Q3 2020 Shenandoah Telecommunications Co Earnings Call
[music].
Rick take today's conference is being recorded at this time I would like to turn the conference over to Mr., John Nesbett of I, Miss any investor relations for <unk>.
Good morning, and thank you for joining us the purpose of today's call is to review <unk> until the results for the third quarter 2020.
Our results were announced in a press release distributed this morning, and the presentation. We'll be reviewing is included on our investor pays her website www Dot Shentel dotcom. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call.
With us on the call are Chris French President and Chief Executive Officer, Dave Heimbach, Executive Vice President and Chief Operating Officer, and Jim Book, Senior Vice President Finance and CFO. After our prepared remarks, we will conduct a question and answer session. As always let me refer you to slide two of the presentation, which contains our safe Harbor disclaimer remind you that this cost.
Let's call. It may include forward looking statements subject to certain risks and uncertainties.
These may cause our actual results to differ materially from this from the statements. That's I'll provide a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review you're cautioned not to place undue reliance on these forward looking statements except as required by law, we undertake no obligation to publicly update or revise any forward looking statements.
That I will turn the call over to Krista good Chris.
Thanks, John we.
We appreciate everyone joining us this morning, and I hope everyone is healthy and safe.
As reflected on slide four we had another strong quarter broadband results was 6000 net high speed data additions driven in part by record glow fiber net adds of approximately 1500.
Together, our income of cable and glow fiber year over year organic subscriber growth rates outpaced our public company peers and with the strong sales and fiber construction momentum. We have achieved we're excited for the future growth over broadband business.
Dave will provide more detail on these outstanding results later on the call.
Turning to slide five highlighting our commitment to shareholder returns we have now.
Announced last week, a 17% increase in our annual cash dividend to 34 cents per share consistent with the growth of earnings per share driven by strong results from our wireless business.
The dividend marks the eighth consecutive year of an annual increase and is also our 60 onest consecutive year of dividend payments.
Moving to slide six I'd like to transition now to the strategic direction, we're taking falling T mobile's exercise of their purchase option of our wireless business.
Over our long history Shinto has continued to evolve.
Vesting in the latest technologies to meet the growing demand for telecommunication services in the rural markets that we serve.
While we have mixed emotions about divesting or sprint affiliate business. The transaction will allow us to fully focus our resources on our transition to a regional integrated broadband Communications company.
Our new glow fiber and being fixed wireless broadband initiatives are the latest highlights decade long strategy that began with the acquisition of several rural income a cable properties.
Aggressive middle mile fiber expansion in our region.
We're very pleased with our first year of glow fiber results, having added 2800 customers as of September Thirtyth 2020, and our first CLO market in Harrisburg, Virginia, achieving a penetration rate of 16%.
Both well ahead of our business plan.
During the third quarter, we entered into six new glow fiber franchise agreements expanding our target market by 33% to 117000 homes passed.
In October we also launched a new fixed wireless broadband service under the beam brand name in the Virginia counties of Albemarle and Rockingham.
Our beam service offers high speed Internet access ranging from 25 to 100 Megabits per second to underserved rural homes without a cable or fiber based service available.
Although we have a very small sample size. The initial response to our targeted launch has been very positive.
We believe the beam service will be a big step towards solving the longstanding digital divide between urban and rural broadband Internet conductivity in our markets.
To further our potential coverage area and supplement our capacity, we purchased decremental spectrum and the recent CBR EPS auction for 16 million.
This investment along with development of the two dot five gigahertz spectrum purchase in 2019 will increase our target addressable market to approximately 425000 homes passed.
With a complementary mix of state of the art cable fiber and now fixed wireless technologies, our broadband business, we will be able to serve over 700000 homes in the coming years and create a platform for sustainable long term growth.
As we transition to a broadband centric company, we're analyzing the resources and capital structure needed to support our aggressive expansion plans, including the use of proceeds expected from the wireless sales.
Beyond reserving cash to pay income taxes from sales and fully repaying the term loans or credit facility. We plan to address the remaining use of proceeds after the value of our wireless business is determined in the upcoming appraisal process.
On a similar note and timeframe, we expect to provide guidance on a new credit facility and level of corporate expenses needed to support the broadband business long term.
Turning to slide seven I'll provide a brief update on sprint's merger with T mobile.
As previously announced T mobile exercise their option on August 26 to purchase the assets and operations of our PCGS business for 90% of the entire business value as outlined in our affiliate agreements and to be determined through an appraisal process.
