DISH DBS Corporation (SATS) Earnings Call Transcript & Summary

Welcome to the EchoStar Corporation's investor call. [Operator Instructions] Please note that today's conference is being recorded. At this time, I'll now turn the conference over to Mr. Paul Orban. Mr. Orban, you may begin.

Good morning, everyone. Thank you for joining us. Before we start, I need to remind you of our safe harbors. During this call, we may make forward-looking statements, which are subject to risks, uncertainties and other factors that could cause our actual results to differ from historical results or from our forecast. We assume no responsibility for updating forward-looking statements. For more information on factors that may affect future results, please refer to our SEC filings. With that, I'll turn it over to Hamid.

Thank you, Paul. Good morning, everyone, and thank you for joining our call. This is a very happy day for us, happy for our shareholders, bondholders, partners, customers, employees. And we only have good news to deliver today. We are about to describe to you a set of transaction, a suite of transactions that, in our view, is one of the largest and most comprehensive, simultaneous, out-of-court M&A and balance sheet restructuring to date and we are proud of the accomplishments in this regard, and I want to walk you through it. I think you will be able to see the slides. I will refer to the slides by number and you will have to click yourself to align it with my words. On Slide #3, you will see that we have 4 different transactions. These transactions are independent of each other, and I'll describe them. So the first transaction at the Pay-TV level, and our Pay-TV is the DDBS entity so that's DISH DBS or DISH Direct Broadcast System entity. At that level, Pay-TV level, we have a $2.5 billion stand-alone financing that was funded today. So that funding has been achieved. That funding will be adequate to pay all of our obligations in 2024 maturity that comes up in November in addition to other payments, interest payments and other corporate needs and pushes off into 2025. That's a standalone already funded facility. In addition to that, we are announcing a sale of our Pay-TV business, DISH TV business to DIRECTV. In that, that sale is conditioned on an exchange offer for the existing bondholders in that facility, in that entity, so it's conditioned on that. We will be elaborate more on that as we go through the presentation. That's a very large transaction. And ultimately, it also requires a regulatory approval, and we'll talk about that as well. So that is the second independent action transaction. And then we come at the parent level, above DDBS, at SATS level, we have raised additional capital and extended maturities of existing convertible bonds we have had in 2025. So the way to think about it is that we have two sets of convertible bonds: one set maturing in 2025, once set maturing in 2026. Those two added up roughly about $5 billion. Those bonds -- those converts will push the maturities out and actually splits into convertibles and straight notes. They go to '25 and '26. We'll describe all of this, again, further. And then the same group offers additional $5.1 billion of spectrum-backed financing. So that transaction is about $10 billion transaction in combination of pushing maturities out of the existing converts, in addition to $5.1 billion of additional capital, additional notes. Then the fourth segment is $400 million Class A common stock pipe that is also spoken for and will further enhance our cash position. So really independent transactions in a massive way changing our capital structure and focusing our business going forward. So the next slide, Slide 4, really captures the highlights of what we try to achieve here to position ourselves for long-term success. First, we have refocused our portfolio on the growth of our wireless and satellite connectivity markets. If you think about it, our stock until now have been a mixed combination of growth, which is our mobile business and our satellite business; and then declining -- significantly cash generating, but declining business on our Pay-TV business. Now by the fact that we are breaking the two, the remaining business of EchoStar becomes a growth profile and more attractive to growth investors. If we look at the second bullet on the list here, we raised $5.5 billion of capital to invest in our mobile business and continue to build and enhance our nationwide 5G Open RAN network and we also can use the same -- some of the funds for general corporate purposes. This will address all of our near-term maturity and, in fact, reduces any financing needs for the next 24 to 36 months, and even then we can address those financing needs at the end of those windows -- at the end of that window with additional firepower from collateral that we have used to raise the $5.5 billion. So once this transaction is completed, the DBS transaction is completed, it also eliminates all of the remaining intercompany obligations, which includes a $2.8 billion spectrum-backed obligation that had encumbered our 3.45 gigahertz of spectrum, of C-band spectrum. That spectrum now becomes unencumbered and can be used for