Q3 2020 Gci Liberty Inc, Liberty Broadband Corp and Liberty Tripadvisor Holdings Inc Earnings Call
Before we begin we'd like to remind everyone that this fall include certain forward looking statements within the meaning of the Friday Securities Litigation reform that since 1995 actual events the results could differ materially due to a number of risks that uncertainty, including those mentioned in our most recent form 10-K, and 10-Q filed with you have to see these forward looking statements speak only up to date of birth.
Paul P. P. R Liberty Liberty brought down and Liberty Tripadvisor expressly disclaim any obligation or undertaking 60, 70 give me update for revisions to any forward looking statements continue appearing to reflect any change your V. C. R. Liberty Liberty brought down or Liberty Tripadvisor expectations with regard there too or any change in a guy's conditions or circumstances unlucky.
Any such statement mistake today's call, we will discuss it non-GAAP financial measures for GCI Liberty, including adjusted OIBDA Unadjusted OIBDA Martin information regarding the comparable gap metrics, along with required definitions and reconciliation, including preliminary note in scheduled wanting to can be found in the earnings press release issued today, which is available on the G.
And they're pretty website.
Please remember to register for original Liberty Investor meeting on Thursday November 19th we will cover Liberty Media Liberty Tripadvisor on Friday November 20th two curate GCI Liberty and Liberty brought down from 11 am to two P M eastern on both days.
After the presentations on those days Giambrone Gregory pay along with presenting to you were close to Cuba session. Please. Please submit questions by Friday November 13th two Investor Day Liberty Media Dot Com you can find the link to register and all of these details on our Homepages now I'd like to turn the call over to brighten pay our president and CEO.
Thank you cordy and good morning to all today.
Today's became a call will also have GCI liberties, cheap accounting and principal officer, Brian one leg and G. T. I C. F. O P pounds also drink Q&A, we will be available to answer questions related to liberty broadband and there'd be tripadvisor.
<unk>.
I'd like to give a few updates on the proposed combination between G. C R Liberty and Liberty broadband.
V. H S are waiting period expired on October 9th.
F C. C approved the transaction on October 23rd which will become final on December 2nd Pittsburgh aren't any applicable challenges, we're still waiting on regulatory commission of Alaska approval.
Filed her application with them on September 16th and are looking to expedite that as quickly as we can.
The proxy for the transaction when effective on October 30th.
And our special meeting for the shareholder vote is scheduled for December 15th.
The proxy does mentioned two lawsuits, which were filed against GCI Liberty one has been dismissed and the second is proceeding with expedited discovery.
We do not expect the proceedings to delay the closing of the transaction.
With the date, so I put a boat and based on regulatory reprove, you've already received we now expect the deal closed no later than the first quarter of 212021 now.
Now on to the third quarter results, starting with GCI Liberty.
<unk> I had another great quarter revenue was up 11%.
Operating income was up 24 million and adjusted OIBDA was up 27%.
Patterns will discuss those results in a little more detail in a moment.
The five G upgrading lankford Anchorage is complete.
And third party tests have shown that is now twice as fast.
The network is twice as fast as our competition.
The company is gonna be very solid liquidity position with 105 million, a cache and $271 million <unk> drawing capacity under its senior credit facility as of the end of the third quarter.
Turning over Liberty broadband briefly we did repurchase 3.4 million shares of Liberty broadband stock for $488 million and an average place price of $142.
We consider these repurchases very attractive is if you look at the look through price to be underlying charter.
Involved the price of 46.
This was the 23% discount to yesterday's close at 634, and giving half the marketing moving I suspect, it's a bigger discount yet.
Charter had another fantastic quarter.
Who would outstanding financial results consolidate debited grew over 13% they generated $1.8 billion, a free castle up nearly 40%. They added 537000 residential and small business internet customers versus 386000 last year.
Over the past 12 months charter.
Charter has added 2.3 million internet customers.
Growth in mobile lines has continued to accelerate as well.
He added 87000 more in this quarter than the same period last year.
Impressively and against most of the industry being added another 670000 video subs.
Year to date, we are up and video sucks.
During the quarter charter repurchased 6.1 billion chairs for $3.6 billion at an average price of $592 per share.
Charter has.
Shown an amazing ability to operate well under the circumstances and it's really a testament to the hard work of the team and the investments they've made in various parts of the businesses over the last few years, which will allow them to operate quite effectively remotely.
Lendingtree coasted the earnest call. This morning, and make sure you check out the replay.
Lastly, tripadvisor will host its earnings call Tomorrow morning.
Please tune into that for an update on their results as well.
With that I'll turn it over to Brian.
Discuss the GCI Liberty financials, thanks Red.
A quarter and you say I love her you had consolidated cash or cash are at once for $553 million, which includes 105 nine a castle the GCI opco level.
