Q3 2020 Gci Liberty Inc, Liberty Broadband Corp and Liberty Tripadvisor Holdings Inc Earnings Call
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No no no.
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Ladies and gentlemen, thank you for doing by welcome to the C.I. Liberty 2022, Great earnings call. During the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question or any of the fashion 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 Courtnee Chinese cheap portfolio Officer. Please go ahead.
Thank you good morning, before we begin we'd like to remind everyone that this fall into certain forward looking statements.
Private Securities Litigation Reform Act was 1995 actual events or results could differ materially due to a number of risks and uncertainties.
Those mentioned in our most recent form 10-K, and 10-Q filed with yet you see these forward looking statements speak only of the data for this call and Liberty Liberty broadband and Liberty trip advisor expressively disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements as he appearing to reflect any changes there.
Pretty liberty broadband and Liberty systems like his expectations with regard there to or any change in events conditions or circumstances on which any such statements made on today's call. We will discuss certain non-GAAP financial measures for GCA Liberty, including adjusted OIBDA and adjusted OIBDA margins different issue regarding the comparable GAAP metrics, along with the required definitions and Murphy.
Television, including preliminary note and schedules one into can be found in the press release issued today, which is available on the GTR and Liberty Web site.
Please remember to register for a virtual Liberty Investor meeting on Thursday November 19, we will cover at Liberty Media and Liberty trip advisor and Friday November 20 wells. The cure rate do you see I Liberty Liberty brought down from 11 am to two PM eastern on both days.
After the presentations on both days, John Maloney, Brett you pay a while presenting studios will host acuity session. She.
Pre submitted questions by Friday November 13, two Investor day at Liberty Media Dot Com you can find the 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 and CEO. Thank you coordinate and good morning to all.
Today speaking on the call. We will also have G.I. Libertys, Chief accounting principle officer, Brian One Lake and G.I. CFO Pete pounds also during Q and 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 GE said Liberty and Liberty broadband.
The HSR waiting period expired on October 9th Yeah.
FCC approved the transaction on October 23rd 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 when effective on October Thirtyth.
And our special meeting for the shareholder vote is scheduled for December 15th.
The proxy does mentioned two lawsuits, which were filed against GCA Liberty.
One has been dismissed and the second is proceeding with expedited discovery well.
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 third quarter results, starting with GE 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%.
Pounds will discuss those results in little more detail in a moment.
The five G upgrade in Atlanta 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 broad Grant briefly we did repurchase 3.4 million shares of Liberty broadband stock for $488 million at an average price price of $142.
We consider these repurchases very attractive is if you look at the look through price to the underlying charter.
Involves a price of 46.
This was a 23% discount to yesterday's close to 634 and given how the market is moving up I 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.
He added 87000 more in this quarter than the same period last year.
Impressively and again most.
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 GC I Liberty financials. Thanks, Greg.
At quarter end, you see our Liberty had consolidated cash and cash equivalents or 553 million, which includes 105 million of cash over the GCR opco level.
The value of the public equity Securities that you see I Livearea yesterday's close was 10.9 billion, which includes our 3.4 billion interest in charter.
4 billion interest in Liberty broadband and a $1.1 billion interest in mining trades.
At quarter end, we see our Liberty had total principal amount of debt 3.2 billion.
Which is relatively unchanged from last quarter. This.
This includes a 1.3 billion dollar market loan outstanding against its Liberty broadband shares which is fully drawn the charter exchangeable debentures, and 1.4 billion of debt, including finance leases with our obligations that you see out.
So if you add 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 as of quarter end.
Note that the above amounts exclude the indemnification obligation to curate and the outstanding preferred stock.
After quarter NGC I'll see a subsidiary of TCR Liberty raised 600 million senior notes due 2028.
You'll 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 its existing senior notes due 2024 2025.
You see I'll see also amended its existing senior credit facility in October extending the maturity of the 20.5 increase in total 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 the proposed CCR Liberty broadband combination.
And lastly, you will note in our 10-Q three release later today that we sold our interest in Dubai.
During the quarter.
With that I'll turn it over to Pete talked about DCR operating results.
Thanks, Brian.
Starting with Cove at 19.
Thus far we have not experienced any uptick in bad debt expense.
At the same time, we benefited from increased demand for our corporate data network and lower health care costs. This has resulted in positive financial outcomes as we remain committed to ensuring we meet all the connectivity needs of our customers.
We continue to work with educational facilities to ensure that alaskans students have the access to the conductivity that they need.
