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DISH Network Corp (NASDAQ:DISH)
Q2 2019 Earnings Call
Jul 29, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the DISH Network Corporation Q2, 2019 Earnings Conference Call.

[Operator Instructions]

At this time, I'll turn the conference over to Jason Kiser. Please go ahead.

Jason Kiser -- Vice President, Investor Relations and Treasurer

Thank you. Thanks for joining us, everybody. I'm joined today by Charlie Ergen, our Chairman; Tom Cullen , EVP of Corporate Development. Erik Carlson, our CEO; Brian Neylon President at DISH; Warren Schlichting President of Sling; Paul Orban, our CFO; and Tim Messner of General Counsel. Before we have some opening remarks from Eric, Paul and I think Charlie, we need to do our Safe Harbor disclosures.

So for that, we'll turn it over to Tim.

Timothy A. Messner -- Executive Vice President and General Counsel

All right, thanks, Jason. Statements we make during this call that are not statements of historical fact, constitute forward-looking statements that 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. For more information, please refer to the risks, uncertainties and other factors discussed in our SEC filings.

All cautionary statements that we make during this call are applicable to any forward-looking statements we make wherever they appear. You should carefully consider the risks, uncertainties and other factors discussed in our SEC filings and should not place undue reliance on forward-looking statements, which we assume no responsibility for updating.

With that I'd like to turn it over to Erik Carlson, our CEO.

W. Erik Carlson -- President and Chief Executive Officer

Thanks, Tim, and welcome, everyone, and thanks for joining us at the last minute. Given all the news, we're going to have a few short remarks today about the results of our wireless news and then leave plenty of time for questions. First, I'd like to share my thanks to the DISH team for all the work that's made these wireless developments possible.

These are a transformative days for us and we look forward to sharing our progress as these deals advance. Let me speak briefly to the quarter, and Paul will have a bit more color. We have -- we are committed to our long-term strategy of delivering the best service, technology and value for our customers. It's the path we have to take it forward to stand out in a challenging Pay-TV environment and succeed in the future.

The second quarter results demonstrate that our continued focus on attracting loyal, high-quality and profitable subscribers continues to work in our favor. Customer profitability is near all-time highs. Our efforts to find the right prospects in the right areas with the right credits and turn those prospects into customers are bearing fruit. As a proof point, we saw sequential and year-over-year gross subscriber growth in DISH TV. In the second quarter, we had a 348,000 subscribers compared to 243,000 in the last quarter and 278,000 in the year-ago period.

In terms of our overall Pay-TV subscriber trend, we saw a net decline of 31,000 compared to a loss of 259,000 in the first quarter and a loss of 151,000 subscribers in the year-ago period. This quarter, I'm pleased to report that we achieved a near record churn at 1.48%. This is a tribute to the focus we placed on our long-term goals, goals that include a data-driven approach to acquisition and a call for operational discipline from teams across the business.

Touching on wireless & Company, you all understand the contours of the transactions that we announced Friday. Let me offer you a little color. These agreements and commitments set us on a clear course to become the fourth provider -- wireless provider in the nation. And it's going to happen quickly. The agreements accelerate our entry into the market as a facilities-based 5G broadband wireless provider. June 14, 2023 is now our deadline to provide 70% of the nation's population access to our 5G broadband network. Look -- we have lots of work ahead of us to land Boost and to the begin the 5G work build out. And I'm confident in our graph, the fundamentals and I'm certainly confident in our ability to execute. Next week is my 24th year at DISH. I joined the company just a few months ahead of our EchoStar I launch. At that time we had no DBS customers and today we serve millions. We launched Sling TV in February of 2015 and today we have millions of customers, but we continue to lead in the live OTT category. We've got a top-flight team that manages three high-profile national brands in DISH TV, Sling TV and DISH Latino. We support the dealer network that's thousand strong and we have a vital direct sales operations. Our people and systems support hundreds of thousands of customer interaction today and we do these things well.

This was prepared to support the Boost and Virgin subscribers with excellent service, excellent technology and excellent value. And we are well positioned to develop market and support a service-based on the nation's first stand-alone 5G broadband network. Paul take it away.

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

Thank you, Eric. As we've been talking about for the past several quarters and to echo Erik, our core Pay-TV business continues to focus on acquiring and retaining high-quality subscribers who are profitable to us over the long-term. We believe that we are ahead of the curve compared to most of our competitors. As Eric said, we achieved near record low churn and increased DISH gross additions with all-time high credit scores. We also saw a positive subscriber growth on Sling as we continue to improve the platform and user experience.

This quarter, we added 48,000 net Sling subscribers, up 7,000 from last year. And looking at the P&L, our operating income and EBITDA are both down compared to last year, primarily due to a lower subscriber base and higher SAC. For revenue, the lower subscriber base was partially offset by higher ARPU due to price increases and improved revenue in ad sales at both DISH and Sling. These increases were impacted by a higher percentage of Sling TV subscribers present in the overall Pay-TV subscriber base. We also saw a decrease in premium channel revenue, mainly related to the removal of HBO.

For subscriber expenses, our margins have been relatively stable. However, we continue to face long-term pressure from programmers, who want higher and higher rates even in the face of declining viewership. Programming expenses were positively impacted by the HBO channel removal. Turning to subscriber acquisition costs. Investments in more subscribers in the quarter had a negative impact on operating income and EBITDA. With that said, we believe that the investments we are making in acquiring high-quality subscribers will pay off over the long-term. DISH TV SAC increased to $786 per activation, up from $763 last year. The increase in DISH TV SAC was due to higher hardware and advertising costs per activation.

Note that we continue to supply a higher percentage of our new customers with higher priced Hopper receivers. While this impacts SAC, we believe offering our best equipment influences loyalty over the long-term by delivering a better customer experience.

G&A expenses were up this quarter as a result of cost to support our wireless initiatives and legal fees. In the first half of the year, we generated over $600 million in free cash flow, despite increases in wireless CapEx. We ended the second quarter with $2.7 billion of cash and investments. This will be more than adequate to redeem the $1.3 billion remaining on our September debt maturity. With respect to Boost, we feel confident in our ability to pay the $1.4 billion purchase price with cash on hand when the transaction closes. As we said before, we will be opportunistic and accessing the capital markets. Finally during the quarter, we announced agreement to acquire the majority of the EchoStar Satellite Services segment, as well as certain real estate and exchange for our stock.

Upon closing. this transaction should significantly reduce our satellite and transmission expenses. And as a result, we should see improvement in both free cash flow and EBITDA.

With that, I'll turn it over to Charlie for a few brief comments.

Charlie Ergen -- Co-founder and Chairman of the Board

Thanks. Paul. Just -- normally, I wouldn't comment, but just -- I just want to briefly set the stage for your questions. Let's talk about what's changed and of course, obviously a big change in that -- with the agreement with T-Mobile and Sprint, and the acquisition of the Boost brand and their customers and the Virgin customers and the Sprint -- and the prepaid Sprint customers. We're able to enter the marketplace in a very timely manner with just over 9 million subscribers, something that we didn't think. We thought we'd have to build a company -- build the retail side of the business from scratch. Now, we get a key ingredient business to move forward from and really just jump starts us to get into the business. We are also requiring a seven-year MVNO deal, the very competitive MVNO deal, but also for seven years -- so that we get provision on the new T-Mobile network, which obviously is going to become an even better network as they build out in the Sprint spectrum.

