EchoStar Corporation (SATS) Q4 2024 Earnings Call
EchoStar Corporation (NASDAQ:SATS) Q4 2024 Earnings Conference Call February 27, 2025 11:00 AM ET
Company Participants
Dean Manson - Chief Legal Officer
Hamid Akhavan - President and CEO
Paul Orban - EVP and Principal Financial Officer
Gary Schanman - EVP and Group President, Video Services
John Swearinga - President of Technology and COO
Paul Gaske - COO, Hughes
Conference Call Participants
Rick Prentiss - Raymond James
Michael Rollins - Citi
Walter Piecyk - LightShed
Jonathan Chaplin - New Street Research
Bryan Kraft - Deutsche Bank
Ben Swinburne - Morgan Stanley
Tim Horan - Oppenheimer
Adam Rhodes - Octus
Operator
Greetings, and welcome to the EchoStar Corporation's Fourth Quarter and Year End 2024 Earnings Conference Call. At this time, all participants will be in listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce Dean Manson, Chief Legal Officer. Dean, you may now begin.
Dean Manson
Thank you, Rob. And good morning, everyone. Welcome to EchoStar's fourth quarter and full year 2024 earnings call. We will begin with opening remarks from Hamid Akhavan, President and CEO followed by Paul Orban, EVP and Principal Financial Officer; Gary Schanman, EVP and Group President of Video Services; John Swearinga, President of Technology and COO; and Paul Gaske, COO for Hughes. We request that any participant producing a report not identify other participants or their firms in such reports. We also do not allow audio recording, which we ask that you respect. All statements we make during this call, other than statements of historical fact, constitute forward looking statements made pursuant to the Safe Harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by the forward-looking statements. For a list of those factors and risks, please refer to our annual report on Form 10-K for the year ended December 31, 2024 filed today, February 27th, and our subsequent filings made 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. We refer to OIBDA and free cash flow during this call. The comparable GAAP measure and a reconciliation for OIBDA is presented in our earnings release and in the case of free cash flow in our 10-K. With that, I'll turn it over to Hamid.
Hamid Akhavan
Thank you, Dean. Welcome, everyone. Thank you for joining us today. This past year marked the beginning of a transformation for EchoStar as we continue to strengthen our business to compete at a larger scale in the global telecommunications market. At the beginning of 2024, we brought two great companies together, EchoStar and DISH Network. The merger combined DISH Network satellite technology, video services, retail wireless business and nationwide terrestrial 5Gs network with EchoStar's premier satellite communications, enterprise go to market capabilities and US based manufacturing, creating one company with the broadest portfolio of assets in the telecom, media and space verticals. Integrating and leveraging these valuable assets allows us to provide unique solutions like direct mobile phone to satellite connectivity under one entity. Over the past year, we enacted a plan to improve our capital structure, leverage synergies across business units, reset Boost Mobile, continue to expand and optimize Boost's state of the art Open RAN 5Gs wireless network and drive value for our shareholders. I'm pleased with the dedication and resiliency of our teams in executing against this plan and managing costs across the board to create shareholder value. As for our operating results, the Pay TV segment improved over prior year results on most key metrics, including churn, ARPU and SAC. Our Hughes business includes both Hughesnet, our consumer brand and the Hughes enterprise business. Among other assets, both leverage the most sophisticated commercial satellite in the world, JUPITER 3, which delivers more than 500 gigabits per second of broadband capacity.
As we increased our focus on the enterprise markets, teams work to make further inroads with in flight aviation products and services, DoD contracts and growth in our managed services arm for which we were named for the second year in a row a leader in the Gartner Magic Quadrant. Boost Mobile made steady progress throughout the year. Excluding the impact of ACP, our efforts resulted in consecutive quarter-over-quarter net positive subscriber growth since Q1 of 2024. Boost Mobile also saw improved churn and achieved significant lift in ARPU. These gains are a bellwether of things to come. We continue to enhance our network and met our 80% FCC coverage commitment by the end of the year. In addition, Boost Mobile Network was recognized last month as the number one mobile network in New York City by third party industry benchmarking experts. This is a testament to the hard work of our network engineering teams and the excellence of our technical infrastructure. Drawing upon two of our exceptional assets, EchoStar is uniquely positioned as both a satellite and mobile service provider to develop solutions with a global impact. Our portfolio of products and our unique spectrum assets put us in the advantageous position to offer such solutions as direct satellite to device connectivity a service we have in operation since 2023 through partners in certain international markets. We are already hard at work on the most capable offering of this technology and we look forward to keeping you updated on our progress in this exciting space. Collectively, for the year, we made progress towards our goals while realigning the business, addressing financial needs and establishing a firm foundation. For 2025, we are focused on maximizing the use of our available resources to gain market share and accelerate value creation. Now I would like to turn it over to Paul Orban for commentary and color on the numbers.
