Good day, and thank you for standing by. Welcome to the EchoStar Corporation Conference Call for Second Quarter 2022 Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Terry Brown. Please go ahead..

Thank you, operator, and thanks to everybody for joining our second quarter earnings call. I'm joined today by Hamid Akhavan, our CEO and President; David Rayner, COO and CFO; Pradman Kaul, President of Hughes; and Dean Manson, General Counsel and Secretary.

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 recording, which we ask that you respect. Let me now turn the call over to Dean for the safe harbor disclosure..

Thank you, Terry. 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, 2021, filed on February 23, 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 forward-looking statements. We assume no responsibility for updating forward-looking statements. I'll now turn the call over to Hamid..

Thank you, Dean, and good day, everyone. As some of you are aware, Dave Rayner, our Chief Operating Officer and Chief Financial Officer, has decided to retire. He has agreed to stay on board to assist through the transition to his successor, and an executive search is already underway.

Dave has served EchoStar and its shareholders diligently during his 18 years with the company, and we thank him for his many contributions and wish him well in the future. As for our agenda for the call today, first, the team will provide a brief overview of activity from the second quarter.

After that, I will offer some comments on the business and our strategic planning process. We'll then move to question-and-answer session. Let me now turn it over to Pradman..

Hughes had a solid second quarter in '22, one that included $426 million of new enterprise orders, one of our highest quarters on record. I'm proud to report that our HughesNet satellite Internet service has been recognized not only as the best satellite Internet provider of 2022, but also the best rural Internet provider by U.S.

News and World Report 360 Reviews. This is the third time in a row that we've been recognized as the best satellite ISP, and both these accolades are a strong endorsement of our commitment to serving rural America. To that end, our team continues to focus on improving the North American consumer offering and customer satisfaction.

Our new service plans, which we began rolling out earlier this year, are being well received by customers who are enjoying more high-speed data each month. And our ARPU remained strong, increasing from the first quarter. We continue to optimize capacity allocations to yield the best performance possible from our satellite fleet.

Looking ahead in our U.S. consumer market, we are excited about our new HughesNet Fusion service plans, which we will start to launch first with existing customers in August as they reflect the U.S. market beginning in September.

You will recall that we announced this first-of-a-kind hybrid geo and wireless capability for consumer in March at the satellite show. Combining satellite and wireless technologies enable us to deliver an overall more responsive internet experience to meet market demand.

Additionally, we remain a proud participant in the FCC Affordable Connectivity Program that helps to ensure eligible households have the high-speed Internet service they need. Moving to our North American enterprise business. In the second quarter, we executed an agreement worth more than $180 million with Gogo Business Aviation.

This is the first phase of our flat panel electronically steerable antenna technology, including 2,000 antennas we'll service to start in 2024 using OneWeb's LEO capacity and network.

Also within the in-flight connectivity market, we completed a multiyear development and deployment project, enabling SES to launch insight services on SES-17 using the Jupiter system platform. And our partners completed deployment of Jupiter modems to initiate in-flight WiFi for Spirit Airlines. In the U.S.

managed services arena, our business remains solid. As just one example, we completed a project for a retail customers that involve upgrading network equipment at more than 2,000 stores in less than 5 months. And we continue to see success with contracts and deployments in the retail petroleum and energy markets.

In our OneWeb program, we continued deliveries of production gateways and systems as planned. We have shipped 23 gateways so far, and expect to complete all gateways in 2023. We've also started delivery of the production models for user terminals. Our Defense Group had a strong second quarter also, winning add-ons from the U.S.

Space Force SATCOM programs, a U.S. Navy 5G networks and classified systems development. In the civilian government market, the team secured a 4-year renewal of our contract with the Commonwealth of Pennsylvania, providing managed terrestrial and satellite broadband services to multiple agencies. Also, the group received an award from the U.S.

Postal Service for managed terrestrial broadband services at 150 sites, bringing the total number of U.S. Postal Service locations in our portfolio to more than 750. Now to our international operations. As in the U.S., our priority in the Latin American market is to maximize yield on our capacity.

For the consumer business, this means value steering through tactics such as selective screening and capacity-optimized price plan. Our ARPU trend is positive, increasing from the first quarter. We are also pursuing high-value enterprise and government projects and decision.