The values in public equity Securities that you see Oliveria yesterday's clothes was 10.9 billion, which includes our three 4 billion interested charter six 4 billion interest in Liberty broadband.
1.1 billion dollar interest in lightning trip.
A quarter and GTI Liberty have total principle knocked at 3.2 billion.
Which is relatively unchanged from last quarter.
This include the 1.3 billion dollar mortgage loan outstanding against celebrity broadband chairs, which is what is wrong with you.
Carter exchangeable debentures, and 1.4 billion of debt, including finance leases and power obligations that you see up.
GCI leverage a quarter and the funding it's credit agreements the three seven times compared to the maximum allowable leverage six five times.
You see I had 271 million on wrong, undrawn borrowing capacity of quarter and.
Nope that would be five amounts exclude the indemnification obligation to curate and the outstanding preferred stock.
After quarter and G T I L D a subsidiary Liberty.
600 million senior notes the 2028.
Proceeds from the step Rag long cash on hand borrowing preference in your credit. So we're used for being all outstanding principal of a consistent June of 2024 of 2025.
T G. I L. C also amended its existence senior credit facility in October spending the maturity of 2025 increase in total barn asked me to $950 million.
You know like we know the corporate and other expenses were elevated during the quarter largely due to expenses related to the proposed CCI Liberty already broadband combination.
Lastly, you will note in our tend to be released later today that we sold are interested in your body.
During the court.
With that I'll turn it over the pizza box out Dci operating results.
Thanks, Brian.
Starting with COVID-19, thus.
Thus far we have not experienced any uptick in Baghdad expense at.
At the same time, we benefited from increased demands for our corporate data network and lower health care costs. This has resulted in positive financial outcome cause we remain committed to ensuring we meet all the connectivity needs of our customers.
We continue to work with educational facilities to ensure that Alaskan students have the access to the connectivity that they need.
With the start of the school year, we work with school districts across the state the brand connectivity to approximately 4000.
Low income students with students, who otherwise would not have had access to school online.
Moving on to the five band five G upgrade.
Or five G deployment in Anchorage is now effectively done we commission to drive test on the network in September and the results are fantastic.
Our network was twice as fast as our primary competitor a T N T and had substantially fewer dropped calls.
Rural Health care to update.
On October 20 2020.
F C C approved our cost base rural rates for the funding years ended June 30th 2019 in June 30 2020.
We expect to collect the entire amount in accounts receivable related to these two funding years approximately 175 million.
Within three to six months.
This is a significant milestone that will not materially affect the income statement, but will bring further liquidity to the balance sheet.
On October 14th we announced that we want a 25 million dollar federal grant to bring fiber connectivity to the towns of Alaska, Kinko standpoint, <unk> Chignik Bay and Larsen Bay.
In total this project will cost $58 million, including 33 million of our own money.
And it is expected to be substantially complete by the end of 2022.
This will greatly improve the connectivity in these locations from the current satellite technology, all the way to fiber to the premise in Alaska and.
And highlights our commitment to continue to be the premier telecom provider in Alaska.
Now I'll walk through our third quarter results.
<unk>.
Revenue was up by 23 million or 11%.
And adjusted OIBDA increased by 20 million or 27%.
Significant customer demand for data.
Cost containment initiatives lower health care costs, and it continued move away from our lower margin products like video in time of materials has enabled us to grow adjusted OIBDA dollars nearly as rapidly as revenues.
On the consumer side revenue was up 8% with data driving the growth.
We gained 3300 cable modem customers sequentially.
Consumer wireless was also up 200 subscribers versus the second quarter, despite our normal prepaid subscriber seasonality.
With the sale of our broadcast business. This summer we've moved cable advertising sales revenue to consumer video.
Absent this movement consumer video revenues would've been down for the quarter.
Over it GCI business revenue was up 13% the.
The growth with largely due to the growth in government health and education revenue.
This was partially offset by the movement of cable advertising sales revenue to consumer.
The year over year growth of 3800 cable modem is where you can see the low cost cable modems that we're providing the school districts for their low income households.
Finally capex.
We've spent 102 million thus far in 2020.
Our primary capital projects for the year five band five G wireless in Anchorage is effectively complete.
Additionally, we're continuing to spend on projects to keep up with our increased data demand.
We expect our total capex for this year to be similar to last year.
I will now hand, the call back over to Greg.
Thank you, Brian and thank you Pee.
We hope you will all join us for our virtual Liberty Investor meetings on November 19th and 20th.
We do appreciate your continued interest in GCI, Liberty Liberty broadband and Liberty Tripadvisor and wish that operator.
Like to open the line for questions.
[noise] [noise], if you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speakerphone. Please make sure your new function is turned off to him out of your account can reach our equipment.
Again that is star one to ask a question.
