you plan your investment 18 years ahead. We scale, we scale up and down during the day, during the night. We need a new platform to test a new private use case, we just scale it. It’s quite fascinating for engineers to see what we can do now.

Charlie Ergen — Co-founder and Chairman of the Board

And so I’ll just repeat what my opening comments last time, which is where we’re technically now confident that we can do technically, what we’ve talked about for the last several years, but we do have execution risk and I’m sure that things won’t go smooth whether it be, whether it be COVID supply chain or the actual execution of taking things from the laboratory and then deploying them in Las Vegas and multiple cities over the next few months. We’re going to have some — some stuff is not going to work and having been through this kind of scale before and we just had to fix it and then we found out how — we find out where that whether that strategy of picking the vendors who are committed to what we’re doing, is that — we pick the right team from a vendor community and do we have the right team internally do overcome the obstacles that we inevitably will face.

And we’re all confident today and then it we light up Las Vegas you know, we’re probably going to be less confident the next day. That’s the way my experiences and then we’ll dig in and fix the problems and you will be patting yourself on the back hopefully. But it’s execution risk and so you guys as investors. That’s a serious risk but we’ve eliminated what I always thought was by far the more serious risk, by 10 times more risky it was, could you architect a network. Could you enter the marketplace when there was a paradigm shift so that your technology, one up not only the — not only the incumbents in United States but we’re one up and what other people around the world are doing, particularly in China. So we’ll see.

John Hodulik — UBS — Analyst

Thanks, Charlie.

Operator

Okay, thank you very much. We will take the next question from Philip Cusick with JP Morgan. Please go ahead.

Philip Cusick — JP Morgan — Analyst

Hi guys, thanks. Hi guys, thanks. So I wonder a couple of things. First, can you talk about the commitment of Amazon in AWS to building the edge of their datacenter network out to host your applications. How close to your radio layer do those AWS hosted locations need to be? And then separate topic, I wonder if you can expand on the T-Mobile relationship. What’s the ideal outcome from the CDMA network dispute? Can T-Mobile help you transition customers or is it really too late with only eight months before they plan to turn off CDMA for that, and they, you really just need them to delay? Thanks.

Marc Rouanne — Executive Vice President and Chief Network Officer

Yeah, so let me take the one on the architecture, so everything north of the base station the site is in the cloud. Right. And then when we have different options for the edge. So for the sites but also for the private edge where the first opportunity is to use outpost. So we have different form factors, so what is outpost, it’s small rack that is on-boarding all the cloud with itself. So you can move that small cloud where you want all the way to you factory site or whatever. So we have that option with AWS. So we can put our software all the way to the edge.

The other option is that we are building together a next generation RAN acceleration what we call a DU, which is the compute part of the O-RAN, we are building that next generation with them, which is CREB Scout and Scout which will allow us to mix and use that technology in O-RAN as well. The first part of the deployment as you know is on FlexRAN with Intel, but we have also announced we are working with partners. We announced Qualcomm, now AWS on Generation 2 because speeds are going up. We are introducing massive MIMO, we are accelerating CBRS and a lot of other technologies and that’s what we are doing with AWS.

Charlie Ergen — Co-founder and Chairman of the Board

Second one with CDMA.

Philip Cusick — JP Morgan — Analyst

Marc, do we need to have more — do we need to have more out post construction? Do you need to have a lot more outpost construction by Amazon? Is that a substantial capital commitment for them?

Marc Rouanne — Executive Vice President and Chief Network Officer

Yeah. We have, we have plans with them. I mean, currently we have today, we’ve designed the network with the latency we require which is I’m not going to give a number but it’s way better than what you see in the current networks. So we have enough local zone situation and availability zones to create a differentiated latency network. But as the demand increases for extremely fast machine-to-machine, we are going to build and we’ve — AWS is going to build deeper and deeper into the network when the demand is coming up. So we have plans with them on that.

Charlie Ergen — Co-founder and Chairman of the Board

I mean I think the key there is, Phil, this is designed into the architecture, so we have to — we don’t have to bolted on. And so, like you know every time, every time you’re bolting something on you get heavier and heavier and heavier, you don’t have the right foundation eventually, you just get so much cost to bolt stuff on and try to make it work and so we can — my — I believe that the edge is going through the phone in your hand. So it’s going farther than even that even the most we will think about it ultimately but will be the phone in your hand. But we are architected to go all the way from the phone in the hand to the core and everything in between without having to bolt stuff on, if that helps.

