Q3 2020 Gci Liberty Inc, Liberty Broadband Corp and Liberty Tripadvisor Holdings Inc Earnings Call
That's exactly right.
[music].
Ladies and gentlemen thing keep us doing by welcome to the T.I. Liberty 2022 for the earnings call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your telephone.
As a reminder, this conference is being recorded November night.
I would like to now turn the conference over to coordinate Chinese cheese portfolio Officer. Please go ahead.
Thank you good morning, before we begin we'd like to remind everyone just fall into certain forward looking statements.
Private Securities Litigation Reform Act was 995 actual events or results could differ materially due to a number of risks and uncertainties.
He knows mentioned in our most recent form 10-K as many key files with the FTC. These forward looking statements speak only as a data for this call and Liberty Liberty broadband and Liberty trip Advisor Express, we disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements because he appearing to reflect any changes there.
Liberty Liberty broadband and Liberty citrus orchards expectations with regard there to or any change in events conditions or circumstances on which any such statements are based on today's call. We will discuss certain non-GAAP financial measures for GCA Liberty, including adjusted OIBDA and adjusted OIBDA margin different issue regarding the comparable GAAP metrics, along with required definitions and lucky.
Television, including preliminary note and schedules one into it can be found in the press release issued today, which is available on the TCR Liberty Web site.
Please remember to register for virtual Liberty Investor meeting on Thursday November 19, we will cover at Liberty Media and Liberty Tripadvisor on Friday November 20 wells to cheer right you see our Liberty Liberty brought down from 11 am to two PM eastern on both days after.
After the presentations on both days, John Maloney brightly pay a while presenting studios will post acute infection, she's pretty submit questions by Friday November 13, two investor day at Liberty Media Dot Com you can find a link to register and all of these details on our home page.
Now I'd like to turn the call over to Graeme say, our president and CEO. Thank you coordinate and good morning to all.
Today speaking on the call. We will also have GCR Libertys, Chief accounting principle officer, Brian One Lake and G.I. CFO Pete pounds also during June eight we will be available to answer questions related to Liberty broadband and Liberty trip advisor.
First.
I'd like to give a few updates on the proposed combination between teacher and Liberty and Liberty broadband.
The HSR waiting period expired on October nine the.
FCC 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.
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.
With the date set for the boat and based on regulatory approvals. We've already received we now expect the deal to close no later than the first quarter of Q1 2021.
Now onto the third quarter results, starting with GCA 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%.
Pounds will discuss those results in little more detail in a moment.
The five G upgrading the Randgrid 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 of cash and $271 million and drawn capacity under its senior credit facility as of the end of the third quarter.
Turning over to 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 to the underlying charter.
Involves a price of 46.
This was a 23% discount to yesterday's close at 634 and given how the market is moving up suspect it's a bigger discount yet.
Charter had another fantastic quarter.
With outstanding financial results consolidated EBITDA grew over 13% they 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 grow.
Growth in mobile lines has continued to accelerate as well.
We 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.
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 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 GCI Liberty financials.
Greg the.
At quarter end, you see our Liberty has consolidated cash and cash equivalents or 553 million.
It includes 105 million in cash so that the GCR opco level.
The value of the public equity Securities that you see our Livearea yesterday's close was 10.9 billion.
That concludes our 3.4 billion interest in charter 6.4 billion interest in Liberty broadband.
$1.1 billion interesting lendingtree.
At quarter end, we see our Liberty had total principal amount of debt 3.2 billion, which.
Which is relatively unchanged from last quarter. This.
This includes a $1.3 billion market loan outstanding against its Liberty broadband shares which is fully drawn.
Other exchangeable debentures, and 1.4 billion of debt, including finance leases with our obligations that you see.
Cpis leverage at quarter end as defined in its credit agreement 2.7 times compared to a maximum allowable leverage of 6.5 times.
You see I had $271 million undrawn borrowing undrawn borrowing capacity as of quarter end.
Note that the above amounts exclude the indemnification obligation to curate and the outstanding preferred stock.
After quarter end, you see I LLC, a subsidiary of TCR Liberty raised 600 million senior notes due 2028.
Let's see from this debt raise along with cash on hand, and borrowings under the senior credit facility were used to redeem all outstanding principal of expenses State Senior notes due 2024 2025.
Do you see I'll see also amended its existing senior credit facility in October extending the maturity to 20 point by the increase in total 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 CCR Liberty Liberty broadband combination.
And lastly, you will note in our 10 to release later today that we sold our interest in Dubai.
During the quarter.
With that I'll turn it over to peace talks out do you see our operating results.
Thanks, Brian.
Starting with COVID-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 school districts across the state to bring connectivity to approximately 4000.
Low income students with students.
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 commissioned to drive test on the network in September and the results are fantastic.