And -- but more importantly something that's not understood, that we of course get to build on our own network out and we get to provision customers on our own network, but then we get to roll on the T-Mobile network, which allows us to build on a market-by-market basis which is materially different than we envision where we believe we had to build the whole country out at one time. Now we can be in business as soon as we build our first market with our own owner economics. I'm sure you'll have more questions about that. Additionally, the DISH and FCC where we have been going -- kind of opposite directions where we are building based on our license, the flexible use license, a narrowband IoT network to meet our build-out requirements.

We're now more in alignment where the FCC wants to go, which is they want, they want to see 5G mobile broadband build out. And as a result of this transaction, we're now totally in line with that where we are -- have voluntarily changed our flexible use licenses to mobile broadband licenses and return for realistic -- 2023 before we can build 70% of the country out. So, -- but we're now in alignment where I think the country wants to go, where I think -- I know the FCC wants to go. I know we want to go. I think where the administration and Congress wants to go.

As a result, our NB IoT, narrowband IoT resources will be redeployed in the short-term for that 5G network because our MVNO deal on T-Mobile allows us to use their nationwide NB IoT that's already built out. So there is no reason to duplicate that network, particularly with some non-standard frequencies.

What's not new is that, we still plan on building our network and spend it about $10 billion to do that. Having said that, with the MVNO deal with T-Mobile, we're able to extend our build-out for some of the less profitable areas longer-term. So our initial capital outlays will actually be less then we had envisioned short-term. And as a result, our OpEx will actually be less than we don't envision. But the $10 billion investment is still in the cards. And then what's not news, we're going to need help. We're going to need help people to help us build our network just like we needed to help back and we started to launch satellites. So there's people that had many of the things that we need, whether it be backhaul, whether it be towers, whether it be mobile edge compute, whether it be hardware or software, whether it be distribution and marketing, all those things are things that we're going to need where our philosophy really is where somebody else has some of those things.

We don't intend to reinvent it -- rebuild it if they want to work with us. If they don't want to work with us, then obviously -- then we'll do it ourselves. And then when we did satellite way back when there where many times from -- most times people who had things in place they want to work with us, but there are few cases where people -- they didn't believe in us -- I didn't think we'd be successful when we ended up having to build those things ourselves.

So with that, I think we will take questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We'll take our first question from David Barden with Bank of America.

David Barden -- Bank of America -- Analyst

Hi, guys. Thanks so much for taking my questions. I really appreciate it. I guess a couple, first would be -- could you guys give us a -- the shape of the EBITDA of the business that you're acquiring from the Sprint, T-Mobile divestiture -- obviously they've got one number, you got a different number based on your relationship will be helpful to get understanding of what that is. And then I guess, second, Charlie, when you say you need help from people, I think one of the biggest things is going to be getting the money to kind of build this plan out. The Wall Street Journal reported that you spent like three weeks, putting the plan together. What is the plan to bring the funding to bear and the shape of the plan, if you could kind of give us a little bit of color on that would be super helpful. Thank you.

Charlie Ergen -- Co-founder and Chairman of the Board

Yes. This is Charlie. I'll try to take it. In terms of EBITDA, the existing Sprint business -- that's really -- we'll probably leave out to them to talk about what their profitability is. Obviously the way they would look at it internally and the way we would look at would be a little bit different, because we know that in the short term, we're paying for the new T-Mobile network different economics than perhaps on the old Sprint network and then, obviously, as we build out our own network, our economics change materially different.

So having said that, I think, maybe just to give you some kind of guidance, like a track phone, who we believe we have a very competitive deal compared to their deals and look at kind of their financials to give you a feel for what the base case would be where you're using somebody else's network in terms of what their profit would be and obviously as we use our own -- as we use our own -- as we build our own network, use our own towers, get own our economics that materially changes in a positive way.

As far as where we get the money to the move the network forward, a lot of different places -- so we obviously have cash on hand-- the business we obviously are generating cash flow, which has been in excess of $1 billion for a lot of years in terms of our existing business. We believe that the boost and our entry into marketplace will be a positive from a cash flow perspective.

The marketplaces are open to us certainly today and there's opportunistic things and I certainly I'm willing to put my money in this company, that's what it takes to do so. And then finally just one of the things in this agreement is our 600-megahertz spectrum, which today as we wait for the broadcasters declare spectrum and what T-mobile taking aggressive stance there, some of that spectrum is followed today. In fact, all of our spectrum today is fallow and the Department of Justice is requiring both companies to use good faith efforts on a market-based deal for them to lease their capacity until such time as we use it.

So -- and to give an example, we have moved our buildup schedule out by four years from 2009 to 2025 as parts that we've accelerated our build-out of 600 . But all of our 600 is not going to be built out until 2025. So it gives you a feel for some possible revenue opportunities there as well.

David Barden -- Bank of America -- Analyst

Thank you so much, Charlie. It's a follow-up, just real quick, as a gambling man, what would you put the odds that the state AGs are going to win or lose in their efforts to block this deal?

Charlie Ergen -- Co-founder and Chairman of the Board

The first of all, to set the record straight, I'm not a gambler. So a gamble -- when you gamble, that means that you don't know the odds, right. And that means that when you gamble, in fact, if you placed in Vegas as an blackjack, and only certain times as blackjack, guards are against you. So that would be a gamble. But when you actually understand like blackjack and count cards, it's not a gamble because the odds are in your favor. So I'm not really a gambler but from that perspective, but -- but look, I think that -- I think is the -- I think to the credit of the FCC and particularly the Justice Department, I think they've structured disagreement so that we feel very competitive, -- we feel very good about our ability to be as a fourth entrant into this marketplace both in the short-term, particularly, obviously in the long-term. I do think that the states played a role and I think that the states had a -- my personal opinion is that big influence on T-Mobile and Sprint and their willingness to be more aggressive to give us the kind of things that we needed to be competitive that they otherwise might not have and obviously DOJ for some of those issues. But I think you have to give some credit to the states as well.

So when you look at all that, I think that the, I would rather have the Department of Justice case, they're not --.

Tom Cullen -- Executive Vice President, Corporate Development

Yes, this is Tom. We're not in the business of handicapping that outcome. But as Charlie said, the way the revenue was structured, it allows us to effectively compete on both price and packaging day one. And so the news just came out on Friday. So I think now the states are in a position where they have to objectively analyze and evaluate the remedy. And our hope is that they will look at it with a different perspective.

David Barden -- Bank of America -- Analyst

Thank you.

Operator

We'll take our next question from Jason Bazinet with Citi.

Jason Bazinet -- Citi -- Analyst

Thanks ,so much. I heard you on the $10 billion number not changing, but my question is pretty simple. If you have a pile of cash, either from cash flow or new funding, how based on the MVNO terms that you got from T-Mobile and sort of the cost to deploy your own network in these selected cities, how should we think about the use of that cash. In other words, will you toggle most of your cash flow. It's getting more gross additions and running it on this MVNO. We toggle all of it toward standing up the network and we really shouldn't expect a bunch of incremental gross additions on the wireless side coming in or is there some sort of balance between those two in terms of how you see this playing out. Any color would be helpful. Thanks?