And we'll go ahead and take care of first question now from the dreams that Clifford Evercore I'm sorry.
Good morning, Thanks for taking the question alright, great, giving your position.
The cable industry can you give us your thoughts on what pieces. It turns out it looks to be it for him. So if government Democratic administration could mean for cable, particularly in the area.
No problem.
<unk> okay.
Thank you for the question James.
Well I.
I I suspect anything that looks.
Somewhat like the current regime is probably pretty good for cable cable has done a my judgment an excellent job of supplying broadband connectivity during the pandemic.
In admirably increased capacity, an increased number of lines and handled the growth.
Growth in upstream and downstream traffic very well, so continuing that trend and.
And letting cable do what it can do well I think it's a positive.
That hasn't been said I'd note that.
During the prior administration, which various times had.
Democrat.
Troll of all three branches of the two branches of the legislature M D.
Executive branch.
Charter was able to operate very well equally under a titled to regulation. So I remain optimistic.
Yeah I'm in a front.
Realistically there is not that much M&A for where charter to do.
There are only a couple of large scale cable companies, which are not.
Comcast or charter.
And I think most of those would probably be still substantially small enough that I wouldn't anticipate that they would be enormous antitrust issues.
Given the retail nature of the business, but.
That remains to be seen.
Okay.
Okay.
We'll take our next question from <unk>.
Okay, great. Thanks, carrying the question. The first one is just any update on the discussions with charter about increasing the cap on the equity ownership, there and if not.
Are there any other mechanism available where you guys wouldn't have to take I attach it on selling charter service should get back under the cap.
So.
We are in discussions with the with.
With the company and directors about modifications for caps.
And I think those would probably be productive.
But I want to emphasize.
That our tax rate.
If we were.
Forced to divert chairs.
Because of the nature.
Of how we overstock effectively be treated as a dividend treatment and are to actually the deep 8% ish.
Given the 20 plus percent discount.
I don't view, while we are not interested really selling our charter shares I also for sale.
Which for which we were still 12 send the money in terms of the trade off if we did for the repurchases would not be the worst result, so while I am optimistic we will reach some resolution would accompany that'll be positive.
Also note that if you're unable to reach a resolution it is not the worst outcome.
Okay that makes sense and then one more if I could just.
To surround fixed wireless Verizon continue to stay optimistic five G home into you know.
Roll on a pretty aggressive plan with home Internet offering and just curious strategy whether you have.
Having change of heart around fixed violence as a competitive got the cable.
Nope.
[laughter] I mean, I don't think Nevada.
There's more competition you know.
There's more competition.
A positive I think cable is shown is very able to operate very well.
During this time.
Cable has done a great job of finding connectivity.
Cable is going to extend its footprint into new regions, partly fueled by our dog.
So it'd be tables on an excellent job of growing its footprint in serving its customers and serving potential future customers.
We'll we'll <unk>.
<unk>.
What happens lodge fixed wireless.
No.
As far as I can tell and I don't know what <unk>.
The Bill is a management, but it appears to be that they're backing off of some of the 28 and 38 gig.
They're emphasizing and most people seem to think that the T. Most efforts in the mid band it more effective so.
To be seen but I don't I don't do it in the near term.
As a.
Is it a massive competitive threat to our business.
Got it thank you very much.
Our next question comes from Bentley Cross the P. P security.
So we have the question operator or did he lose somebody.
Mister Cranky now how can I help in mind.
A quick question for the D. C. I folks wondering if communications privatisation might change in dynamics in the market or if you have any thoughts on it you know.
Hello. This is Rob I guess I'll take that one.
We would expect so I'm increasing.
Go to the nature of the market.
We'll have a long wait.
Several years before they are able to take them a while to clothes and then we'll have to make substantial investment I would expect we'd see some more fiber in their networks, but we're pretty confident.
The quality of our product offerings and the superiority of will hold your favorite color.
And we have designers that combined with heart.
Bundled products I suspect cool.
Bless you in a position where it won't have a huge impact on us although we are paying for some <unk>.
Activity in the market once it is closed and you have to admit to me.
Thanks for the Gander.
Our next question comes from Matthew Harrington with benchmark.
Okay. Thank you.
Oh I see.
I'm pretty libertarian.
Is there a point to feel like talking about half the cable industry without it almost went there.
Then I took a small sofa all D and it's really wasteful.
<unk>.
Back yet from everyone L C D.
Bill.
You could.
As you pointed out the right and definitely a mood for the.
<unk> excuse me do you think that.
Reaching awareness on the part of some of the normal company cause I'd like to work for the obviously, specifically Verizon that you'd like to work something out with cable on on small tall side and are you drawing any.
And Francis from your experience up in Alaska.
<unk> <unk> <unk> <unk> <unk>. Thank you.
Thank you I I I I missed the first part you said, who said we had mentor advantage.