Our network was twice as fast as our primary competitor 80, MP and had substantially fewer dropped calls.
Rural Health care to update.
On October 20 2020.
The 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 on Alaska, Kimco standpoint, Pakistan 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.
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 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.
Alright, 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%.
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 modems 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 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 meeting on November 19th and Twentyth.
We do appreciate your continued interest in GCI Liberty Liberty broadband and Liberty trip advisor and with that operator.
We'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 could return 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.
In any given year position.
The cable industry can you give us your thoughts on.
What is it turns out to be a state government Democratic administration could mean for cable, particularly in the area.
I want to know from trained 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 as a positive.
That having been said I'd note that.
During the prior administration, which various times had.
Democrats.
Patrol of all three branches of 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 remain optimistic.
Optimistic on the M&A front.
Realistically there is not that much M&A for.
Our 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.
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 guys would have to take a tax hit on selling charter should get back on that account.
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 divest shares.
Because of that nature of 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.
On to the trade off if we get further repurchases would not be the worst result, so while I am optimistic we will reap some resolution with the company 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 in Verizon continues to be optimistic on fiveg home into two though.
Hi rollout of pretty aggressive plan with the home Internet offering and just curious strategy whether you have.
Probably a change of heart around fixed wireless as a competitive shack got to cable.
No.
I mean, I don't think that rolled out.
There is more competition.
There is more competition more upon.
A positive you know I think the table has shown its very able to operate very well.
During this time.
Cables done a great job of providing connectivity.
Cables going to expand its 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.
Certainly potential future customers.
We'll we'll do.
These new C.
What happens on fixed wireless.
No.
As far as I can tell and I don't know what side the head of the dialyzer 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 as a.
Is that 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 we lose somebody.
Mr Cracking they'll have an open line.
A quick question for the DCP folks wondering if.
I left communications privatisation, my changing 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 in the competitive nature of the market, but we will have a long lead time.
We'll go with the.
Several years before they're able to really take them a while to close and then we'll have to make substantial investments I would expect we'd see some more fiber in their networks, but we're pretty confident is.
Quality of our product offerings and lose superiority hybrid battery for antibody network that we have designed it that combine before.
Bundled products I suspect will lead us in a position where it won't.
A huge impact on us, although we are planning for some increased competitive sets.
Activity in the market wants equation after a niche in the best which.
Thanks for the Gander.
Our next question comes from Matthew Harrigan with benchmark.
Okay. Thank you.
Oh, it's like being a pretty libertarian.
Why is it fair points is really 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 else do you foresee the bill.
Bill you could.
So as you pointed out the horizon.
Definitely a move towards the.
Yeah Yeah.
Can you do you think that.
There's an increasing awareness on the part of some of the mobile companies like award for the obviously, specifically horizon that would likely work something out with.
Cable on the small cell side and are you growing in the infant right inferences from your experience up in Alaska with these are obviously in the in the lead for me you know point. Thank you.
Thank you and I missed the first part you said.
We said we had an unfair advantage.
Gee pie the FCC chairman I take near Lax Yep Yep I, just didn't I didn't hear that I didn't hear you okay I.
Nice to be a FTC commissioner thinks that we have are the right technology.
I believe charters, though 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.
Network with a lot of capabilities and I've said that we're looking to extend that network.
How fiveg interact and how Fiveg yeah operates on top of it I think we could be a good partner as you note we.
We already Arbor license partner for the M.B. no relationship and you've seen.
As we look to expand some of our network capabilities by.
Purchases of spectrum.
DBRS spectrum so.
I think it works they wear to work 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 a big part of the reason, we're doing well with our Fiveg theory, you got to jump on other folks is that the.
Joseph 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 competitive.
Platform or of our competitors come to us because only the cable industry can really do drive decline to last.
Hundred foot backhaul, what you need for the Brightree small cells.
Thanks, Greg next month.
Thank you.
Our last question comes from Vincent This is my 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 convertible notes and 2.75% converts through 2015 to put more color on what that transaction is done.
What that all means for the cap structure. Thank you.
Well, let them or and talk about the convertible notes.
I think what this record convertible notes.
Good call dates in 2023, so yes, we take a look at it.
The ability to refinance those opportunistically between now and that they are.
Do you watch the charter share price.
Yeah, just really the best reserves.
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 P.I. last capital.
Thank you for including good morning.
And congratulation on are resolved.
I housekeeping question or rumors Parker network.
Uh huh.
I believe this past quarter.
Over 80% of.
Individuals essentially silver and gold.
Clearly is paying you.
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.
Things that this would be a significant savings on a 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 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.
The Oh cable installers coming to their home.
So like many things in the pandemic things borne out of necessity have become a more.
More convenient and more driven and more digital and more self reliant.