We also previously announced that we had provided T mobile nodes of dispute relating to the appraisal framework and other contractual terms related to T mobile's pending acquisition.
Earlier this week, we aligned in principle on certain elements of the appraisal and sales process.
Under the agreement in principle, the appraised valuation will be performed as of July Onest 2020.
The appraisal will also value syntels discontinued wireless operations as though she until we're still an affiliate of spread with access to its brands and spectrum without any regard to T. Mobile's acquisition of sprint or subsequent integration efforts.
It's currently expected that the appraisers will complete their assessment of the entire business value on or about January twentyth 2021 to two.
Transaction expected to close in the second quarter of next year subject to receipt of customary regulatory approvals.
2020 has presented many challenges for our organization.
And I could not be more pleased with how our employees and management team have responded or.
Our company's accomplishments bode well for our ability to meet the challenges of the coming months and have us well prepared for the next phase of Syntels long history of growth and change.
With that I'll now turn the call over to Jim to review the details of our financial results.
Thank you, Chris and good morning, everyone.
Before reviewing our financial results for the quarter, Let me walk you through the kind of changes we made regarding the pending sale of our wireless segment.
Please refer to slide nine.
After T mobile exercised their option to purchase our wireless assets and operations on August 20 that we concluded that the sale would be consummated within one year and therefore, our wireless assets and liabilities are presented as held for sale.
Consolidated balance sheet and the wireless net income is now presented as discontinued operations in our consolidated statement of comprehensive income.
On a similar note the wireless cash flows have been separated and showed its operating investing and financing cash flows from continuing operations in our consolidated statement of cash flows.
Prior period results and balances had the retro at breakfast secondly, revised presented as discontinued operations and assets held for sale for comparability.
We have a depreciating and amortizing assets held for sale perspective at least starting in September.
In addition, certain intercompany expenses have been reallocated between segments to conform with the accounting standards on discontinued operations.
And an income tax provision has been applied separately to continuing and discontinuing operations.
Lastly, our outstanding term loans have been reclassified as current current liability in our consolidated balance sheet.
Although not a wireless segment liability that will be transfer there is a mandatory pre payment requirement in our credit agreement.
Upon the sale of wireless.
Interest expense related to the term loan is included in net income from discontinued operations.
Payments of our term loans is presented as cash used in financing activities from discontinued operations.
Please refer to two.
To in the 10-Q, we filed this morning for more details on the accounting changes regarding our wireless segment.
In addition to these accounting changes, we will no longer disclose wireless operating statistics, nor provide comments on the wireless operations.
Please now refer to slide.
Financial results for the third quarter.
Consolidated revenue was $55.2 million in the third quarter 2014, as compared to $51.8 million in the third quarter 2019 due.
Due to growth up to now.
Our ban said.
1.4 million in our tower segment.
Consolidated adjusted EBITDA for the quarter was $14.6 million compared to 12.1 million in the same period last year.
The increase was due primarily to growth in Howard.
And a reduction in corporate expenses.
Turning now to our segments in slide 11 revenue in our broadband segment 2 million or 4.2% $50.7 million in the third quarter 2020.
Driven by an increase of 3.8 million or 11.2% cable residential SMB revenue due primarily from the 19.8% increase in broadband data Rts.
And while we're bundling discounts and promotions.
Fiber enter enterprise and wholesale revenues declined 500 sales due to a onetime adjustment of $1.7 million.
Hi revenue more than offsetting the $1.2 million growth and bumpy recurring revenue from an increase in enterprise and backhaul circuits.
Our net revenue declined 900000, or 16.8% primarily from lower EBITDA primarily from.
Lower DSL subscribers and intercompany phone service.
Broadband adjusted EBITDA for the third quarter declined 300000 or $9.6 million from the same period a year ago. The.
The decline was primarily due to the onetime adjustment of 1.7 long fiber enterprise and wholesale revenue and 600000 dilution from the loss of CLO and fiber being.
Excluding these impacts adjusted EBITDA would have grown 10.2% and the adjusted EBITDA margin would have been 41.8%.
On slide 12.
Our segment revenue grew 43.3% to 4.5 million.
Adjusted EBITDA grew 42.9% 2.9 million for the third quarter 2012 due.
Due to 8.9% growth in tenants.
7.9% increase in the average lease rate due to amendments to the intercompany leases.
Moving to slide 13.
