Prepared remarks
Greetings, and welcome to the EchoStar Corporation Q2 2026 Earnings Conference Call. Operator provided instructions to participants. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeff Blum, Acting Chief Legal Officer and Secretary. Thank you. You may begin.
Good afternoon. I'm here with Charlie Ergen; Paul Orban, our CFO; and John Swieringa, our COO. We will begin with opening remarks from Charlie, followed by a question-and-answer session. We ask that any participant producing a report not identify other participants or their firms in such reports. We also do not allow audio recordings. All statements we make during this call other than statements of historical fact constitute forward-looking statements made pursuant to the safe harbor provided by the Securities Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by the forward-looking statements. For a list of those factors and risks, please refer to our annual report on Form 10-K for the fiscal year ended December 31, 2025, our Form 10-Q filed today and our subsequent filings made with the SEC. This information and supplemental materials relating to today's call will be posted on our Investor Relations website. All cautionary statements we make during the call should be understood as being applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks described in our reports and should not place any undue reliance on any forward-looking statements. We assume no responsibility for updating any forward-looking statements. We refer to OIBDA and free cash flow during this call. The comparable GAAP measure and a reconciliation for OIBDA is presented in our earnings release and in the case of free cash flow in our Form 10-Q as filed today with the SEC. With that, I'll turn it over to Charlie.
Thank you, Jeff. We're just going to take questions. But before we take questions, I just want to give a few opening comments. As you all know, August 1, we had a $1.5 billion bond maturity for Hughes Corporation. We had discussions with the bondholders, but weren't able to come up with a workable solution. So we filed Chapter 11 bankruptcy this morning for Hughes. I want to make just a couple of points on that. One is this filing is strictly limited to the Hughes entities. It does not include EchoStar Corporation, our other non-Hughes subsidiaries or even Hughes international entities. Second, we have first day motions this afternoon in front of the court to ensure that Hughes continues to operate in the normal course of business. That means we're paying our employees, we're delivering for customers and channel partners as usual, and we expect to fulfill all ongoing forward commitments to our vendors. And third, we don't know how long bankruptcy will take before we can emerge restructured. As a result of the litigation that is expected in this, we won't take questions on Hughes, but I refer you to our press release; there's a link to our filing that lays out the details there. So with that, we'll take questions.
Questions and answers
Operator provided instructions to participants. And your first question comes from David Barden with New Street Research.
I guess I wanted to start with, Charlie, no one probably knows better than you the discount to which EchoStar trades to its remaining portfolio of assets and SpaceX. Now that you've got the AT&T money, it would seem a logical thing to start buying back stock. And if not, why not? And what would be the priority for that capital next?
Yes. Thanks, David, for the question. I think the way — first of all, you will see in the 10-Q that we did increase the buyback authorization. The Board increased the authorization. So it's obviously one of the things that we look at based on our capital structure. First and foremost, we look at investing in our business. So we look at our existing businesses to invest in and the opportunities there. And then EchoStar Capital now under the leadership of Tom Cullen — we look at other things we can look at, which could include our own company. And then after that, if we can't find anything there, then you can work all the way down to paying dividends. So we've been a good steward of capital for a lot of years, and I hope we'll continue to do that.
Operator provided instructions to participants. Your next question comes from Brent Penter with Raymond James.
A couple for me. First one to follow up on David's question. You mentioned EchoStar Capital, and that was folded under the corporate development arm. Does that represent any change in philosophy about how you're investing at EchoStar Capital? And any change to the list of kind of opportunities you gave back in November last year?
Yes, Brent. No, really no change other than it's probably a little bit more efficient since we're kind of under one roof and probably move a little bit faster just because we're literally in the same area in the company. And obviously, Tom comes with a wealth of experience in the industry, not just at EchoStar.
Okay. Got it. And then on the SpaceX transactions, given where the SpaceX market cap is today compared to the $400 billion valuation it was when you signed the deals, the implied value is obviously much higher. How do you size the expected tax payment today? And then are you doing any hedging on that? Or have you all had any discussions with SpaceX about alternative ways that you could structure those deals to reduce or delay those taxes?