Paul Orban
Thank you, Hamid. At the end of the fourth quarter, our total cash and marketable securities was $5.7 billion, reflecting an increase of $3 billion compared to the prior quarter. This improvement was primarily driven by a series of financing transactions that raised $5.6 billion in net proceeds, partially offset by the repayment of approximately $2 billion of DISH DBS senior notes in November. In addition, we recognized a $689 million gain on debt extinguishment from the successful exchange of $4.7 billion of our convertible notes and extended those maturities to 2030. EchoStar generated positive operating free cash flow in 2024, defined as free cash flow before debt service payments and non-operating CapEx, which was in line with our expectations. Looking to 2025, we expect to maintain positive operating free cash flow as we remain disciplined in managing our operating cost structure while continuing to grow our wireless business. Free cash flow, including debt service in 2024, was a negative $1.2 billion. That's an improvement of approximately $500 million compared to the prior year. We reduced CapEx, excluding capitalized interest, by over 50% in 2024 to $1.5 billon, which is in line with our prior guidance. We expect CapEx will decline in 2025 as our SEC build out deadlines were extended.
Now let's review our financial performance for the fourth quarter and for the full year of 2024. Revenue was approximately $4 billion in the fourth quarter, down 5% year-over-year primarily due to fewer subscribers at Pay TV and Hughes compared to the prior year. OIBDA was $397 million in the fourth quarter and an increase of $9 million year-over-year adjusted for the 2023 noncash asset impairment charge. This improvement was driven by more efficient Boost Mobile marketing, partially offset by a slight decline in Pay TV OIBDA due to fewer subscribers. For the full year '24, consolidated revenue was $15.8 billion, that's down 7% year-over-year due to subscriber declines in each of our segments. OIBDA was $1.6 billion in '24, down from $2.1 billion in '23 when excluding last year's noncash impairment charges. The reduction in OIBDA was driven by lower average of subscribers and higher wireless network spend, partially offset by a reduction in SAC and cost savings from G&A. Lastly, I'd like to provide a brief update on our segment reporting structure. Historically, we have reported four segments: Pay-TV, retail wireless, 5G network deployment and broadband and satellite services. To align with how we view and manage the business, we combined the retail wireless and 5G network deployment segments into a single segment now called wireless. This change reflects a more integrated approach to how we operate and manage these businesses and is in line with industry practices. With that, I'd like to turn it over to Gary to discuss Video Services.
Gary Schanman
Thanks, Paul. In Q4 and throughout 2024, our Pay TV businesses fared well despite industry headwinds. In 2024, we achieved a year-over-year ARPU increase of 4.2% across Pay TV. Our cost optimization work continues and we yielded year-over-year SG&A and variable cost savings, and these efforts drove substantial increases in OIBDA per sub group versus the prior year. Across both services, we also leveraged our native proprietary AI and ML capabilities to better identify, attract and retain quality customers, leading to reduced marketing SAC and significant churn reductions. For DISH TV, we finished the year with approximately 5.7 million subscribers with 2024 churn at 1.46%, a 23 basis point improvement versus last year. SAC per activation also improved 10.5% year-over-year, driven by increased marketing efficiencies. Our lower year-over-year churn is really attributable to our data driven retention efforts, our improved DISH TV Hopper UX that we launched, our bundled Netflix offer for DISH TV customers and our lack of programmer blackouts. We also drove incremental ARPU via the introduction of our DISH connected set-top box programmatic advertising capability last year. On the Sling side, we finished the year with approximately 2.1 million subscribers, a year-over-year increase of almost 40,000 customers. We saw a churn improvement of 141 basis points year-over-year. That's our lowest level since the pandemic. And lower year-over-year SAC and increased our marketing ROI.
In 2024, on Sling, we launched many new product features, including free stream DVR, Arcade and our rewards program. And late in Q4, we launched our unlimited storage DVR and our replay feature, which provides consumers with unparalleled access to the best of live TV on their own schedule. These differentiated product features and our focus on quality resulted in 21 straight months of viewership growth and extended our lead in live TV streaming quality. We are especially proud that we were recognized as the best live TV streaming service by both US News and World Report and Tom's Guide, and we're well positioned for 2025. Our main focus in 2025 is to better integrate and cross sell our products with the Boost Mobile and Hughes product portfolios. Our first effort is the recent launch of Sling within our Boost Mobile app, providing our wireless customers added value with free content and we'll continue to more deeply integrate our content experiences into Boost Mobile to help support wireless growth. I'll now turn it over to Paul Gaske who will cover broadband and satellite services.
Paul Gaske
Thank you, Gary. Our Broadband and Satellite Services segment operates in the consumer, enterprise, aero and government markets. Our Hughesnet consumer business continues to add subscribers on our JUPITER 3 satellite, offering affordable high speed unlimited data service plans to new customers while simultaneously providing high value upgrades to existing customers. We closed 2024 with approximately 880,000 subscribers. Our satisfaction surveys continue to show that customers like our new plans, confirming that our JUPITER 3 satellite and platform are delivering a quality experience. Our focus remains as in previous quarters on acquiring and retaining high value customers for Hughesnet. Our North American enterprise managed services business signed several major contracts to upgrade network infrastructure, provide managed Wi-Fi access, offer network management and launch our latest cybersecurity services. Hughes was selected over larger competitors because of our superior support and service offerings. Additionally, our Hughes managed LEO business has now shipped over 15,000 Hughes manufactured user terminals. Feedback from our customers continues to be very positive. Our in-flight connectivity business signed an expanded contract with Delta Airlines to provide in-flight connectivity for future new deliveries of select A350 and A321neo aircraft. This expanded contract features the Hughes Fusion multi-orbit in-flight connectivity solution, an industry first technology tailored for commercial aviation that simultaneously blends LEO and GEO satellite capacity at ka and ku frequency bands. The multi-orbit and multi-band capability allows Delta to utilize worldwide capacity to deliver an industry leading passenger experience. Our unique network architecture for in-flight connectivity is experiencing increased interest from airlines around the world.