That is also probably been somewhat became impacted by the fact that some of our competition really almost shut down and we're not doing any installs. They didn't have a truck rolls and nor do they have the same self installed capacities or ease of use that chartered it. So 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 that 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 on it.
In terms of market downturn attrition.
Yeah, I mean, we were running and churn or just about 50% of the homes passed.
Where do you think ultimately because of the quality of the service as well as well he will be missed.
So 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 it.
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 or Tom Rutledge believed that ultimately it could get to two thirds penetration, but I didnt do that at a time frame for that.
But I appreciate the B 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.
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 and 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.
Oh, Hi, how long, it's going to take it how you know 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 think Todd 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 Liberty family and we look forward to speaking with you either.
Next quarter, if not sooner.
This concludes todays call. Thank you for your participation you may now disconnect.
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Ladies and gentlemen, thank you for standing by welcome to the C.I. Liberty 2020 degree earnings call. During the presentation. All participants will be in it was gonna only smoke.
Afterwards, we will conduct a question and answer the question at that time. If you have a question. Please God 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 Football 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 was 1995.
Actual events or results could differ materially due to a number of risks and uncertainties.
When she was in our form 10-K, and 10-Q filed with the <unk>.
These forward looking statements speak only as of this call.
Oh, I see our Liberty Liberty broadband and Liberty trip advisor roughly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained appearing to.
Like any change in Liberty Liberty Liberty tickets, I think expectations with regard there to or any change in events conditions or circumstances on looking such statements.
On todays call, we will discuss certain non-GAAP financial measures would you see I liberty, including adjusted OIBDA and adjusted OIBDA margin different issue regarding the comparable GAAP metrics, along with the required definitions and reconciliations.
Pulmonary no its scheduled wanting to be found in the press release issued today, which is available on the TCR Liberty website.
These are my words register for virtual Liberty Investor meeting on Thursday November 19 were covered Liberty media and Liberty Tripadvisor on Friday November 20 wells. The cure rate you see our Liberty Liberty brought down from 11 am to two PM eastern on both good.
After the presentations on both days, John Maloney Brucie pay along presenting to you post acute infection.
Please submit questions by Friday November 13.
Yesterday Liberty News 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 Grace there, but yeah. Thank you Courtney and good morning to all.
Today speaking on the call. We'll also have G.I. Libertys, Chief accounting principle officer, Brian one like CFO.
CFO 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 9th.
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.
Wilder 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 30.
And our special meeting for the shareholder vote is scheduled for December 15th.
The block you Doug mentioned, two lawsuits, which were filed against GCR Liberty.
One that 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 before the vote and based on regulatory reforms, you've already received we now expect the deal to close no later than the first quarter of Q1 2021.
No wonder third quarter results, starting the 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.
It's the network is twice as fast as our competition.
The company, it's been a very solid liquidity position with 105 million in cash and $271 million on drawn capacity under its senior credit facility as with the end of the third quarter.
Turning over to Liberty broadband briefly we did repurchased 3.4 million shares of Liberty broadband stock were $488 million an hour.
Average place price of $142.
We consider these repurchases very attractive because 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 up suspect it's a bigger discount yet.
Charter had another fantastic quarter.
With outstanding financial results.
<unk> 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, our charter has added 2.3 million internet customers.
Growth in mobile lines has continued to accelerate as well.
Added 87000 more in this quarter than the same period last year.
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 businesses 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.
Tuned into that for an update on their results as well.
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.
<unk> includes 105 million in cash so the GCR opco level.
The values and public equity security, but you've got to Liberty EPS yesterday's close was 10.9 billion.
Which includes our 3.4 billion interest in charter 6.4 billion interest in Liberty broadband.
$1.1 billion interesting lendingtree.
At quarter end Liberty had total principal amount of debt 3.2 billion, which.
Which is relatively unchanged from last quarter.
Include $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 out.
Do you guys leverage at quarter end defined in its credit agreement 2.7 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.
No could be above amounts exclude the indemnification obligation to curate the outstanding preferred stock.
At quarter end, we see I'll see a subsidiary of TCR Liberty raised 600 million senior notes due 2028.
Proceeds from the step break long 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.
Ill see also amended its existing senior credit facility in October extending the maturity to 2025, increasing full 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 those whose liberty Liberty broadband combination.
And lastly, you will note in our 10 to release later today that we sold our interest in Dubai.
During the quarter.
With that I'll turn it over to Pete talked about 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 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 Bretton connectivity 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 80, MP and had substantially fewer dropped calls.
Rural healthcare 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 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 on Alaska, Kinko standpoint, packet, Pam 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 on 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.
Like our normal prepaid subscribers seasonality.
With the sale of our broadcast business. This summer we've moved cable advertising sales revenue to consume our 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 by 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 meetings.