Marc Rouanne — Executive Vice President and Chief Network Officer

CDMA?

Charlie Ergen — Co-founder and Chairman of the Board

Oh the CDMA. It is disappointing, I mean I very rarely get into the politics of this kind of stuff, but the CDMA issues where you saw our disclosure, I was extremely disciplined. I’ve always had high respect for management at T-Mobile and particularly their CEO. But I’d say — I was disappointed when he went on TV and really said a couple of really untrue things. One was that there was no big deal that he is turning the CDMA network off. So only, yeah so 10% of people didn’t have phones, only 900,000 people, no big deal.

First of all that number is way low as you’ve seen in our disclosure. I’m not sure exactly I don’t think he is looking at our books maybe he is, but I don’t think he is looking at books. I don’t know how he knew the number. And the second thing he said which was even shocking was that he had to do it because the FCC was requiring it and demanding it. I mean, I don’t know exact words, but that was the gist of it, but this is the same company that goes on Twitter and talks about dumb and dumber and how they are for everybody, they love everybody and they are for the consumer, they went to the Public Utility Commission in California under open said to be three years before they turn CDMA off like they forgot about that, once they got their merger done, they became, they look like every other big company, you as shareholders should be pretty happy because they are certainly getting a good return.

They’ve gone from synergy of $43 billion to now talking about $70 billion of synergy from the — and they’re going to go and turn off millions of customers particularly low economic customers. To me that’s hard to accept, and that’s just not the T-Mobile that I’ve seen before. And you know it’s they become the Grinch, right, we’ve seen this story before. I’d say Grinch — Grinch stole everybody’s — all the kids toys. Right. And they’re stealing everybody’s phone out of their hands and it doesn’t work any more, and it was because the Grinch heart was too small, they had a tiny heart. And so the un-carriers become the uncaring carrier and that’s a shame. Now the positive is that the Grinch, at the end decided to give the toys back and its heart grew 3 times the size.

All right. So I’m hopeful that T-Mobile, nobody will work harder than this company to try to make that transition smooth, but it will take — to answer your question, it will take more time, if they were to — if they were to give us several million phones today that we could use we still can do it in the next eight months, because we don’t always have the emails like customers don’t always have emails, they don’t have addresses, they don’t and were transient. They don’t always come into our stores. So it’s a much more difficult process. Verizon’s recognized that, they’ve extended their 3G shutdown, so you may shut down. I hope that T-Mobile will reconsider that but if not it will be a lot of material impact on our customers and certainly in our financials.

Philip Cusick — JP Morgan — Analyst

Sure. That might be the hardest I’ve left on a conference call in 20 years. Thinking about Mike as the Grinch on top of Mount Crumpit. Thank you.

Charlie Ergen — Co-founder and Chairman of the Board

Well know that hard is so small it’s funny because I just have to read that story to our granddaughter. And I get every time I get to clean the Grinch I kept seeing — being green, I kept seeing him in Magenta, I keep seeing the Magenta Grinch, and it’s just there difficult. I guess you learn a lot from reading to your kids, thank you.

Philip Cusick — JP Morgan — Analyst

Thanks.

Operator

Thank you for the question. The next question we will take is from Michael Rollins with Citi, please go ahead.

Michael Rollins — Citi — Analyst

Thanks and good morning. First, just following on your supply chain comment, is there a mechanism for you to ask the FCC and DOJ for an extension of your build out requirement and do you plan to submit a request for that? And then just secondly, taking a step back on the retail wireless strategy, can you share with us on how the postpaid and prepaid retail strategy has been evolved over the next 12 months, and I noticed in the 10-Q that you described after acquiring Ting that you’re offering that nationally and I was just wondering if that satisfies that component of your regulatory obligation to be a postpaid service provider. Thanks.

