Hello and welcome everyone to the EchoStar Fourth Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to VP Investor Relations, Deepak Dutt.

Okay, thank you, operator, and good morning, everybody. Welcome to our earnings call for the fourth quarter and full year of 2018. I'm joined today by Mike Dugan, our CEO; Dave Rayner, COO and CFO; Pradman Kaul, President of Hughes; Anders Johnson, Chief Strategy Officer and President of EchoStar Satellite Services; and Dean Manson, General Counsel. As usual, we invite media to participate in a listen-only mode on the call and ask that you not identify participants or their firms in your report. We also do not allow audio recording, which we ask that you respect. So, let me now turn this over to Dean for the safe harbor disclosure.

Thank you, Deepak. All statements we make during this call other than statements of historical facts constitute forward-looking statements that involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially differ 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 filed with the SEC. 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. I'll now turn the call over to Mike Dugan.

Thank you, Dean. Good morning everyone and welcome to our earnings call. 2018 was another good year for EchoStar although our solid financial results were somewhat masked by a couple of non-cash items in the fourth quarter. Dave Rayner will discuss these items in more detail during his comments. I am convinced that we are well positioned to take advantage of the sweeping changes taking place in the satellite industry. We intend to be the leading global connectivity provider for people, enterprises, and things. We have already made great progress in enabling connectivity for people and enterprises, and believe that we are best positioned to provide connectivity for the evolving Internet of Things. Let me now turn it over to the management team to expand on their specific business segment, and before closing as usual we will have questions and answers. So here Anders please take over for ESS.

Thanks, Mike. Good morning. ESS fourth quarter revenue was $82 million compared to the $96 million last year. EBITDA was $69 million versus $73 million last year. ESS 2018 revenue was $358 million compared to $392 million last year and EBITDA was $308 million compared to $315 million last year. As we mentioned last quarter, the year-over-year revenue decline that ESS experienced is primarily based on the previously disclosed termination by DISH of the lease for the EchoStar 7 satellite. We expect that difficult environment for commercial FSS business and pressure on rates for U.S. government service opportunities will continue through 2019. On the EchoStar Mobile front, the team continues to make good progress in bringing innovative MSS products to market and in preparing to build out our next-generation hybrid network for IoT and 5G services in the European Union, and the primary focus on expanding MSS operations in the EU, over the last year, we have grown the EML commercial team, broadened MSS distribution relationships, and evolved our MSS products and services including the development of a new lower cost mobile terminal optimized for M2M and IoT services that we will launch later this year. We are also making significant progress in the development of new platforms and services to empower our distribution partners to rapidly expand our offerings in the mobile M2M and IoT verticals. Looking further down the road, we are hard at work in developing new technologies to integrate S-band satellite services into 5G networks and dramatically reduce the cost of satellite IoT services. We also plan to leverage technology developed by our affiliate DISH Network to enable exciting new hybrid services utilizing our complementary ground compartment – component authorizations. Over time we expect that EML products and services will be integrated into new global hybrid networks leveraging multiple satellite and terrestrial technologies. I'll now turn it over to Pradman.

Thank you, Anders. I'm delighted to say that financially, Hughes had a solid fourth quarter and fiscal year 2018. Q4 revenue was up 10% and EBITDA was up 12% over the same quarter last year. In the full year 2018, revenue grew 16% and EBITDA was up 27% over 2017. This strong performance consolidates our leading position in terms of both market share and EBITDA. Dave will present more financial information in a few minutes. We focus strongly on consumer satisfaction, and I'm pleased to report that satisfaction levels remained high in the fourth quarter. For the fourth consecutive year, HughesNet was ranked number one among all ISPs in meeting or exceeding advertised download speeds in the latest FCC’s Measuring Broadband America report, which was published in December. As another indication of customer satisfaction, we managed to keep churn low and ARPU remained high. This allowed us to continue to grow revenue and earnings, despite many beams on Jupiter 1 and 2 turning up. We ended the year with approximately 1,361,000 HughesNet subscribers, an increase of 153,000 subs over fourth quarter 2017 and 29,000 sequentially over the third quarter of 2018. Increasingly, much of our subscriber growth is coming from South America, and we expect this trend to continue. Jupiter 3 satellite is currently under construction with an anticipated in-service date in 2021. It will add significant additional capacity and enable us to offer service plans delivering 100 megabits per second of download speed to the consumer while maintaining the high quality and competitiveness of our service for unserved and underserved regions of the country. The new satellite will leverage the latest satellite and system technology to lower our costs a bit and maintain pace with the increasing usage from our customers. In consumer services, we lead the market in…