strategic or financing purposes. As part of this deal, we also get access to approximately $1.5 billion of cash flows all the way to September of 2025 while we are waiting for regulatory approval -- expecting to be waiting for the regulatory approval of the transaction, we can -- the parent can receive about $1.5 billion of additional cash coming out of the Pay-TV business. Moving to Slide 5. This is the details of the 3 transactions or 4 transactions we talked about. It significantly delevers our company and provides capital for us to strengthen our position as the #4 U.S. facilities-based carrier and become a much stronger competitor in the market. Let me walk you through the transaction, which is the sale of our DBS to DTV and our financing for the $2.5 billion. On the left side of the page, we have the financing of $2.5 billion is purely centered based on the cash flows and subscribers that are within the DBS business. That's a $2.5 billion financing provided by TPG's Angelo Gordon arm and is at a rate of -- blended rate of 11% for the first 12 months and 11.5% after. This would be earmarked for paying the $2 billion of senior notes that are due in November of 2024, an additional $500 million for other corporate purposes, as I mentioned. Now once the transaction closes, that $2 billion will be obviously ported to the new company, the new DTV combination, so that leaves EchoStar a cap structure. And the $500 million of the $2.5 billion will be amortized through end of September 30, 2025, which is the -- or close to the time line that we hope and expect regulatory approval would be offered or given, granted for the combination. So that's a fast amortization of the $500 million, but the $2 billion would remain import to the new company. Now the terms of the sale of our Pay-TV to DIRECTV are as such that we are -- DIRECTV is acquiring our Pay-TV business for a headline price of $1 and assumes all of the DISH DBS net debt at close. We, as I mentioned, in this period between signing and closing, DISH DBS is entitled to transfer about $1.5 billion additional cash to the DISH parents and intercompany receivables will be eliminated. There are footnotes here that explain exactly what those receivables are. But I mentioned already that, that's $2.8 billion of receivables based on a tranche B of a lien on our 3.45 gigahertz of spectrum, and in addition to $1.5 billion of receivables from the parent -- from the DNC, which is the parent of DDBS, will be eliminated. And all of this is conditioned on the exchange producing at least $1.568 billion of reduction in DDBS bonds and also regulatory approval. Now that exchange offer will produce that $1.5 billion -- approximately $1.5 billion of discount is structured such that all of the DBS note holders can participate, except for obviously the 24s, which we are paying in full. And there are two steps in the exchange process. The first step is that it has to reach a 66 and 2/3 acceptance or participation. And once that level is reached, the participating note holders will receive almost identical notes as interim notes. They will trade their notes that they have now to almost identical in terms of maturity and coupon, but will be more senior. They'll be senior to the non-participating notes, so that is the only benefit at this stage if we only reach 66 and 2/3, but not reach the total amount expected in terms of reduction of $1.5 billion. Then the participating holders will, at that point, become more senior to nonparticipating going forward. But no transaction will take place in terms of M&A. If the second step is reached, which is beyond the participation of 66 and 2/3, we also achieve $1.5 billion, approximately $1.568 billion of principal reduction. Then the papers will have the automatic conversion right through the new DIRECTV notes. And at that point, the M&A will take place. Now moving to the right side of the page, let me talk about the transactions with the converts. Again, the left side, we spoke about what happens with the Pay-TV business and our legacy business as part of M&A and exchange. Now completely independent that, we're moving to the right side of the page and talk about the DISH Network, additional new money coming on our balance sheet. This is also includes an exchange, but it's -- a large portion of our convert note holders have already participated and provided their consent, greater than 85%. We do require 90% at our discretion for that exchange to take place. But 85% have already spoken for. This is a combination of '25 and '26 convertible note holders. And they would -- they are committed to exchanging to reduce face value and extending their maturities, as I mentioned. If 100% participation is achieved, $4.9 billion of convertibles would be exchanged. In that exchange, they will receive -- they would exchange for $2 billion of new converts and $2.4 billion of notes issued by EchoStar, and those will be dated 5 and 6 years out in maturity. All of this is based on using our AWS-3 and AWS-4 spectrum licenses. So these are secured by two of our most valuable spectrum pieces. I mean, that is the exchange part of the existing DNC converts. Now we also get -- for the same collateral, we raised additional $5.1 billion of financing and based on senior secured notes with 5-year maturity. In addition, there is a Class A common stock pipe of $400 million based on closing price on Friday, September 27, 2024, just this past Friday. And this is conditioned on closing DNC exchange offers and a new EchoStar spectrum senior secured notes. So all in all, when you look at it, about $7 billion is reduced from the total consolidated debt. And in the presentation later, we'll walk you through how that number comes down from 21 to a 14 level. In terms of refinancing needs all the way through end of 2026, from what we have today, $11.6 billion of consolidated refinancing needs will be addressed that we would be looking at today if these transactions did not take place. And our cash on balance sheet will be improved by $5.5 billion as a result of the new increases that I just mentioned. Now moving to the more picture -- the strategic picture of the business on Slide 6. I as I mentioned it earlier, this focuses our business on our growth-oriented part of our business, which would be our wireless business, both terrestrial and space, and our satellite business. We have the nation's only and first Open RAN 5G broadband network. We sell our product, our services on the Boost Mobile brand. We have blended, merged postpaid and prepaid offers into one brand, the first company in the U.S. that is heading in that direction is doing that. Our network is a state-of-the-art and it is virtualized, no legacy. I think these are some of the advantages we have. We are already providing coverage for greater than 250 million pops, population, for broadband connectivity and greater than 200 million for voice services in more than 100 markets. We have significantly larger than 20,000 sites in commercial service, about 5 million subscribers today on one mobile site and we provide nationwide coverage beyond using LTE service, 4G service from roaming partners. So AT&T and T-Mobile as roaming partners, we do have nationwide coverage that gives us 99% coverage. One could argue the best coverage in nation given our roaming partner relationships. We do have significant strategic spectrum assets. We have it in low, mid- and high band for terrestrial purposes as well. We have global rights to S-Band spectrum. And this spectrum is highly desirable for use in directed satellite connectivity, so NTN, 5G NTN standard, as it's called. NTN stands for nonterrestrial network in 5G as of Release 17, and now Release 18 is supporting connectivity of mobile devices directly to the satellite on a 5G type of interface, essentially eliminating the distinction between connectivity to a tower that is next to you or a satellite that is above you. We do have global coverage for that through our own spectrum ownership over the United States as well as rights to the same spectrum around the world, the only company that can make that claim. And so we do intend to use that strategic asset to its fullest. To this day, we have spent greater than $30 billion in spectrum assets. We have 40 megahertz of U.S. S-Band spectrum and 30 megahertz of S-Band rights around the world, being well positioned to take advantage of that strategic position. We are also a global leader in enterprise managed services on our Hughes satellite side of the business. We have been recognized by Gartner as a leader, in the Leader quadrant. We serve more than 570,000 commercial sites through our VSAT connections. We are in 43 countries in terms of our product and services, managed services. And we have -- we serve more than 1 million broadband subscribers today. We are recognized as a force in terms of our ability to deliver products that are unique in the space, in the satellite industry. We provide the ground structure -- ground stations and software for OneWeb, one of the largest LEO systems in the world today as well as many other satellite providers and technologies and networks around the world. And so we continue to develop that business in the enterprise side and international satellite services. Moving to Slide 7. Let me speak a bit about what is our network, the Boost network. We are the world's first 5G Open RAN cloud-native network. Everything runs on the cloud. The advantages are vast, and I will not take the time to describe that today here. But not having any legacy, being software-based, being able to move within a matter of hours from one radio provider to the next or optimizing the network just simply because everything runs on a cloud-native network has tremendous advantages that we have yet to take advantage of in the marketplace. We have brought together postpaid and prepaid. We don't believe form of payment is a product. We believe form of payment is a preference. And we will make this much more friendly and visible addressable to the consumers in the market who do not want to be divided into a binary categorization regardless of their credit rating or the preference of payment. We have now a competitive device portfolio. Every device that we have introduced this year has been -- is compatible with our network, and we have devices from Apple, Samsung, Motorola and our own in-house brand, Celero, for every price point and every