G I B S. P C <unk>.
Yep Yep I, just didn't I didn't hear that I didn't hear it okay well I.
Nice to be F. C. C Commissioner thinks that we have the right technology.
I believe charters goal is to serve its customer as well and you know.
For the benefit nation, having more ways that people can connect is not a terrible thing I think we have an excellent service and an excellent.
Net work with a lot of capability from I've set up were looking to extend that that works how five G interact and how five G. Yeah operates on top of it I think we could be a good partner as you note.
We already are Verizon partner through the M V no relationship and you've seen slipped to extend.
A bar Ah network capabilities by purchases of spectrum C.
C B R F spectrum so.
I think it works they work can work pretty well together hand in glove.
<unk> I don't know if you'd add anything about based on our side you experienced in Alaska.
Oh, so long that five G was gonna be his motorcycle game as it was.
Ireland networks game, and I think part of the reason that we're doing well with our bug you up here and you got the jump on other folks is that.
Yeah, just shape with gives us a much better back all that works. So we're confident in.
<unk> ability to drive five G wireless and in the long run either have a superior platform.
Platform or have our competitors come to us because only the cable industry can really do drive the kind of lost.
100 foot that call that you need for the five two small children.
666 months.
Thank you.
Our last question comes from <unk> to my catheter.
Hi, Good day quick question I'm kind of new to the story. So I just wanted to get some color around the 575 million.
Multiple nodes within 2.75% converts to 2050 to put more color on what that transaction is in.
What that all means for the cat structure. Thank you.
Well at 10 or and talk about the convertible notes.
I think with this record commercial notes.
<unk> 2023 so.
Take a look at it.
The ability to refinance.
Between now and that day.
Sure sure price and.
Determine what are the best Windows.
We're happy to take it offline if you need more details on that.
Yeah I'd appreciate like there's one banking.
Thank you I think there's one more question is that correct operator.
Yeah, we'll take our last question from Michael Diana with P. I last capital.
Thank you for including good morning.
And congratulation on it for yourself.
I haven't gave us <unk> <unk> Parker Uhm network.
I believe this past quarter.
80%.
Individuals essentially self installed.
Clearly is changing.
The economics servicing.
An average customer could you just walk us through.
What does that mean in terms of the economics of managing the network on an ongoing basis, because I would think that this would be insignificant things on it per unit basis.
Yeah. It's a great question I think if you look back two years ago, we were something like 38% sub 40% self install.
And during the most recent quarter, we were as you noted over 80.
That's probably a couple of things one.
That is a great Testament to the work that the charter team has done.
On improving self installed capacity and making that process simpler for customers and better than us, making it simpler for them and then do you get more easily.
I also think it's probably somewhat driven by the pandemic the reality is that.
People don't necessarily want to see.
Cable installers coming to their home.
So like many things in the pandemic things born of necessity have become.
More convenient and more driven and more digital more self reliant.
It's also probably been somewhat the case impacted by the fact that some of our competition really almost shut down and will not doing any installed they didn't have a truckload and nor did they have the same self install capacities or ease of use that charter did all of that contribute to an acceleration in the growth of self install.
That has really reduced our cost of installed.
I'm not sure it had you'll have as much an impact on the ongoing costs once they're installed because I'm not sure if the network management Israeli that substantially different but I think it's both been a.
A reduction in costs and then the ability for us to gain market share during the time of Covid.
To see if I may just.
To follow up in terms of market.
Yeah, we we were running at charter just about 60%.
Home Smith.
Where do you think ultimately because of the quality of the service as well as well.
<unk> and now having call centers.
Essentially within the U S.
What what what kind of penetration over time.
Could be reached and or what do you think would be.
A reasonable goal I don't know three to five years from now.
I'm not sure that the charter management has set that goal or we have that forecast I know I have heard.
<unk> believe that ultimately he could get to two thirds penetration, but I didn't you didn't have a timeframe for that.
But I appreciate the bee hag, the big hairy audacious goal that is cause that's obviously a lot of market share game, but I do think that cable.
Has an advantage and you can see the the fact that will have added nearly.
It'll be during this to your during the last 12 months added something like almost my 8% to 9% growth in its customer account in in during the last 12 months I'm not sure. That's gonna continue to accelerate the same rate, but that shows the potential that is there to grow cause that's your points, probably gone up two or 3% during the last 12 18.
Months.
Oh, Hi, how long it's gonna take it out you know how how that slows as the hopefully exit the pandemic I don't know, but I still bullish our ability to increase sure I can talk to us as well.
Again, thank you very very much and for commercial reasons.
Thank you so with that operator, I think we're done. Thank you again all for your continued interest in the Liberty family and we look forward to speaking with you either next quarter if not sooner.
This concludes today's <unk>. Thank you for your participation you may now disconnect.
[music].
[music].