Thank you, Pradman. Before I get into our quarterly results, I want to highlight two items that significantly impacted the results. First consisting with the new accounting provisions relating to investments, which were adopted at the beginning of 2018 we are required to mark our investments to market and record the resulting gains and losses. As expected this has created volatility in our financial results throughout the year. As you know, the market experienced significant swings recently, especially in December when there was a downward movement in the broader market prices. Our investments were also impacted negatively resulting in a loss of $46 million in Q4 more than offsetting gains earlier in the year. Those investments have recovered so far in 2019 and are currently recovered to the point that they exceed the full year 2018 losses of $12 million and more. The second item has to do the valuation of our 45 West orbital slot over Brazil. As you know for several years we attempted to identify a partner for development of this VSS slot. We determined that plan will not be successful and accordingly have recorded an impairment expense of $65 million in Q4. We intend to redeploy EchoStar 23, which is located in that slot to a revenue producing role. Now the quarter's results, consolidated revenue in the fourth quarter was $531 million, a growth of 5% over the same period last year driven primarily by Hughes consumer and international enterprise growth offset partially by ESS. EBITDA in the fourth quarter was $85 million compared to $207 million last year with a growth in EBITDA at Hughes being more than offset by the unrealized losses on investments and asset impairments on the 45 degrees slot as well as a reduction in ESS EBITDA. Net loss from continuing…

Thank you, Dave, Pradman and Anders. As I indicated at the start, 2018 was a solid year and myself and the team are looking forward to an exciting 2019. We are now ready for the question-and-answer session, so let me turn it back over to the operator.

[Operator Instructions] And our first question comes from the line of Chris Lidle [Ph] from Northstar [ph].

Hey, guys. Chris Lidle here. Just a quick question. The talk around ESS and Europe, that's the first time you all have talked about integrating with DISH in terms of providing connectivity from a device standpoint and not necessarily a consumer. Could you expand on that a little bit in the sense of where are you spending money now to develop that and where do you see that going in terms of ultimately integrating with DISH and what they're trying to do from a connectivity standpoint? Thank you.

Well, this is Anders Johnson. I think given the strategy that DISH is pursuing regarding their NB-IOT network here in the United States, a collaboration at the device and applications level seemed obvious to us. So as many as a standards necessary for those products to be produced, we're doing it in a coordinated fashion looking more at the global opportunity as opposed to a regional opportunity to share in both the costs at the development stage as well as a rollout to as large market as possible.

Your next question comes from the line of Ric Prentiss from Raymond James.

Thanks, good morning guys.

Good morning, Ric.

A couple of questions. First, I appreciate that the Hughes segment grew year-over-year, but obviously in a recurring revenue model there is a lot of focus also on quarter-over-quarter and it looked like the Hughes revenues were basically flat quarter-over-quarter, and EBITDA was actually down quarter-over-quarter. Can you help us understand what might be going on there consumer versus enterprise, U.S. versus international. There's probably a lot of moving pieces there that are maybe masking what is growth markets versus new markets.