For example, during the second quarter, we won 2 additional orders from resellers to deliver broadband to schools throughout Colombia using our Ka-band services, bringing our total to nearly 10,000 sites under this project.

In Brazil, we secured a 5-year contract extension with one of the biggest utility companies in the country, providing fleet automation for 3,000 vehicles. A large Brazilian customer expanded and extended our contract, connecting 1,700 additional retail sites to the satellite network.

And we won a new retail customer in Brazil with an 80-site managed SD-WAN contract. In Europe, a large multinational oil and gas retailer extended our contract to support the digital transformation with higher speed services and managed WiFi.

An important element of our strategy is to expand connectivity in emerging markets, focusing on large populations and businesses either unserved or underfilled like terrestrial broadband business. We continue to successfully execute on this strategy, leveraging the strong acceptance of our Jupiter platform worldwide.

As you know, in January of 2022, we completed the formation of our joint venture in India with Bharti Airtel now operating under the Hughes Communications India brand, HCI, the largest satellite service operator in India.

It secured its first major win with a 5-year contract with Indian Oil Corporation to provide managed SD-WAN across 10,000 sites, and we launched nationwide high-throughput satellite service business, targeting enterprises, telcos and small to medium businesses using the GSAT-29 and GSAT-11 satellite office.

Indonesia is fast developing into a highly active and important region for us. During the quarter, PSN, Pacific Satellite Nusantara, selected Hughes to power their third high-throughput satellite with 11 Jupiter gateways that will provide 100 gigabits per second.

And we received an order from Nusantara to supply the Jupiter system to support cellular backhaul over satellite for 390 LTE-based stations. We look forward to the launch of our Jupiter 3 satellite as it will bring significant additional capacity to our market as well as the ability to offer high-speed service plans as demanded by our customers.

Our satellite continues to progress at Maxar and is currently in the thermal vacuum chamber where it can be tested in conditions similar to the space environment. Once this testing is complete, we'll move it into final integration. We anticipate that the satellite will be launched during the first half of 2023. Let me now turn this call over to Dave..

Thank you, Pradman, and hello, everyone. Our revenue in the second quarter of 2022 was flat compared to the same period last year.

We have managed to sustain our revenue with higher equipment sales to our enterprise and government customers both domestically and internationally, while at the same time, managing the capacity constraints and other factors across our consumer business. This change in our revenue mix has and will continue to put some pressure on our gross margin.

Our adjusted EBITDA in the second quarter was $168 million, decreasing 10% from last year. The decline in adjusted EBITDA was driven primarily by a gross margin as our operating expenses have remained relatively flat.

Inflation began to impact our operations in 2021, and we have experienced increased costs in certain functional areas including field services and customer care. We are making every effort to minimize this impact to our operations and protect our margins.

Free cash flow, defined as adjusted EBITDA minus CapEx, was $92 million during the second quarter, increasing $38 million sequentially. Meanwhile, our balance sheet remains one of the strongest in the industry, and we continue to seek opportunities to deploy cash for growth.

In the second quarter of 2022, we bought back 1.9 million shares of our stock in the open market at a cost of $43 million. Let me turn the call back over to Hamid..

Thank you, Dave. On our first quarter earnings call, I shared some of my initial thoughts about EchoStar, our competitive environment and our unique strengths, including our strong balance sheet, our global presence and trusted reputation, our engineering expertise and our S-band spectrum assets.

Since then, I have conducted a series of in-depth reviews of the various business lines and functional areas throughout the company in order to ascertain operational strengths and areas of opportunity. While I'm not ready to disclose this specific road map, I will share some of the process with you as we chart a strategic course.

This is a methodical undertaking, designed to safeguard our financial stability and independence while capitalizing on long-term growth opportunities of existing business lines and new ones, including potential acquisitions. We are pursuing 3 parallel work streams that I call horizons, referring to 3 consecutive time windows.

I would like to repeat that we are working on all 3 time horizons in parallel. First, for horizon 1, we are looking at current business and ways to optimize both our operations and our offerings over the next year or so.