Ladies and gentlemen, thank you for standing by welcome to the C.I. Liberty 20 twice weekly earnings call go into other locations all participants will be in it was gonna open. Both afterwards, we will conduct a question and answer session at that time. If you have a question good got star one on your telephone.
As a reminder, this conference is being recorded November light I.
I would like to now I'll turn the conference over to coordinate <unk> Chief Clinical Officer. Please go ahead.
Thank you good morning, before we begin we'd like to remind everyone. All include certain forward looking statements within the meaning.
The Securities Litigation Reform Act is 995 actual events or results could differ materially due to a number of risks and uncertainties.
Nope lunch and dinner.
Form 10-K, and 10-Q filed with <unk>.
These forward looking statements speak only as well.
Oh, Yeah, Liberty Liberty broadband and Liberty trip advisor Leslie disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements is easier to reflect any change in Turkey.
Pretty nobody thought on Liberty tickets, I think expectations with regard there to or any change in events conditions or circumstances on the things such as they are.
Todays call, we will discuss certain non-GAAP financial measures for GCA Liberty, including adjusted OIBDA and adjusted OIBDA margin deeper nature regarding the comparable GAAP metrics, along with the required definitions and reconciliations including preliminary schedule one to be found in the press release issued today, which is available on the TCR Liberty website.
Teach them I went to register for personal Liberty Investor meeting on Thursday November 19, more covered Liberty media Liberty Tripadvisor on Friday November 20, Willi food sure right you see our Liberty Liberty brought.
From 11 am to two PM eastern on both good after.
After the presentations on both days, John Maloney brightly pay a while presenting studios, but most acute infection.
Please submit questions by Friday November 13, two Investor day, Liberty Dot com.
You can find a link to register and all of these details on our home page now.
Now I'd like to turn the call over to guidance. They are president and CEO. Thank you coordinate and good morning to all.
Today speaking on the call law. So we'll have to see our liberties, Chief accounting principle officer, Brian one like and you see our.
Well Pete pounds also during June eight we will be available to answer questions related to Liberty broadband and Liberty Tripadvisor.
For.
Like to give a few updates on the proposed combination between teacher and Liberty.
Hi, Ben.
The HSR waiting period expired on October 9th.
The FCC approved the transaction on October 20, Threerd, which will become final on December 2nd Pittsburgh or any applicable challenge it's yes.
We are still waiting on regulatory commission of Alaska approval.
We filed our application with them on September 16th and are looking to expedite that as quickly as we can.
The proxy for the transaction went effective on October Thirtyth.
In our special meeting for the shareholder vote is scheduled for December 15th.
The proxy does mentioned two lawsuits, which were filed against G.I. Liberty.
One has been dismissed.
And the second is proceeding with expedited discovery.
We do not expect the proceedings to delay the closing of the transaction.
We did take that put the boat and based on regulatory repos, you've already received we now expect the deal to close no later than the first quarter of Q1 2021.
Now on to the third quarter results, starting with Juicy I Liberty.
Do you see I had another great quarter revenue was up 11% operating.
Operating income was up 24 million and adjusted OIBDA was up 27%.
Pat will discuss those results in little more detail in a moment.
The five G upgrading the lingering anchorage is complete.
And third party tests have shown that is now twice as fast as the network is twice as fast as our competition.
The company is in a very solid liquidity position with 105 million in cash and $271 million on drawn capacity under its senior credit facility as of the end of the third quarter.
Turning over at Liberty broadband briefly we did repurchase 3.4 million shares of Liberty broadband stock for $488 million at an average price price of $142.
We consider these repurchases very attractive is if you look at the look through price the underlying charter.
Bob the price of 46.
This was a 23% discount to yesterday's close and 634 and given how the market is moving I suspect, it's a bigger discount yet.
Ah charter had another fantastic quarter.
With outstanding financial results.
Solid EBITDA grew over 13% they generated $1.8 billion or free cash flow up nearly 40%.
It's 537000 residential and small business internet customers versus 386000 last year.
Over the past 12 months charter.
Charter has added 2.3 million internet customers grow.
Growth in mobile lines has continued to accelerate as well.
He added 87000 more in this quarter than the same period last year.
Okay, impressively and again.
Most of the industry being added another 670000 video subs.
Year to date, we are up in video subs.
During the quarter charter repurchased 6.1 million shares for $3.6 billion at an average price of $592 per share.
Charter has shown.
Shown an amazing ability to operate well under the circumstances and it's really a testament to the hard work of the team and the investments they've made in various parts of the business is over the last few years, which will allow them to operate quite effectively remotely.
Lendingtree hosted their earnings call. This morning, and make sure you check out the replay.
Lastly trip advisor will host its earnings call Tomorrow morning. Please.