Yeah, Ric, let me try and address that. And as you well know, there are a lot of moving pieces and a lot of components. It's not as straightforward as it might appear. Certainly, on the consumer side, both in North America and South America, we continue to grow that business. Sequentially, we had a – I’ve got to be careful here, certain customers that we have contracts for development and equipment that we either slowed down or stopped work in Q4 because of their financial, our concerns that we had about their financial ability to pay us. That also, obviously impacted EBITDA as a result and it also impacted bad debt on one of those customers specifically. In addition, as we started up in new countries in South America, there are certain startup costs that we incur. Clearly, the first customer that we sign up is not a positive margin customer, and those businesses are going to scale just as Brazil has scaled and eventually contribute to the bottom line. But in the near term, those are investments in those new markets and their startup costs, both operationally and from a lack of scale standpoint. So this is – for the most part, those costs in South America, we view as very positive. There are investments that we're making in future revenue and margins. On the enterprise customers that we're concerned about, we think those will be – some of them will be resolved, others not so much.

And when you mentioned the reserve for bad debt, was that taken as a contra revenue or was it an expense item and can you kind of put a magnitude on that for us?

Yeah, it – well, it was more than five, less than 10. It was there – there was obviously an increase in bad debt overall is the size of the consumer business story. So, I don't want to say the consumer business is excluded from bad debt, obviously bigger revenue, more bad debt there, and it is flowing through G&A. On the enterprise customer, it also flows through G&A and really related to revenue that we’ve recognized in prior periods.

Okay, and obviously this tees up the natural question of more disclosure. Have you thought about are these businesses getting large enough at some point to break out U.S. versus international? Or some more clarity there to help us kind of peel back the onion to get out to actually see the growth versus the startup phases?

Yeah, we constantly discuss that and we’ve decided not to do this quarter because frankly it raises more questions than it does answers. As you start looking at the dynamics on a smaller scale, if you will, between Brazil – let's say between South America and North America, I think we'll get there -- as we've said previously, we think we'll get there, but it's got to have meaning before we put it out.

Okay. And then the last question for me is in the 10-K, there was a new language in there about the S-band that you’re looking at seeking additional licenses or opportunities to align with other licensees. Can you share with us kind of what your thoughts are there as far as what you need to own? How could you maybe align or partner with people? Just kind of help us to understand what that new language might be suggesting to us?

Well, this is Anders again. I think it's reflective of us identifying a broader opportunity and a lot of that opportunity is going to be dimensioned by the footprint. So, we don't necessarily need to own everything, but we want to make sure that we're aligned with parties that will give us the greatest reach possible as some of these new commercial markets develop.

And as far as timeline, I know the World Radio Conference is coming up this year, late this year, but how should we think about the opportunity to kind of put some more meat on the S-band bones over the next one or two years?

Well, I think, we've had our S-band licenses now for the most meaningful one for five years. So it's certainly taking a long view of the opportunity. I think to recognize your point, the World Radio Conference and then equally important to release some new standards early in 2020, we'll probably stimulate the actual manufacturer of devices and the rollout of products associated with it. So I'd look at it more in the intermediate term of 2020 being the start and 2021 and 2022 being the more meaningful periods of development.

That helps. Thanks guys.

Your next question comes from the line of Jason Bazinet with Citi.

I just had a question on Hughes. When I go back and look at launch of EchoStar 17 or EchoStar 19, you would either a few quarters ahead or a few quarters behind ViaSat launch. But candidly you can't even really see in the net adds at the financials that you guys put up that there were sort of any implication of that at all. And my question is as we get ready for ViaSat 3 launching in 2020, you guys said you're going to launch your next satellite in 2021. Do you think it's the same dynamic? Or do you think we're hitting the point where it becomes a little bit more zero some? Or there is not enough incremental capacity for you guys to sort of meet latent demand if you will that's out there? Thanks.