Yes, Brent, those are all good questions. The way I try to answer your question is we still are of the mind that the cost of finalizing the liquidation — the termination of our wireless network and our tax liability — is in that $5 billion to $7 billion range. We don't know the answer on where we're going to be there; it could be a little higher or a little lower than that. A lot depends on litigation related to the termination of the network, and we don't know where SpaceX will be in the future. But we know that there are mechanisms like 1033 exchanges and other things that can reduce tax liability. So we're in that $5 billion to $7 billion range in terms of what we think it's going to be, and that includes our wireless network termination. We're a good steward of capital, so we're looking at everything and how we can make sure that we take care of capital the best way. On Boost Mobile strategically, I would say we haven't, as management, cracked the code on how to be as successful as we'd like in the wireless business. In general, we've treaded water for four years now. We were slightly cash positive in the quarter, but we did lose subscribers. Having said that, we have new leadership with Bob Rupczynski, who joined us four or five months ago, and he's certainly taken a fresh approach. We think we have some strategic initiatives going forward that will reinvigorate that part of our business. In general, all of our businesses have to run at a profit long term and have a right to exist — everybody is only as good as their last quarter. So we like the business. We're disappointed that we haven't done better in it. It's a great challenge for us and strategically important. We do have a fair amount of contractual flexibility for M&A or partnering, and we'll continue to see if we can figure out how to be productive there.
Operator provided instructions to participants. Your next question comes from Sebastiano Petti with JPMorgan.
Charlie, just maybe going back to David Barden's question, just — I mean, why increase the buyback from $2 billion to $3 billion, but yet be out of the market? I mean is there anything like that is precluding EchoStar from buying back stock currently in the market? And then maybe just a follow-up, thinking about the remaining assets, particularly AWS-3. I mean how are you thinking about that now on the other side of the auction and perhaps maybe timeline? And I think would there be any debt that would need to be paid off from the sale of the AWS-3 spectrum at this point?
Yes. We do have some restrictions on buying back stock in our bond indentures. When you look at the total company, having closed the AT&T transaction and putting $2.4 billion into escrow to close down our network as mandated by the FCC, we have about $14 billion or $15 billion in cash overall. We see that $5 billion to $7 billion liability going forward, which includes the $2.4 billion escrow. We still have Boost, which we haven't shown we can fully realize the potential in, and our traditional video business, which continues to throw off cash. In addition to that, we have 261.8 million shares of SpaceX. You can estimate public valuations for that. We have solid spectrum positions — AWS-3, CBRS, 700 MHz, et cetera — that you can attempt to value. Excluding Hughes, which is in the restructuring process, we have about $5 billion of debt and another almost $8 billion of debt that the SpaceX transaction will pay at closing, and $1.9 billion of convertible debt that at this point is in the money with the converts. So you end up with a company that's cash rich and not very leveraged. How the market values that and the conglomerate discount or lack of confidence in management determines the market price. This year a lot of focus is on cleaning up the network shutdown and the related litigation, because we had no other choice. Then we'll get into a position to focus the company on moving forward with all the opportunities that we have. We also have to pivot to the AI era and how it affects our business. Our company wasn't built for AI years ago, and we have to pivot now. There's a restructuring going on within EchoStar to determine how we take advantage of that paradigm shift. Our team is excited and focused on it, but it's way too early to tell how we'll perform. Culturally, we're energized.
Operator provided instructions to participants. Your next question comes from Walter Piecyk with LightShed.
Just a question on the DBS prepackaged proceedings. I know bidders could still potentially emerge during this process. But assuming that you end up being the kind of stalking horse bidder and the winner of those assets, just thoughts on what you do with the radios. Has there been any appetite in the market for the redeployment of those radios for like a wholesale fourth network? And any other assets that you might end up effectively still owning at the end of that reorganization?