Please tune into that for an update on their results as well and with that I'll turn it over to Brian to discuss the GC I Liberty financials. Thanks, Greg.
At quarter end Liberty has consolidated cash and cash equivalents for 553 million, which includes 105 million in cash held at the Opco level.
The values and public equity Securities that you see our Livearea yesterday's close was 10.9 billion.
Which includes our 3.4 billion interest in charter.
4 billion interest in Liberty broadband.
$1.1 billion interesting lendingtree.
At quarter end Liberty had total principal amount of debt 3.2 billion.
Which is relatively unchanged from last quarter.
This includes a $1.3 billion, marking loan outstanding against its Liberty broadband shares which is for the long term.
Robert Exchangeable debentures, and 1.4 billion of debt, including finance leases in tower obligations that you see.
Got leverage at quarter end defined in its credit agreement.
Seven times compared to a maximum allowable leverage of 6.5 times.
You see I had $271 million undrawn borrowing undrawn borrowing capacity at quarter end.
Note that the both amounts exclude the indemnification obligation to curate the outstanding preferred stock.
After quarter end, you've got LLC, a subsidiary TCR Liberty.
600 million of senior notes due 2028.
Proceeds from this debt raise along with cash on hand, and borrowing severance in your credit facility were used to redeem all outstanding principal of its existing senior notes due 2024 2025.
Giles He also amended its existing senior credit facility in October.
Spending the maturity to 2025 includes initial borrowing capacity to 950 million.
You'll likely know the corporate and other expenses were elevated during the quarter largely due to expenses related to the proposed liberty broadband combination.
Hopefully you will note in our 10-Q release later today that we sold our interest in Dubai.
During the quarter.
With that I'll turn it over to Pete Bucks out do you.
Operating results.
Thanks, Brian.
Starting with Cove at 19.
Thus far we have not experienced any uptick in bad debt expense.
At the same time, we benefited from increased demand for our corporate data network and lower health care costs. This has resulted in positive financial outcomes as we remain committed to ensuring we meet all the connectivity needs of our customers.
We continue to work with educational facilities to ensure that alaskans students have the access to the conductivity that they need.
With the start of the school year, we worked with the school districts across the state the Briton chronic pivoting to approximately 4000.
Lower income students with students.
Otherwise would not have had access to school online.
Moving onto the five band five G. upgrade.
Our fiveg deployment in Anchorage is now effectively done we commissioned to drive test on the network in September and the results are fantastic.
Our network was licensed fast as our primary competitor, a DMP and had substantially fewer dropped calls.
[noise] Rural health care to update.
On October 2020 Corning.
FCC approved our cost base rule rates for the funding years ended June 32019, and June 32020.
We expect to collect the entire amount in accounts receivable related to these two funding years.
Approximately 175 million.
Within three to six months this.
This is a significant milestone that will not materially affect to the income statement, but will bring further liquidity to the balance sheet.
On October 14, we announced that we won a 25 million dollar federal grant to bring fiber connectivity to the pounds of Alaska Pinko standpoint, packet pair picnic Bay and Larson Bay.
In total this project will cost $58 million, including 33 million of our own money and.
And it is expected to be substantially complete by the end of 2022.
This will greatly improve the conductivity in these locations from the current satellite technology, all the way to fiber to the premise in Alaska.
And highlights our commitment to continue to be the premier telecom provider.
Last good.
Now I'll walk through our third quarter results.
Revenue was up by $23 million or 11% and adjusted OIBDA increased by 20 million or 27%.
Significant customer demand for data.
Cost containment initiatives lower health care costs, and a continued move away from our lower margin products like video and time and materials has enabled us to grow adjusted OIBDA dollars nearly as rapidly as revenues.
On the consumer side revenue was up 8% with data driving the growth.
We gained 3300 cable modem customers sequentially.
Consumer wireless was also up 200 subscribers versus the second quarter.
By our normal prepaid subscribers seasonality.
With the sale of our broadcast business. This summer we've moved cable advertising sales revenue to consumer video.
Absent this movement consumer video revenues would have been down for the quarter.
Over at Gcs business revenue was up 13%.
Growth was largely due to the growth in government health and education revenue.
This was partially offset by the movement of cable advertising sales revenue to consumer.
The year over year growth of 3800 cable modem is where you can see the low cost cable modems that we're providing to school districts for their low income households.
Finally capex.
We've spent 102 million thus far in 2020 our.
Our primary capital project for the year five band Fiveg wireless in Anchorage is effectively complete.
Additionally, we're continuing to spend on projects to keep up with our increased data demand.
We expect our total capex for this year to be similar to last year.
Ill now hand, the call back over to Greg.
Thank you, Brian and thank you Pete we.
We hope you will all join us for our virtual Liberty Investor meetings.
Remember 19th and Twentyth.