Charlie Ergen -- Co-founder and Chairman of the Board

It's the ladder. It will be balanced because we plan to aggressively grow the Boost business as well as begin building out the 5G network as soon as possible. In fact an RFI and an RFP was released today by DISH regarding the 5G network, it's a very cloud-centric approach and embraces the ORAM [Phonetic] mentality of virtualization from the ground up. And so we believe that the CapEx and OpEx that we'll get to in a cloud-native 5G stand-alone network will be very attractive. However, in the meantime, we have every motivation to grow the Boost space and we not only want to expand the boost distribution because we're moving -- one of the conditions of closing is that we have to be able to provision new subs on T-Mobile's network. So we're not going to provision any new boost customers on the Sprint network. And since the T-Mobile network is far superior to the Sprint network, particularly in terms of coverage, it opens up new geographically diverse markets for us. So we could not only work with the boost current distribution to expand their footprint, but we'll also be able to use the current DISH distribution and retail presence throughout the country because you're going to be able to make the service available in a much broader geographic footprint.

Jason Bazinet -- Citi -- Analyst

Great. Thank you very much.

Operator

Our next question is from Doug Mitchelson with Credit Suisse. Please go ahead.

Doug Mitchelson -- Analyst

Thanks, so much. Charlie, I was just hoping you could talk about your go-to-market strategy, your vision, I sort of thought you were thinking about wholesaling capacity on DISH as you build out a 5G network. Now you're squarely in retail and talking about getting into postpaid sort of as quickly as possible. So as you transition to your own sort of cloud-based efficient 5G network with all the capacity that you have, I just curious how you plan to sort of differentiate the service and go-to-market. And then I've got a follow-up.

Charlie Ergen -- Co-founder and Chairman of the Board

Yes. So one of the nice things about virtualized network with the architecture that we're using is completely different than the incumbent legacy networks, is that we'll be able to slice our network in any number of ways, you might look at it as if one of the slice -- one of the big slices of our network will be our own retail business to consumers to compete against incumbents. Right. And we didn't know whether we'd be able to do that on a very timely basis. But now we know that we can, in fact we know that's how we're going to enter into the marketplace. Having said that, when you look at wireless portfolios, and now, approximately 14-megahertz of 800 megahertz, we're well over 100 megahertz of spectrum that we're able to utilize .

And with that, and obviously a more downlink than uplink, so we actually have more downlink low and mid-band spectrum, Verizon as an example. And I think they have over 120 million customers on their network, and in the 5G virtualized architecture, that not only take 30% of your to get put on in 20 million customers. From where they are today. That may only take 30% of your network, -- so of our network. So we think we can do both, which is we still, in this particular thing, we have the ability to lease out 35% of our network, we're going to probably use about the same amount if we get 120 million subscribers and I'm sure all of you in this call believe that we're going to give 120 million subscribers and we still have room for where 5G really needs to go, whether it'd be precision agriculture or healthcare, or robotics or smart cities or smart grid or blockchain, artificial intelligence or timeless vehicles, all of those things still need a network. So, I think we're going, I think we are in a very good position to put our network where its best use and we have a lot of flexibility in doing that, but certainly the end result is we have plenty of spectrum for -- to go in the consumer business and still do some of the things and a network that architected where the other income is going to a tougher time to get there.

Doug Mitchelson -- Analyst

Yeah, I think last quarter, you talked about it being difficult to raise financing given the uncertainty on the FCC side in terms of protecting the licenses on an IoT network build out and that uncertainty is now off the table. Do you think it's going to be easier to have these financing conversations now that there is sort of certainty around what the business plan is in the FCC strategy around your spectrum licenses?

Charlie Ergen -- Co-founder and Chairman of the Board

No, I think there is no question that the elimination of the uncertainty at the FCC is big, but it is equally as big we can handle the marketplace in the short period time is starting to return on our investment and actually start cash flow in the business. So look, the markets are open, you guys are on the business. A good business plan can raise money almost anytime, but times are good for raising money and we don't have good business plan. We're going to have great business plan.

Doug Mitchelson -- Analyst

All right. Thank you.

Operator

Our next question is from Brett Feldman with Goldman Sachs. Please go ahead.

Brett Feldman -- Goldman Sachs -- Analyst

Yeah, thanks for taking the question, and congratulations by the way and getting this done. Once the deal closes, the new company is basically going to be a holding company that has a video distribution business and a wireless services business and I'm curious to hear your thoughts on whether you think there is operating synergy between them, or if the intent is going to be to start having separate operating structure, separate capital structures and maybe even separate ownership structures to the point where you could consider spinning out or selling the DBS business? Thanks.

Charlie Ergen -- Co-founder and Chairman of the Board

I'll take a short [Indecipherable] Erik, Paul you want to jump in here, but look, we have a lot of flexibility in our structure. Obviously, it's certainly going to be enhanced as we get to the satellite assets, we need to run our DBS business over into Dish, but the plan is not to duplicate with a completely new sandbox, where we have, we have customer service, we have call centers today there is no reason like a different call centers for wireless and boost than we do for our video business. We just had to do different training, we already bill. We already understand security, we already have distribute -- we have sales and marketing, we have distribution, we have an in-home service with trucks keep going in and do things in home in terms of smart homes and connectivity and delivery of products, so and we've been an awful lot of infrastructure in place and boost is a really, really similar business to ours.

They use independent retailers. We started with independent retailers, we're still with independent retailers, we're a big part of our business. Then as the customer facing product that there is billing, collection of the cap. money each month, probably the biggest differences that we get to sell something the cost of goods sold is not going up maybe its going down.

And people are using more not less. So in the TV business, people are watching -- people are watching some of the channels less but those channels want more money. That's not, we're the first company to talk about that in a conference call, we are probably three years ahead to anybody else talking about it right and people finally caught up to that notion, but in this case we're selling something people are using more, but cost is going down.

And as we build our own network. The cost go down materially did do you want to comment, maybe Erik on the gaps that's here.

W. Erik Carlson -- President and Chief Executive Officer

I'm not sure there's a lot of gaps to fill in there, Charlie. I think, obviously there is a, there is a business over the past 20 odd years that we've built a certain number of capabilities, whether it's like Charlie said, with independent distribution, our marketing our digital assets are being able to go to somebody's phone being able to provide security, understand procurement etc that will continue to leverage. Like we leverage for Sling that will continue to leverage for the year for the wireless business.

Charlie Ergen -- Co-founder and Chairman of the Board

So, I mean there is synergy. We're going to, -- we're going to be a lower-overhead -- we're going to be a lower overhead situation and perhaps to boost was within Sprint as an example. Even though they were the same company we'll do better than that.

Brett Feldman -- Goldman Sachs -- Analyst

Guys, if you don't mind a follow-up because it has been a topic of discussion on prior calls about the merits of considering a combination with your largest satellite TV peer. It sounds like because you do see synergy between the video business and the wireless business. Does that mean that you're not maybe interested in anymore. It's just the bar is higher because you'd actually have dis-synergies if you decided to consider something strategic?

Tom Cullen -- Executive Vice President, Corporate Development

Well, I'd say it's a little bit simpler. We just don't have a relationship with AT&T.

Brett Feldman -- Goldman Sachs -- Analyst

Got it. Well, thank you taking the questions.

Operator

We'll take our next question from Philip Cusick with J.P. Morgan. Please go ahead.

Philip Cusick -- J.P. Morgan -- Analyst

Hey, thanks guys. One for Charlie and one for Erik, if I can. Understanding that the designated entities aren't part of this deal. Charlie, do you think we can expect some movement from the FCC around those. And then second, Erik. I see this is the first quarter of satellite gross -- growth in five years. What changed in the business to drive that and did that have something to do with the AT&T promotional roll-off or is that all internal? Thanks.