In our Government and Defense business, we continue to execute on our contracts with the DoD for 5G open RAN networks and DoD installations with the US Navy and with the island in Hawaii as well as with the US Army at Fort Bliss, Texas. These awards add to the growing number of US military installations with the capabilities Hughes can provide, including program and network management alongside Boost Mobile's leading edge 5G technology and network. In 2024, Hughes was the only satellite connectivity and telecom business recognized as a leader in the Gartner Magic Quadrant for Managed Network Services. This is the second year in a row for Hughes to win this award, which is a testament to our ability to deliver cutting edge secured network services. Additionally, Hughes was also named the 2024 Managed Security Service Provider of the year by CyberSecurity Breakthrough. The award recognized Hughes as a leader in providing businesses of all sizes with managed network and security solutions. Our international managed services business recently earned several multimillion dollar contracts in India and Brazil, providing connectivity for more than 3,000 schools and multiple energy companies. Increasingly, international business customers are selecting Hughes for managed services in addition to capacity. Globally, we see continued interest in our Jupiter ground system with new contracts expected throughout 2025. With that, I will turn it back to Hamid for an update on Boost Mobile.
Hamid Akhavan
Thank you, Paul. Regarding Boost Mobile, we made significant progress in 2024 toward our goals of optimizing marketing and acquisition techniques, simplified and differentiated consumer offers and a strengthening device parity, all while increasing on-net usage to take advantage of owner economics. The new Boost Mobile has made steady progress since its launch midyear with a host of prepaid and postpaid plans under one cohesive brand. We also launched differentiated offerings like the one free year of service with the purchase of a qualified device and a 30-day money back guarantee risk free. Strengthening product parity was an important objective for us this year. Through the introduction of more devices that are compatible with Boost Mobile network, our product portfolio continues to expand, allowing for increased customer profitability. Additionally, we increased our distribution through an expanded relationship with Apple with customers now able to purchase and activate Boost Mobile service through Apple retail channels alongside the nationwide incumbents. We plan to further invest and grow our distribution footprint in 2025. Excluding the impact of ACP, our efforts resulted in consecutive quarter-over-quarter net positive subscriber growth since the first quarter of 2024. We finished 2024 with approximately 7 million wireless subscribers with a growth of 90,000 net subscribers in the fourth quarter. In addition to these promising subscriber trends, Boost Mobile is acquiring higher quality customers as evidenced by our 28% improvement in churn year-over-year, an increase in take rates for auto pay and the highest ARPU across the wireless prepaid market. We will continue to build upon this momentum, capitalize on operational improvements and leverage our new go-to-market approach in 2025. Let me now hand the call to John to cover our network deployment progress.
John Swearinga
Thank you, Hamid. We are the world leader in developing and operationalizing the cloud native Open RAN 5G network. In 2024, we further expanded our leadership in innovation in this space as we've proven our American led Open RAN architecture provides competitive wireless services for consumers and businesses. Our software defined scalable architecture allows us to continually improve the performance and efficiency of our network and rapidly deploy new solutions. Additionally, our Boost Mobile network architecture is well positioned to support Gen AI use cases and workloads. In 2024, we invested $1.1 billion in CapEx for network deployment in addition to the $2.6 billion in 2023. And continue to be disciplined in our approach as we transition from building our network to running, optimizing and monetizing it. During the fourth quarter, we met our latest FCC milestone by extending our 5G broadband coverage to over 80% of Americans, which is more than 268 million people. With this achievement, we now have over 23,000 sites on air. We also added to our 5G voice coverage, now offering VoNR to more than 220 million Americans in over 100 markets with successful network launches in Boston, Seattle and Pittsburgh. We've already deployed 3GPP Release 17 across our network and we're well on our way to achieving 24,000 sites on air by June 14, 2025 in alignment with our new FCC framework, which allows us to more efficiently build out our network and increase competition in highly populated areas.
Along with the expansion of our network, we are also observing increasingly competitive network performance metrics. And in many markets, our network is already outperforming our competitors. Recently, the Boost Mobile network was awarded by a key third party benchmark survey, the best overall mobile network in New York City and we anticipate highlighting more head-to-head wins in the future. In regard to our on-net customers, they received pure 5G on the Boost Mobile network and have extended coverage through our network partnerships with wireless coverage totaling 99% of the US. Today, we have over 1 million customers on net and are loading more than 75% of compatible devices on our network in the accelerated markets. As Hamid mentioned earlier, we are focused on activating a growing percentage of new customers directly on to our network as well as upgrading existing customers to Boost Mobile network compatible devices. This will continue to be a key priority as we work to further leverage owner economics. For 2025, we plan to continue optimizing the Boost Mobile network and increasing our networks footprint based on consumer needs and in accordance with meeting our FCC milestones. Additionally, we look forward to working with the FCC to increase CBRS power levels, a key step towards improving spectral efficiency, increased utilization of this band and aligning the US with the rest of the world. Now I'd like to turn it back to Hamid for a few short closing comments.