preference of the customers. We do have digital presence, a strong digital presence. We have branded retail and national retail distribution. You could find our products anywhere from Amazon to Best Buy to Target and other branded national retail distribution as well as our own thousands of shops and our own digital presence online at boostmobile.com. We recently launched our product within the Apple retail stores, retail presence in the market as one of the only 4 brands that appear there next to T-Mobile, Verizon and AT&T, which aligns us much more in the future with them in terms of our market positioning and strengthens our relationship with Apple, which is already incredibly strong. We are the only carrier that offers integrated device offers on amazon.com today, and we continue to develop that further. We do have a modern IT systems underneath supporting the operation today, which we think is a significant advantage as the market continues to focus on innovation. And we can lead that trend using our agility and the systems that are designed for that type of environment. Moving to Slide 8, the composition of our portfolio now once the transaction completes, if the transaction completes for sale of our Pay-TV to DIRECTV. You could see that we stepped significantly down on the total volume of our revenues, but we become a much more growth-oriented revenue profile and we'll have a much more growth profile in our revenue base. Primarily, our revenues will come from our mobile business. But we certainly have, as I mentioned, a big portion coming from our broadband and satellite services, all of it focused on fast growth and value creation. And moving to Slide 9. We try to paint for you a picture that shows how would our cash and debt position change once and if the transaction completes for a sale of our Pay-TV business. You could see that on the pro forma side transaction on the right side, significant additional liquidity of about $6 billion all-in cash on balance sheet. The consolidated debt will drop $7 billion, from $21.6 billion to $14.6 billion. I will walk through that calculation on the next slide in a minute. And then our maturity profile, that would be through end of 2026, will come down by $11.6 billion, from a whopping $13.1 billion down to $1.5 billion. And then the debt including intercompany obligations that have -- from the DNC level will go from 7.5 -- 17.5 to 8.3. There's a significant amount of intercompany obligations that we removed, which unencumbers our assets and also allows us to independently move forward on the growth side of the business. Slide 10 will show you how the maturity -- how the debt profile will be impacted, reducing our debt obligations by $7 billion. I won't necessarily need to go through every step. But quickly, we had the $21.6 billion to start. We -- obviously, the DBS notes will leave us the $4.9 billion of obligation for converts of '25 and '26 will also be refinanced, and that will just move on to $2 billion of new spectrum secured exchange convertibles. Then we have spectrum secured exchange notes, $5.1 billion of additional new capital. And then we obviously have PIK interest that has to be added. And then so that gets us to a $14.6 billion, very quick walk-through to show the $7 billion of debt leaving our cap structure after the transaction closes. The new maturity profile now, as shown on Slide 11. The 2026 is a Hughes -- is actually 2 tranches of Hughes that comes due in 2026 to the tune of $1.5 billion. We do intend to refinance that when we get the Hughes in Hughes within the same daughter company. So that will just be refinanced using the cash flows of that business, which is healthy and growing. The 27 maturities of $3.5 billion, we can certainly overcome using the same collateral that we have used. There's plenty of headroom. And there's some details here that shows we have access to and permissions and rights to increase leverage, if need be at that time to refinance the 2027 maturities. And then obviously, then we are pretty much towards the end of the decade before our maturities become significant. In summary, on Slide 12, I just want to repeat that this refocuses -- this has been a tremendous amount of work to put ourselves in a position to win and create value to growth. We are refocusing our portfolio on the growth part of our business. We will have access to significant additional capital to develop our Boost Mobile nationwide 5G O-RAN network, a very competitive network that has tremendous technological advantages that we have not yet put to use, and we are intending to do that. Our maturity profile becomes much lighter and gives us the runway of at least 24 to 36 months. And much of our -- in fact, all of our intercompany obligations between the DISH network and the parent company and the parent entities will be eliminated, unencumbering our spectrum, our C-band spectrum at 3.45 gigahertz. And we also have access to approximately $1.5 billion of additional cash that will be passed to the parent between now and September of 2025, where it should be close to the time window that we expect to receive regulatory approval. At this point, I'll stop presenting the slides and open it for Q&A.