Yeah. I'm not sure, Jason, that I understand your question, but fundamentally the dynamics of the market, I don't expect any difference in the sense that as you use up all the beams, you saturate the amount of subscribers that we can handle with those beams and those satellites. So the curve starts flattening and then when you launch the next satellite, you pick it up again for a couple of years and hopefully the – order the next satellite at the time so that we don't necessarily have the period of flattening be as long as it – as it has been between Jupiter 2 and Jupiter 3.

I guess my question…

Should remain the same…

Should remain…

Sorry, go ahead.

No, no, that's okay. So does that mean you think you’ll see even more unit growth or the financials will just workout because you will end up having a higher priced product. We may not see as many subs, but you'll just get more ARPU as they buy higher end products?

No, I think you should see more unit growth definitely because you will have more, more capacity. And the market, as we mentioned is the penetration so far, it's only being about 10% of the available market, so plenty of room to grow number of subs.

Okay. The reason I ask – it just seems like if indeed the penetration rate is only 10%, it just seems like all of your capital should just be thrown towards the North American market where the ARPUs are high and there's this huge kind of opportunity. I mean, every time you launch a North American satellite, it seems to work for you and it seems like you're spending quite a bit of capital going to Latin America. Now, we're talking about Europe and I don't know, it just – if it really is 10% just let us focus on the North American untapped market, why is that not the right answer?

Yeah because we are not limited by capital, right. We’re addressing the market in Brazil for example, that's growing very nicely. Yes, the ARPU is lower than North America, but it's still a very good market. We make good margins. So I think, we will continue to address all these markets. We have, for example, the capacity available in Latin America, which we don't have now in North America where we are saturating. So the advantage of that is that for the next couple of years till we get Jupiter 3 launch, we'll see much more growth in Latin America then we will see North America. So the diversity of the marketplace is an important element in our strategy.

Okay.

Jason, this is Dave. Let me just add one more piece of that. We've conceded previously that we underestimated how quickly Jupiter 2 would sell and we were probably a little bit late on starting Jupiter 3. You can build more capacity throw it on earlier, I mean, and once again remembering this is a long build cycle on these satellites.

Yes.

But the reality is if you do that you’re going to be disadvantage in the long-term because the cost per gig on these satellites comes down dramatically with each generation. So we can go spend CapEx and go build, yes, 2 Jupiter 3 simultaneously and have that capacity available longer, but the reality is that a subsequent satellite is going to have better technology, better economics. And so you want to try and stage things appropriately, so that you're getting the best returns on the capital investment.

That makes sense.

Ideally, yeah, Jupiter 3 would be sooner than what we're going to realize, but we’ve conceded that now for some time.

Understand. That's very helpful. Thank you.

Our next question comes from the line of Giles Thorne from Jefferies.

I am Giles here from Jefferies. I had a handful of questions too. The first one was around Mexico. I'm seeing DISH Mexico straight terms with HISPASAT for capacity for a residential broadband. So that’s didn't make any sense to me. I didn't understand why you weren't in the frame for that. So if you could fill in the gap in my knowledge that that would be useful. And, yeah, I'll do one question at a time. Okay.

Okay. This is Mike. Obviously, we don't directly control DISH Mexico. We certainly have a capacity in Mexico that could be used. We constantly work with them on what we have to offer and so on, but they made that decision and we're okay with it. So we're pursuing other options for the capacity that we have in Mexico. We actually have a part of it already be [ph] producing revenue with a customer for part of it and we're working very hard to include [indiscernible] whether DISH Mexico will be part of that is yet to come.

Okay. But there was definitely a composition around that.

Oh, absolutely. I mean, Giles, you can have confidence. We worked with DISH Mexico on a daily and weekly basis and sometimes people do things financially that we find we can't do because we manage things a little bit closer than other people do. So, the HISPASAT probably made a little better opportune than we were willing to do. Our capacity is very valuable and our equipment is high quality and that’s all I can say.