W. Erik Carlson -- President and Chief Executive Officer

Yeah, Phil. I'll start off and then I'll let Charlie handle the question. You know, look, we've been talking on the calls for a good many years now about kind of our focused effort on really doing what it takes to acquire profitable customers that we think will be with us long term that are in the right areas and really providing superior service, technology and value. And I think this Q2 is probably the first quarter where you're seeing that all come together. Obviously, as we talked last year there was some overhang on the business with both Univision and HBO. And really that overhang is now gone and so you're kind of seeing Q2 as, let's call it a cleaner quarter without channel removals and so kind of the fruits of our labor and the discipline and the focus that we've had over the past few years has come to fruition. We -- obviously you mentioned AT&T and maybe they're going through something similar that we went through many years ago. I can tell you though that our profitability and our credit scores new customers are near all time highs. And so, we still feel really good about the customers that we are attracting both from a geographic perspective and a credit quality perspective.

Charlie Ergen -- Co-founder and Chairman of the Board

And I might just add that Game of Thrones, I think the largest viewing HBO overhead, we still were able to -- Erik and his team, kudos because they are able to get through that. I think, I know that's good news for HBO. But certainly it was a headwind during the quarter. On the DEs, the DEs didn't, as you know, it might be is a restricted proceeding. So it did not come up as part of this transaction. Having said that, I think, now that the FCC and Dish are inline. So both totally inline to do 5G mobile broadband. I would hope that one of the things that was disappointing and look at there are good arguments on both sides of this issue, but, the fact is that some spectrum is lying fellow that nobody can do anything about yet till this is resolved and at this point, it's on the, in the FCC court not in ours. I think it's been six or seven, eight months since we've responded. So I'm hopeful that ultimately between the FCC and Dish with the ease that we can get everything moving in the right direction.

But no guarantees of that, but we're certainly willing to try.

Philip Cusick -- J.P. Morgan -- Analyst

Eric, if I can follow up. Was any of the -- or any substantial portion of the customers who came back this quarter more like returns after some of the Hispanic issues have been cleaned up?

W. Erik Carlson -- President and Chief Executive Officer

I wouldn't necessarily categorize that way, Phil. I mean, obviously we're, making good progress now with our partnership with Univision. And I think, we can kind of get back to grow in that business, but I wouldn't, I would know besides your point there.

Philip Cusick -- J.P. Morgan -- Analyst

Thank you again.

Operator

We'll take our next question from Kannan Venkateshwar with Barclays. Please go ahead.

Kannan Venkateshwar -- Barclays Capital -- Analyst

So I guess, Charlie. One question on the MVNO agreement. You mentioned the ability to license 35% of the capacity in your own network, but the language around the ability to do so using the MVNO agreement was less clear. So, if you could just clarify if it is any ability that you have near-term to use some of the capacity that you're getting to license that to potential third parties. And the second question, I guess is more from the perspective of the states, obviously there has been push back there. And one of the issues that seems to have come up is DISH is not in the wireless business. And therefore, is it a credible fourth player. So is there any conversation with the states in terms of what they want from a DISH perspective rather than a T-Mobile, Sprint perspective. Thank you?

Charlie Ergen -- Co-founder and Chairman of the Board

Yes, So on the MVNO deal, the MVNO deal is two DISH and the brand is DISH brand and DISH -- I think you should look at us similar to Netflix were Netflix has a lot of forms of distribution that might -- I think they are Amazon sales, cable sales and DISH sales and DIRECTV sells them. So there's a lot of forms of distribution. But the fact of matter is you're getting your bill from Netflix and they control the consumer relationships. So we don't have any restrictions on how we market as long as it's a DISH product, but it would be unlikely that we could sell capacity to -- third-party on the T-Mobile network, that wouldn't make any sense.

Having said that, the beauty is that as we build our own network out and realize we're going to have a both -- we're going to have both postpaid, build around core within the next year, or withing a year closing, we're also going to build our first cities pretty quickly. That assumes we build a city -- when you're in our city, your in our network. But as soon as you leave our city, the Interconnect agreement is really a first of a kind in the United States as far as I can tell. But when you -- when as you go outside of our footprint, you would seamlessly roam on to the T-mobile network and in fact you won't even drop -- you won't drop your session or your phone call. So that's unique and hasn't been done and we're excited about the help that justice played a role there. And so, -- and obviously, when we have our own network then we can do, -- obviously, there's nothing to prevent us long-term from doing MVNO deal with other people and so forth as we build our own networks.

We have a lot of incentives to build our own network. I think it would be -- and not the least of which are severe penalties if we don't, but irregardless of that, we're going to build this network out and it's hard --I think it's really hard for people who haven't studied the wireless business on the inside, and have really studied it to the degree that this company has and to understand the -- you read about 5G and everything you get is what the incumbent say about 5G and how they're going to do 5G, but the reality is that 5G, you can do so much more and just as important is the 5G technology is the architecture and how you build the network.

And so all the incumbents have built networks that were primarily designed for voice and were built and designed architected in the '80s, but we're -- this is 2019. And we don't want yesterday's network. And architectures today that everybody wants to get to. Our open architecture is where you're not relying on just one equipment supplier that equipment becomes off the shelf where it's interchangeable and the majority of your network works on software, which allows you to do your network to do so many more things at a lower cost. And so, we have the ability to do that. I mean that, I'm probably bad at analogies here, but you can imagine -- these guys are building the internal combustion engine and we're building electric cars, except we're not in a situation, our electric cars are going to be half priced.

They're going to be 50% cheaper than the pit, the cars they're building and better yet you don't have to plug it in to charge it. It is just going to be charged because we do it in software. So you have to plug it in. So you'd imagine if somebody was building electric car today that was superior in every way, went faster, so it's more robust at better user features, cost half as much money and you didn't have to wait in line to fill it up, that's what we're going to have.

And the other guys are going to get there, but the other guys have to tier their networks down and then they got to rebuild. And so, I'm just wondering to answer, but some of the people have talked about whether we'd have a hosting agreement. Hosting agreement didn't make sense for us, because a hosting agreement means we would have internal combustion cars. They would host our spectrum on and we'd look just like they would look like. And so customers have wonderful choices. They all look pretty much the same. They all make a phone call. They all surf the Web. They're all pretty much the same. But our network in our phones will be different because we architect it. We could take advantage of massive MIMO. So our tower placement is different than the incumbent tower placement. We get to use things like eSIM, even our cable structuring and protocol is different, all right. It means that we do things that big shade you see at the bottom of towers today, that's going to be in the cloud. Right. So all that's different. We get the best of both worlds, which as we get to use the old as long as we need to, but we get to build the new. And someday when we get a chance to show you the economics of that, that's powerful. We get -- and our build-out will be where the towers are used -- where people are using that. That's where we're going to build our efforts and so we get to build out very highly efficient deployed towers, all right.

And longer term, we will build out the more rural areas where we're in middle of Montana driving down the road you and the cows out there, not a lot of people using that tower, but we'll get to use that tower until we need to build it out, which we will, but we get to defer that CapEx, OpEx. So it's a very good economic model for us and will be very competitive.

Tom Cullen -- Executive Vice President, Corporate Development

I'll make a couple of follow-up points. One the agreement as Charlie said, does not allow us to wholesale their capacity. Nobody really expected that would be the case. However, we do have flexibility in creating new brands on to the network. As I said earlier, we intend to continue to grow the Boost brand and presence, but we do have the capability to create new brands as well as bundle that with third-party products and cross market with third-party partners. So we do have new avenues of growth beyond that.