With the start of the school year, we worked with school districts across the state to bring connectivity to approximately 4000.
Lower 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 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.
Rural Health care to update.
On October 22020, the FCC approved our cost base rule rates for the funding years ended June 32019, and June 32020, we.
We expect to collect the entire amount and 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 of the income statement, but will bring further liquidity to the balance sheet.
On October 14, we announced that we won a $25 million federal grant to bring fiber connectivity to the pounds of on Alaska, Kinko standpoint, actually Pam picnic Bay and Larson bad.
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.
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 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 that growth.
We gained 3300 cable modem customers sequentially.
Consumer wireless was also up 200 subscribers versus the second quarter, despite 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 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 meeting on November 19th and Twentyth.
We do appreciate your continued interest in Gcs 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 to 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.
Great given your position.
Cable industry can you give us your thoughts on what.
What is it turns out to be a state government Democratic administration could mean for cable, particularly in the area.
I want to make from trained on 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 in 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 at various times had.
Democrats.
Control of all three branches of the two branches in the legislature Mb.
The executive branch.
Charter was able to operate very well equally under title two regulation. So I remain optimistic on the M&A front.
Realistically there is not that much M&A for.
We're 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 are 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.
That remains to be seen.
Thank you.
Well take our next question from docs over 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 selling charter should get back on that account.
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 divest shares.
Because of the nature.
Of how we hold the stock effectively be treated as a dividend treatment and our tax rate to be 8% ish and 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.
Turning to the trade off if we did for the 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 when Verizon continue stay optimistic on Fiveg home into two though.
My goal on a pretty aggressive plan in the home Internet offering and just curious Greg whether you had probably change of heart around fixed wireless as a compound that has got to table.
No.
Yes, I mean, I don't think its been rolled out.
As more competition.
There is more competition.
A positive I think the table has shown its very able to operate very well.
During this time.
Cable has done a great job of providing connectivity.
Cables going to extend 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 and certainly potential future customers.
We'll be.
Vince you 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 EBITDA backing off from some of the 28 and 38 gig.
There is that they are emphasizing and most people seem to think that the t. Most 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 it a massive competitive threat to our business.
Got it thank you very much.
Our next question comes from Bentley Cross the PCB Securities.
Do we have to question operator or did you lose somebody.
Mr Cracking they'll have an open line.
A quick question for the DCP folks wondering if a lot of communications privatisation my changing dynamics in the market or if you have any thoughts on it you know.
Well this is Ron I guess I'll take that one.
We would expect some increase in the competitive nature of the market.
Hello Long Beach, they will go with the several years before they're able to really 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 their networks.
But we're pretty confident in the quality of our product offerings and the superiority of your call report.
Anthony network that we have designed a combined or.
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 once its closed and you have to admit tremendous which.
Thanks to the Gander.
Our next question comes from Matthew Harrigan with benchmark.
Okay well.
Oh, Yes, Oh.
Oh, it's quite being a pretty libertarian.
Why is it fair points before we talked about how the cable industry that an almost unfair advantage with the small cell topology and its really wait for the U.S. economic perspective from everyone else do you need to be positive.
Bill you could.
As you pointed out right then.
Definitely a move towards the.
Yeah great.
Great can you do you think that.
There's an increasing awareness in the part of some of the mobile companies that they'd like to work for the Odyssey, specifically driving that they'd like to work something out with cable on small cell side and are you drawing any interest rate increases from your <unk>.
Hearing it's up in Alaska with these are obviously in a multi part from the U.S. and point. Thank you.
Thank you and I missed the first part you said, we said we had an unfair advantage.
Oh Gee part of the FCC, Karen I hate year like Yeah I.
I just didn't I didn't hear that I didn't hear you okay I.
It's nice that the FCC commissioners thinks that we have are the right technology.
I believe charters, though is to serve its customers well and you know.
With the benefit the 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 that I think we could be a good partner as you note.
We already Arbor rises 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.
Pbrs 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 about based on our fiveg experienced in Alaska.
Well, we show along 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 five Geo theory, we got to jump on other folks is the CHF shape, what gives us a much better backhaul network. So we're confident in cables ability to do.
Right by GE wireless and in the long run either have a superior because.
What form or of our competitors come to us because only the cable industry can really do drive decline to last.
200 foot backhaul that you need for the luxury small cells.
Thanks, Greg next month.
Thank you.
Our last question comes from Ben So it took 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 have been 2.75% converts through 2015 to a little more color on what that transaction is done.
What that all means for the cap structure. Thank you.