[Operator Instructions] And our first question today will come from the line of Walter Piecyk with LightShed.

When you talk about the 24 to 36 months, that seems to be kind of what a lot of people were looking for anyway in terms of the burn. Does that imply that you're not planning on stepping up either CapEx? I know you have a deal with the FCC, but even on marketing to try and get more subscribers on the network? Or is there some increased aggression implied in there? And then just in terms of financial terms. I think the way I'm looking at it, I guess, if it's AWS-3 and AWS-4, you're using it for the convert and the new money, that's $10 billion, $0.50 per megahertz pop, that's pretty close, I guess, to your cost basis of $0.67. I'm just kind of curious if you can talk about the implied kind of loan-to-value metrics on that? Is there -- because I think in your prepared comments, you talked about the fact that there was more capacity under AWS-3 and AWS-4. Maybe I misheard that and you were just referring to the [ 3.4, 3.5 ] stuff. But if you could give us a sense of kind of the debt holders implied value that they're willing to allow you to borrow $0.50 a megahertz pop off of that bucket?

Okay. I'll try to unpack that into a couple of questions. If I missed part of it, please reiterate your question, Walter. So look, the 24, 36 is just a rough guideline we put in here. Much of the information I'm presenting to you has been work in progress and has recently come together plus the fact that we have had excellent news from FCC in terms of supporting us becoming a better competitor, a stronger competitor in the marketplace. All of this has come together very recently. We have not done a complete business, redoing of our business plan based on the additional new resources we have. And so that's something that we now can put our focus on and be much more precise about what we are going to do. But we are playing to win in a wireless business. There's no doubt about it. You asked me -- your question was whether we're going to be aggressive? The answer is yes. Are we playing to win? Yes. May that require additional financing and funding? It might. We've not at the point that we can disclose exactly what our road map for investment and spending will be, but we clearly are expecting and hoping to work towards a healthy cash-generating business in as fast as window as we can. You've got to balance that in terms of how much of the money goes towards developing the market, how much goes towards capturing. And so there's still work to be done there, but we definitively are playing to win in the mobile business. In terms of loan-to-value, I think that the way to think about it is that our spectrum in terms of what we paid for it is not really relevant. What matters is that what the market values it as a fair market value, and we have a methodology to calculate that. And in fact, we do already know what the current rate that we have, valuation of that spectrum is, as we went through our recent evaluation. Because of our merger of EchoStar and DISH, we have a very good understanding of the value of that business. So do our convert holders, they understand that. And based on the value of that spectrum, we also have a 37.5% loan-to-value opportunity. We are nowhere near that at the moment, so there is a very significant amount. In fact, $13 billion would be accessible to us today through the agreement we have made and that can even go to $15 billion in the next couple of years based on another assessment of the value that is spectrum. And the spectrum value goes up every day. There's no -- has never been a case that it comes down. It's a very limited resource. We have access to excellent spectrum. And we -- so therefore, I think we have plenty of headroom. We're not planning to misuse that or use any headroom that is not necessary. But if we discover that growing and developing our business to its fullest potential requires additional capital, we have no restrictions on not being be able to access it.

Got it. So just to -- so I understand this clearly, you're using $10 billion of what today you think is $13 billion available or $13 billion to $15 billion, that can theoretically go up as spectrum value goes up. And then in addition to that, you also have the 3.5, which we can theoretically -- if this is implying $1.50, $2, whatever, make our own assumptions on 3.5. Do I have that general math right?

Generally, correct, yes. And as I said, we have plenty of dry powder still, plenty of dry powder. And we only focus on what we think we need at the moment. And I believe we're going to use that very prudently, very effectively, much more efficiently than the other providers, operators may be using their capital. We are focused on wireless. We're not focused on -- at the moment, we're not focused on other infrastructure, fiber or anything else. We do have a national roaming that -- and the FCC recent ruling that helps us focus our builds as opposed to spread our money in areas where it does not help the consumer, does not help to market, provides multiple coverage -- overlapping coverage in areas where no one benefits and allows us to kind of focus on where we can win and reduce the market price and become a more effective challenger. So all of this is in play. Long way of saying we have access to it, but we're going to be very prudent in uses of capital and making sure that return on that capital is very healthy.

I would add, this is Paul. We do have the ability to go up to 60% LTV using junior debt on that spectrum, too.

