Dish Network’s core pay-TV business continues to decline — although it managed to narrow its cord-cutting losses in Q2 — as the No. 2 satellite TV operator is getting ready to launch into the retail wireless phone biz and invest billions in building its own 5G network.

For the second quarter, Dish’s overall net pay-TV subscribers declined by 31,000 subscribers. That included a loss of approximately 79,000 satellite TV customers and a gain of 48,000 customers for Sling TV, the company’s over-the-top television service.

The subscriber loss was not a severe as a year ago: In the second quarter of 2018, Dish lost a net 151,000 total pay-TV customers (dropping 192,000 satellite TV subs while gaining 41,000 for Sling TV). In Q1 of 2019, the company dropped 266,000 satellite customers and netted just 7,000 OTT subs.

HBO remains unavailable on Dish TV and Sling TV, after the premium network was pulled over a programming dispute in November 2018. Meanwhile, most of Fox’s regional sports networks went dark on Dish’s platforms last week; Disney in the process of selling off the RSNs. “It doesn’t look good for the regional sports networks to ever be on Dish again,” chairman Charlie Ergen on the company’s earnings call Monday.

For the most recent quarter, Dish reported $3.21 billion in revenue — down 7% year over year — and net income of $317 million (60 cents per share). Wall Street consensus estimates had pegged revenue of $3.14 billion and EPS of 65 cents.

As of June 30, Dish had 12.032 million pay-TV subscribers in the U.S., comprising 9.560 million Dish TV subscribers and 2.472 million Sling TV subscribers. The company said it had 25% higher gross net adds on the satellite TV side (348,000 in Q2 2019 versus 278,000 in the year-earlier period), which Dish attributed to “the effectiveness of our promotions and product offers.” Dish execs say it’s focusing on attracting and retaining higher-value TV subscribers; president and CEO Erik Carlson noted average revenue per customers increased in Q2 to $86.34 (up 0.9%).

“We feel really good about the customers we’re attracting both from a geographic perspective and a credit-quality perspective,” Carlson said on the Q2 call.

Last Friday, Dish announced a $5 billion deal with T-Mobile and Sprint to acquire Sprint’s prepaid wireless businesses including Boost Mobile (which have about 9.3 million customers) along with spectrum in the 800-MHz band and a seven-year mobile virtual network operator agreement with the new T-Mobile. That was required as a condition of the Justice Department’s approval of the T-Mobile/Sprint merger, on the theory that it will establish Dish as a fourth competitor in the market.

Dish still plans to invest $10 billion in building out its own 5G network, Ergen said. But he said the initial capital outlays will be lower because of the MVNO agreement with T-Mobile.

To fund the 5G network buildout, Ergen said Dish will use cash on hand, cash generated from the Sprint prepaid businesses, and debt. He said the company will acquire Sprint’s retail prepaid businesses for $1.4 billion using cash on hand. “I’m certainly willing to put more money in this company if that’s what it takes,” he said. As of the end of June, Dish had total long-term debt and finance lease obligations of $15.16 billion.

Analysts see several wins for Dish under the agreement — while also noting that it’s a risky bet. “In aggregate, the degree of difficulty for Dish to execute its mobile plans has fallen materially,” Morgan Stanley analyst Benjamin Swinburne wrote in a research note before the earnings release. “This was a truly unique opportunity that Dish has successfully exploited.”

Dish now has a less capital-intensive path to deploy its spectrum including access to T-Mobile’s network, while the deal also moved its 5G buildout deadlines with the FCC from March 2020 to June 2023 (to cover 70% of the U.S. population), Swinburne noted. Ergen said Dish has multiple incentives to build and operates a 5G network, “not the least of which are severe penalties if we don’t.”

The deal between T-Mobile/Sprint, the DOJ and Dish still faces a pending lawsuit from state attorneys general seeking to block the merger. And consumer advocates remain staunchly opposed to the tie-up, questioning whether Dish is in a position to represent a fourth option in the U.S. wireless market (especially given the relationship with the new T-Mobile).

Ergen said he was “insulted” by the suggestion that Dish would be unable to compete as a fourth wireless carrier in the U.S.

“This project is certainly challenging, but we have so much more infrastructure in place” today compared with when the company first launched satellite TV service in the mid-’90s, Ergen said on the call. “It’s not our first rodeo.”

T-Mobile said it expects the merger to clear regulatory approvals in the third quarter and close in the second half of 2019.

Pictured above: Dish Network chairman Charlie Ergen