The second point I'd make is, while we're starting with attractive economics on the MVNO deal, there is also a mechanism in the agreement that enable those cost to drop at specific periods of time. But at the end of the day, it's always going to be more cost effective for us to be on our own network. So the incentive to build around where the traffic and capacity is being consumed today goes up every month.

Kannan Venkateshwar -- Barclays Capital -- Analyst

Thank you. And if you could just help with the question on the states and the losses there?

Charlie Ergen -- Co-founder and Chairman of the Board

Okay. What was the question. I forgot the questions.

Kannan Venkateshwar -- Barclays Capital -- Analyst

Yes. The question was mainly about any conversation with the states around the credibility of DISH as a fourth player and any solution they might need in order to get to it?

Charlie Ergen -- Co-founder and Chairman of the Board

Yes. This is Charlie. I'm insulted when somebody say the credibility. When you're talking about a company in '19, I can remember in 1991 when we first started digital compression. And we started building our satellites. And we saw digital compression lab and we said we think digital compression is going to work, that's the new architecture of how video is going to be delivered. Everybody in cable, everybody in broadcast, everybody in -- that was so-called expert, every analyst said digital compression can't work. Trust me. I was there. All right. Now by 1994, '93, the same people, the exact same people said, oh, yes, we always knew digital compression could work, because DIRECTV and us are starting to use it. All right. And of course the cable company 10 or 12 years to upgrade their plant equipment to digital, because they're analog. So here we are with 5G architecture, the people want to know where this has gone.

They're not discounting what DISH's saying. And by the way, DISH became the third largest MVNO. So DISH just wasn't -- DISH became bigger than Cox, DISH became bigger than Charge [ Phonetic], DISH became bigger than Time Warner, DISH became bigger than. -- what was the name the company in New York before it was Altice? DISH became bigger than Cablevision. Right?

We didn't become bigger than Comcast or DirecTV, so we still got a room to go. All Right. But --But -- and I can remember, we did -- thank god, Bennett Goodman was around because we -- our first money was 12, seven and eights with warrants for $400 million. Because we didn't have any money, we never built a satellite, we never built a set-top box, we never interfaced with the customer, never taken a call, never built an up-link center, never done encryption in our life. And yet we were able to do all that, right. And this project is certainly challenging, but we have so much more infrastructure in place and the ability to, and we know what we're up against, it's not our first rodeo and I think we will be a competitive threat in this business.

Tom Cullen -- Executive Vice President, Corporate Development

And regarding discussions with the states. Obviously that is confidential and not something we can discuss.

Kannan Venkateshwar -- Barclays Capital -- Analyst

Thank you.

Operator

We'll take our next question from Ric Prentiss with Raymond James.

Ric Prentiss -- Raymond James -- Analyst

Thanks. Good afternoon and thanks for taking my questions. Obviously, an interesting complicated settlement good to get this far. I'm really intrigued by the option to acquire decommission Sprint locations and retail stores. How many do you think, might those towers be in the right place that you were just referring to and how soon could you actually start using locations and stores and how complicated would it be to help your plan?

Charlie Ergen -- Co-founder and Chairman of the Board

Well, I think thanks for the question. I think, T-Mo indicated on their call that they are Sprint, T-Mo transition is likely to be in the two to three year timeframe. But there are notification periods in the agreement that where they have to give us adequate notice of what -- which towers will be decommissioned in what timeframe. So, we will have enough time from RF -- our own RF planning efforts to determine which towers would fit into the right footprint at the right time. But that being said, we'll have our own independent relationships with each of the tower companies. Some towers may have assignable leases. But if they're not assignable, we'll have an agreement with the tower Company, but we'll know where the RAD centers is being vacated.

And so that's important for us as we apply that to our -- the RF plan that we'll have in place at the time. As for stores, it's similar. We'll look at opportunistically, where the locations are relative to where we have strengths or holds. And again not all the leases will be assignable, but we get first look. I mean the net effect is -- it's going to be a positive. We probably don't know the scale of that, but certainly will help us in our build-out in our retail presence.

Ric Prentiss -- Raymond James -- Analyst

And then, Charlie, you mentioned on the narrow band you would kind of redeploy your efforts in the short-term. I noticed in the language, the FCC said, it's been told to LLOED [Phonetic] as far as the timeline for the March 2020 deadline. Would we think that you should be stopping that like almost a main event, because obviously you don't want to keep throwing-up looking at your narrowband IoT network. But, how fast could you actually stop that effort and redirect it?

Charlie Ergen -- Co-founder and Chairman of the Board

I'm going to start. I'm going to -- stop throwing up yesterday, but it is told. And just to be clear, it's told -- it's told when and if the FCC approves the merger then it will be told day for day. And obviously, the extent, it was going to be a trial or some, we have plenty of time to -- we have time to start back up. But, it is probably one of the things, I'm personally most excited about.

I was never -- the narrowband IT, never we get great experience. We put up a lot of towers, we know how to buy a plan in network. We know how to get permit, we know how to get zoning. We know how to climb towers, we know how to provision. So, those are all things we probably wouldn't have known, and now we just have to expand the scale of that. So, it's really, really, good education for us. But it's not -- I agree with the FCC and some of the commissioners, it wasn't the network to be proud of, compared to what we could do, compared to what the -- the country needs. And now, we get to build that.

Again my soapbox is, there is only one other country, there is only one other country, that's building the stand-alone 5G network and that's China. And the only company in United States that's doing it, is [Technical Issues]. And if we want to lead in 5G, if this country wants to lead in 5G, DISH is very, very important to that effort. And I think, not that I would say anything nice about T-Mobile, but they also with the acquisition of Sprint, will be in a position to decommission the Sprint network and build it back as 5G.

So, what the FCC and Justice have done is have taken, Sprint who was challenged to build a 5G network and enhanced Sprint -- T-Mobile's ability to build a 5G network in a shorter period of time because they get available capacity to do it, as they decommission the network and they brought a new entrant that can build the new architecture, the more modern way to build a network. So that we -- and I think the -- net of that is -- is that obviously T-Mo -- I mean, AT&T and Verizon are doing wonderful things in 5G. So, with their own build out, this country is going to be the envy of the world and this transaction has got a lot to do with.

Ric Prentiss -- Raymond James -- Analyst

Great. Any update on the ESS, PSS closing timeframe?

Charlie Ergen -- Co-founder and Chairman of the Board

No. We are still waiting some regulatory approvals from outside the US and it's probably a couple of months out.

Ric Prentiss -- Raymond James -- Analyst

Great. Thank you.

Operator

Our next question is from Craig Moffett with MoffettNathanson. Please go ahead.

Craig Moffett -- MoffettNathanson. -- Analyst

Hi, thank you. A couple of questions, if I could Charlie. First, I just want to be clear, how confident are you that the eSIM strategy that you described really does enable operationally the full make versus buy transition from the two networks, just given that it's obviously -- it hasn't been possible to do any field testing of that yet?

Second, are we just thinking of someone like Rakuten as possibly the best analogy to what it is you plan to build. And I wonder, if you could just talk about what some of the similarities and the differences are between your network and a network like that. And then, finally, just a technical question, just with the financing of the $1.4 billion, which is the first payment, if you could just talk about where and how that will be financed?