Okay. Can I just sneak one last one in. Are you -- I mean, this gives you, again, now it sounds like more than 3 years if you tap all that stuff. Are you done with looking for a strategic transaction? Because there's certainly opportunities, I would think, particularly if the administration changes with network sharing, spectrum monetization, things like that. Is this -- do you consider yourself done at the moment? Or are there more things that you're exploring?

The first things I have to do, Walter, is get 2 hours of sleep before I can start thinking about the future. This has been, by some accounts, and I'm not an expert, but if I listen to some experts that have been in our circle, this is potentially the largest M&A restructuring and new debt raise in the history that they can remember in -- or stock market history that they can account for. We kind of think of it and I think of it as landing 2 or 3 747s on the same runway at the same time without crashing. It's taken all of our energy to get here. But we're not -- I'm not expecting, as management team and with leadership from Charlie's vision and Charlie's insight, who has been a driver of all of this, that he's been creating this opportunity for all of us. With that vision and our drive, I don't expect us to sit here and do nothing; however, there is nothing that I can report today. I just want us to position ourselves. We have worked very hard to position ourselves to win. And now is our job to go try to execute. I think of executing on an organic basis is our priority #1, obviously. But we are always looking for how we can deliver additional value to our shareholders and bondholders and employees and customers. And I think we were positioned to take advantage of many opportunities, one of them being in this direct to satellite. I think the direct to satellite to us is very dear to our hearts. I came from -- I started my career working at NASA for a few years, and that was an S-Band satellite project, Voyager 2, I was a telemetry engineer there. And the passion is that Charlie has built -- Charlie made the satellite business what it is today. And we both have a strong passion for that and we have spectrum rights and opportunity to make direct-to-device a global business. That's not necessarily organic all. And so we -- for instance, I just highlighted for you, one vector that is not in service today or out of our operating business today, but we are best positioned in the world to go take advantage of.

Our next question is from the line of John Hodulik with UBS.

I just have a few questions -- follow-up questions on Walt's questions. First of all, and you alluded to some of this, but any change in strategy we could think about now with all the new liquidity you have, either from a network deployment standpoint or a sort of go-to-market strategy? And then second, just following up on the spectrum comments. Obviously, you have a great portfolio of spectrum. Does it change your view on the value or the need for the 800 megahertz spectrum that is potentially still available there and held by T-Mobile?

Right. The first part of your question related to any change in strategy for us in terms of market deployment. Look, we -- first of all, I want to say that we will meet -- given the profile of liquidity that we have today, we would meet every obligation to FCC, every obligation that comes with our spectrum ownership going forward. We do not intend to miss any obligations or any deadlines immediate in the -- immediately or longer term. This is a very reassuring statement. I think that protects our assets. Now beyond that, I think, our mindset is, what is the use of best -- what is the best use of our next dollar? Is it better for us to go above and beyond in terms of coverage, putting that dollar into building infrastructure in order to have owner economics on net? Or is it better to put that next dollar in terms of marketing acquisition of customers, whether it be marketing, whether it be providing subsidy devices. All of that then becomes a judgment call and based on what is the best return on that dollar. So I can't tell you today that we definitively are going to spend more on the network or definitively more on customer acquisition. I think there's a right balance. There's nothing good comes out if you have the greatest network on earth that covers every corner of every neighborhood, but you don't have enough money to get great customers. The reverse is also true. You cannot get great customers if you don't have fantastic coverage, which we have today. So the good news is that we do have the ability to roam -- in nation roam on a couple of other networks, and that takes some pressure off of us in terms of allocating our capital to infrastructure versus go-to market. We will take advantage of that to the best of our abilities to judge, which will return better value. I won't comment on the 900 megahertz or our position towards the spectrum. I mean, those are things that I think we will discuss when -- if and when we have any plans to take advantage of any situation. But right now that's not something I can comment on.

Our next question is from the line of David Barden with Bank of America.

First, congrats on getting this amazingly complicated transaction pulled together. I guess, Hamid, maybe could you synthesize for us the slides, especially Slide 8, where we kind of now see in greater black and white the mix of businesses that you will have on a pro forma basis and the kind of new balance sheet and how this all boils down to the cash flow run rate that the company -- that we should expect the company to have in 2026 after the close, that would be appreciated.