Hamid Akhavan
Thank you, John. Based on the momentum of 2024, we have a good starting point for the current year. EchoStar is positioned to deliver further operational improvements in 2025. We will continue to run our business with fiscal and operational discipline and focus on value creation by serving our customers with exceptional experiences. With that, we will open it for Q&A from the analyst community. Operator, please give the instructions.
Question-and-Answer Session
Operator
[Operator Instructions] The first question today is from the line of Rick Prentiss with Raymond James.
Rick Prentiss
A couple of quick questions. I appreciate the details, particularly on the 5G network, 23,000 sites on air, heading to 25,000 by the June '25 deadline. Is there a number out there as far as what you want to hit the year end '26 extended deadlines?
Hamid Akhavan
John, would you like to take that question?
John Swearinga
Just to correct one thing you said, it's 24,000 sites on air by June 14th of this year is what's required under the new FCC framework. But in 2025, we're obviously focused on hitting the commitments that we've made. As we look to the future, obviously, we'll be back into construction mode. We have to put sites on air to hit our future deadlines. And we're not really sharing numbers on exactly the number of sites that we would have, I think some of that's going to be success based. A good amount of the work that we're doing is driven by customer experience in the major markets where we operate in addition to what our FCC requirements are. So I think we're going to try to value steer our deployment capital towards the right outcomes based upon how, among other things, Boost Mobile business is doing at a market level. So obviously, we'll try to provide some drill markers as we go but we're not going to give concrete numbers on year end on site numbers. And to the extent that we don't have firm FCC commitments around those things that implicate the licenses, it is not a metric we'll look to overly share, obviously, as we're looking to compete.
Rick Prentiss
On the Boost Mobile side, speaking of which, it sounds like a lot of cross selling then from the video side to the Boost side. Should we think of this kind of all what we've seen with the cable operators kind of as they try and bundle things together? And what kind of share of gross adds should we think Boost is targeting, if I'm right about that, kind of bundling video and mobile together?
Hamid Akhavan
Listen, we have just begun, honestly, just begun scratching the surface of what we can bundle. We are already cross bundling our Pay TV business with Hughes consumer connectivity business, that's something we have been doing through the year and very good results. We're happy with what's there. We have integrated Sling service inside of our mobile app already on Boost Mobile app. So some of these things are already as you've seen early indications that the usage and adaptation by the customers is increasing. But I don't want to set any expectation that this is part of the growth plan we have for the year. This is part of the things that we're developing this year. I think you will see the result that is clear. As I mentioned, we are uniquely positioned with three or four different assets nobody else in our immediate industries have. We have satellite connectivity, we have content, a great content experience, we do have a great 5G and cloud based experience. We're just beginning to get to the point where we tie these things together. We talked about an example of direct-to-satellite. I think 2025 for us would be a year there's some of these things become very tangible in terms of market offerings. We have most of these things under development. You're going to hear from us as the year goes on. I think mobile companies -- the cable companies have been doing that to some degree. They're selling their broadband connectivity with content. We think that's in the market. We do a version of that with Hughes, between Hughes and DISH. But as I said, it's just a couple of small examples. We expect a lot more to happen this year.
Rick Prentiss
Last one for me is to touch on that satellite connectivity you led with, obviously, the direct-to device market has gotten a lot of excitement out there. How do you view that market, the uniqueness that you bring to the table with the spectrum? But also we get the question a lot, is this going to be a replacement for terrestrial? So maybe if you could just kind of expand a little bit on the direct-to-device opportunities. And it's a fairly crowded marketplace, at least with a lot of people talking about it.
Hamid Akhavan
We believe we are very uniquely positioned. I'll talk about that in a second. I think it really is not as crowded as it seems, is crowded from announcement but not crowded from the reality of what is possible. I think there's only a couple of different ways, a couple of different companies that can possibly do this properly. First of all, we have been in service offering, direct-to-device messaging in international markets and we could easily do that in the United States. There's nothing special in the markets that we are offering to. We have been doing this for the past couple of years in commercial service. So people are just announcing that as a novelty we have been in the market. We are working on the next generation of connectivity, which is far beyond messaging connectivity. We expect to have broadband connectivity, which provides natural use as you can have voice, video, just everything the same as you would have on your standard mobile phone, your iPhone or your Android phone, you would have the same and you have it everywhere in the world. We have the highest ITU rights coming back to that what makes us a special. So first of all, we have the most important ITU rights to offer this and I think that's a spectrum assets in the United States to offer that.
I think that in itself is probably the biggest endowment. But we also happen to be a company that is very capable, both in satellite and space as we -- Hughes has a long heritage and a global supplier to many, many satellite systems, including LEO systems such as OneWeb. So our experience, our institutional knowledge, our technical capability and acumen in that space is unparallel. Very few others have it. And then we also have a mobile system, I don't know anybody else that is both in a satellite and a terrestrial mobile company. So you tie the two together. I mean we think that equally important is not just about having expertise in one or the other, just -- I think these are equally challenging and equally important skill sets in addition to the ITU rights and the spectrum ownership in the United States. We just don't see anybody else on the radar that has all of that in one hand. So we are hard at work to make sure all of that becomes a reality again, also relying on experience, our experience that we have in providing messaging service to the satellite for the past couple of years. So it's not -- nothing new to us. I hope that answers your question. It was a long answer but I think you had a few angles that you touched on.