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I'd like to open the line for questions.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speakerphone. Please make sure. Your mute function is turned off to allow your signal can reach our equipment.
Again that is star one to ask a question.
And we'll go ahead and take our first question now from James Ratcliffe with Evercore ISI.
Good morning, Thanks for taking the question right.
Great given your position.
The cable industry can you give us your thoughts on.
What is it turns out to be a split government Democratic administration could mean for cable, particularly area.
More money from phones on regulation.
Thank you for the question James.
Well I.
I suspect anything that looks.
Somewhat like the current regime is probably pretty good for cable cable has done a.
My judgment, an excellent job of supplying broadband connectivity during the pandemic and admirably increased capacity and increased number of lines.
And handled the.
Growth in upstream and downstream traffic very well, so continuing that trend.
And letting cable do what it can do well I think it's a positive.
Having been said I'd note that.
During the prior administration, which various times had.
Democratic control of all three branches of our load the two branches in the legislature and the.
The executive branch.
Carter was able to operate very well equally under a title two regulation so I remain.
Optimistic on the M&A front.
Realistically there is not that much M&A for.
Charter to do their.
There are only a couple of large scale.
Cable companies, which are not.
Comcast or charter.
And I think most of those would probably be still substantially small enough that I wouldnt anticipate that there will be enormous antitrust issues.
Given the regional nature of the business, but.
That remains to be seen.
Thank you.
Well take our next question from Zack Silver with B. Riley.
Okay, great. Thanks for taking the question. The first one is just any update on the discussions with charter about increasing the cap on the equity ownership, there and if not.
Are there any other mechanisms available where you guidance, but you have to take a tax cut on selling a charter should get back on to the cap.
So.
We are in discussions with the.
With the company and directors about.
Modifications to the cap.
And I think those are probably be productive.
But I want to emphasize.
That.
Our tax rate.
If we were.
Forced to the less shares.
Because of the nature of all of how well the stock effectively be treated as a dividend treatment and our tax rate to be 8% ish.
Given the 20 plus percent discount.
I don't view, while we are not interested in really selling our charter shares I also for sale.
With for which we were still 12% in the money.
So the trade off if we did further repurchases would not be the worst result, so while I am optimistic we will read some resolution with the companies that will be positive.
Also note that if we are unable to reach a resolution it is not the worst outcome.
Okay that makes sense and then one more if I could.
Just around fixed wireless than Verizon continues to be optimistic on fiveg home into Q, though.
Well a lot of pretty aggressive plan with the home Internet offering and just curious dragon whether you have.
Probably change of heart around fixed wireless as a compound that got the cable.
No.
I mean, I don't think its leveled off.
As more competition.
He is more competition more.
A positive I think the table has shown its very able to operate very well.
During this time.
Cables done a great job of cloud and connectivity.
Cables going to expand its footprint into new regions, partly fueled by our dog.
So I think cables on an excellent job of growing its footprint and serving its customers and certainly potential future customers.
[music].
We'll see what happens on fixed wireless.
No.
As far as I can tell and I don't know what lies ahead of the lives of management, but it appears to be that they're backing off from some of the 28 and 38 gig.
They are emphasizing it most people seem to think that the timos efforts in the mid band at more effective so too.
To be seen but I don't I don't view it in the near term known as a.
Is it a massive competitive threat to our business.
Got it thank you very much.
Our next question comes from Bentley Cross the Pp Securities.
So we have to question operator or did you lose somebody.
Mr Cracking they'll have an open line.
A quick question for the DC I folks wondering if a lot of communications privatisation might change in dynamics in the market or if you have any thoughts on it in general.
Well this is Rob I guess I'll take that one.
We would expect some increase to the competitive nature of the market, but we will have a long lead time.
It would be several years before they're able to take a little while to close and then we'll have to make substantial investments.
Expect we'd see some more fiber in there that works, but we're pretty confident.
The quality of our product offerings and move superiority hybrid cloud report and some of that work that we have designed it that combined with our bond.
Bundled products this will leave us in a position where it won't.
Huge impact on us, although we are planning for some increase in pay ups.
Activity in the market won't reach close to NAV to a niche and the best which.
Thanks to the Gander.
Our next question comes from Matthew Harrigan with benchmark.
Okay.
Oh.
Paul I like being a pretty libertarian.
Why is it fair point talking about how the cable industry had an almost unfair advantage with the small cell topology and its really wait for you what economic effect yet from everyone. So you positive.
Bill you could.
So as you pointed out the horizon.
Definitely a move towards the.
AD growth.
Right I mean, do you think that.
As an increasing awareness on the part of some of the mobile companies like award for the obviously, specifically driving that would likely work something out with cable and small cell side and are you growing in the infant inferences from your.
Hearing it's up in Alaska with obviously.
In the lead part you know point thank you.
Thank you and I missed the first part you said, who said we had an unfair advantage.