We have touched on some of this already with the introduction of the HughesNet Fusion service, value steering and, more precisely, managing churn. To help combat profitability erosion due to the shift in revenue mix, we are focusing on capacity yield management rather than on subscriber growth.

Simply -- and similarly, in the international markets, we'll direct our efforts towards the most scalable and profitable regions. Across the organization, we are identifying areas for cross-functional collaboration, simplifying and centralizing our structure for greater efficiency.

Through these actions, we intend to improve our operating and financial trends in the near horizon. For the couple of years following horizon 1, which we are calling horizon 2, we are developing and defining organic growth opportunities and preparing the organization to pursue them.

This includes a sophisticated go-to-market plan to best monetize our fleet capacity once Jupiter 3 enters service. We are outlining the focus areas for our enterprise business globally and plan to increase our scale through internal investments and potential complementary acquisitions.

We will also pursue growth by leveraging our managed services portfolio and hybrid LEO-GEO business solutions. For horizon 3, we are currently evaluating opportunities for new long-term avenues of growth, including commercialization of our S-band assets and potential M&A opportunities.

Regarding our S-band initiatives, I would like to share a couple of high-level updates. EchoStar Mobile, our EU licensee, introduced our Pan-European LoRa-enabled Internet of Things network at the LoRaWAN World Expo in Paris.

This network is the world's first bidirectional, real-time LoRa-enabled satellite service, and it provides seamless coverage of Europe, combined with the ability for hybrid devices to roam onto existing LoRaWAN terrestrial networks.

We are on track for commercial service launch in late 2022, and we are excited to help transform the satellite IoT market with cost-effective, reliable and standard-spaced IoT services.

EchoStar Mobile made significant contributions of S-band satellite terminals and accompanying voice and data services to EU and national government humanitarian relief efforts associated with the ongoing comps lift in Ukraine.

We are grateful to our many team members across Europe who did a superb job in responding to this crisis, and we believe this effort demonstrated the vital role of high-quality mobile software services in the region, potentially worldwide.

I know you're eager to hear more specifics on our strategic and financial direction, and I look forward to sharing additional information with you on future earnings calls. Let me now turn it over to the operator to start our Q&A session..

[Operator Instructions] Our first question will come from the line of Ric Prentiss from Raymond James..

Dave, been great working with you. This might be the last earnings call, I guess. So congrats and enjoy retirement. I wanted to start first with Jupiter 3. Update us maybe more specifically as far as what's causing the delays.

I think, supply chain, manufacturing, other projects may be jumping ahead, but how comfortable are you that we now have a pretty good date as far as when Jupiter 3 could get launched? And when do you expect in service to be if you expect Jupiter 3 launch to be in first half..

Yes. Sorry, go ahead..

Please, Pradman, please continue..

Okay. As you know, we are now in the -- we have the satellite in the chamber, which is one of the biggest hurdles that one has when you build satellites. And the testing so far is going good. And so we're getting more and more confident that the dates that we have projected are going to be met, give or take a few days here and there.

So we got to feel good about it. I think, typically, once we launch the satellite in a couple of months after that, we should be in service. So we're still being -- we can't predict the exact date we launched for satellite, but by the end of the first half, I think we should be in service as a total new satellite in service..

Okay. Good. And obviously, some major industry events and news over the last couple of weeks, one of which was OneWeb and Eutelsat proposing a merger, Help us understand what that means for EchoStar and Hughes since they're both customers of yours.

And what does it mean longer term as far as the relationships you had as far as having the ability to sell LEO capacity into India and the U.S.?.

Pradman, go ahead..

Yes. Thank you. So really, it's a very positive development for us, I think. Both -- as you mentioned, Ric, both Eutelsat and OneWeb are very good customers of ours, so we feel good that we will continue to do business with them going forward. The current contracts that we have, which are significant are -- will continue.

No changes are expected in that contract. In addition, as you know in the past, we are strong believers in the GEO-LEO concept. And I think this merger, along with the relationships we have with them really facilitates the GEO-LEO advantages that we've been talking about for the last 6 months.

So all in all, we are positive, and we hope it will enhance not only our business, but obviously Eutelsat and OneWeb's business..