Operator
Our next question is from the line of Michael Rollins with Citi.
Michael Rollins
You referenced earlier that wireless ARPU is growing. I'm curious if you could discuss some of the details on what you're seeing on intake ARPU versus what the average currently is to better appreciate where that may be going over time? And then second, just as you're looking at growth in the wireless business, can you expand pace of quarterly customer growth while also reducing the EBITDA burn at the same time, or are you in a situation where you need to pay for these customers first, keep investing in the marketing engine and then work on that EBITDA burn in future years?
Hamid Akhavan
So in terms of ARPU, I'll take that one first and then OIBDA, I'll take my best shot at it because I'm not sure I 100% understood your question, but let me start with ARPU. I mean generally, we are lifting the quality of our customer base. And the reason the ARPU -- the primary reason the ARPU is rising is because we are -- people adopting higher price plans. And so we are moving up in terms of what price plans we sell, bundled offers. And so that -- and you're going to see that trend continue. We are essentially positioning Boost, the combined Boost now the two brands at a more premium placement in the market and evidenced by the fact that every metric, it is not just the ARPU, every metric has improved. We have improved churn. We improved customer adds and you've seen that. We think that trend will continue. Now in terms of OIBDA, this is a good -- OIBDA obviously goes down when you get more customers. I mean I'm giving you a statement of the obvious. I hope that I'm not missing a nuance on your question. But on the basics of it, any customer acquisition, any customer acquisition has an upfront investment of OIBDA and often even CapEx for you to get the customer and you pay that back during the customer lifetime value.
And we do a better job today than we have ever done in terms of value steering, taking a look at which price plans, which devices, which geographies in terms of markets provide us, which actions whether it be upgrades, whether it be device offerings. We look at every angle to see how we can maximize our customer lifetime value relative to what we spent to acquire that customer. And lastly, we're putting more and more people on net, which I think will improve our owner economics. All of the metrics that I just talked about get even better when we bring the customer on net. So there's a lot at play. But a simple answer to your question is OIBDA will go down usually when you have faster growth but then you'll get paid for that, obviously, over time, and that's how the mobile business works. If I missed the part of your question or nuance in your question, I'm happy to answer it.
Michael Rollins
I mean, if you're going to ramp customer acquisition significantly, to your point, you pay for that upfront as you're describing and then you get the benefits potentially, right, over that customer lifetime. And I was just kind of curious, as you look at 2025 in terms of the exit rate of EBITDA burning '24, how you balance those factors of trying to increase the pace of acquisition and aim for that relative to scaling that business over time?
Hamid Akhavan
Look, we -- I think that at the moment, I won't be able to give you a exact number. But I just want to say that we will focus on acquisition, profitable acquisition. I would not walk away from a profitable acquisition. We don't have a shortage of cash right now. I don't have a limitation that prevents me from growing the business profitably and we certainly get paid for that investment. Now I hope I get more customers than is on my budget. And I'm happy to have a decline in my EBITDA as a result of that. That is a solid investment that I get paid for, I get a return on that. At the moment, I don't have a limitation on spending our capital at hand. We are sitting on a significant amount of capital at hand I'd like to put to use. So hopefully, we'll get more customers than we have planned. So long way of saying our primary focus is growth, profitable growth. Again, I want to underline profitable growth because in that case spending EBITDA is actually a good thing.
Operator
Our next question is from the line of Walter Piecyk with LightShed.
Walter Piecyk
Just on the sub growth. I mean, I just -- I think what's noticeable to me at least the gross adds being up 13.5%. It seems like a pretty major inflection. Obviously, service revenue grew sequentially. Rick was implying that you were getting this from bundling? Did I miss something in the prepared comments? And if not, why are customers all of a sudden kind of signing up to the network? And I don't know if you're planning on breaking out the traditional prepaid versus, I guess, what we would consider to be postpaid. Just if you could just give a little bit more color on what's happening in that business and how sustainable is that going to be going to '25?
Hamid Akhavan
So our growth of subscriber is not from bundling. It is from the 1,000 actions we have taken last year to improve the customer experience, the network experience of Boost Mobile, and we think that's a sustainable improvement. And I have been saying internally and obviously, generalizing, saying that there's not a single process we had at the beginning of '24 that we had the same at the end of '24. We brought the two brands together. We redesigned practically every workflow that impacted the customers, whether it be from acquisition to activations, to billing, to customer care. I think if you -- and you've seen the result of that. I don't want to repeat the fact that in every metrics have improved. And I think customers are recognizing that we have a fresh network. It's got incredibly good experience in terms of service experience. I think we make it much easier to adopt. We have been much more focused on making sure that the experience is really polished. So I wouldn't put it into bundling and I wouldn't say this was a onetime effect that we worked on. We are -- as it comes to prepaid-postpaid, I think the market has been too -- in our view and over time, we'll talk more about this.