Oh Gee pie at the FCC, Karen take real right Yep Yep I, just didn't I didn't hear that I didn't hear you okay.
Might that be a FCC commissioners thinks that we have the.
The right technology.
I believe charters goal is to serve its customers as well and you know.
For the benefit of nation, having more ways that people can connect is not a terrible thing I think we have an excellent service and an excellent net.
Network with a lot of capabilities and I've said that we're looking to extend that network.
How fiveg interact and how fiveg.
Operates on top of that I think we could be a good partner as you note we.
We already Arbor rising partner for the MB no relationship and you've seen.
US look to expand some of our network capabilities by.
Purchases of spectrum.
DBRS spectrum so.
I think it works they worked and worked pretty well together hand in glove, Ron I don't know if you'd add anything to that based on our fiveg experienced in Alaska.
Well, we are so long that fiveg is going to be as much of that call game as it was a wireless networks game and I think part of the reason, we're doing well with our bug you up here and we've got to jump on other folks is that.
Joe sheep, what gives us a much better backhaul network show, we're pumping in cables ability to drive Fiveg wireless and in the long run either have a superior.
Platform or of our competitors come to us because only the cable industry can really do drive decline to last.
Hundred foot backhaul, which indeed for the Brightree small cells.
Thanks, Greg like crop.
Thank you.
Our last question comes from Ben pellets systems like capital.
Hi, Good day quick question on kind of new to the story. So just wanted to get some color around the 575 million convertible notes due in 2.75% converts through 2015, just little more color on what that transaction is and.
What that all means for the cap structure. Thank you.
Well, let ben or and talk about the convertible note.
I think with respect to the convertible notes.
Good call dates in 2023, so let's take a look at it.
The ability to refinance those opportunistically between now and they.
Indeed, we watch the charter share price and just start really the best Windows.
We're happy to take it offline if you need more detail by that.
Yes, I appreciate there's one thank you.
Thank you.
I think there's one more question is that correct operator.
Yes, well take our last question from Michael Bunyaner with Pls capital.
Thank you for including good morning.
And congratulation on are resolved.
I have.
Justin.
Okay.
Network.
Oh.
I believe this past quarter over 80% of.
Vigils, essentially silver and gold.
Clearly changing.
The economics of a servicing.
And average customer could you just walk us through.
What does that mean in terms of the economics of managing the network on an ongoing basis because.
I think that this would be a significant savings on a per unit basis.
Yeah.
That's a great question.
I think if you look back two.
Two years ago, we were something like 38% sub 40% self install and during the most recent quarter. We were as you noted over 80.
That's probably a couple of things one that is a great Testament to the work that the charter team has done.
On improving self install capacity and making that process simpler for customers and better and we are making it simpler for them and managing a more easily I also think it's probably somewhat driven by the pandemic. The reality is that.
People don't necessarily want to see a.
Cable installers coming to their home.
So like many things in the pandemic things borne out of necessity have become.
A more convenient and more driven and more digital and more self reliant.
That is also probably been somewhat the case impacted by the fact that some of our competition really almost shut down and we're not doing any installs. They didnt have a truck rolls and nor do they have the same self install capacities or ease of use that chartered it. So all of that contributed to an acceleration in the growth of self install.
That has really reduced our cost of installed.
Im not sure its guidance, we'll have as much impact on the ongoing cost once they're installed because I'm not sure. The network management is really that substantially different but I think it's both been a.
A reduction in costs and an ability for us to gain market share during the time of Cobiz.
If I may just too.
To follow up.
In terms of marketing penetration.
Yeah, we we were running and charter just about 2% of the homes passed.
What do you think ultimately because of the quality of the service as well as well.
So and now having a call centers.
Essentially in the U.S.
What what kind of penetration over time.
Couldn't reach and or what do you think would be.
Reasonable goal I don't know three to five years from now.
Im not sure that the charter management has set that goal or we have that forecast I know I have heard Tom Rutledge believed that ultimately could get to two thirds penetration, but I didnt do that at the time frame for that.
But I appreciate the fee had the big hairy audacious goal that is because that's obviously a lot of market share gain but I do think that cable.
As an advantage and you can see the the fact that.
We'll have added nearly probably during this year during the last 12 months added something like almost 89% growth in its customer count and in during the last 12 months all I'm not sure that's going to continue to accelerate the same rate, but that shows the potential that is there to grow.
Because you know that share points, probably gone up two or 3% during the last 12 18 months.
How high it how long it's going to take it how you know how.
How how that slows as we hopefully exit the pandemic I don't know, but I still bullish on our ability to increase share I can talk as well.
Again, thank you heard agreements and are utterances.
Thank you so with that operator, I think we're done. Thank you again all for your continued interest in Liberty family and we look forward to speaking with you either next quarter if not sooner.
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