And any specific changes to what you expect to be able to do in India or in the U.S.

maybe with those -- the OneWeb relationship that you had?.

No. I think those agreements are still very valid. I think if anything, we are hopeful that this will accelerate the process of starting phase 2, which gets us much more capacity and much higher speeds than phase 1 because potentially, this could make the funding for phase 2 and OneWeb a lot more practical at this stage..

Our next question will come from the line of Michael Rollins from Citi..

A couple of questions about -- first question is just in terms of the performance of the Hughes consumer business. Did you see any impact during the quarter from competition, which could be fixed wireless access, some of these emerging fiber builds or any other LEO competition? And I have another question after this..

Pradman, I'd like to direct that question to you as well..

Okay. We are obviously losing some subscribers to other technologies and other LEO networks. The biggest threat right now really is Starlink because they are -- they can address the latency issue that the GEO sat has done. So we're losing some subs clearly to Starlink.

And we've been working hard to try to come up with solutions that will compete on this latency issue. Now the solution we are hoping in the interim will be Fusion, the Fusion service that we talked about, which is the combination of GEO and LTE capability, which will address the Fusion -- Fusion will address the latency issue very well.

So we're hoping once we do that, that should reduce our churn from the people who need faster latency compared to the other services that don't need it. In addition, 70% of our traffic is video, and video broadcast video primarily. And that application doesn't require fast latency.

So we're hoping that we take the combination of customers that we have that will require low latency and the introduction of Fusion service beginning in August and September this year, that we will address the customers that are churning out. But having said that, we will churn up some customers to Starlink.

They are a formidable competitor, and we'll have to continue to battle it out with them. But I think the market will support 2 or 3 suppliers of this service, of high-speed service. And we're comfortable that we'll be one of those 2 or 3 suppliers that will stay in the business successfully..

And the second question is I've noticed that as you've embarked on evaluating the horizon 1 through 3 review, you've continued as a company with share repurchases. I'm curious on the one hand, the governing thought, continuing repurchases while thinking about some of these future strategic opportunities that you may have, particularly on the S-band.

And does that infer that whatever you may do on S-band, that you're hoping for it to be very limited from an EchoStar balance sheet perspective and to create a platform that others are investing and funding to take advantage of the opportunity?.

Dave, may I direct it to you first, and if there's additional comments on that, at the end of your comments..

Yes, Hamid. We continue to view the stock as being grossly undervalued, and so we're continuing the buyback program. It's something that we continue to evaluate. Right now, we're only using a fraction of our operating free cash flow on that share repurchase. So we're -- it's not like we're eroding the balance sheet by doing it.

Maybe we're not growing the cash balance as much as we could. But I think we will continue to evaluate that. In terms of what an S-band network structure would look like, I think that is very much still in play.

As to exactly what we will build out, we're aggressively pursuing those opportunities to evaluate that network, as Hamid has discussed, and I'm sure he's willing to discuss it further. But right now, we're very confident in the position of our balance sheet and our capability of making significant investments going forward..

Thank you, Dave..

And just one follow-up to that.

As you think about the free cash flow, do you think about it in terms of the free cash flow that the core consumer business throws off relative to the free cash flow of the enterprise segment and the product segment relative to maybe some of the incubation projects like the S-band? Is there a way that you think about that internally that would be helpful for investors to think about from an external perspective?.

Yes. I think we evaluate all of it, right? I mean all aspects of that is positive, right? Growth in the enterprise business generates free cash flow. The consumer business obviously generates significant free cash flow today. It's sliding a little bit as subscribers shrink.

But at the same time, we're not spending as much on subscriber acquisition costs, so we continue to generate cash from operations related to that.

And it's always important to balance that against new investments, not just S-band, but other organic growth opportunities that we may want to invest in, other product enhancement, acquisitions that we may want to look at. So all of that is in the mix.

It's certainly -- we don't look at it one-dimensionally, and we know we have to trade off one against the other. And in the future, if we see huge opportunities in 1 area, that we make significant investments in, it may result in us slowing the growth in some other areas.

But it's all done with a lot of thought and a lot of analysis with the intent of long-term growth of both revenue and cash flow and, obviously, shareholder value increase..

Our next question will come from the line of Chris Quilty from Quilty Analytics..