We ended the quarter with 706 million of debt with an effective interest rate of 2.3%.
And 259.1 million total liquidity income.
Including a 148 million in cash and equivalents.
Cash grew 40.4 million sequentially in the third quarter.
Our discontinued wireless operation continues to generate strong free cash flow was 165 million year to date.
Or transitioning to date. Please note that our share repurchase program has expired and we will have value, we'll re evaluate reimplementing. After the wider valuation is determined in the first quarter 2021.
And now I'll turn the call over to date.
Thanks, Jim and good morning, everyone.
I'll begin on slide 15, with our incumbent cable business and.
In which total RG use grew a robust 7.8% year over year in the third quarter to approximately 181500.
Impaired to roughly 168400 in the same period in the prior year.
As Chris pointed out at the start of the call. We added roughly 4500 net broadband data or to use in the quarter and ended the quarter with 96000 data or to use which is an impressive 16.4% increase to the prior year period.
We're also very pleased to report that our income and cable broadband data penetration increased from 40% in the third quarter last year to 46.2%. This quarter on the continued strength of our new broadband speeds rate card service improvements and increased demand related COVID-19.
Incumbent cable broadband data churn declined nine basis points to 1.8% in the third quarter, representing the 14th consecutive quarter of year over year churn improvement.
Excluding the impact of deferred non pay disconnects from the second quarter third quarter data churn in our income at cable business would have been 1.73%.
And those markets broadly.
Broadband data average revenue per user increased slightly versus the prior year to $77.66 as our new powerhouse branded rate card leveraging and improved value proposition based on our DOCSIS three one speed upgrades now comprises 70% of the base.
At the end of the third quarter 2019, 37% of income in cable data customers run rate plans of 10, Megabits per second or less and now 75% are on plan to 25, megabits per second or greater with an average subscribe download speed of 79 Megabits per second which is well beyond the reach of our DSL compare.
Yes.
Turning to slide 16, we continue to gain momentum with our new fiber to the home edge out strategy glow fiber.
Low had approximately 4000 total RG use at the end of the third quarter with a 12.5% broadband data penetration rate comprised of roughly 2800 unique broadband data customer relationships.
As Chris mentioned at the start of the call our Harrisonburg, Virginia market has achieved 16.4% broadband data penetration in aggregate.
Some of our most mature neighborhoods in that community already achieving 30% penetration.
We continue to see extraordinarily low churn our glow fiber high speed data product.
With only dot nine 8% churn in the quarter.
ARPU was down sequentially to $80.03 in the quarter as a result of new activation revenue timing.
We're seeing a higher percentage of new subscribers electing higher speeds with 38% of new subs electing the one gig speed tier in this quarter.
Our streaming TV and voice services continue to perform well with 26% in 14% attachment rates in the quarter respectively.
Slide 17 depicts the status of our active and approved glow fiber markets as of the end of the third quarter. Construction efforts are progressing very well and also exceeded our expectations in the quarter in spite of concerns the delays related to COVID-19.
Approximately 9200, new residential and small business Passings were released to sales in the quarter with a total of 20600 addresses constructed year to date and 22300 overall at the end of September we.
We expect to have approximately 27300 total new target Passings released to sales by the end of the year.
The third quarter was a productive one for our new market development team as well.
We added new glow fiber franchises in the cities of Frederick Maryland, Charles Town, a ranch in West, Virginia, which added over 15000, new target Passings. Then in October we successfully added three additional markets, including Martinsburg, West, Virginia, Lancaster Township, Pennsylvania, and Blacksburg, Virginia, adding approximately 13500 additional.
Target passing.
And total CLO fiber has approved franchise target passings of approximately 117000 with a strong funnel of additional markets and our edge out strategy heading into the fourth quarter.
On slide 18, we have depicted our fiber cable and fixed wireless broadband footprint.
This map really helps illustrate the integrated nature of our broadband networks and how operating leverage will increase over time, given the overlap in adjacent see of our operations and our growing footprint.
As Chris mentioned at the start of the call. We're very excited to have launched beam Internet, which is our new fixed wireless broadband service in early October.
Beam will leverage our newly acquired spectrum at target approximately 425000 on cable households, with speeds of up to 100 Megabits per second.
We'll have roughly 25 macro sites on air by the end of this year as we continue to bring critical high speed Internet access to the underserved in our region.
We will continue to update you on the status of both our glow fiber and beam Internet expansion plans as we progress in our market development and construction efforts toward the launch of commercial services over the next several quarters.