It would be way premature to speculate on that. You can see our stalking horse bid; I think it was potentially around $300 million, somewhat less than that because of cash on hand. So in our opinion, there is not a lot of liquidation value there, and it's relatively immaterial in the scheme of things when you look at the other assets that we have.
Got it. And then on the...
I think the more important thing is we're a unique company in the sense that we have mobility through Boost, we have a lot of broadband relationships — not the least of which is through SpaceX — and we have video. We know connectivity pretty well, and connectivity is going to take a lot of different shapes for customers. Most customers are going to need Wi-Fi and broadband, whether that be through cable or satellite; some customers might have both. People still have video needs, and we're uniquely positioned to provide connectivity and video. The Big 3 networks have built a pretty big moat around their businesses, and we play with one foot in that business as well. The real key is the knowledge base we have and the fact that we play in many places in the connectivity field. That should be helpful for us going forward, though we have to prove it.
You bid also in the re-auction of the DE stuff. Do you have plans to bid in the upcoming C-band auction? Or does anything you have with the FCC where you've committed to sell your existing spectrum prohibit you from bidding in upcoming auctions or even secondary market transactions for spectrum?
The C-band auction rules aren't out yet, but we would anticipate that we would not be prevented from participating. We've participated in auctions historically. Whether it would make sense for us to participate given where we are is a different question; we haven't fully analyzed that. For secondary market transactions, if there was something strategic and important that would enhance the value of our company, we would consider it.
Just one last question. This EchoStar Capital — the last time this topic was discussed, it was described as prioritizing finding new investments and deploying capital from spectrum sales into new opportunities. It sounded a little different in tone today, where you're saying invest in what you already have first, then share repurchase and dividends. Is that deprioritized in terms of the use of capital when cash starts flowing in from the spectrum sales?
No, I would phrase it differently. Obviously, we invest in our core businesses where we have opportunities. Secondarily, we would look at the opportunities that Hamid had identified — he had identified quite a few and relationships, some of which we already had. So we would look at returns there. As part of that, you would look at your own company. It depends on how you evaluate those opportunities. I would add a cautionary note that we're going to be patient. The market is pretty frothy, and we're not going to rush out to do something and overpay just because we have money. We're going to play the odds and be cautious; we may be more cautious than some others given current market conditions.
Operator provided instructions to participants. Your next question comes from Michael Rollins with Citi.
Just curious, Charlie, if I could ask a follow-up to that and then a second question. So the follow-up, when you discussed being more cautious than some, does that also apply to the value of EchoStar? Or is that specifically relating to other investments or new investment opportunities? And then secondly, just if you're able to clarify, did I read correctly that you're still waiting on a waiver from the FCC with respect to holding on to your spectrum without a network? And is there any outstanding risk that the FCC could take back remaining licenses that you still control and own that may preclude you from monetizing the spectrum you discussed earlier, the AWS-3, the CBRS, the 700 megahertz?
I'll take the first part. We're cautious about everything, and that includes EchoStar. We're not pessimistic, but things are at historically high levels in many metrics, so we take a cautious approach. That may be smart or not, we don't know.
In terms of spectrum, in September the FCC Chairman confirmed that we had met our build-outs and commitments. That's the last official statement from the FCC. As you mentioned, we have filed a waiver for our remaining spectrum licenses to sell those for fair value in exchange for an extension of building out the network. We're awaiting that waiver. It makes sense now that we don't have a network any longer for that to be granted, so we hope the FCC will rule on that in the near term.
Operator provided instructions to participants. Your next question comes from Bryan Kraft with Deutsche Bank.
I have a few, mostly follow-ups. First, going back to the buybacks: Will you be seeking an amendment to the covenant that's restricting share repurchases? And related to that, would you consider buying back the converts in the open market, which I don't believe would need an authorization? On the investing side, could you elaborate on the change in strategic direction that was alluded to in the 8-K announcing Hamid's resignation and what that really meant? And on the topic of DBS consolidation, which is carved out in the covenants in the prepack, one worry investors have is that DISH could end up being the buyer in that scenario. I know the last time DIRECTV was the buyer. How are you thinking about if there were going to be a combination — is it more likely that it would be similar to the September 2024 merger agreement where DIRECTV was the buyer? Or would you be open to being the buyer? And lastly, can you do a reality check on the timeline risk for the DISH Wireless and DISH DBS bankruptcies given opposition from infrastructure companies?