Understood. Turning to Africa and downside of the JV there. You put $100 million – well, that's my first question, $100 million. Was that an amount of money you put into the JV in return for equity? Or was that an amount of money you gave to Yahsat to buy a stake from them in the JV? I'm guessing it was fresh money into the JV. Was that right?

Yes, yes, it’s the fragrance of the JV.

Okay. So that's – so there is $100 million cash sitting in that JV and presumably that’s going to fund a large marketing and distribution campaign. It is that right? And if that is right what’s…

Well, actually…

What early conclusions you’re coming through about distribution?

Actually, there is more than $100 million because there's about $160 million of cash in the JV because of some of the insurance payments on Yahsat 3. But having said that, this money is – allows us to have some ambitious expansion plans in Africa. We hope that we will buy more capacity either close to payload or a new satellite and we just kicked it off on January – early January. So it's only been a month since the JV has been in operation. But we are very optimistic that we’ll rapidly start filling the capacity available in Yahsat 2 and 3 and started our expansion planning.

And Yahsat has been operating there for years and years. So what are you bringing that's going to be different?

Well, one of the reasons they were interested in doing a JV with us is to use our expertise in marketing and distribution and proceed because repeat the success we had in North America, use some of the same knowledge and techniques distribution. So, hopefully, we have reset the marketing plans and distribution plans and that's all the experience that we bring to the party will allow us to grow that business in Africa.

And Giles, the other thing that's also different is the introduction of Yahsat 3, the new satellite into the market with new capabilities.

Understood. Thank you. And coming back to the question of the S-band. Anders if you could define, I mean, we ask most quarters what's the latest and what are you doing and so on. But if you could kind of top down define your ideal setup for the deployment of that license. Well, what is it to define that vision for us? Yeah, very open question.

Well, I think, as previously stated, our initial focus here has been to focus on the MSS development of the opportunity. And given what's happening in the evolution of networks overall and the opportunities that the whole 5G environment will create the MSS opportunity for us, we certainly considered significant how that eventually will carry through in the development of the CGC portion of the licenses we hold in Europe has yet to be fully defined. But for right now we're definitely focused on the MSS components and the opportunity there and have not really focused on CGC yet, although I would expect that naturally will follow as the definition of some of these 5G hybrid capabilities becomes clearer.

This is kind of what I'm coming to, which is everything you've said you've said before and that is understandable, but here's your opportunity to define what you would like to see be the outcome.

We have a lot of thoughts regarding that. We're just not sharing it right now.

Okay. Fair enough. Last question is then obviously it's a very lazy question, so do forgive me, but the window for a month that's opened up again. It feels like that that business and that equity story hasn't done much to reduce its candidacy as a target. I'm not going to ask you if you're going a bid again. But I am going to ask you what could be a catalyst for bidding again? I mean that was a situation you walked way what could be the catalyst for reengaging…

Yes Giles, as you can certainly understand we don't have any comments regarding that.

Okay. So what I'd give it a shot. I just have a lazy question. That was it from me, thank you.

Thanks.

Your next question comes from the line of Chris Quilty from Quilty Analytics.

So you don't feel so bad.

Chris Qulity.

Yes. So anyways, David I just want to follow-up on the Hughes margin question that Rick was asking. They were sequentially down about 350 basis points and understand there was a lot of stuff thrown in there with bad debt and start up costs. But just as we model out into 2019, I assume both of those issues should resolve to a degree. And are we looking at the margins continuing on the prior trend up at kind of the 36, moving to 37 level? Or should this impact drag on for another quarter or two?

I think you can probably expect a dampening impact from the startup. And a lot of it really factors into how successful we are in South America. If we're growing subscribers aggressively and we're meeting a lot of success in these new markets, we're going to be incurring subscriber acquisition cost of products. And as you know that's going to have a damping impact on margin. So it's sort of damned if you do and damned if you don't, right? We all want to have constantly increasing margins, but investing in new markets and new subscribers comes at a cost. And frankly, I hope we do have a little bit of a dampened impact on margin goods that bodes very well for the longer term.