Well remember 19th and Twentyth.
We do appreciate your continued interest in Gcs Liberty Liberty broadband and Liberty trip advisor and with that operator.
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 could 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.
Right given your position.
The cable industry can you give us your thoughts on.
What is it turns out to be a split.
So tell me.
Hi administration could mean for cable.
In the area.
Normally 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.
Supplying broadband connectivity during the pandemic and admirably increased capacity and increased number of lines.
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.
Troll of all three branches of the two branches in the legislature and the.
Executive branch.
Charter was able to operate very well equally under a title two regulation so 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.
That remains to be seen.
Thank you.
We'll 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 guys would 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 to the cap.
And I think those would probably be productive.
But I want to emphasize.
That.
Our tax rate.
If we were.
Forced to go less shares.
Because of the nature of Dol 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 really selling our charter shares I also for sale.
With for which we were still 12% in the money.
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.
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 two though.
Hi rollout of pretty aggressive plan in the home Internet offering and just curious dragging whether you have.
Now the change of heart around fixed wireless as a competitive I've got to get little.
No.
I mean, I don't think theres several about.
As more competition.
He is more competition.
A positive I think the table has shown its very able to operate very well.
During this time.
Cables done a great job of providing connectivity.
Cables kind of extended footprint into new regions, partly fueled by our dock.
So I think tables on an excellent job of growing its footprint and serving its customers and certainly potential future customers.
Well.
He asked and see what happens on fixed wireless.
As far as I can tell and I don't know whats side, the head of the riser management, but it appears to be that they're backing off from some of the 28 38 gig.
They are they are emphasizing and most people seem to think that the timos efforts in the mid band at more effective so.
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 these folks wondering if.
Good luck 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 in the competitive nature of the market.
Hello long.
FFO would be several years before they are able to take a little while to close and wed love to make substantial investments.
I would expect we'd see some more fiber in their networks.
We're pretty confident.
The quality of our product offerings and the superiority of your call.
Report and some of that work that.
We have designed this combined with our bonds.
Bundled products as this will leave us in a position where it won't.
Huge impact on us, although we are planning for some increased competitive sets.
Activity in the market wants which closed the AMPU and that she investments.
Thanks for the Gander.
Our next question comes from Matthew Harrigan with benchmark.
Okay.
Oh.
Oh yeah.
Pretty libertarian.
Why is it fair point, we're talking about how the cable industry is that an almost unfair advantage with a small cell topology and its really wait for you what economic perspective from everyone felt you'd be duplicative.
Bill you could.
Yes, as you pointed out the horizon.
Definitely a move towards the.
Bad growth.
Great I mean, do you think that.
As an increasing awareness on the part of some of the mobile companies that they'd like to work for the RBC, specifically driving that they'd like to work something out with cable and small cell side and are you drawing any input from inferences from your experience up in Alaska with obviously.
Multi part from the U.S. 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 yeah Yup I.
I just didn't 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 goal is to serve its customers well and you know.
With 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 it I think we could be a good partner as you note we.
We already Arbor rising partner through the MB no relationship and you've seen.
Slipped to extend some of our network capabilities by.
Purchases of spectrum.
CBR EPS 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.
Oh sure. So long that fiveg is going to be as much of that call game as it was.
Wireless networks, Jay and I think part of the reason, we're doing well with our bugs you up here and we've got to jump on other folks is the.
Joseph what gives us a much better back all that work. So we're confident 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 that you need for the juice fulfilled.
That's great. Thanks, a lot.
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 convertible notes in 2.75% converts through 2015 to a little more color on what that transaction as well.
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.
Take a look at it.
The ability to refinance those opportunistically, it's been down that day.
Do you watch the charter share price and determine.
To start really the best reserves.
We're happy to take that offline, 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.
Yes, Jason Lewis.
Network.
Huh.
I believe this past quarter.
Over 80% of.
In.
Individuals essentially sell from school.
Clearly is changing.
The economics 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 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.
Cable installers coming to their home.
So like many things in the pandemic things borne out 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 we're not doing any fault. 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 as well is 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 Kobe.
If you if I may just ER.
To follow up.
In terms of marketing and attrition.
Yeah, I mean, we were running at charter just about 2% of the home Smith <unk>.
What do you think ultimately because of the quality of the service as well as well.
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 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 you didnt have a timeframe for that.
But I appreciate the you had the big hairy audacious goal that is because that's obviously a lot of market share game, but I do think that cable.
Has an advantage and you can see the.
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.
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 Ah how that slows as we hopefully exit the pandemic I don't know, but I still bullish on our ability to increase share I didn't talk as well.
ER and France is good agreements and for commercial reasons.
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 todays call. Thank you for your participation you may now disconnect.