Charlie Ergen — Co-founder and Chairman of the Board

I’ll let John talk about the Ting acquisition and our postpaid plans. As far as supply chain, obviously, the FCC, the agreement we have recognized that their supply chain issues outside of our control that the timelines could be adjusted. But we don’t look at it that way internally. I mean you always have, there is always unforeseen circumstances, this one might be particularly acute, but we’re not going to let anything stop us we’re focused on meeting our timelines and regardless of what the challenges are and nobody is going to know, but that’s our focus. And we’ll have to reevaluate that from time to time, but we’re focused right now on Las Vegas and we’re focused on the 20% build out by June of next year. John?

John Swieringa — Executive Vice President and Group President, Retail Wireless and Chief Operating Officer

Yeah, this is John. Thanks for the question. Certainly, you’ve seen us acquire now three MVNOs in the past three quarters, certainly started with Boost and we’re working to improve the profitability of that business. We did acquire Ting and have since relaunched it as a nationwide postpaid service, starting to see some traction there. And we certainly do expect to close on Republic Wireless here this quarter. And I mean generally, we’re looking to expand our reach, expand our distribution for new segments to serve compared to where we started with Boost. And look, I think really started in the gas when we have access to our own network in the best products and services. And just to follow up on some things Charlie said earlier the handset market is a big factor for us right now.

We’re certainly making some progress, but we could potentially do more as the supply chain situation starts to open up a bit.

Charlie Ergen — Co-founder and Chairman of the Board

Yeah, I would say — you know that it’s not a bit later the CDMA point of view but it talked about a tiny heart that you’ve got it LG has shut down production, which was, which is our biggest vendor for phones for our customers and you’ve got a pandemic and you got a supply shortage of chips, right. And that’s the time that you decided you got to make $70 billion synergy and maybe instead of maybe $69.8 billion and I doubt you guys would sell the stock if they only made $69.8 billion of synergies. Right. So that’s particularly disappointing.

Michael Rollins — Citi — Analyst

And does this Ting national launch does that qualify for the regulatory requirements. I think it’s the year anniversary I believe after you closed the transaction with Boost, is that right?

Charlie Ergen — Co-founder and Chairman of the Board

The answer is yes, it would qualify.

W. Erik Carlson — President and Chief Executive Officer

Yeah satisfies the final judgment as it is, but we believe as we add Republic and other growth into the market, we will further reinforce that.

John Swieringa — Executive Vice President and Group President, Retail Wireless and Chief Operating Officer

But I think you’re being a little too annual on that. We got FCC obligations but what we’re really doing is build on a world-class network that takes telcom to the next level. We really, it really is an IT network that it looks like a telecom network that’s, it’s really, it’s really the same thing that happened in IT, IT world 20 years ago. So we work with the FCC to explain what we’re doing, why we’re doing, why this is important and the FCC is always going to make decisions in the public interest and from time to time, they may want us to go and it’s stronger in one direction and another and we’re always listening to their advice of how we can help consumers, because we are a regulated body and a company in that sense.

And so we don’t, I get it that retail, but we got so many. We’re going to be in retail postpaid in a much, much bigger way. But for us to make an impact a bigger impact. We have to have our own network we have to have the owner economics and we have to have a unique network that we can do things differently than other guys can do, and that’s where we can make the biggest impact. So that’s where you see.

Michael Rollins — Citi — Analyst

Thank you. And the next question is from Doug Mitchelson with Credit Suisse.

Doug Mitchelson — Credit Suisse — Analyst

Thanks so much. I love the — thanks so much. I love the Blockbuster analogy, it’s actually 101 point, Charlie, but —

Charlie Ergen — Co-founder and Chairman of the Board

[Speech Overlap] one thing about management and you make a mistake to try not to make that mistake again and I don’t think you’ll ever see us go into last year’s technology ever again.

Doug Mitchelson — Credit Suisse — Analyst

Okay. So a few quick ones for Marc, I think you answered this. With regards to Phil’s question but so I wanted to ask it directly regarding massive my mobile and because there some controversy over the last sort of couple of months here with the radio math through be informing other thing I don’t fully comprehend. Moving to the radio to distributed unit with Open RAN what you were saying basically is highly confident that O-RAN on your architected network will have sort of no issues do a massive MIMO that’s one.