Yes. Look, I mean, the chart is relatively self-explanatory. It obviously talks about revenue. It does not -- we're not showing the cash flows here. The chart is meant to show that -- if you look on the right side, we definitively are now -- will be post transaction, if the transaction actually closes. Post exchange, successful completion, we will become a growth company and a growth stock for most part. Everything on the right side of the page speaks to opportunities to expand our revenue base and, over time, obviously expand our cash flows. In the short term, we obviously will not be cash flow positive for some time. I think I'll reiterate some of the answers that I gave earlier. We have not done a complete replanning of everything today based on the new information we have in terms of how much we were able to achieve on exchanges, in terms of the level of participation we have for issues that we talked about in terms of the new capital. And also the news that we have from FCC, gives us a little bit of new parameters and flexibility to play with our -- with the capital that is available to us. So I am not in a position today to paint a picture for you as to how the profile of our cash flows will be and how soon we'll get to the point that the cash flow is actually breakeven. That is something that we're going to focus on. But the only thing I committed is that we're going to be very prudent in uses of capital. We understand just the fact that we just dealt with a significant amount of cash flow issues that we were facing. We understand the value of getting our business to the point that it's self-sustainable from an operating perspective. But there's a balance. You can't go there very quickly because then you lose all the possibility of growing your business and capturing value for all the constituents in this picture. There's a balance. Give us some time. We need to work on that. And then over time, we'll disclose additional information when we have it solidified.

And if I could follow up, just one more question. So you made it very clear that the convert note holders are 85% onboard, and that looks like it's moving in the right direction. Could you elaborate a little bit more on how your relationship with the DBS note holders is right now and how this transaction kind of comports with the kind of back-and-forth lawsuits that you've got going on with that set of investors?

Right. Look, there has been often discussions and interactions, and we understand the position they had, which we believe first of all that, that was not based on any actual legal restrictions, or in our case, we don't believe that anything that took place was done without complete legal rights to do. So we are very comfortable with the situation. Obviously, as you see with the level of participation that we have had in all of these transactions. I think the market speaks to the fact that we have had the right to do what we did. And in fact, it was the right thing to do as we are now everyone benefiting, including the bondholders who brought those claims. I'll speak to that in a minute. I think all bondholders, our shareholders, our employees and consumers more than all will benefit from this transaction. So this is -- we believe we have created what is win-win-win. There's no constituents in this picture that is negatively impacted. Let me be specifically focused on the DBS bondholders. I think the DBS bondholders now are looking at a very pleasant situation, where they have the opportunity to move on to something that is much more secure in terms of cash flows in a combined business. The combined business of existing DTV and future DBS coming together, it will be about 2x levered and falling. It will have a very attractive bond rating. I think that the bondholders were looking at a much rosier picture going forward. Plus the fact that if the exchange takes place, they get to step up on their coupons much sooner than the maturities. I mean some of these coupons, if you look at -- some of them are going further out. Anyway, I don't want to talk about all the benefits of that exchange. That's all highlighted in the exchange memorandum, and we'll let the bondholders decide for themselves. But clearly, I think, we are offering something that, in our view, is highly attractive and I hope they recognize it and see it. They do have an opportunity to work through the exchange period and get themselves comfortable with it. I'll stop right there. I can't speak much more to it simply because that's a legal offering, and very specified -- very detailed specified memorandum will be available for them to go through, and you obviously will have access to that as well.

Our next question is from the line of Jonathan Chaplin with New Street Research.

I'll add my congratulations for getting this massive transaction across the go line. Two questions for you, Hamid. First, wondering what's happening to the 12 gigahertz licenses in this transaction? Are they all traveling with the DBS assets and going to TPG DIRECTV? Or do you keep access to a portion of that spectrum? And then sort of relatedly, it seems like the direct-to-device opportunity is sort of a big part of your thinking. Is any part of the new capital that you guys have raised directed at launching a direct-to-device fleet? Or is the direct-to-device opportunity globally is something you think that you would pursue on your own? Or does it make more sense to do that in conjunction with perhaps Starlink or Amazon who have fleets in the air, but no global spectrum to use with them?