Well, let ben or and talk about the convertible note.
I think with this record convertible notes.
Let's call. It till 2023, so you must be take a look at it.
The ability to refinance those opportunistically between now and that they.
Do you watch the charter share price and Ah, yes, determining what the best Windows.
We're happy to take it offline if you need more detail about that.
Yeah I appreciate there's one thank you.
Thank you.
I think there's one more question is that correct operator.
Yeah, 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 hunky less true in the winter.
Network.
Huh.
I believe this past quarter.
Over 80% of.
Individuals essentially self fund schools.
No clearly premium.
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.
I think that this would be a significant savings on a per unit basis.
Yep.
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 see.
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 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 a truck rolls and nor do they have the same self install 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 [laughter] 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 to.
To follow up on it.
In terms of market downturn attrition.
Yeah, I mean, we were running and charter just about 50% of the home Smith <unk>.
What do you think ultimately because of the quality of the service as well as well.
So and now having a call centers.
Essentially in the U.S.
What what kind of penetration over time.
Could be reach candour, 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 management has set that goal or we have that for cap I know I have heard or Tom Rutledge believed that ultimately could get to two birds penetration, but I didn't he didnt have a timeframe for that.
But I appreciate the he had the big hairy audacious goal that is because that's obviously a lot of market share game, but I do think that cable.
As an advantage and you keep seeing 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 how long, it's going to take and 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 think Todd as well.
Again, thank you very very much and congratulations.
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 our next quarter if not sooner.
This concludes todays call. Thank you for your participation you may now disconnect.
HM.
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Ladies and gentlemen, thank you for standing by welcome to the PPI Liberty 2022, Great earnings call going I got patients 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 God star one on your telephone.
Am I note. This conference is being recorded November night I.
I would like and I'll turn the conference over to coordinate <unk> Chief Financial Officer. Please go ahead.
Thank you good morning, before we begin we'd like to remind everyone. Paul include certain forward looking statements within the meaning of the <unk>.
The Securities Litigation Reform Act is 1995 actual events or results could differ materially due to a number of risks and uncertainties.
Nope lunch and dinner.
Form 10-K, and 10-Q filed with the <unk>.
These forward looking statements speak only as I do this call and.
Liberty Liberty broadband and Liberty trip advisor roughly disclaims any obligation or undertaking to disseminate the updates or revisions to any forward looking statements and she appearing to reflect any change.
Pretty liberty broadband and Liberty took its like its expectations with regard there to or any change in events conditions or circumstances on which is such a good thing of today's call. We will discuss certain non-GAAP financial measures, we keep the eye liberty, including adjusted OIBDA and adjusted OIBDA margin information regarding the comparable GAAP metrics, along with the required definitions and lucky.
Illusion, including preliminary schedule one to be found in the press release issued today, which is available on the TCR and Liberty Web site.
Teach them I wouldn't register for virtual Liberty Investor meeting on Thursday November 19 will cover in Liberty media Nobody trip advisor.
I didn't November 20 wells the jury duty on Liberty Liberty brought down from 11 am to two PM eastern on both get.
After the presentations on both days, John Maloney, Brett Wong presenting to you post acute infection.
Please submit questions by Friday November since.
Two investor day, Liberty Dot com.
Can find the link to register and all of these details on our home page.
Now I'd like to turn the call over to Grace there, but yeah. Thank you coordinate and good morning to all.
Speaking on the call last we'll have to see our liberties, Chief accounting principle officer, Brian one like a GE CFO Pete pounds also during June eight we will be available to answer questions related to Liberty broadband and Liberty Tripadvisor.
Worked.
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.
Wilder application with them on September 16th and are looking to expedite that as quickly as we can.
Oh, the proxy for the transaction when effective on October Thirtyth.
And our special meeting for the shareholder vote is scheduled for December 15.
The block you Doug mentioned, two lawsuits, which were filed against Juicy 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 reports Weve already received.
Now expect the deal to close no later than the first quarter of Q1 2021.
Now on to the 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 as the network is twice as fast as our competition.
The company is in a very solid liquidity position with 105 million in cash and $271 million on drawn capacity under its senior credit facility as of the end of the third quarter.
Turning over at Liberty broadband briefly we did repurchase 3.4 million shares of Liberty broadband stock for $488 million at an average price price of $142.
We consider these repurchases very attractive as 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 closing 634, and given how the market is moving up I 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.
At an 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 made in various parts of the businesses over the last few years, which will allow them to operate quite effectively remotely.
Uh huh.
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 of 553 million, which includes 105 million of cash held at the Opco level.