I think second, Charlie. We look at the available financing and engage the potential pricing for the upcoming 3.45 structural auction and what’s your level of interest in expanding beyond 140-megahertz or the — or so that yeah I’m giving the confidence you’re showing out in the technology at this point do you think about future potential market shares versus the spectrum as the other folks have posted C-band. And then lastly, I don’t know if Jason’s on, but any thoughts on the managing the June 21s, that are coming to whether those are the sort of rolled forward or paid off with cash. Thanks so much.

Charlie Ergen — Co-founder and Chairman of the Board

Paul can answer the June question.

Paul W. Orban — Executive Vice President and Chief Financial Officer

Yeah, we’re going to be opportunistic in the marketplace. So we clearly have enough cash on hand to redeem both this year’s maturity as well as next year’s. So —

Marc Rouanne — Executive Vice President and Chief Network Officer

Yeah, you said it right, we on the massive MIMO, I just want to say a couple of things about O-RAN, we have seen an extraordinary investment, especially in the US ecosystem on silicon, we in the radio domain everybody has been dreaming of that for the last 20 years. Silicon has been the weakest point and what we see now wow, I mean it’s all over the place and O-RAN has driven that. I mean you can think of it, of all the IT and silicone industry of the US and abroad investing now to serve that market. I mean I’ve never seen that. So what we have in our hands for today, but also for massive MIMO is just, it’s just incredible and we’re going to leverage that and you know I’m making a bet that the existing vendors are going to use the same silicon that was brought to the market by the O-RAN because just don’t have the same in-house.

So that’s forcing them to come to the market as well. And for massive MIMO now there is a debate about massive MIMO and people are confused about O-RAN. One of the debate is that you need to pair the compute with the radio in order to manage to be informing and we agree with that. But O-RAN allows you to do that as well. Right. O-RAN allows you to bear the compute and the software and the radio in order to have advance informing so O-RAN can do exactly the same, if not better.

Charlie Ergen — Co-founder and Chairman of the Board

And then on spectrum. You know one hundred megahertz probably was table stakes up and though the T-Mobile, Sprint merger and last auction obviously we look at. We’ve been in every auction except the first two and once that auction and nobody else has been in besides Gulf company. So we always look at that, but we have advantages in our architecture, we have no spectrum to do up to grow and we’ll go from there. We’ll see what happens because people there are spectrum caps and spectrum limits and I would think that the regulators would look and make sure somebody doesn’t capture too much, which maybe gotten a little bit sideways, but we’ll see.

Doug Mitchelson — Credit Suisse — Analyst

All right, thank you very much.

Operator

Thank you. And the next question is Jonathan Chaplin with New Street.

Jonathan Chaplin — New Street Research — Analyst

Thanks. I have — thank you. Got a couple of quick ones. First, Charlie, you mentioned that the AWS deal materially helps you on capex guidance is still $10 billion. Does that mean that the sort of the scope of the network. Now that you’ve locked in this Amazon deal is bigger than you initially anticipated. And then you mentioned that Verizon is keeping their CDMA network around for a while. Is there any way to transition CDMA subs off of the Sprint network onto the Verizon network. I presume that they would be happy to have the extra traffic, if they’ve got fixed cost there.

And then thirdly you bailed on C-band auction pretty early in the process, what does that say about your sort of appetite to the 3 gigahertz band generally would — would you, are you likely to be a big player in the 3.45 gigahertz auction. Thanks.

Charlie Ergen — Co-founder and Chairman of the Board

On the auction question, look we, I feel confident that we have a fair to good feel for the value spectrum, as we just not in that particular auction, because of the structure of the auction and the dynamics of the auction that it went it went far beyond what a reasonable company would bid. And I think we’re, that was a place that was a level that didn’t make sense for our company. Obviously if we had hundreds of millions of customers and you had bet you’re, you were telling everybody that took the millimeter wave was the future and maybe that technically was a bit of a problem you had a different strategy. And I think that I think the guys — in regards to the price I think they’ll do fine on — I think that long term, they’re going to do just fine there going to be very happy that they have that spectrum.