Okay. Great. So first part is no spectrum assets are leaving our business with the DBS transaction. All the spectrum assets will remain within at EchoStar level. Now certain uplink spectrum for the satellites operation, not any other spectrum that's necessary for just operating the satellites we have. That spectrum will go to DIRECTV and come back to us after their use of it is finished. So net-net, no spectrum lease are asset based as part of the transaction, including the 12 gigahertz. When it comes to direct-to-device, look, this is a very large undertaking in terms of magnitude of technology and investment magnitude. We think it's one of the greatest, if not the single greatest opportunity left in the space right now in terms of impact on consumers and global relevance and also financial return. So we're very focused on it. It is expensive to start in terms of what a satellite business is. That's nothing cheap about the satellite business. So it is capital intensive. So as a result of that, we do expect to work with partners. We do -- we will have enough -- if you want to do it all on our own, it's something that we can, given we just -- what we discussed in terms of available capital to us. But I do believe -- we do believe that it's better for us to work with partners, not necessarily simply because of the capital availability, which is very important. But also from a perspective, this is a global offering. And you would like to have more participants in there in order to advance its chance of success in deployment. In due time, we'll talk more about that. We are very excited about it. We think we're uniquely positioned for it. But that doesn't mean we are going to uniquely try to own all of it. We'll certainly work with people who can help us, not just from a capital perspective, from a strategic perspective, help us make this a reality as soon as possible.

The question will come from the line of Bryan Kraft with Deutsche Bank.

I also congratulate you on this transaction, incredibly complex, enormous undertaking. Two things, Hamid. First, how do you see today's announcements at a high level impacting the business plan in terms of focusing on consumer versus enterprise? Do you still have to prioritize consumer? Or do you think you can pursue both at this point? And then the second one is just how should we think about dissynergies from the sale of the Pay-TV business, how much G&A and corporate costs are in the DBS segment currently that will have to stay with the company and continue to run it on the corporate side?

Look, we're definitely focused both on consumer and enterprise. Enterprise is a fast-growing part of our business in terms of opportunity, and we have at least a $1 billion or $2 billion of backlog in terms of enterprise business that is coming our way. Just our entry to aero segment has been massive and groundbreaking for us, and we have much more enterprise and opportunities that are being worked to speak. So private 5G is something that over time is going to be very, very large in our estimation, again, over time. This is not something that is developed yet, but we see it coming on the horizon. We are well positioned, best positioned for that enterprise business because of our O-RAN infrastructure. We can network slice. We can offer unique enterprise-grade products that our IT systems can support that the others can't. So we are best positioned for the enterprise, but that market needs to develop. So it's taking time. We are #1 on -- we are Gartner's Leader quadrant participant today on the enterprise side of the world, so we're very bullish on the enterprise. Consumer, obviously, is also our bread and butter. We already have 7 million subscribers there. with a nationwide network. We'll play both of those going forward. In terms of G&A, Paul, would you like to say something about our corporate profile and G&A going forward and synergies there or dissynergies?

Yes, sure. Thanks, Hamid. Today, if you look at our Pay-TV segments and all of our segments, we allocate out our corporate overhead to all of them. So the vast majority of those costs, obviously, that you've see in Pay-TV will go there. There will be some dissynergies. I don't believe they're going to be very material, but there will be some going forward.

Great. With that, I want to thank everyone who has been supporting us or been patient with us. I know it took a long time. I want to say that -- I want to thank also Charlie Ergen, Candy Ergen and the rest of my Board for being incredibly supportive and helping us drive these transactions. We all owe a lot to them in terms of having created this over 40 years of work to create a great business that we've been proud of. And we're going to try to put it in the best hands going forward, the best hand we can, bringing the two together, creating a very competitive provider in the video space. Propelling the legacy that they have created into a winning position, continuing that and then also creating the opportunity and the vision to create the opportunity for all of us, shareholders, bondholders and employees, customers on the wireless side of the business, creating a very, very attractive #4 position in the United States. I want to thank for their support and all of you who have joined us. And hopefully, we'll continue to deliver good news for you going forward. Thank you very much for your participation today.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.