Q3 2020 Gci Liberty Inc, Liberty Broadband Corp and Liberty Tripadvisor Holdings Inc Earnings Call
Alright, let you statements within the meaning of the Friday Securities Litigation Reform Act 1995 actual event the results could differ materially due to a number of risks and uncertainties.
He knows mentioned in our most recent form 10-K, and 10-Q filed with the I P. C C.
Forward looking statements speak only have the date of this call I P. P. R. Liberty Liberty brought down and Liberty Tripadvisor expressly disclaim any obligation or undertaking city 70, any 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 chain.
And your new guys conditions or circumstances in which any such statement mistake today's call. We will discuss it non-GAAP financial measures for GCI Liberty, including adjusted OIBDA Unadjusted OIBDA margin information regarding the comparable gap metrics, along with required definitions and reconciliation, including preliminary note in scheduled wanting to can be found in any depression.
Issue today, which is available on the GCI Liberty website.
Changed my work 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 you've already brought down from 11 am to two P M eastern on both days.
After the presentations on both days Giambrone Gregory pay along with presenting to your security question. 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 Greg pay our president and CEO. Thank you cordy and good morning to all today.
Today's became a call will also have G C. Our liberties cheap accounting and principal officer, Brian one leg and G. T. I C. O 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 get a few updates on the proposed combination between GCI 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, 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 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 to Smith 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 to close no later than the first quarter of Q1 2021 now.
Now on the third quarter results, starting with GCI Liberty.
G C. 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 the wankers 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 in a very solid liquidity position was $105 million cash and $271 million on drawing capacity under it senior credit facility as of the end of the third quarter.
Turning over Liberty broadband briefly we did repurchased 3.4 million shares of Liberty broadband stock for $488 million at 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 given how the market is moving I suspect, it's a bigger discount yet.
Charter had another fantastic quarter.
Outstanding financial results consolidate give it a 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 has added 2.3 million internet customers.
Both in mobile lines has continued to accelerate as well.
Added 87000 more in this quarter than the same period last year.
Impressively and against most of the industry. They added another 670000 video subs.
Year to date, we are up and video subs.
During the quarter charter repurchased 6.1 million 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 investment they've made in various parts of the businesses over the last few years, which will allow them to operate quite effectively remotely.
Lendingtree hosted the earnest called 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 see I've already had consolidated cash or cash equivalent to the $553 million, which includes 105 nine a castle the GCI opco level.
The values in public equity Securities that you calibrate yesterday's clothes was 10.9 billion, which includes our three 4 billion interested charter six 4 billion interest in Liberty broadband.
At 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 this Liberty broadband chairs, which is always on the charter exchangeable debentures, and 1.4 billion of debt, including finance leases with all obligations that you see.
GCI leverage a quarter and it's fun and it's credit agreements the three seven times.
Maximum allowable leverage six five times.
You see I had $271 million on wrong, undrawn borrowing capacity of quarter and.
Nope that the total amount exclude the indemnification obligation to curate and the outstanding preferred stock.
After quarter and G T I L D. A subsidiary GCI Liberty right 600 million senior notes do 2028.
Proceeds from the step Rag long cash on hand borrowing senior credit facility were used for being all outstanding principal or assistant.
2024 2025.
T G. I L. C also amended its existing senior credit facility in October spending the maturity of 2025, an increasing showed up on either $950 million.
You'll likely note the corporate and other expenses were elevated during the quarter largely due to expenses related to the proposed CCI Liberty Hillary broadband combination.
And lastly, you will note in our tend to be released later today that we sold are interested in you by during the court.
With that I'll turn it over the pizza box out Dci operating results.
Thank you Brian.
Starting with COVID-19, thus.
Thus far we have not experienced any uptick in bad that 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 to burn 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 30, 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, Pakistan, 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 and on Alaska.
And highlights our commitment to continue to be the premier telecom provider in Alaska.
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 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 do consumer video.
Absolute this movement consumer video revenues would've been down for the quarter.
Over it GCI business revenue was up 13%.
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 project for the year five band <unk> 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 meeting on November 19th and 20th.
We do appreciate your continued interest in GCI, Liberty, Liberty broadband and Liberty Tripadvisor and with that operator.
Like to open the lines 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 mute function is turned off turn on 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 dreams that Clifford Evercore I'm sorry.
Good morning, Thanks for taking the question alright, great, giving you position.