Charlie Ergen -- Co-founder and Chairman of the Board

And the last on, we've we already answered. We indicated that the $1.4 billion would be paid-off of cash on hand.

Craig Moffett -- MoffettNathanson. -- Analyst

From cash on hand. Okay, thanks. I missed that.

Charlie Ergen -- Co-founder and Chairman of the Board

I think, it's possible that we would be opportunistic to raise capital but we do have the cash to close the transaction on hand and pay our debt payment in September, I think, Paul said. On the Rakuten is really build a 4G virtualized network and they've taken -- their going pretty far with virtualization, we will go farther.

W. Erik Carlson -- President and Chief Executive Officer

They have a path to 5G.

Charlie Ergen -- Co-founder and Chairman of the Board

And they have a path to 5G. But there are lot of similarities. For example, they also have an MVNO deal. So, their initial build out is -- a few cities in Japan. So, they're not building the whole country once.

W. Erik Carlson -- President and Chief Executive Officer

Their nationwide MVNO with KDDI.

Charlie Ergen -- Co-founder and Chairman of the Board

Yeah. So, they have some of the similar benefits that we have. I think, that -- and we are fortunate because they are blazing the path. I mean, they're obviously -- it's a difficult engineering challenge for the first Company to do it and we are going to benefit as are others, by learning the lessons from them. But, they have -- one of the really cool things. We have a lot of American manufacturers involved in the Rakuten thing.

So, you've got the Cisco, this is all public, Cisco and Intel and Altiostar and others, Red Hat. There's a lot of American vendors. And what I think is really exciting about it is, we don't have American hardware providers today in the existing networks, in terms of radios and things. We get a chance to do that in the future with that. So I think, Rakuten is a good one to watch. I think, it's a good question, it's a good company to watch. And I forgot the other point.

W. Erik Carlson -- President and Chief Executive Officer

eSIM.

Charlie Ergen -- Co-founder and Chairman of the Board

Oh, eSIM. eSIM -- in this particular transaction, both us and T-Mobile have to support eSIM. There are a few restrictions, if you are financing a handset. But, you can imagine that we like eSIM because, when you don't have many customers, it's that much -- that easier when a customer can port their phone number and their hardware, without going into a store or physically putting something in the phone, it's little bit -- obviously, customers will -- you have to be really good, you have to be good on customer service and customers can switch much more easily. So, if you don't have a lot of customers, that's an advantage. You get a lot of customers, as you know from the marketplace, the incumbents who are not in favor of eSIM and they have not been supportive of it.

So, that's something in this merger that's probably overlooked and that is -- look, my prediction will be that eSIM will be standard in several years in this country from -- all the major players, based on this deal.

Craig Moffett -- MoffettNathanson. -- Analyst

But to be clear, Charlie. Your ability to transition customers from one network to the other is not dependent on the eSIM workaround, it's instead embedded in the MVNO agreement that you have with T-Mobile?

Charlie Ergen -- Co-founder and Chairman of the Board

That's true.

Craig Moffett -- MoffettNathanson. -- Analyst

Okay, thank you. That helps to clarify it. I appreciate that.

Charlie Ergen -- Co-founder and Chairman of the Board

Yes. It's more of a convenience for consumers. It also can be a convince for people like Apple that have eSIM in their watch and tablet. There is going to be bunch of other effects, maybe we don't know, all the effects but it's going to be positive, but consumer is going to be positive for people that use a network that relies on eSIM.

Tom Cullen -- Executive Vice President, Corporate Development

And just to clarify some of the perceptions around the MVNO. We start as an MVNO and have a path to pretty quickly get to an infrastructure MVNO, which then provides a guide path to being a stand-alone mobile network operator. And the infrastructure MVNO is once we implement our converged core, which would likely to be mid-2020. Then will be able to provision eSIM -- I mean, I'm sorry, SIMs on our facilities, which also allows us to route traffic through our core and will have all the customer and subscriber information on our equipment, not in a traditional MVNO.

The MVNO is dependent on the host network to do those types of things. And as a result, they don't get any visibility into traffic analytics and being able to set their own policies and so forth. So, that's an important distinction of this versus a typical MVNO. And clearly, as we start rolling-out the RAN network, it becomes more and more important. It also allows because we're using a thing, they call the N26 interface that when we're moving -- a customer would be moving from our network, at our boundary on to the T-Mobile network, it would seamlessly transfer the call, because the two cores are interconnected.

Craig Moffett -- MoffettNathanson. -- Analyst

That's helpful. Thank you.

Operator

We'll take our next question from John Hodulik with UBS.

John Hodulik -- UBS -- Analyst

Great. Maybe for some more detail on the $10 billion spend. Should we should think of the spending, as -- or the sort of timing of the spending, sort of ratable with the coverage targets. Or is there some more upfront spend, Tom, as you were talking about the sort of getting the converged core up and running by 2020? And then, clarification -- is that $10 billion the CapEx number, or does it include operating losses or working capital investment we may see in the wireless business? That's number one.

And then, number two is -- just a general question on wireless pricing. Can you -- you talked about adding Boost subs pretty aggressively. Does the MVNO in your mind, give you the ability to be disruptive in terms of the prepaid or postpaid market out of the gate, but before you've got any infrastructure up and running? And then again, maybe for Tom, any rough numbers, you talked about the cost advantage that you are going to have with this virtualized network, as you bring up each of these markets. Can you give us a sense on what the magnitude of the cost advantage you expect to have over sort of current carrier networks in these areas you've built-out? Thanks.

Tom Cullen -- Executive Vice President, Corporate Development

Hi, John. I'll take a crack at some of them and then Charlie, you might want to come in. But, yes, the CapEx is generally ratable with the expansion of coverage. As you pointed out, the 11 upfront investment in core, for instance. But in on the grant scheme of things, a core is grounding area compared to the entire build. So, there will be some upfront investments but generally its ratable. As far as wireless pricing, yes, we do think, we'd be disruptive, day one, as I said, not only because of attractive rates but also bundling capabilities that are reported to us in the deal. In rough numbers, in terms of CapEx savings, we've had discussions with Rakuten and we've talked to every vendor you can imagine. But since the RFI and the RFP just went out today, it's a little premature to answer, but we're confident that the CapEx savings are at least 25%.

John Hodulik -- UBS -- Analyst

Yeah. And the OpEx savings, there's some OpEx savings too?

Tom Cullen -- Executive Vice President, Corporate Development

Well, obviously, OpEx will be much reduced, if you virtualize things like you see in data centers or cloud service providers today.

Charlie Ergen -- Co-founder and Chairman of the Board

But if you take the 15,000 towers that we are committed to the FCC and you took the $200,000 per tower, you get to--.

Tom Cullen -- Executive Vice President, Corporate Development

The historic metric.

Charlie Ergen -- Co-founder and Chairman of the Board

That's a historic metric. You would be $3 billion, right. So, it gives you a feel for that we have a lot of flexibility in the timing. I think, the way I would look at it John, in terms of -- we mentioned we would spend $500 million to a $1 billion in a narrow band IoT network by the end of 2020. We've spent a lot on the narrowband IoT network. But obviously, to extent that we're able to redeploy those resources, while I think, we might be at the higher end of this range, right, maybe slightly over it, I think, that's still a pretty good number between now and 2020, in terms of what it will take to the core --.

End of '20.