Combined our multi pronged broadband growth strategy will more than triple homes passed to over 700000 in the next five years.
As summarized on slide 19, we now have product offerings to serve a variety of market dynamics with our glow fiber service targeting higher density urban markets and being fixed wireless service targeting lower density rural areas. The.
The common denominator and all of our offerings is to provide the leading high speed Internet service available in each market combined with superior local customer service.
With projected terminal penetration rates have been in glow in the low to mid 30% range and incumbent cable penetration in the mid 50% range, we expect our broadband business to have industry, leading sustainable growth for the next several years.
Turning to slide 20.
Total towers and small sales increase to 230 in the quarter totaled tenants, increasing 8.9% year over year to 414.
We had a backlog of 119 open orders related to upgrades of existing tenants, where the addition of new tenants at the end of September 2020.
And finally on slide 21.
We provide an update to our 2020 capital spending results and guidance for our continuing operations, we're no longer providing wireless guidance as a result of the pending sale and discontinued operations presentation.
Capital expenditures were $82.7 million through the third quarter 2020, compared to 48.8 million at the end of third quarter and 2019.
The primary driver of the year over year increase relates to the investments in our global fiber to beam Internet fixed wireless broadband initiatives for the full year 2020, our revised guidance is now $104 million to $116 million as we capitalize on our strong liquidity and cash flow generation to invest aggressively in the expansion of our fiber cable and fixed.
Sales broadband networks.
Thank you very much and operator, we're now ready to take questions.
As a reminder to ask a question you would need to press star one on your telephone to withdraw your question press the pound key please stand by while we compile commit a roster.
Your first question comes from the line of Ric Prentiss with Raymond James.
Thanks, Good morning, guys glad to hear you're doing okay. During these crazy times.
Morning, Rick.
Great.
Couple of couple of questions first on the wireless process.
So have all three of the appraisers been selected to.
Get started on their work.
Rick that's going to happen here before the month is out.
Okay.
And.
With the framework in place.
The expectation on how they will be able to do that work has a discounted cash flow comps what was your expectation of how they'll perform that appraisal process.
Likely it's a combination of factors, Rick DCF would be among them precedent transactions comps.
Comps et cetera, but we don't want to comment too much on how.
We're a pine too much on on how we think they ought to conduct the process, obviously, because we don't want to take the process very likely it's a combination of factors.
And how would the expansion territories you addressed in that I know, it's assuming that the T. Mobile sprint deal has not happened. So is there a thought that the expansion territories, perhaps be addressing that valuation.
Yeah, that's right Jim do you want to you want to take that one.
Yes, Rick so.
We expect the appraiser, who want to look at our 10 year plan and growth that we're expecting from the expansion markets, which as you know, yes were a big part of our growth strategy going forward. So they will be factored in from a DCF perspective in that respect and there is also a mechanism with DB in the affiliate agreements in the spring.
Teamwork that if for some reason the appraised value for the expansion markets.
Let's call it the multiple permanent expansion market on EBITDA is left in the book value. We would think would bump the value for the expansion markets up to them to the net book value as of the valuation date. So.
So there is a kind of up.
The mechanism was intended to make sure that we don't lose our investments that we've been making since we acquired these markets.
Great. Thanks sense and Chris You had mentioned you look at the proceeds obviously have to repay the term loan and then income taxes any.
Indication of what kind of taxes might be born or what the.
Let the basis is on the wireless business.
Not not that we publicly said.
Yes, I don't know, Jim if you want to add.
Add any other color, we have not disclosed the cost basis on those assets.
Yeah, Rick we as Chris said, we have not disclosed the basis, but we will once the value is determined.
It looks like it's going to be the second half of January.
We will disclose not only value what we think the after tax proceeds would be.
What the tax impact will be.
Make sense okay.
I think Chris you also mentioned.
Guidance and financing and corporate costs, obviously that will be one of the areas that you have to look at what's the thought was first time frames as far as looking at the corporate costs. How do you rightsize. The organization is and how should we think about that timing and rough magnitude of what that dollar level might be.
Yeah, we're obviously looking at that now and timeframe will be about the same.
As once we get clarity on the proceeds from the sale and the tax effect and all that so should be the first or second quarter of next year.
Okay.
And then as we think about the tower business.
How critical is that to keep with the broadband business.
I've seen some transactions even just this week American tower paid.