The value of public equity Securities that you calibrate yesterday's close was 10.9 billion.
Which includes our 3.4 billion interest in charter.
4 billion interest in Liberty broadband.
$1.1 billion interesting lendingtree.
At quarter end Liberty had total principal amount of debt 3.2 billion.
Which is relatively unchanged from last quarter. This.
This includes a $1.3 billion, marking loan outstanding against its Liberty broadband shares which is fully drawn.
Charter exchangeable debentures, and 1.4 billion of debt, including finance leases the tower obligations that you see out.
Yes, Robert at quarter end defined in its credit agreement.
Seven times compared to a maximum allowable leverage of 6.5 times.
You see I had 271 million undrawn borrowing undrawn borrowing capacity as of quarter end.
Note that the buff amounts exclude the indemnification obligation to curate the outstanding preferred stock.
After the quarter end, you've got LLC, a subsidiary of TCR Liberty.
600 million of senior notes due 2028.
Proceeds 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 consistency in EPS from 2024 2025.
You see I'll see also amended its existing senior credit facility in October.
Then in the maturity of the 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 to Liberty broadband combination.
Lastly, you will note merchant to release later today that we sold our interest anybody.
During the quarter.
With that I'll turn it over to Pete talked about do you.
Operating results.
Thanks, Brian.
Starting with Cove at 19.
Thus far we have not experienced any uptick in bad debt expense.
At the same time, we benefited from increased demand for our corporate data network and lower health care costs. This has resulted in positive financial outcomes as we remain committed to ensuring we meet all the conductivity 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 the brand connectivity to approximately 4000.
Lower income students with students who.
Who otherwise would not have had access to school online.
Moving onto the five day on 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 has substantially fewer dropped calls.
Rural Health care to update.
On October 20 2020.
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 Alaska Kinko standpoint, occupier chip mixed bag 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 that growth.
We gained 3300 cable modem customers sequentially.
Consumer wireless was also up 200 subscribers versus the second quarter.
All right our normal prepaid subscribers seasonality.
With the sale of our broadcast business. This summer we've moved cable advertising sales revenue due consumer video.
Absent this movement consumer video revenues would have been down for the quarter.
Over at GCA business revenue was up 13%.
Growth was largely due to the growth in government health and education revenue.
This was partially offset by the movement of cable advertising sales revenue to consumer.
The year over year growth of 3800 cable modem is where you can see the low cost cable modems that we're providing to school districts for their low income households.
Finally capex.
We've spent $102 million thus far in 2020 our.
Our primary capital project for the year five band Fiveg wireless in Anchorage is effectively complete.
Additionally, we're continuing to spend on projects to keep up with our increased data demand.
We expect our total capex for this year to be similar to last year.
Ill now hand, the call back over to Greg.
Thank you, Brian and thank you Pete.
We hope you will all join us for our virtual Liberty Investor meetings.
November 19th and Twentyth.
We do appreciate your continued interest in GCI Liberty Liberty broadband and Liberty trip advisor and with that operator.
I'd 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 signal can be 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.
Good morning, Thanks for taking the question right.
Right given your position.
The cable industry can you give us your thoughts on.
What kind of as it turns out it looks to be a split.
Hi, Selman.
Hi administration could mean for cable.
In the area.
Warm and they probably trending 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 Mb.
The executive branch.
Charter was able to operate very well equally under a title two regulation so.
I remain.
Optimistic on the M&A front.
Realistically there is not that much M&A for.
We're charter to do their.
There are only a couple of large scale.
Cable companies, which are not.
Comcast or charter.
And I think most of those would probably be still substantially small enough that I wouldnt anticipate that there will be enormous antitrust issues.
Given the regional nature of the business, but.
That remains to be seen.
Thank you.
Well take our next question from Zack Silver with B. Riley.
Okay, great. Thanks for taking the question. The first one is just any update on the discussions with charter about increasing the cap on the equity ownership, there and if not.
Are there any other mechanisms available where you guys would have to say good attach rate on selling a charter shares you 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 the less shares.
Because of the nature of all.
Of how well the stock effectively be treated as a dividend treatment and our tax rate to be 8% ish.
Given the 20 plus percent discount.
I don't view, while we are not interested 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.
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 and then Verizon continues to be optimistic on Fiveg home in two key though.
Rollout a pretty aggressive plan in the home Internet offering and just curious Greg whether you have.
Now the change of heart around fixed wireless as a competitive got to table.
No.
I mean, I don't think it leveled off.