So it will take, but it’s, it doesn’t set up very well, as the consumer that the $90 billion has to be paid by the company, unless the government is going to give the money back. So it makes it a less competitive industry out there. So I think it’s maybe even more important for DISH to be successful. And then I think with AWS and cloud in general we started, and Marc have been looking at it for a long time. You may or may not know but Marc used to be one of the big OEM providers. He’s always been frustrated by the pace and the technology and that’s one reason he came to work at desk because you could start with a clean sheet of paper and it was his dream to do that, was at is head how to do that any new, but a lot better than we did the issues with legacy and so I think that meetings that I’ve been in and stuff. We always had high hopes for cloud. We knew it could get there, but I do think the scale that the investment and vision of Amazon is maybe a bit larger than I mean you might expect speak that maybe could you had been working with them before.

Marc Rouanne — Executive Vice President and Chief Network Officer

So, yeah, if we were to start network by ourselves we would build one datacenter second and therefore we don’t see, we here we just expanding across the footprint, and in terms of what we can do implement in different regions in different available zone. This is, this is something we could never built nobody could have built on day one. It would have taken 10 years to do and same on the transport and redundancy on the, on the size of the compute the same on the elasticity of the network. When one of the things about the telco, that is really slowing down Telco is that they are over optimized, they never have more capacity than they need, we have limited capacity and for us it’s a luxury because then we can put additional software we can do automation, we can put things that no Telco would dream of because the older hardware is tight, they are running at 70%, 80% we scaled down up during the day, during the night. So it’s a different scale, it cannot be compared.

John Swieringa — Executive Vice President and Group President, Retail Wireless and Chief Operating Officer

So on the question around Verizon and CDMA. It’s really not a viable option, because you got to look at the bands and the devices where our customer base is today and the fact that it would be potentially even more disruptive to try and do the transition. So we’re very focused on the customer experience even as we go through this transition with T-Mobile today and that would just add one more variable. And actually one more complexity in that step. And so while in theory, it might be an interesting concept, it’s just not practically or operationally viable.

Charlie Ergen — Co-founder and Chairman of the Board

Not to mention it’s not plausible from a timing standpoint.

W. Erik Carlson — President and Chief Executive Officer

Well, you’re going to be doing all the year.

Charlie Ergen — Co-founder and Chairman of the Board

Yes you do it and try it again.

Jonathan Chaplin — New Street Research — Analyst

Got it, thanks guys.

Operator

Okay, thank you so much. We’ll take the next question. The next question is from the — going to be from Kannan Venkateshwar with Barclays. I apologize for butchering your name but go ahead.

Kannan Venkateshwar — Barclays — Analyst

Don’t worry, I butchered it myself sometimes it’s all good. So clearly a couple of questions, first on the DBS side, the DirecTV deal with private equity, I mean, it probably opens up another avenue for you to look towards monetizing that asset and you’ve been running this business of cash margins have expanded like you saw the results today. Could you just talk about if the AT&T plan makes it a bit easier for you to somehow look at divesting this deal, regulatory issues aside.

And then on the capital side. The AWS deals should help you on capex. And like you said I guess it increases your opex needs, but when you think about the overall capital means, I guess, it’s also a function of the cash burn as you scale the business in the first few years. So the $10 billion probably does not capture that could you give us a sense for what your total capital needs would be if you include the cost of scaling the business and the initial years of cash burn. Thanks.

Charlie Ergen — Co-founder and Chairman of the Board

Yeah, that — we’re not sharing that modeling today. But I’d say a couple of things, one is the $10 billion build that doesn’t all happen in the next two years. We don’t spend that entire 10 billion to meet our FCC obligations. So it’s, you will see it as we ramp up, you will see the ramp rate we get to and you’ll be able to, to model that out. We will just give you the overall objective of where we’re going, but it doesn’t all that $10 billion isn’t spent by June of ’23, which is our major milestone. So, but it does take us through the complete build out. So for the FCC.

So, and then the other part of the question, I didn’t write it down —

W. Erik Carlson — President and Chief Executive Officer

DIRECTV.