End of '20 to the core, launch some cities and invest in Boost, correct. And then, we expect we're going to be profitable into business once we get up and running. I'm not saying we will be day one, but want to get -- see our legs on this -- we will be.

John Hodulik -- UBS -- Analyst

So, you're doing the whole process you're expected to -- let me say, profitable, you're expecting to sort of continue to generate positive EBITDA throughout the process?

Charlie Ergen -- Co-founder and Chairman of the Board

Again, I'm not saying, that we're going to do day-one because maybe we don't know what we don't know yet. But, based on what we're seeing from other MVNOs that do not have anything like the breadth and scale that we're going to have, we see some of them being profitable. It's not huge margins, but we think we'll be profitable and we think we'll improve on their margins. And again, some of the things there are actually doing with video, and a lot of things that at our disposal that maybe our competition doesn't have. So, we're not going to be just the one-man band, as a company.

Tom Cullen -- Executive Vice President, Corporate Development

Well, for instance, in video, as you know, we have a lot of cross-channel inventory in ad avails that we can use to communicate to 12 million homes, which represents about 30 million handsets. And we have granted, there is an opportunity cost there versus selling all of that time. But it's an easy way for us to communicate with a pretty large base.

Charlie Ergen -- Co-founder and Chairman of the Board

Yeah. I mean, we've got 30 million handset users that watches every day. And to the extent they have one of our competitors, some of them are very disappointed.

John Hodulik -- UBS -- Analyst

Got you. Okay. Thanks, guys.

Operator

We'll take our next question from Marci Ryvicker with Wolfe Research. Please go ahead.

Marci Ryvicker -- Wolfe Research -- Analyst

Thanks. I have a couple of questions. First, I just want to confirm that the prepaid transaction has no impact on leverage, because it sounds like it does not. So, is that the case?

Charlie Ergen -- Co-founder and Chairman of the Board

It won't have any impact -- yeah, it does in a direct way, which is -- we have net cash on hand, we'll have $1.4 billion of less cash. So, it has an impact on leverage, as you relate to net cash.

Marci Ryvicker -- Wolfe Research -- Analyst

But, you're also acquiring EBITDA. So, I guess, we're trying to get where your leverage --.

Charlie Ergen -- Co-founder and Chairman of the Board

Yes. No, it's -- the whole transaction is going to be positive. Let me put this way. I feel safe to say, it'll be very positive, long-term.

W. Erik Carlson -- President and Chief Executive Officer

We're only few days into this and we're certainly building the models in here, but we certainly believe that that financial side that maybe some people point to, in terms of our ability to fund this or raise capital or renew, that is not -- that's certainly not going to be our biggest issue. Our biggest issue is going to be blocking and tackling and execution. Planning the network, building that network in a modern way that's maybe quite a bit different than the way people have done in the past, just like digital compression was quite a bit different than analog video. That will be our biggest channel. But, we've done it before and there's an awful lot of people that -- there's a lot of people have done a lot of similar things because most of our architecture looks more like a data center, looks more like a cloud data center than it does a wireless network. So, most of what we need to do has already been done by Amazon and Google and Facebook and Microsoft and Equinox -- not Equinox but data center companies. So, we're not breaking a lot of ground there.

Marci Ryvicker -- Wolfe Research -- Analyst

And where will the business sit in your structure?

Tom Cullen -- Executive Vice President, Corporate Development

It will be the holding the company, Marci.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. And then, the last question I have unrelated. Is there anything that you can say on the Arpson deal? We know you dropped the 22 Fox networks. Is the issue REIT or a minimum guarantees or something else?

Warren Schlichting -- Executive Vice President and Group President, Sling TV

Marci, hi. This is Warren Schlichting. I don't know how detail we'll get. But, look -- we offered a 30-day extension and we have tried incredibly hard. And frankly, I think, we said it in the past, the model is broken. And we've got real data, we've got real viewership and it's an expensive gamut for us. So, frankly, I and my team have made a recommendation to the Chairman. Now, we don't know, exactly how the Chairman might react to that. But, the RSNs are just not a good deal. And so the recommendation is actually to leave those RSNs off service long-term.

Charlie Ergen -- Co-founder and Chairman of the Board

This is Charlie. The frustrating thing is they are not very good economic deals for us and our customers are a little bit more rural; on the Sling slide, they are younger, they don't watch as much as sports. We have yes on Sling, we don't have yes on linear TV. So, we have real data that tells us that the channels are priced and Fox, has a lot of leverage to get people to overpay when they own them. So, that's the nature of the beast.

Having said that, the new owner Sinclair, we think, is a company we want to do business with. We like a lot of what Sinclair is doing with the ATSC 3.0 and culturally I think, we're pretty well aligned with them. So, we hate to be in a position to not be able to carry a product that they are investing a large sum of money in.

So, that's why the Chairman is having a tough time with this one. So, I'm probably going to take this to our Board this week. And because, I'm emotionally involved, I want to keep them. And my nose tells me, that's not the right thing to do. So -- but once you take something down, a month from now, we won't have anybody that wants a regional sports network. And to put it back up, when you've lost the customers that want it, makes no sense, makes no sense. And all you're doing is taxing the customers, you don't watch it. We clearly will lose some customers, but it's a very small fraction of our customers that are avid viewers of the regional sports, primarily baseball. So, it's kind of now, and we will lose some customers. I hate it that we lose customers. But, I also feel really good about the fact that maybe the vast majority of our customers can get a price break in a marketplace where it's getting more and more difficult to raise prices. So, it doesn't -- I guess, the Chairman saying, it doesn't look good that the regional sports will ever be on DISH again.

Marci Ryvicker -- Wolfe Research -- Analyst

Okay. Thank you.

Operator

We'll take our next question from Ben Swinburne with Morgan Stanley. Please go ahead.

Ben Swinburne -- Morgan Stanley -- Analyst

Thank you. Charlie, just a couple of questions following-up on some of your wireless comments or Tom. When you guys think about the opportunity in front of you, you've paid $20 billion for the spectrum, you've got another $10 billion, as you mentioned, plus this acquisition. Is the bigger opportunity long-term in sort of the retail business to build-out a DISH brand in wireless business or is it more significant as a wholesaler? You've talked a lot in the past about all the tech companies that depend on conductivity and that was a pretty compelling message. And now you've got seemingly a path to build something pretty unique.

Just wondering if you look at those two options and you can even throw the cable companies in the mix, long-term, which one of those do you see as a bigger opportunity for you? And secondly, I noticed you guys hired a new CTO, I think, about 10 days ago, it was a background from Jio. I was wondering if -- may pronounce the name wrong, Kannan is going to be running the wireless network build out. If there's more sort of executive hiring you plan at the top on this business?

Tom Cullen -- Executive Vice President, Corporate Development

Hey Ben, this is Tom. So, I'll answer the first one, which Charlie already mentioned earlier. So, I'm not sure, if you were on through the whole call. But, we still envision the breadth of our spectrum being deployed in a wholesale manner, based on 5G virtualization. But, you can see that one of those significant slices will be committed to retail. So envision it like DISH bought one of the slices and that's where we'll support Boost and the Boost growth in retail, and as I said potentially other brands. That doesn't mean there is still isn't other capacity that can be wholesaled as we've talked about for the past couple of years, and that could be to many different verticals as well as, 5G enterprise applications.

So, I don't think they are mutually exclusive and we'll pursue both. As for Kannan, the new CTO, he is hired to replace the CTO that left the DISH network operation. And he happens to have wireless experience but he's going to be primarily focused on the DISH operations but we value his experience and look forward to bringing him on board.