More competition.
He is more competition more positive I think the channel has shown its very able to operate very well.
During this time.
Cable has 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 done an excellent job of growing its footprint and serving its customers.
Certainly potential future customers.
I will.
We'll be.
These new see what happens on fixed wireless.
As far as I can tell and I don't know what lies ahead.
Out of the Blue eyes, a management, but it appears to be EBITDA 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 <unk> too.
To be seen but I don't I don't view it in the near term as a as.
Is it a massive competitive threat to our business.
Got it thank you very much.
Our next question comes from Bentley Cross the Pp Securities.
So we have to question operator or did we lose somebody.
Mr Cracking they'll have an open line.
A quick question for the Dbi folks wondering if.
Less communications privatisation might change in dynamics in the market or if you have any thoughts on it in general.
Well this is Rob I guess I'll take that one.
We would expect some increase in the competitive nature of the market.
Hello.
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 their networks.
But we're pretty confident.
The quality of our product offerings and the superiority of your call report expenses.
We have designed combined or bundle.
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 in after that.
Sure.
Thanks for the Gander.
Our next question comes from Matthew Harrigan with benchmark.
Okay well.
Oh.
Oh yeah.
Pre libertarian.
Why is it fair points before we talked about how the cable industry that an almost unfair advantage with the small cell topology and its really wait for you what economic effect yet from everyone else you positive.
Bill you could.
So as you pointed out right then.
Definitely a move toward de <unk>.
Yeah great.
Great can you do you think that.
There's an increasing awareness in the bars on the mobile companies as they like to work for the RBC, specifically driving that they'd like to work something out with cable and multiple side and are you drawing any input inferences from your.
Hearing it's up in Alaska with obviously in the Middle East far from you a point. Thank you.
Thank you and I missed the first part you said, we said we had an unfair advantage.
G pie the FCC, Karen take real like Yep, Yep, I, just didn't I didn't hear that I didn't hear you okay I.
Nice that the FCC commissioners thinks that we have the.
The right technology.
I believe charters goal is to serve its customers as well and you know.
For the benefit 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 that I've set up we're looking to extend that network.
How fiveg interact and how fiveg operate.
Operates on top of it I think we could be a good partner as you note we.
We already Arbor rising partner through the NB no relationship and you've seen.
US look to extend some of our network capabilities by.
Purchases of spectrum.
CVR 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 about based on our fiveg experience in Alaska.
Oh sure. So long that fiveg is going to be as much of that call game as it was.
Carlos networks game, and a big part of the reason, we're doing well with our bug you up here and we've got to jump on other folks is that.
Just shoot 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 one 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.
Thanks, Greg.
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 dogs in 2.75% converts through 2015, just little more color on what that transaction is and.
What that all means for the cap structure. Thank you.
Well, let ben or and talk about the convertible note.
I think with respect to the convertible notes.
Let's call it until 2023, so let's take a look at it.
The ability to refinance those opportunistically between now and that date.
Do you watch the charter share price and to determine what the best Windows.
We are happy to take it offline if you need more detail about that.
Yeah I appreciate there's one thank you.
Thank you.
There's one more question is that correct operator.
Yes, well take our last question from Michael Bunyaner with Pls capital.
Thank you for including good morning.
And congratulation on are resolved.
I am Lucky last June.
Right.
Network.
Huh.
I believe this past quarter.
80% of.
Individuals' essentially silver and gold.
Clearly is changing.
The economics of a.
Servicing.
And average customer could you just walk us through what does that mean in terms of the economics of managing the network on an ongoing basis because.
I think that this would be a significant savings on a per unit basis.
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 Oh 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 installs. They didnt have a truck rolls and nor did 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 that we'll have as much impact on the ongoing cost once they are 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.
Terms of markets and attrition.
Yeah, we we were running and churn or just about 2% of the home Smith <unk>.
Do you think ultimately because of the.
Quality of the service as well as well he will be missed.
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 a.
Reasonable goal I don't know three to five years from now.
I'm not sure that charter management has set that goal or we have that forecast I know I have heard Tom Rutledge believed that ultimately could get to two thirds penetration, but I didnt see that 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 gain but I do think that cable.
Has an advantage and you can see the the fact that.
Well have added nearly.
I will be 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 and 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 can chime in as well.
Again things, we've heard agreements and are utterances.
Thank you so with that operator, I think we're done. Thank you again all for your continued interest in Liberty family and we look forward to speaking with you either next quarter if not sooner.
This.
Todays call. Thank you for your participation you may now disconnect.