The cable industry can you give us your thoughts on what pieces. It turns out it looks to be answering split government Democratic administration could mean for cable, particularly in the area.
185.
<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 or 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 having 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 electric nature and the.
Executive branch.
Charter was able to operate very well equally under a titled to regulation. So I remain optimistic.
On the <unk> front.
Realistically there is not that much M&A for for 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 there will be enormous antitrust issues given the regional nature of the business but.
And that remains to be seen.
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 a tax had on selling charter center should get back onto the cat.
So.
We are in discussions with the.
With the company and directors about.
Modifications the caps.
And I think those would probably be productive.
But I want to emphasize that our tax rate.
If we were.
Forced to the last chairs.
Because of the nature of ball of how old the stock effectively be treated as a dividend treatment and are actually the deep 8% ish and 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 further repurchases would not be the worst result, so while I am optimistic we will reach some resolution with the company that'll be positive I 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.
To surround fixed wireless and Verizon continues to be optimistic <unk> home into you know.
Roll out a pretty aggressive plan with at home Internet offering and just curious dragging whether you have.
Change of heart around six violence or they can publish I've got the cable.
Nope.
[laughter] I mean, I don't think Nevada.
There's more competition you know.
More competition.
A positive you know I think the table as shown it's very able to operate very well.
During this time.
Cable has done a great job defining 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 and serving its customers and serving potential future customers.
We'll we'll <unk>.
See.
What happens lodge fixed wireless.
No.
As far as I can tell and I don't know what's inside the head of the Bill is a management, but it appears to be that they're backing off from some of the 28 and 38 gig.
They're they're emphasizing and most people seem to think that the T. Most efforts in the mid band or more effective so.
To to be seen but I don't I don't do it in the near term no as a.
At a map of competitive threat to our business.
Got it thank you very much.
Our next question comes from Bentley Cross the P. P securities.
So we have the question operator or did we lose somebody.
Mister Cranky now how can I open mind.
Quick question from the D. C. I folks wondering if communications privatisation might change in dynamics from American 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 the competitive nature of the market.
We'll have a long wait.
Several years before they're able to take them a while to clothes and then we'll have to make substantial investments I would expect we'd see some more fiber in there that works but.
Pretty confident.
The quality of our product offerings and the superiority hydrophobic will explain it to me.
Does that work do we have designed it that combined decor.
Bundled products I suspect cool.
US in a position where it will go to a huge impact on us, although we are paying for some <unk>.
Activity in the market Wantage closed and you have to admit to your destination.
Thanks for the Gander.
Our next question comes from Matthew Harrington with benchmark.
Okay. Thank you.
Oh I see.
Free.
And.
Is there a point you can really talk with that have the cable industry that it almost unfair.
I took a small sofa all D and it's really wasteful.
It.
Get some everyone L C D.
Bill Yeah.
As as.
He pointed out the right and.
Okay Ah means for the.
<unk>.
It's gonna be do you think that.
Increasing 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.
Bring it up in Alaska.
Obviously and the <unk> the U S. <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 at the F. C C Commissioner thinks that we have the right technology.
I believe charters goal is to serve its custom as well and you know.
The benefit nation, having more ways that people can connect with not a terrible thing I think we have an excellent service and an excellent.
Network with a lot of capabilities and I've set up were looking to extend that that works how.
<unk> G interact and how five G.
Operates on top of it I think we can be a good partner as you note. We already are Verizon partner through the M V. No relationship and you've seen a slip to extend I'm a bar Ah network capabilities by.
Purchases of spectrum seed.
C B R S spectrum so.
I think it works they work can work pretty well together hand in glove, Ron I don't know if you'd add anything about based on our side you experienced in Alaska.
Oh wait so long that five G was gonna be his motorcycle game as it was.
Oh isn't that works game and I think part of the reason that we're doing well with our budget you up here and you got the jump on other folks is that.
<unk> gives us a much better backhaul network. So we're confident in K.
Cable's ability to drive five G wireless and in the long run.
You have a superior platform.
Platform or have our competitors come to us because only the cable industry can really do drive to kind of lost.
100 foot that call that you need for the two small children.
That's correct.
Thank you.
Our last question comes from seven system like capital.
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.
Vertical note to make 2.75% converts to 2050 to put more color on what that transaction is in.
What that all means put a cap structure. Thank you.