And that should also show up in the net ads continuing to rise then.

Yes we will show up in net ad and it should also show up in revenue.

Okay. And just as specific question on Telstar 19V I know you kind of – you bought the entire payload there. But you're not fronting the entire, or are you fronting the entire cost of that, on day one when the satellite turned on?

Yes, the hosted payload that we are using which is on the whole satellite, we're fronting the costs of the hosted payload.

That was also reflected in the Q4 step down, correct?

It stepped down in CapEx, yes.

Yes.

Right, but I mean, in terms of margins?

Yes, I mean this is a little – there’ll be a little bit of operating cost with that. And certainly there are gateways and other ongoing OpEx associated with operating the satellites certainly.

Okay. Question on an EchoStar 23, because it's a little bit of an unusual satellite with Ka-band and S-band again, but also it's a broadcast satellite if I remember correctly. And that somewhat limits the utility, or I guess the orbital slots you may choose. Have you made some determination or are you still in discussions with who might want to use that capability because it's not a native capability you can deploy in terms of to the end customer?

Yes, I mean, just to be clear about the spacecraft, it's a space systems moral, FS1300X. So it's a very large, powerful DTH spacecraft, it's strictly a Ku BSS frequency space station. So it does not have any S or K capabilities on board. And in fact, when we designed it we contemplated future deployment of it, so from a capability standpoint it's pretty much a Western Hemisphere region to Ku BSS spacecraft. So it's capable performing since both into North America, as well as South America. So we're obviously going to be in discussions with the usual suspects about onward deployment opportunities.

I understand. David question for you, I mean, I was surprised that the buyback was not larger given where your stock is trading here. Is there some reason that you're not deploying cash quicker?

The buyback which we have, that's my reflection, we've never done, we might have done some things back in 2008, 2009 timeframe, but certainly not recently. So this is our first buyback that any size that we've done. And it's being done under parameters based on Board of Directors guidelines.

And if the stock remains at these levels is the Board perhaps more motivated to get more aggressive with the buyback.

I don't think I want to discuss what motivation the Board may or may not have, or what our plans would be in that arena.

Got you. And so final question back to Anders on the IoT and M2M side of the market, can you please just clarify the type of service, because it can range from very narrow band, low cost type of IoT service to more of a high bandwidth applications. Or for trucking and transportation where exactly are you looking to position the service with your customers? And have you established distribution channels for going to market.

broadband (0:48:56):

Okay. And I’ll add one more question, if I can circle back to something David said earlier about the rate of technology progression with the staging of satellite acquisitions. You haven't given a throughput or any type of capability around Jupiter-3, but as you look at developments in onboard processors and beam forming and other technologies, do you expect the rate of improvement that we've seen over the past decade to improve, to continue for the next decade, or are we starting to see either due to size of satellite or available spectrum, the rate of growth starting to slow in terms of the satellite improvements for your Jupiter-4 call it?

I'm going to turn that over to do the engineering expertise, of Mr. Pradman Kaul.

I think the rate of technology improvement is pretty steady. And so I would expect that Jupiter-3 will reflect that growth in capacity, cost per bit, the speeds, the various parameters that are very important to us. We've said previously that [Technical Difficulty]. So we've said that we will have over 100 megabits download speeds into each terminal. [Technical Difficulty] the various parameters that dictate what kind of services we will be able to offer. And the fact when you have that much capacity in a satellite the cost per bit goes down also and so all of them contribute to the quality of the service that we will be offering.

I understand. Alright.

Your next question comes from the line of [indiscernible].