Charlie Ergen — Co-founder and Chairman of the Board

So DIRECTV, I’d just say the same thing, I think it’s inevitable those 2 companies to go together. There’s, it’s harder and harder for it would be harder and harder for regulators and people to, to make a case when gosh it is going to be 10 to 20 competitors now 50 million, 100 million subscribers. I think DISH and DIRECTV or price not even the top 10 video companies today and you run the risk that prematurely rural America and other people don’t have a choice. But our vendors are competing with us in Linear TV. So that’s an unhealthy place and so I think that’s, I think that’s inevitable. But certainly, certainly that will be something that gets scrutinized if it ever came to pass. That’s an AT&T question you have to ask them whether they have an interest in that. And now a TPG question.

Kannan Venkateshwar — Barclays — Analyst

And can I ask just one quick follow-up on the AWS issue. Was there ever a discussion around. Amazon putting capital into DISH as a part of this whole negotiation?

Charlie Ergen — Co-founder and Chairman of the Board

Man, we’ve talked about that for five years, and I just think that but I said this I mean mistake of doing 0% converted, which is essentially our selling shares a little bit less than $41 a share. I thought we get better execution on that. They want to do, they’re so committed to cloud, telco cloud, they want to be a vendor for everybody. So you should ask them, but they don’t. They’re not big in size here. I think they want to be a vendor for everybody in the world and they’re going to, they get a leg up to learn from us and and so forth. And we think we’re building the world’s best network and we think that’s pretty valuable and we think that that’s what more valuable than we are the market has us today. So we’ve been building value for the last five years every day is just not showing up as analysts that are on the call you guys I used to be financially as you want numbers you want to put in a model it spits out a net present value kind of thing. And you can kind of value a company.

We’re not quite there yet that we don’t quite fit that mold where bit conceptual of we’re one of four wireless players, you can’t nobody gave me connected without one of the four of us in a nationwide way, the wireless business is going to be a bigger, more profitable business for everybody in this business putting the three incumbents. Because everybody has to be connected. Facebook made almost $10 billion this quarter and I think 90% it was from your that data on your I’m not that smart. I’m from Tennessee, I can’t figure it out. I just know that not one Fortune 500 company can make money with that wirelessly connected not one of the big infrastructure companies they all rely on it, it’s a. This is a necessity and the technology is changing to provide more robust service for all the incumbents and us and opens up a lot of value added service for the incumbents and for us and we think we’ll get our fair share of that and when you start seeing that you’ll be able to put that into model and but we’re probably that first FCC milestone before everybody will be comfortable with the numbers to put in that model. I think we’re still bit conceptual for another year.

Kannan Venkateshwar — Barclays — Analyst

Thank you.

W. Erik Carlson — President and Chief Executive Officer

Operator? We may have time for one more question if somebody has got one.

Operator

Yes, sir. The next question will be from Rich Greenfield with LightShed.

Rich Greenfield — LightShed — Analyst

Thanks for taking the question. Two questions, Charlie, one for Walt who couldn’t make it today, but in 5 or 10 years was what will be generating more EBITDA for DISH, traditional consumer wireless or new 5G applications and what role would Amazon play in actually selling the latter. And then I’ve got a follow-up on the media side.

W. Erik Carlson — President and Chief Executive Officer

Rich, ASR, you guys are doing great, great quarter for you guys. Yeah. I think I think 5G applications will be the more valuable part, part of our business. But only because that’s where Marc like the tanker and he kind of runs the show when it comes to that kind of stuff. The Amazon look it, if you look at it this a question. You’d have to ask them, but if I look at it from a big picture point of view, they are business that is that does cloud, but it doesn’t do the last mile, it doesn’t wirelessly connected. But they have a huge base of customers that need to be able to connect the campus or connect the factory or connect the last mile or connect to their customer in a secure way and you’ve seen some of our white papers on security about how, what we’re doing, it’s more secure. We believe that incumbents.

They have a retail business and that retail business, you need to be connected to the order but that retail business also needs to deliver things too and they deliver by plane and by truck, those move, they need to be connected. They’re going to deliver by drones needs to be connected. They have devices in your home. They have, they want to, they want to connect your home would be a camera, doorbell or Alexa all those things need to be connected. They’d like to make those products better and safer and if you have, if you’re connected. And you can do that on your own private network, they can make their products better maybe get a leg up on their competitors.