Well at 10 or and talk about the convertible notes.
I think with this record tomorrow notes for college in 2023, So you must be taking.
Take a look at it.
The ability to refinance opportunistically between now and that day did you watch the charter share 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 that one <unk>.
Thank you I think there's one more question is that correct operator.
Yeah, we'll take our last question from Michael Diana with T I last capital.
Thank you for including good morning.
And congratulation on X one yourself.
Uhm I have a <unk> <unk>.
Uhm network.
Huh.
I believe this past quarter.
Over 80% mm mm.
The visuals essentially self installed.
Clearly premium.
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 pretty 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.
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 and I was making it simpler for them and then junior 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 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 will not doing any installed but I 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 will have as much of 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 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 penetration.
Yeah, we were running at charter just about 60% of the.
Home Smith.
Where do you think ultimately because of the quality of the service as well as well.
Still and now having to call centers.
Alright, essentially in the U S.
What what kind of penetration Hoover time.
Could be reached and or what do you think would be.
Reasonable I dunno three to five years from now.
I'm not sure that the charter management has set that goal or we have that for cats I know I have heard.
<unk> would you believe that ultimately you could get to two thirds penetration, but I didn't he didn't have a timeframe for that.
But I appreciate the sea 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 probably during this year. During the last 12 months added something like almost my 89% growth in its customer account and and during the last 12 months I'm not sure that's going to continue to accelerate the same rate but that show.
The potential that is there to grow.
Cause you know I bet Sharepoint is probably gone up two or 3% during the last 12 18 months.
Oh, Hi, how long, it's gonna take it how you know how.
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 BPCI Liberty 2020 deeply earnings call going I jumping from all participants will be in it looked good on both afterwards, we will conduct a question and answer the question at that time. If you have a question quick star one on your telephone.
I note. This conference is being recorded November light.
I would like to now I'll turn the conference over to coordinate <unk> Chief Legal officer. Please go ahead.
Thank you good morning, before we begin we'd like to remind everyone. This call includes certain forward looking statements within the meaning of the.
The Securities Litigation Reform Act of 1995, actual events or results could differ materially due to a number of risks and uncertainties.
Which is in our form 10-K, and 10-Q filed with the <unk>.
These forward looking statements speak only as well.
Oh, Yeah, and Liberty Liberty broadband and Liberty trip advisor Leslie disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein.
Sure like H. EGPC on Liberty Liberty broadband and Liberty since I guess expectations with regard there to or any change in events conditions or circumstances on what things such as they.
On today's call, we will discuss certain non-GAAP financial measures would you see I liberty, including adjusted OIBDA and adjusted OIBDA margin the burning through regarding the comparable GAAP metrics, along with the required definitions and reconciliations.
You probably know is scheduled to be found in the press release issued today, which is available on the kids yard in Liberty website.
He's from I went to register for virtual Liberty Investor meeting on Thursday November 19, more covered Liberty media and Liberty trip advisor on Friday November 20, well be sure right you see our Liberty and Liberty brought down from 11 am to two PM eastern on both good.
After the presentations on both days, John Maloney Brucie pay a while presenting studios will host acuity session.
Please submit questions by Friday November 13.
Yesterday 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 Graeme say our president.
Thank you coordinate and good morning to all.
Speaking on the call. We'll also have G.I. Libertys, Chief accounting principle officer, Brian one like a GE I see.
Well Pete pounds also during June eight and will be available to answer questions related to Liberty broadband and Liberty Tripadvisor.
First I'd.
I'd like to give a few updates on the proposed combination between teacher and Liberty broadband.
The HSR waiting period expired on October nights.
C. C approved the transaction on October 20, Threerd, which will become final on December 2nd Pittsburgh or any applicable challenges.
We're still waiting on regulatory commission of Alaska approval.
While their application with them on September 16th and are looking to expedite that as quickly as we can.
Oh, the proxy for the transaction went effective on October Thirtyth.
And our special meeting for the shareholder vote is scheduled for December 15th.
The block you Doug mentioned, two lawsuits were filed against GCR Liberty.
One has been dismissed.
The second is proceeding with expedited discovery.
We do not expect the proceedings to delay the closing of the transaction.
With the gates said for the boat and based on regulatory approvals you've already received we now expect the deal to close no later than the first quarter of Q1 2021.
Now onto third quarter results, starting with Juicy I Liberty.