I'll take the timeline question first. Our confirmation hearing for DISH Wireless is set for October 13, so we expect the DISH Wireless bankruptcy could be wrapped up in the fourth quarter. On buybacks, we do have some restrictions in our debt agreements, and to the extent we ever wanted to buy shares back, we'd look at whether that was possible and, if not, what we would do. It's my understanding we don't have restrictions on buying converts, but whether that would make sense is another question. Regarding the change in investing, Hamid had done a lot of work on that side, and many of the things he put in place have been handed off to Tom. I don't see a change in that strategy other than we're now more integrated under one roof and communication is better. The priorities remain looking at core businesses first and other opportunities second. If we can't find anything, we may use capital for buybacks or dividends. We're cautious because the market is frothy; opportunities are harder to find and valuations are elevated.
Am I hearing you correctly that you don't have a real plan to buy back stock and maybe you're even a little cautious on the valuation of EchoStar because of the valuation of SpaceX, even though your stock is trading at a large discount to NAV and you're increasing the authorization to $5 billion? We're struggling to understand what the real message is here and why you increased the authorization while you sound like you don't really have any plans to buy back stock. Can you shed more light on that?
DIRECTV question...
I've always said it's inevitable to put the companies together. We may have missed some opportunities to do that earlier because synergies would have been higher then, but synergies still exist. We would look at any transaction without preconceived notions — buyer, seller, joint arrangement — it depends on value and incentives. We think we're taking a longer-term perspective at DISH; we are investing in customer relationships and the way we approach customers. That investment can be negative to OIBDA or EBITDA in the short term. If someone made the right offer, it's not a critical component of what we have to have going forward, but we do like that business.
I certainly appreciate that. I do think there's a big opportunity to create long-term value because of that NAV discount, and that was more the nature of the question.
You may be correct; it's Captain Obvious. Good management positions itself to have flexibility. A larger buyback authorization does not obligate us to buy back shares, but it gives us the option if the opportunity arises. We're a company with a long track record of managing capital and making decisions as owners who are focused on long-term value. We're generally conservative; we rarely take big risks. We'll likely have a mix of risk and conservatism depending on the situation. We're not trying to be evasive — we simply will be prudent.
Operator provided instructions to participants. Your next question comes from Mark Dunbar with JPMorgan.
Given all the various lawsuits and machinations over the past year, how do you think about access to the capital markets going forward? I know you have a lot of cash but would like your thoughts on that.
We don't need access to the capital markets today, so we're not focused on that. It's important to work with our bondholders to get to good solutions, and that includes vendors. The tower companies did a good job for us, but they also made a lot of money and will lease capacity to others. Litigation was unfortunate because it stopped communication and inserted lawyers with incentives to litigate, which slows resolution. Now we have a judge in bankruptcy making decisions, which either side may like or dislike. My experience is it's better to negotiate directly, but it takes two to tango.
Operator provided instructions to participants. Your next question comes from Michael Abatemarco with Helix Partners.
I was wondering if you'd be able to clarify the $5 billion to $7 billion liability as it relates to the SpaceX taxes. Does that also include the kind of appreciation in value in SpaceX? And does that include any kind of 1033 dynamics?
The answer is we've taken all those variables into account in our estimate, and it's our best guess but it could be a little higher or a little lower. If you take the high end of that range, $7 billion, that's probably a realistic model based on what we know today. There are many variables like 1033 exchanges and litigation affecting shutdown costs, and tower companies have different expectations, so the number could change. We're trying to give you an indication, but don't take it as formal guidance.
And with that, we will conclude today's call. All parties may disconnect. Have a good day.