I think the market has been too focused on form of payment as being the differentiator. We don't see it that way. No other industry in the world, whether it's auto industry or housing industry or any other industry that finances a customer, they're not talking about segregating the customers who pay cash versus noncash. You go buy a house. Your first choice of payment and buy a car, no car dealer asks you no if you just want to pay installments or cash, go to another store. Whereas in the US and in mobile market that happens, we want to serve everything off of one hand. For us, we look at our profitability. And our prepaid customers are incredibly profitable for us and we are not in any way disappointed to be a leader in our market today and taking more share than anybody else and being the highest prepaid ARPU. There are postpaid customers that are very profitable. But I think that we're not hung by a notion of only one set of customers is profitable. We look at every customer on a profitability basis, we're very happy with the progress we have made on the customers we have gotten this year. And we continue to focus on…
Walter Piecyk
You're not going to break that out and we're not going to get some sense of kind of what the inflection was on the growth more recently, like which part of the business? I guess I'm on the postpaid side, mine works pretty good. Like are there more me people coming on or is it the traditional prepaid guys that are driving this growth?
Hamid Akhavan
The answer is we're not going to break down, because we're actually trying to merge the experience to be one. And I can tell you that if you look at many postpaid plans, if you don't have to finance a device, you end up with a much easier shorter payback than a postpaid customer. There used to be a time that the difference between postpaid and prepaid was incredibly large in terms of monthly payments, service cost, service pricing, it used to be very different in terms of churn and those metrics -- those assumptions are no longer real. Those assumptions have changed over time, and I think the market is still hanging on. We look at every customer based on customer lifetime value and profitability. So we're not going to break down postpaid versus prepaid because we think the industry ultimately will merge the two.
Walter Piecyk
Can you -- I'm on the network but I'm not on the network because I got the alert to change my SIM, I guess, to get on your network. I'm like a Boost one customer, I guess you call me, I forgot our Boost on ultimate, I'll forget what your branding is, but nevertheless. Can you give us some sense of like how many people, how many subs amount of traffic, whatever it is that are on the network that you built versus your roaming partners? And then how is that -- how are those roaming partnering relationships kind of playing out? Like where are you sending more traffic? How does that evolve over time, because that's obviously a cost component that's impacting you on the cash side?
Hamid Akhavan
John, perhaps you can take this?
John Swearinga
Glad you're enjoying the experience on the network. In my opening comments, I shared we're over 1 million on-net now, and that's -- so those are customers on our core, on our RAN enjoying their use of the service. I also said, look, when we have a compatible device that's in one of our open markets, our goal is to put that customer onto our own 5G network. Now when you think about how that interplays with our roaming and MVNO partners, obviously, we were able to use both of those relationships as we've discussed in past calls for in market and out of the market roaming. They work a little differently. We have a little bit of a focus on how do we make sure we own the customer. And then based upon where people work, live and play, we can make sure that they're connecting to the right RAN. But we've generally been very happy with how the technology is working. And it's really a big advantage for us to really have access to more RAN sites than anybody. So we think about that in terms of how we bring customers on to the network. I think one of the major differentiating factors continues to be whether or not the device itself can support 5G SA and VoNR and we've talked about that in the past as well. And I remember talking to you on a call a couple of years ago where we had literally one certified device, right? And I think we've now completely flipped over where we have only one device that we're selling that isn't compatible with our network. So the ecosystem supported us. We got a little bit ahead of the industry in terms of the type of device technology we needed to run the network, but that's now all come back into balance. And so -- and look, I'd also be remiss not to point out, we do have some commitments around loading onto our network between now and June. And we have every intention to hitting those and we're pleased with the performance we're seeing on that as a result of that.
Operator
The next question is from the line of Jonathan Chaplin with New Street Research.
Jonathan Chaplin
I'm wondering if you can give us a sense of how the enterprise and wholesale revenue line is progressing? It's difficult to sort of see that within the way you've reconstituted results. And how -- where do you think that revenue line could be by the end of the year? And then a housekeeping question for Paul. Spectrum amortization, does it start when the spectrum goes into service or when you purchase the spectrum? And then going back to the direct-to-device comments for you, Hamid is do you need to launch, do you need to use a LEO satellite to really do direct-to-device effectively or rather a LEO constellation? And if so, is that something you would do yourself or would you partner? And who would be the ideal partners for that?
Hamid Akhavan
Let me start with the enterprise. Look, we -- you may know that we have Hughes as a company that one of our entities that has a significant presence in the enterprise market. In fact, not only we have a presence in the enterprise market, we are among all the competitors that you can name for us, we are the only one who is in the leader box of the Gartner's quadrant. None of the other competitors we have, none, not a single one, is anywhere near it. And so we are very respected in the enterprise market, serving hundreds of brands and governments. And we are now beginning to use that -- those relationships to put Boost in our 5G network into the enterprise space. And you have seen examples of that. You saw the Fort Bliss example, I think Paul Gaske talked about a few of those things. And we bring in those relationships that are very trusted in long term within Hughes' Enterprise domain as a starting point of our enterprise. Just remember that in the enterprise space, sales cycles are long. But once you get the customers they last a very long time. So we are not -- it's a different go-to-market motion. We are probably not going to break down any specific enterprise numbers now or putting any sort of forecast out there. We are loaded with opportunities. We just can't address every single one.