Do you see I had another great quarter revenue was up 11% upward.
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 repurchased 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.
Involves a 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.
Charter had another fantastic quarter.
With outstanding financial results consolidated EBITDA grew over 13%.
We generated $1.8 billion or free cash flow up nearly 40%.
They added 537000 residential and small business internet customers versus 386000 last year.
Over the past 12 months.
Charter has added 2.3 million internet customers.
Growth in mobile lines has continued to accelerate as well and they added 87000 more in this quarter than the same period last year.
Impressively and again.
Most of the industry. They 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 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 made in various parts of the businesses over the last few years, which will allow them to operate quite effectively remotely.
[music].
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 G.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.
Current quarter on an interest in Liberty broadband.
$1.1 billion interesting lendingtree.
At quarter end GTR 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 Liberty broadband shares, which is always on the charter exchangeable debentures, and 1.4 billion of debt, including finance leases the tower obligations that you see.
You've got leverage at quarter end defined in its credit agreement.
At a time 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 above amounts exclude the indemnification obligation to curate the outstanding preferred stock.
At quarter end, we see I'll see a subsidiary TCR Liberty raised 600 million of senior notes due 2028.
Mostly from the step rate along with cash on hand, and borrowings under the senior credit facility were used to redeem all outstanding principal of its existing senior notes due 2020 or 20 point Bob.
You see I'll see also amended its existing senior credit facility in October.
Turning to maturity. The 2025 includes initial borrowing capacity to 950 million.
We'll likely know the corporate and other expenses were elevated during the quarter largely due to expenses related to Liberty broadband combination.
And lastly, you will note market to release later today that we sold our interest in Dubai.
During the quarter.
With that I'll turn it over to Pete talks out do you see our operating results.
Thanks, Brian.
Starting with Cove at 19.
Thus far we have not experienced any uptick in bad debt expense.
The same time, we benefited from increased demand for our corporate data network and lower health care costs.
This 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 Bretton conductivity to approximately 4000 low income students with students who.
Who otherwise would not have had access to school online.
Moving onto the five band Fiveg upgrade.
Our fiveg 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 DMP and had substantially fewer dropped calls.
[noise] Rural health care to update.
On October 2020 Corning.
The FCC approved our cost base rule rates for the funding year 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 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 on Alaska, Kinko standpoint, Bakken pair shipment 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 20 talking to.
This will greatly improve the conductivity in these locations from the current satellite technology, all the way to fiber to the premise on Alaska.
And highlights our commitment to continue to be the premier telecom provider.
Glasgow.
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 EBITDA 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.
Like 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 GCA business revenue was up 13%.
The 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 are 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 meeting on November 19th and Twentyth we.
We do appreciate your continued interest in Gcs Liberty Liberty broadband and Liberty trip advisor and with that operator.
Like to open the line for questions.
[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 mute function is turned off to allow your sales now can we turn 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.
Morning, Thanks for taking the question right.
Great given your position.
The cable industry can you give us your thoughts on.
What if it turns out it looks to be a state government chemicals ministration could mean for cable, particularly in the area.
I want to make from toned down regulation. Thanks.
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.
That having been said I'd note that.
During the prior administration, which various times had.
Democrats.
Control of all three branches of our blow the two branches in the legislature and the.
The executive branch.
Charter was able to operate very well equally under a title two regulation so I.
I remain optimistic.
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 you know.
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 that charter about increasing the cap on the equity ownership, there and if not.
Are there any other mechanism available for you guys. When you have to take a tax hit on selling a charter shares you get back on to the cap.
So.
We are in discussions with the.
With the company and directors about.
Modifications the cap.
And I think those are probably be productive.
But I want to emphasize.
That.
Our tax rate.
If we were.
Forced to go less shares.
Because of that nature of how we hold 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.
In terms of the trade off if we get further repurchases would not be the worst result, so while I am optimistic we will read some resolution with the company that will be positive I 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 when Verizon continues to be optimistic on fiveg home into Q, though.
Well a lot of pretty aggressive plan in the home Internet offering and just curious dragging whether you had.
The change of heart around fixed wireless as a competitive got the cable.
No.
I mean, I don't think it's doubled up.
More competition.
He is more competition.
A positive I think the table is shown to be very able to operate very well.
During this time.
Cable has done a great job of providing connectivity.
Cables kind of extended footprint into new regions, partly fueled by our dock.