Wanted to start off with a question regarding your OneWeb relationship. Obviously, you're supplying gateways to Eutelsat and you're supplying gateways to OneWeb, so you seem pretty well positioned there. Can you talk about the opportunity beyond gateways? I think I heard you mention that you actually began shipping some CPE equipment to OneWeb.

And if so, how would you size that opportunity?.

Pradman, I'll pass this question to you..

Sure. Thanks. Yes, besides gateways, we're already supplying modems for the user terminals at OneWeb. So these modems are being supplied to manufacturers of the parabolic antenna user terminals that other manufacturers are making for them. So every user terminal will have our modem card in it. So that's number one.

Number two, our program of developing the electronic scanning array is a very exciting program, and we are in significant testing right now and expect that we will be able to start delivering production terminals next year.

And that's a different ball game once we get there because we believe and our customers believe this as global by signing $180 million contract that we probably have one of the best ESAs in the market today.

And so we are hopeful that a lot of the applications at OneWeb next year will use our ESA, and that should generate significant revenues for us in the next 3 to 4 years..

Got you. Now I thought last quarter, when you talked about the ESA, you were talking mainly about the IFC market. And clearly, you've got the announcement with Gogo. And I thought at the time you said we're not supplying consumer terminals.

So is this a new product? So you've got one for the IFC and now you have one for the consumer market?.

Yes. No, we're not going to supply and neither is OneWeb where their plan doesn't have the consumer in mind because the cost of an ESA, it just doesn't make sense for the consumer market where you can generate an antenna cost of $40 or $50. You just can't compete.

So the intent here is to address mobility -- the mobility market airplanes, ships, trucks, cars for the high-end enterprise. And so the idea there would be, today, they have to use these domed parabolic antennas because there's no ESA in the market that meets the requirement. But once we do that, then that becomes a different ball game.

And we will then start supplying the user terminals using the ESAs for all these other applications, except the consumer, which OneWeb announced are not addressing at this stage..

Got you. Sorry, I said consumer I meant for enterprise because clearly, OneWeb is focused on the enterprise market.

Can you deploy that in some of your sort of WiFi hotspot community service? Does the economics work in that sort of a scenario?.

Oh, absolutely. It will work and work well. It will work great there in planes, any mobility kind of application. The government is going to be a big market for that, the U.S.

government, the British government and a bunch of other governments that OneWeb already either signed contracts with or in the process of signing should be a big element and then certain types of big enterprise customers. where the economics will work for an ESA. So we're very excited.

We think next year, we should be deploying them all over the globe..

No. I think in Gogo's 8-K, they indicated '24, '25 sort of deployment.

Is that just simply because of airing and FCC certifications that are specific and much longer for the IFC market?.

Yes. As you said, we have to -- in order to fly a new piece of equipment, it has to go through a whole bunch of safety and airing kind of tests to be done, and that just takes time..

Understand. Question on the ESS business. I know a small contribution, but the margins, which had been in the 50s were up to kind of 60% in Q1 and in the 70% range in Q2. And yet, I hear you talking about starting to ship some hardware.

So I guess, should we expect to see the margins correct down 10, 20 points or so as you actually begin to ship hardware.

And I thought you said sort of full-scale shipping perhaps later this year or early next year, but you did ship some to Ukraine, you indicated?.

Dave, if I may direct this to you in terms of the margin question..

Yes. I'm not really sure I'm following you there, Chris, because you seem to reference ESS margin increases, and then you went back to Hughes equipment. So I'm not sure I understand the question..

Well, in the 10-Q, you break out the ESS as both service and hardware, but there has been no hardware up to this point, and I'm kind of referring to the EML business..

Okay. Yes, the EML business is not -- and to be clear, EML is not part of ESS. EML is part of corporate and other..

No, that wasn't obvious..

Okay. Sorry..

Fair enough.

So was there an underlying reason why the margins in ESS have gone up by 20 points?.

Yes. I mean part of it is -- a big piece of it is we're actually starting to see some increase in revenue in that. And as you know, that revenue incrementally is almost 100% -- 90% margin. So as we grow that business, even on a small basis, the margin increases significantly..

Okay.