So all of their businesses. And then, and then they are video company so last, live video, you need to connection to get it and whether that means storing it overnight or on the phone or watching TV or watching on tablet or watching on Alexa device. So all those things, and they’re making a moving to health care. And if you have the future of health care is people being connected. So that we can be monitored without having to go to the emergency room, save cost and give better outcomes to patients. So I don’t know again I’m fortunate enough that I am not smart enough to figure out all the stuff that you guys for I’m not smart enough to figure out every to write a report, not smart enough and I can’t speak English and you — all I know is like see trends, I can see where things are going. I can see what people do, I observe what people do and you just observe it and you just say let’s go where the — let’s go where things are going and less invent things that people don’t even know they need and let’s make it a great product.

And so all right. So Rich you have immediate follow-up and then operator, we’ll go to the press after that. Rich?

Rich Greenfield — LightShed — Analyst

Speaking of — speaking of where the puck is going, all of the media companies now they just redid their NFL deals, they’re all talking about the fact that they’re now going to simulcast all their NFL games essentially on streaming services that don’t require DISH or Comcast or DIRECTV or any of you, as they are really putting now even some of their most iconic content out of the bundle yet sub fees, keep or affiliate fees keep going up and retrans keeps going up. And I guess what changes this like, is there going to be someone going to draw a line in the sand Charlie and just say, this doesn’t make sense affiliate fee should be down 30% not up 5%.

Charlie Ergen — Co-founder and Chairman of the Board

Affiliate fees probably down 50%.

Rich Greenfield — LightShed — Analyst

But what makes that happen, who is going to make that happen?

Charlie Ergen — Co-founder and Chairman of the Board

I don’t know, I don’t know, I mean I think that the. I think it’s unfortunate, I’m very empathized for broadcasters particularly local broadcasters, lot of them are starting to have small businesses and growing their businesses they’re are not only having to deal with legacy linear TV but they are, they’re having to compete against their big owners and I think they’ve got to come up with strategic solutions to reinvent themselves and we’d like to work with them to do that but retrans is beat. Yeah. But we were the first guys as they had a regional sports with a regional sports of 2 or 3 years later, people figure that out retrans is beat Pete yes, it did I mean you’ve I said it. I’ve said it the retrans, is basically an NFL season-ticket subscription right.

I mean how the, how the Academy Awards do this year used to be must see TV. It’s just changed. All right, operator, we go to the press now. What did you say Rich?

Rich Greenfield — LightShed — Analyst

I was just saying retrans peaking is an important statement.

Charlie Ergen — Co-founder and Chairman of the Board

I think it’s captain obvious, but we’ll see.

Rich Greenfield — LightShed — Analyst

Thanks, Charlie. Thanks, Tom.

Charlie Ergen — Co-founder and Chairman of the Board

Operator, we’ll go to the press now.

Operator

[Operator Instructions] And our first media question comes from Scott Moritz with Bloomberg please go ahead.

Scott Moritz — Bloomberg — Analyst

Great, thanks. Charlie, if you would go back with me to the trial when the State Attorney Generals wanted to block the T-Mobile, Sprint deal you recall as a witness and you had to describe your business to the judge. Was this Amazon Cloud partnership part of that discussion?

Charlie Ergen — Co-founder and Chairman of the Board

Amazon specifically was not. I wouldn’t give you testament, but obviously the technology in the paradigm shift in what we’re doing was intended to the judges credit, which I think is people on this call can’t understand what marc or I was saying, but I think you understood the world was going to go to different place. As you know, Scott, it was a closed proceeding.

Scott Moritz — Bloomberg — Analyst

Got it, thanks.

Operator

Thank you. And our next question will be from Andrew Fitzgerald with WSJ please go ahead.

Andrew Fitzgerald — WSJ — Analyst

Yeah. Hi, Charlie. Two questions if I could. First of all say this partnership with AWS will affect capex. Could you describe is it necessary, is it dependent on AWS building more infrastructure closer to the edge, closer even to the tower and do you have any idea on if that’s a commitment on like what kind of time frame AWS would be working on.

And then just second. I didn’t see in the following slide. Sorry if I missed it. What is the company’s head count today and where do you see hiring going over the next year.