So I think cables on an excellent job of growing its footprint and serving its customers and certainly potential future customers.
Well Bill.
And see what happens on fixed wireless no.
As far as I can tell and I don't know whats side, the head of the large a management, but it appears to be that they're backing off from some of the 28 and 38 gig.
They are they are emphasizing it most people seem to think that the two most efforts in the mid band of more effective so too.
To to be seen but I don't I don't view 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 with PD Securities.
So we have to question operator or did we lose somebody.
Mr Cracking they'll have an open line.
A quick question for the Dbi folks wondering if.
Left communications privatisation might change in dynamics in the market or if you have any thoughts on it you know.
Well this is Rob I guess I'll take that one.
We would expect some increase and the competitive nature of the market.
Hello long.
We'll go with the.
Several years before they are able to take a little while to close and then we'll have to make substantial investments I would expect we'd see some more fiber in there that works, but we're pretty confident.
The quality of our product offerings in the superiority of recovery.
Yeah.
We have designed this combined with our bonds.
Bundled products at this point, we'll leave us in a position where it won't.
Huge impact on us. So we are planning for some increased competitive such.
Activity in the market wants you to close the gap to a niche and the best which.
Thanks to the Gander.
Our next question comes from Matthew Harrigan with benchmark.
Okay.
Oh yeah.
Pretty libertarian.
Why is it fair points before talking about how the cable industry had an almost unfair advantage with the small cells and policy and its really wait for you what economic perspective from everyone tells you the duplicative.
Bill you could.
As you pointed out horizon.
Definitely a move towards the.
Yeah great.
Can you do you think that.
There's an increasing awareness on the part of some of the mobile companies that they liked award for the Odyssey, specifically driving that would likely work something out with cable and small cell side and are you drawing any input from inferences from you're hearing.
Hearing it's up in Alaska with obviously.
In the lead part from the U.S. as 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 care about an eight year like Yep Yep I, just didnt I didn't hear that I didn't hear you okay I.
Mike that the FCC commissioners thinks that we have the right technology.
I believe charters, though is to serve its customers 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.
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 rises partner for the M.B. no relationship and you've seen.
Slipped to extend 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 the.
Jumpsuit, what gives us a much better backhaul network. So we're confident in cables ability to drive fiveg wireless and in the long run either have a superior.
Platform or that of our competitors come to us because only the cable industry can really do drive decline to last.
Hundred foot back Paul what you need for the juice fulfilled.
Thanks, Greg next month.
Thank you.
Our last question comes from Ben pellets system like capital.
Hi, Good day quick question I'm kind of new to the story. So just wanted to get some color around the 575 million.
Vertical notes during 2.75% converts through 2015 to a 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 where this record convertible notes.
Good call dates in 2023, so let's take a look at it.
The ability to refinance those opportunistically between now and that day.
Do you watch the charter share price and yes just.
It's our best Windows.
We're happy to take it off line, if you need more detail about that.
Yes, I appreciate that 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.
[noise], thank you for including good morning.
And congratulation on are resolved.
I haven't.
Justin Renz Parker.
Network.
Huh.
I believe this past quarter.
Over 80% of.
In.
Individuals essentially sell from school.
Clearly changing.
The economics of Oh 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 would think that this would be a significant savings on a per unit basis.
Yep.
That'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 install capacity and making that process simpler for customers and better and we are making it simpler for them and managing them 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.
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 installed they didnt have.
Truckload 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.
I'm not sure if that you'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 coding.
If I may just ER.
To follow up.
In terms of marketing organization.
Yeah, I mean, we were running and charter just about 2% of the homes passed.
Where do you think ultimately because of the quality of the service as well as well he will be still and now having a call centers.
Essentially in the U.S.
What what kind of penetration over time.
Could be reached and or what do you think would be.
Reasonable goal I don't know three to five years from now.
I'm not sure that the charter.
Chartered management has that 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 now the timeframe for that.
But I appreciate the but you had the big hairy audacious goal that is because that's obviously a lot of market share gain but I do think that cable.
Has an advantage and you can see the the fact that.
Well 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 at the same rate, but that shows the potential that is there to grow.
Because you know that share points, probably going up two or 3% during the last 12 18 months.
Hi, how long, it's going to take it out.
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.
And France is good agreements and are sources.
Thank you.
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.
This concludes today's call. Thank you for your participation you may now disconnect.