And with the Fusion service, again, how should we think about that in terms of the margin impact? If you're -- is it fair to assume you're basically going to be reselling terrestrial wireless service, which I'm assuming is going to be at a much lower margin contribution than your satellite broadband? And have you inked -- or I should say, how many carriers have you inked agreements with so that you can be able to provide that on a national basis?.

Yes. Let me address the first part of that, and I'll let Pradman address the second part. Yes, I mean, from a pure margin percentage standpoint, you're going to see erosion. We would like to see the margin dollars stay relatively flat, that obviously, there will be an up charge for Fusion to offset that incremental LTE cost.

But given that we haven't really introduced the product yet, we haven't seen the impact on the margins, but our expectations would be dollar margins flat, but the percentage margin obviously erodes a little bit because of it. and I'll let Pradman answer the second part..

Yes, sure. Thanks, Dave. We have an agreement with 1 major wireless carrier right now, but it's not exclusive. And we're talking to everybody in the market right now..

Understand. And the exclusive actually brings back a question regarding Gogo. In their 8-K, they indicate that they've got an exclusive on that business aviation product. Is there a -- and that seems to be a good decision since they dominate that market.

But do you have plans for a version of that for the commercial aviation?.

Not right now. We're focused on the business aviation product. And as we get into the business next year, we'll certainly look at the commercial aviation market. But today, our product is focused purely on the business aviation..

Okay. And one final question. This is a bit of a hypothetical, but recently, SpaceX made a filing for 2 gigahertz spectrum, specifically the spectrum that DISH currently holds on their -- what used to be called the TerraStar satellite here in North America.

And I won't force you to guess what happens with that battle royale, but I guess the question is the Echo XXI is in essence, the TerraStar 2 satellite that you operate in Europe.

And if SpaceX were to get access to that spectrum, how does that impact you and your deployment plans of what you're doing in 2 gigahertz?.

Dean, if I may first direct this question to you, and then I'll add comments at the end, if necessary..

Sure. Chris, yes, we noticed the filing. Obviously, we have an interest in the S-band and do monitor filings there. It's -- we're still digesting it. It has not been on public notice. It's definitely something we intend to understand better. But at this point, we don't have a view on that..

We have a follow-up from Ric Prentiss from Raymond James..

A couple of follow-ups. One, I want to follow up on one of Michael's questions earlier with the competitive dynamics. How do you see the WISPs, the wireless Internet service providers out there? Are they formidable, not formidable, something you're looking at? Just trying to think of how they are playing into the competitive environment..

Pradman, perhaps you can start the question..

Sure. We view all competitors as formidable. We don't think of anybody as not being able to be formidable. But I think at this stage, they're not the major barrier for us because the markets that they are serving are different from the markets that we are serving. And that's -- so we don't really run into them head on everywhere.

We do in some of the fringes have some overlap markets, but not in a significant manner. From a competitive technology, obviously, a company like Starlink is the competition we worry about the most. And so we'll see how it develops over the next year or 2..

Okay. When you say the WISPs are really a different market served.

Can you give us just kind of an example of something they would serve that you wouldn't or vice versa?.

Well, it's where the line is between number of subs per square distance. We go to certain densities where we are very competitive and WISPs have more capacity at other densities. And generally, the other element that comes into play, obviously, is the financing the capitalization of a lot of these WISPs. WISPs is not the best in the world right now..

Fair point..

Yes. I mean, the WISPs -- go ahead please..

Another question on kind of horizon 1, 2 and 3.

As we think of Jupiter 3 coming in service then by the end of the first half '23, what are you anticipating it will take to fill the Jupiter 3? 10 years, 5 years, 3 years, less? I mean how fast are you anticipating you'll fill that burden? Obviously, that plays into Michael and my kind of competitive landscape questions as well..

Yes. We've not completed that analysis. But the way we think of horizons right now is that we are assuming that at least for the first 2 to 3 years of the operations of Jupiter 3, we do have a significant market advantage with an enormous capacity at a very reasonable cost per bit and some new products that we are working on in that area.