Right now, each line of business is primarily focused on their own getting up. But the enterprise segment is one of those cross segments that I think we have a great hopes for, but you have to be patient until all of those things become -- come intofruition. I'll answer the second -- third question before I pass it to Paul related to spectrum. I'll talk about the direct-to-device. That's another example of where our Boost and 5G networking and mobile business ties to use the satellite business. And I want to say that we already have, as you know, as I mentioned, we already have. We've had a service that direct-to-device messaging, direct-to-satellite messaging for a couple of years. We have not been beating our chest on it. Other people are very proud of their first experiments. We have been selling that commercially in international markets and we certainly can do that in the US as well. But we don't think that's end of the game and I think that's not even the beginning of the game. We started that game many years ago with testing five or six years ago, but I think the real game is LEO. So I'm bringing it to your question. Yes, it's a LEO based solution. The LEO based solutions will be low latency and provide -- can provide -- our solution can provide natural use case where you can't really tell the difference whether your phone is connected to the ground based mobile station cell site or is it connected to the satellite, that's just be indistinguishable from a consumer's perspective. And we're not going to do everything in-house. We certainly have technology to do a part of that work based on the capabilities we have at Hughes and we have had Boost, we think we have some critical technologies and institutional knowledge that we're going to bring to table. But we are going to use partner manufacturer and technology companies to give us that best experience. Paul, would you like to talk about the spectrum?
Paul Orban
Just to level set, for book purposes, we do not amortize the spectrum. But for tax we do, which I believe is what your question is, and we do start to amortize that upon purchase.
Operator
Our next question is from the line of Bryan Kraft with Deutsche Bank.
Bryan Kraft
I had -- I guess, I wanted to ask you, Hamid, with the financing transactions completed in the fall, can you talk about how much room the company now has to pursue wireless and the other growth opportunities in front of you like enterprise and direct-to-device, particularly just given the capital needed for wireless subsidies and marketing, and the maturity wall that is coming up in two years? And just related to that, are you still actively working to improve the balance sheet and extend maturities or even raise equity capital? Will we see any more positive developments on this front in 2025?
Hamid Akhavan
A number of questions in one. First of all, I think we are, at the moment, obviously, we try to maximize our market opportunities. We will address -- in multiple fronts, we are working on financial and growth improvements. As I said, Boost Mobile and Hughes, everywhere, we have -- any opportunity in front of us, we won't ignore it simply because of potential limitation of capital. I mean, we are limited on resources and it's not just capital. We are a start-up in many ways. We are a company of $50 billion revenue but start up in many ways. We have a challenger position. So we can only address so many opportunities given the capital and human resources we have. But at the moment, I'm not looking at missing any opportunities because we don't have the cash at hand to finance it or develop it. Your second part of the question was, are we seeing -- are we concerned or are we focused on in any way to increase our liquidity over a longer horizon. The answer is we always look at that. I mean that's not -- we're not short term focused. We're focused at the long term. We understand our obligations that are ahead of us. We are -- just like we did in 2024, we understood our obligations. We met our obligations. We found solutions that puts us in a position to gain and win and create shareholder value, and we have done that. And we will continue to operate with the same fiscal discipline and mindset of shareholder value creation. Long way of saying, we are cognizant of what financial needs we have in the future and we do intend to stay ahead of our needs with whatever means we have.
Operator
The next question is from the line of Ben Swinburne with Morgan Stanley.
Ben Swinburne
Two questions, one for Paul Orban, and then I want to ask Paul Gaske about Starlink and satellite broadband. Paul Orban, on the cash flow front, you said you delivered positive operating free cash flow in '24, which was your guidance. Do you have the dollar number you can share just to make sure we're looking at it the way you guys are as we think about 25? And you mentioned the $1.2 billion burn in '24 and CapEx coming down this year. Is it fair then to assume that the burn -- the total free cash burn should improve, should reduce in '25 versus '24?
Paul Orban
So let me address the first question or second question first. So we don't give guidance on free cash flow or cash burn. But what I will say, though, is if you take a look at our disclosures there, you'll see that we have about a little more than $500 million more in interest payments in '25 versus '24, which will then be a drag on free cash flow. As it relates to giving numbers for operating free cash flow, we don't disclose those but it was better than our expectations that when we had to start the year. So it was a good number. And we're very pleased that the operational efficiencies that we put in place actually came to [front] and we saw the benefit of it.
Ben Swinburne
And Paul, just a request from all of us out here in the sell side and buy side if you're willing to provide a trending schedule with the new wireless segment coming back into the '24 quarters, we'd all be appreciated, I figure, at least throw that out there. Paul Gaske on -- there's a lot of noise, obviously, around Starlink. T-Mobile Super Bowl ad got a lot of attention. Can you just talk a little bit about Hughesnet's position, the technology of JUPITER 3 and how it compares to Starlink? And we're seeing these overall sub declines. But is it your expectation that over time we should see growth in that business? And do you view Starlink as a competitor in the enterprise and government space, which is obviously meaningful to the Hughes business, in general? I would love to hear your thoughts there.