Ben Swinburne -- Morgan Stanley -- Analyst

Got it. And just on the satellite business. You guys have talked for a long time, as you just did on the Fox RSN that sort of once you take the pain of letting a channel go dark, it's now worth bringing them back. So, I was surprised Univision came back. I think, it was off for like nine months and you guys took a hit on the subscriber front. Maybe you could talk about your thought process in terms of bringing that programming back on?

Charlie Ergen -- Co-founder and Chairman of the Board

Yeah. This is Charlie. That was painful for both companies. But believe, the deal they could have had and the deal they got were different. So, it's economics for us and it's not -- so it's -- I mean, regional sports might come out at a fraction of the cost down the road but that's not going to be very attractive for anybody. And obviously, people have MFNs and things like that in the industry. So, Univision was unique. It was kind of same situation, Univision was unique that the management changed. So, it took the new management -- the old management, there's a reason why the old management went there, because they didn't value DISH as a customer and tried to charge us more money than anybody else, which is -- I mean not the same, I'm talking about more money than anybody else, which is probably -- which is not a good idea. And here, we are -- the problem with Fox Sports is they've been sold to Sinclair, but they're still under the Disney umbrella and I think Disney's got a -- correct me if I'm wrong, but I think they have an independent -- they've somebody else to negotiate. I don't think, we're negotiating directly with them.

So, it would have been logical just to extend the contract till Sinclair owned the asset. And then, based on the overall relationship we have with Sinclair, particularly with retrans and some other things with Sinclair, and we are trying to do together that there probably was a basis for a deal that works for everybody. But, if you're not going to extend the contract, are you want to extend the contract long-term at poor rates, at the beginning of the baseball season next year, that's not -- I'm from Tennessee, but I'm just not that stupid. And we're not going to do that. So, I have this -- I expect people to be logical but they're not always logical. And the top ten not so smart things that I've seen since I've been in business, Fox not extending the regional sports contract, is one of the top ten, it doesn't make any sense. But, we also know that we're not in their shoes and we may be missing something. And we don't know contractually what they have and we don't know contractually what they can and can't do. So, we may be missing something. But it doesn't make any sense for us. But, we got a Board meeting later this week, and we'll make a final decision.

Tom Cullen -- Executive Vice President, Corporate Development

Operator, we'll take one more from the analyst community before moving on to the press.

Operator

Thank you. [Operator Instructions] Our final analyst question is from Jonathan Chaplin with New Street Research. Please go ahead.

Jonathan Chaplin -- New Street Research -- Analyst

Thanks. Since I'm last, I'm just going to rattle-off a few quick ones. So, first of all, Charlie, I'm curious why you went for 800 megahertz and not a big chunk of the 2.5? Was 2.5 something the T-Mobile wasn't willing to give up? And then, is the deal that you got at the moment the best deal you think you'll get or is there an opportunity for you guys to get more value as T-Mobile goes in to negotiate with the states and in -- in court? And then, probably the 15,000 sites, does adequate to 50% of pops or to 70% of pops? Thank you.

Charlie Ergen -- Co-founder and Chairman of the Board

Yes. I'll let you in on -- we negotiate deals with Sprint T-Mobile that we thought would be very competitive for us. It then went to DoJ, and I think with the pressure from the state, that deal got actually materially better for us on a lot of fronts. And so, kudos to the Department of Justice, but also to the threat from the states. That got a lot better. And I don't know what's going to happen with the states. That's up to T-Mobile and Sprint as to whether they make further concessions, and if they make further concessions, it might be the people other than DISH. So, the 15,000 towers probably come pretty close to 70%, depending on where you put them and depending on the frequencies used probably comes pretty close to 70% of the population.

Tom Cullen -- Executive Vice President, Corporate Development

But until we get a link budget in RF plan, we can't finalize that.

Charlie Ergen -- Co-founder and Chairman of the Board

But, we expect that we're obviously going to build out, as fast as we can so. So, if the FCC has got some good guardrails for us in terms of goalpost to where we need to get to. So we know kind of where the floor is, but it really depends on the economics as we grow and as we move forward. I would say, just Jonathan -- and you by the way, congratulations, you are an analyst that has picked up on some things that maybe some others haven't in your model.

As you know, our cost goes way down when use -- owner economics. But every Fortune 500 Company, every Board of Directors either has or will, ask their management to have a 5G strategy, all right. And if you are going to have a 5G strategy, then you're going to have to understand what a network really can do. And there will be a lot of companies that can help companies with the 5G strategy. The one Company will be in everybody's list is going to be DISH. And we're not going to be able to do things for everybody and -- but we're going to work with the companies that have a vision, the same vision that we do, and want to move in the same direction that we do, or we get educated and we should go in a different direction.

The 800 megahertz, well, the 2.5, the -- so that's leased, it was a bit complicated, and of course we knew it pretty well because we try to buy Clearwire and then Sprint six years ago. So, it was something that we looked at different buckets, the 800 for us, given that we believe we're going to build macro towers from the outside in and that we believe additional frequencies will come on the market on CBRS or C-band or some other frequencies, we might build inside out. We don't like the longer-term play for us was better there.

Jonathan Chaplin -- New Street Research -- Analyst

Thank you very much, guys and congratulations.

Tom Cullen -- Executive Vice President, Corporate Development

Thanks.

Charlie Ergen -- Co-founder and Chairman of the Board

Okay, operator, we'll move to media.

Operator

Thank you. [Operator Instructions] Our first media question comes from Scott Moritz with Bloomberg. Please go ahead.

Hey guys, thanks. On financing, Charlie, are you open to selling any of your spectrum at this point?

Charlie Ergen -- Co-founder and Chairman of the Board

Well, we prefer not. In fact, we have some restrictions on -- potentially restrictions, although it needs the FCC approval. So, it depends on what the spectrum was. I mean, if you looked at our portfolio that we believe, we need to spectrum that we have to be competitive. Right. It is not to say, there is not a piece here or there, but we believe we need that spectrum.

Operator

Thanks.

At this time, we have no further questions in the queue. I would like to turn the conference back to our speakers for any additional or closing remarks.

W. Erik Carlson -- President and Chief Executive Officer

No. Thank you for your time and interest. We will be in touch.

Operator

[Operator Closing Remarks]

Duration: 77 minutes

Call participants:

Jason Kiser -- Vice President, Investor Relations and Treasurer

Timothy A. Messner -- Executive Vice President and General Counsel

W. Erik Carlson -- President and Chief Executive Officer

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

Charlie Ergen -- Co-founder and Chairman of the Board

Tom Cullen -- Executive Vice President, Corporate Development

Warren Schlichting -- Executive Vice President and Group President, Sling TV

David Barden -- Bank of America -- Analyst

Jason Bazinet -- Citi -- Analyst

Doug Mitchelson -- Analyst

Brett Feldman -- Goldman Sachs -- Analyst

Philip Cusick -- J.P. Morgan -- Analyst

Kannan Venkateshwar -- Barclays Capital -- Analyst

Ric Prentiss -- Raymond James -- Analyst

Craig Moffett -- MoffettNathanson. -- Analyst

John Hodulik -- UBS -- Analyst

Marci Ryvicker -- Wolfe Research -- Analyst

Ben Swinburne -- Morgan Stanley -- Analyst

Jonathan Chaplin -- New Street Research -- Analyst

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