So at least for the 2 to 3 years, which we consider horizon 2, we get an uplift in nearly all of our financial metrics, top and bottom. And by then, obviously, Jupiter 3 will continue to evolve and give us additional growth, but then our horizon 3 kicks in. We are working on additional investment opportunities beyond horizon 2.

So we consider horizon 2 to be about 2 to 3 years. Of course, Jupiter 3 will continue to grow. But we're expecting to have additional growth above and beyond that based on the things we're working on which we consider horizon 3. I hope that answers the question, what you wanted to hear..

Yes, that does.

And then another one for me is as you think about what you've been looking at the landscape and how you think about horizons 1, 2 and 3, any early indicators of what products or markets, geographies, anything that stands out that you could call out? Again, not looking for specific maybe name or identification, but just kind of dramatic coming out that you'd like to add to the future of what you guys could address, either organically or inorganically?.

Right. As I mentioned, it would be difficult for us to disclose any of that because it's work in progress and also somewhat sensitive. From a competitive perspective, you really can't disclose much until you have made enough progress that it makes sense to let the market know.

But perhaps I can say that in horizon 2, it's primarily organic, but there may be some tuck-ins where in the enterprise business, we can increase additional density as opposed to scope. Our enterprise business is very wide and broad.

We have served a very large set of products, and we might choose to go deeper on 2 or 3 categories of enterprise or verticals, vertical offerings within the enterprise business, which is very broad. So there'll be more of a tuck-in acquisitions, just to give us enough depth and density. But we're doing a lot of organic work as well.

In horizon 3, we clearly are looking at a much larger scale, acquisitions or investments. Obviously, our S-band opportunity phones in that horizon 3, as I mentioned. But we are certainly looking at what can be, in the periphery or adjacency of the space we serve, that can come -- that could be synergistic with what we already have.

So that takes us from our core to adjacent rings, perhaps towards enterprise business where we can have a bigger play in terms of the addressable market, yet remaining synergistic with what we already have.

So that's probably as specific as I can be at this time, but we are hoping to share with you in the future release the earnings calls much more specifics..

Makes sense. And a final question for me, related. Any thoughts of the time frame you'd like to fill the CFO and/or COO role? And were there any one-timers in this quarter that [Indiscernible] he's gone..

Well, the horizon is as soon as I can. So as I mentioned, we are in a search process right now. We have some qualified candidates.

This is a position that I will absolutely take very seriously, and it's an incredibly important position for our company, not only because it is generally an important position, but also we're in a company that we expect ourselves to remain in transition and new growth opportunities mode, both organically and inorganically.

And certain depth and skill sets is required for that, and that is something that is obviously not easy to find. However, I do expect that within this quarter, we will land on a candidate. Again, that's -- please allow us to take our time and do the best job we can in terms of selecting.

But I would like to do this -- to fill this position within the third quarter..

We have another follow-up from Chris Quilty..

So I should assume that Dave's exit package is a new set of golf clubs?.

That's not correct, Chris. I'm hoping for us to leave a ball..

Okay.

Well, I will leave with one final question for you, which is just, any change on the CapEx forecast for this year? And then post Jupiter 3 launch and assuming you don't commit to a Jupiter 4 for India, what should we think about as sort of the steady state CapEx launch?.

Yes. On the second half of that, it's hard really to address that. Sort of from the status quo, you're going to have -- by status quo, I mean, the existing business, not the horizon 2, the horizon 3 initiatives, which could obviously change that CapEx mix.

But in post launch of Jupiter 3, what you're going to see is probably an increase in SAC, so consumer premise equipments, specifically on the CapEx piece, and a decline obviously on the satellite and launch-related costs associated with that.

So it just depends on the -- how quickly we decide to grow the residential business or how much we take that capacity into alternative uses, as Pradman described. It's all about yield management, it's not about subscriber counts.

But in terms of this year's CapEx, yes, it's going to be in the same range, probably in the $400 million range for the full year..

Very good. Enjoy the retirement..

Thank you, Chris..

And I'm not showing any further questions in the queue. I'll turn the call back over to Terry for any closing remarks..

Okay. Thank you, operator, and thank you for everybody for joining the call today, and we'll look forward to talking to you next quarter..

And this concludes the conference call. Thank you for participating. You may now disconnect. Everyone, have a great day..