Charlie Ergen — Co-founder and Chairman of the Board

Okay. I think Marc answered the first part of that question, but maybe you can summarize for Andy.

Marc Rouanne — Executive Vice President and Chief Network Officer

Yeah. So we have, we have designed a network with AWS and datacenters they have today do what we call the availability zone and local zone together with the transport, they have sufficient for the first phase of our services and the latency that we have defined with them, and that latency is is already much better than what can we don’t today with the 4G plus 5G minus networks that we see in the US. Now when over time we expect the demand to be for very specific applications and some customers to ask us for specific latency in that case we can push up, push down our post or other sites with Amazon and we have discussed that. So we have a path forward for that when needed.

Charlie Ergen — Co-founder and Chairman of the Board

And in terms of headcount. I don’t think, I don’t know that we’ve disclosed that. But we certainly have thousands of people working on — the biggest hiring probably has been deployment over the last 6 to 9 months probably in deployment. But, and then the other thing that you don’t have visibility to is our vendors. I mean we got over 10,000 people probably between our vendors working on you know what we’re doing. So there is a tight community that wants to do this happen. And, but we’re happy to be working with the people, some big companies some small companies and it’s fun. Because we all want to see it happen. We all want to make it happen. And everybody, we’re all convinced we can do it and we’ll see how good we are when we start work into the problems.

Operator. I understand there’s one more press in queue, so we’ll go to that and then close up.

Operator

All right, thank you. We’ll take the next question from Mike Dano with Light Reading.

Mike Dano — Light Reading — Analyst

Yeah, hi, thanks so much for taking my question. I appreciate it. Two quick questions. One is that, can you talk about your plans for the CBRS spectrum licenses that you have. My understanding is that the radios — the radios may not support that spectrum band. And so I’m wondering if it’s going to be deployed at a later date or kind of what the plan is there and then the second totally separate question is, you’ve talked about having silicon from Qualcomm and Intel and now I guess with the Amazon grab silicon are you planning to deploy equipment using that. So all of those different kinds of silicon or are you going to pick one and stick with that or like, how does that work?

Stephen Bye — Executive Vice President, Chief Commercial Officer

Yes. So I’ll touch on the CBRS to start with and then hand to Marc. But in terms of CBRS the radios that we’re currently deploying for our macro build and for for example for Las Vegas, the other markets that we have underway. Those radios don’t include CBRS and we are working on another generation of radios that will incorporate CBRS as we go forward and what’s important there is a lot of the traditional radios to date for CBRS are really being LTE and 4 G radios or band 48 and we’re actually moving towards in 48. And so being sort of 5G native, we need to see that next generation of radio development to happen.

The other thing that you probably seen is that we have filed to look at different power levels and increasing the category on the power level up on CBRS as well that would give us far more flexibility in a much more efficient build using that spectrum. And so we’re working through that and that will have an impact in terms of the supply chain. So with that, I’ll just hand it over to Marc.

Marc Rouanne — Executive Vice President and Chief Network Officer

Yeah, so the silicon, so today we are deploying a 4G to our network. We’ve 100-megahertz. So we are happy we are FlexRAN architecture, it’s powerful enough, we’re using Ice Lake, we can include order processing. We have good acceleration guards now when we go to massive MIMO when we go to CBRS when we go to other banks. We expect to need more acceleration and more integrated silicon and that’s our second-generation, that’s when we will make the choice for additional silicon.

You were asking about Qualcomm and Gravitant and on top of FlexRAN, you have to think about the diversity we’re going to use for small cells for example indoor distributed indoor I’m pretty sure that the type of silicon we’re going to use will be different for — certain very identity massive MIMO I’m pretty sure that we would have integrated DU and RU and we’ve different type of massive accelerators. So I think we will then do have one silicon per use case. But when we diversified the use cases I see different requirements and we are working very hard, we’ve the software vendors to put an abstraction layer on top of the silicon, so that we can pretty much port our software on top without much changes between the different blocks of silicon.

Mike Dano — Light Reading — Analyst

Great, thank you.

Charlie Ergen — Co-founder and Chairman of the Board

All right, thank you all. Operator, that will complete the call. Thank you.

Operator

[Operator Closing Remarks]

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