Hi. So I guess almost everything has been asked at this point. But just wondering in terms of a follow-up on the beams on Jupiter 2 being full, can you just give us a sense as to whether or not, they're full in the sense that they're maxed out fully or is there sort of a conscious decision for certain beams not to fill them up totally with consumer broadband capacity and reserve some of that for other uses in the future? And then just in terms of, I know that probably there was an interview with you late last year on India-related opportunities for building and deploying a casing a satellite so anything there? And then finally, Dave, I just wanted to make sure I understood correctly what you said earlier. Are you paying off the sort of the full balance the $990 million of the 2019 debt when it comes to, or are you in repaying?

Well, let me answer that piece then I'll turn it over Pradman for the first two parts of the question. Yes, our intent would be to repay the 2019 maturity, not refinance it at this point. I think we've got lots of capabilities to refinance it if we wanted to do so. But at this point in time we'll just repay it.

Yes, let me address the question Jupiter. We are very keen to and will be looking hard with the India Government and ISRO to get a license to try to put a Ka-band satellite, broadband satellite over India. I think we are in good position there and if the Indian Government makes a decision to issue such a license we're in a good position to be right up front on the list of companies that get that license. But as of this stage we have a not crossed our final hurdle. So we are working right there and hopefully one of these days we'll succeed. What is the first question? I didn’t get you.

It was around just beams filling up on Jupiter-2.

Yes, yes, yes. So basically we tend to fill beams up to capacity. But then there's always sure that creates a little capacity and then we fill it up again. So there's a constant filling action going on. But essentially the beam is full. The only area where we reserve a little capacity is for our aeronautical business, in certain beams. But for practical purposes when a beam is full it’s full.

And Pradman we ought to add, as we manage capacity within the beams, customer experience is very key.

Right.

We do our very best to make sure that the full position four our beam still supports what the customer expects that I think are constant awards for best service and best expectations by the customer, I think, we're doing the right thing. We value every bit and we try to deploy it in the right way. And we will not say that every beam being full is set up the same heights because that's just not the way it works.

Okay. And just one additional follow-up. Just looking at the a Hughes equipment revenue, should we infer that OneWeb might not be deployed as quickly as people had originally expected, might be having any sort of problems there?

I don't think would infer anything regarding OneWeb or any other specific customer.

Got you. Thank you, appreciate it.

Operator we probably got time for one more question.

Our next question comes from the line of Jonathan Jacoby with Tabor.

Hey just two quick follow-up questions. One, I think, we all understand now that sort of margin call it in the near to somewhat mid-term are going to be under some pressure. But what is the long-term margin target for the business as you sort of work through the investment cycle? And then secondly, do you have any monetization plans for the Dish Mexico? Thanks.

In terms of the sort of the long term margins a lot of that really is driven by the mix and the distribution methods. When we have in North America for instance incremental margins on a consumer, retail, subscriber, are very high above 50% incrementally. And so as we grow that business obviously there's very, very strong opportunity for margin expansions. There's other aspects for our business, the equipment sales and development efforts with specific customers, we don't see those kinds of margins, which is why we're so excited about the consumer business and shifting more to a recurring revenue. South America incremental margins, we're approaching from a margin standpoint then those kinds of numbers in Brazil right now we're starting to achieve scale. Obviously the smaller markets such as Columbia, Ecuador, Peru and other countries we launched in, yeah, realistically I don't expect to be able to get to those margins because I don't think we'll be able to achieve same kind of scale that we see in North America. So hopefully that gives you a kind of indication without giving the specifics. As we started looking at other joint venture kind of markets be it Africa, be it other places, real distribution methods are going to be different. If we're selling capacity, if we're selling equipment and letting our partner run the local operations, it's going to give us a different margin mix than if we were running it ourselves. But obviously we wouldn't have the same kind of capital investment in those markets.

Okay. Thank you.

Dish Mexico, I would say just like any of our investments opportunities to monetize versus continue to operate them, we would always evaluate that. So we don't have any specific plans at this point.

Thanks.

Operator, I think, that brings us to the end of the call today. So let me close by saying thank you everybody for participating. Good day.

This does conclude today’s conference call. You may now disconnect.