Paul Gaske
Well, let me first say the TV ad you're referring to actually was a direct-to-device advertisement at Starlink T-Mobile, right? So that's really not in the broadband space. But if you look at the broadband space, a couple of things going on there. Obviously, they have a huge fleet that's addressing a lot of markets worldwide. But if we look at our Jupiter GEO service, we're focused primarily on customers that we see want video services. If you look at the typical consumer, you can break them up in different categories but an awful lot of them just want to watch their streaming videos nowadays. So we've repurposed our positioning to provide an economical satellite solution for rural America where they can get their video services and of course, interactive is included, but we're focused on the customers that are trying to get the good video experience. So we see that as a natural fit for us. If I look across broader markets, I think this answer will be similar. We're looking at ways we can be in a differentiated position relative to a Starlink. We have some LEO products and offerings that we provide. And those -- again, we look -- did provide special service parameters for our customers, special SLAs and so on. So in all cases, we look at the differentiation of that. So those are -- it's that differentiation, which will drive our long term future.
Operator
The next question is from the line of Tim Horan with Oppenheimer.
Tim Horan
Can you give any more real-world qualitative maybe color on the advantages of the cloud kind of RAN network that you're operating? And congratulations on the number one network in New York. And then I had a go-to-market question.
John Swearinga
Look, in top level, when you look at how we approached our detecting and building out the network, it looks a lot more like an IT system than a traditional wireless network. We're fully virtualized from the RAN to the core. It's a very flexible system in terms of our ability to deploy new features, new software to really swap out pieces. A lot of the traditional systems are very monolithic in nature and you get your services from one or two big suppliers. We've got over 30 different key partners in the network and we're reevaluating those and changing them all the time. And in addition, I just -- we have a pretty advanced software development life cycle in terms of the rate at which we deploy changes to the network, it's very similar to how hyperscalers run their own businesses in terms of the types of things that we do there. And so as we look at what we have today, one of the biggest advantages we have by being more like an IT system is just really good access to all the data on how the network is performing. We're really using that to determine our next steps. So it's sort of like the game of money ball now, because we just have a lot of advanced metrics to help us identify exactly where and how we're going to invest. And that's very helpful as it relates to CapEx, very helpful as it relates to where the next dollar is going to go. And from our perspective, it's really AI ready and that -- we sort of got there -- we got a little bit lucky on that one, but having a fully virtualized RAN, it really enables us to quickly address new advanced use cases and we're having a lot of those discussions now across our partner ecosystem. I hope that helps.
Tim Horan
I missed what you said about AI. Did you say the AI ready or yes…
John Swearinga
I think it comes down to the ultimate use case that you'd want to discuss. The -- I mean, ultimately, we have a virtualized RAN. So if you want -- you could go down the path of saying, we'd like to put in video processors at the edge. We do have, for example, probably one of the largest distributed edge compute implementations in the world. And yes, I did say, it's AI ready.
Tim Horan
And just on the go-to-market. New York, it looks like you have a hyper localized and targeted marketing blitz. Can you talk about how cost effective that is and is that the model you're going to be going out with nationwide?
Hamid Akhavan
It's a bit too early to see how cost effective it is until we actually see the take rate with New York. We are pleased with the initial results. We are quite pleased with what it has produced so far. We think New York market is an incredibly important market. It's the scale of the market in itself, for us, is very relevant and density of the market is also very efficient for us. So we are very -- our spectrum position is very advantageous. So we have good in New York. And it's too soon to tell all indications of that is a good approach. We will obviously, as I said, the values steer our focus. If the local marketing efforts produce better results, we'll continue to focus on local marketing. So this is a year that you're going to hear more about it. But local marketing for us is an important angle to focus our spending where we make the most returns.
Dean Manson
Operator, we're at the top of the hour. So we'll take one more question.
Operator
The final question comes from Adam Rhodes with Octus.
Adam Rhodes
I appreciate you squeezing me in here. With the FCC moving towards the re-auction of its AWS-3 spectrum inventory, I want to hear how you guys might think about approaching that auction. And relatedly, I noticed in your 10-K that an appraisal of your AWS-3 and AWS-4 spectrum came in at $33 billion. Since this appraisal provides you with roughly $3 billion of additional perispectrum secured note capacity. Do you think you might look to this as a source to participate in the re-auction?
Hamid Akhavan
So we support the FCC moving forward the auction and we do plan on participating there. Adam, I think AWS-3 spectrum is a very valuable spectrum, much more valuable today in our view than it was in 2014. And it has -- now the spectrum is not distributing devices, it's widely adopted. We think it's highly, highly desirable spectrum. And we do plan on participating, we are confident that the spectrum will go for above the $3.3 billion to our judgment. I think that's also good for FCC because, obviously, anything above $3.3 billion will go towards reduction of deficit in helping the government and all the actions that the Trump administration is taking right now would be aligned with that, trying to do that. So we feel very good and bullish about the auction. So we stand in support of it.
Adam Rhodes
And then I guess any consideration on how you might potentially look to use that additional capacity that you have?
Hamid Akhavan
Well, the capacity would certainly be -- once -- our aspirational growth in the company is our network is large. And when the spectrum is available, we certainly see that it gives us additional capacity and headroom to take market share and grow [Multiple Speakers] from financing based on appraisal. Paul, if you want to talk.
Paul Orban
So no, you're right, there's about $2.9 billion of additional capacity, which would be first lien on that spectrum. And actually, we get to go up to 60% on second lien, which would get us about $10 billion of capacity in total. We're going to be opportunistic when it makes sense for us to take a looking at that. Right now, as Hamid has pointed out, we are flushed with cash at this point in time. But when that option comes up, we will take a look at that. And we have many levers that we can pull to help finance that if we need to.
Operator
This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.