Page 30.4 times tower cash flow for a private tower company. So how should we think about the tower business is that something you want to keep you need to keep or is it something that might get monetized as well.
Yes, yes.
But I would say.
We'll take it one step at a time here wireless is is in the batters box right now and will determine where what to do with towers down. The road I don't think it's strategic to us as I think we said in the past, but the towers can.
Can be invaluable.
Source of funding it we're doing an acquisition and we wanted to monetize and to help US fund an acquisition.
So so we're kind of thinking about it.
Last one just pick up on a comment are there any.
Transactions out there that are in the telco cable broadband space.
How does that market look in pipeline for potential acquisitions.
Yes.
Yes, Rick we continue to look for opportunities both kinda.
As a small tuck in opportunities like like Big Sandy that we completed last year and there's a couple of those that were competing on as we speak today.
And we're also looking at more transformative.
Opportunities as well.
You know they don't come along as frequently but we're we're pleased to be opportunistic as a as you know.
Great Great. Thanks, guys. Appreciate it have a good day stay well thanks Rick.
Okay.
Your next question comes from the line of Zack Silver with B. Riley.
Okay, great. Thanks for taking the question. The first one just following up on Smnrx questions around the appraisal process.
And it will tell us steel.
Spread agreed to waive around 250 million of cash payments for management fees is that something that is factored into the appraisal framework.
Exactly.
It actually won't be a part of the appraisal framework is it much it will be a cycle working capital purposes price adjustment once the value center.
So we will be added to the ultimate value, but it will be done kind of after the fact not not as part of the the appraisal process.
Okay that makes sense and then you flagged that the term loans require repayment upon closing of the wireless sales. When you think about how that the new shaft. Alex how are you thinking about capitalizing that business from a leverage perspective.
In fact go we're still.
Putting pen to paper on that but I would I would say in general you probably can expect leverage similar to the leverage that we have today in the same range that we have today, we will be growing the business the broadband business it aggressively as Dave and Chris have outlined on the call.
So we will put.
Put something in place that will allow us to make sure we have adequate funds to keep running that business and keep growing the business.
Got it.
Then Adam.
Hi level, it seems like that alongside the cobot accelerating demand for high speed broadband and the.
The relative attractiveness of this business, there's been a lot of investment from incumbent players.
Also new entrants and you guys sort of have a hybrid approach there.
How do you see it.
How do you see the competitive environment evolving in your markets and what gives you the confidence that you can compete but yes. Some of the larger incumbents are yeah.
Others pursuing fixed wireless technology in those markets.
Hey, good morning, Jack Yeah, I'd look we we have a I think a track record over.
Over the over the course of the last year that.
That hopefully gives gives you confidence in our ability to do that with the investments we've made and the results were we're achieving.
We are well known.
A company in our region and.
The.
The the urban markets get real quickly here in this part of the country.
And though I think having a multi pronged.
Broadband strategy here leveraging three distinct technologies.
Is the absolute best way to go we have been as.
Thank you would observe we've been aggressive in acquiring protected spectrum assets in our region and you probably noticed the overlap of the Threed out five we acquired with our incumbent cable markets as well. So we we have a both an offensive and defensive strategy with with.
Our our three prong strategy here.
And I'm quite confident and our ability to take market share and defend our our existing market share and the.
In the near future.
Got it and then.
Last one for me.
I'd be incumbent broadband penetration for the incumbent cable business I mean, I think expanded at one of the better rates that.
We've seen this quarter can you talk about where the new subs are coming from is it.
Folks upgrading from DSL as a broad band members in just what were those new additions coming from.
Yeah, I think it's I think it's both both of those categories. In addition to folks that perhaps we are leveraging their their cellular data plan.
Trying to tether off of that I obviously.
We're capitalizing on the Tailwinds of the pandemic work and study from home.
But our our investments in both our network and our new rate card and our operations. All came at it had an outstanding time quite frankly, so I think that's.
We're executing better I think we've got a better price value equation now than we did before.
I think you see that as evidenced in 14 consecutive quarters of churn reduction our NPS scores are through the roof and you know not so long ago. They were were pretty poor. So I think if you consider the operational momentum momentum that we have.
In addition to the tailwind of the demand factors of Cobot I think they've all.
Come together quite nicely here to produce those results.
But in terms of where the share is coming from it's stealing it from our DSL competitors, it's taking it from folks that were tethering to say other plans.
They have been using satellite previously and and last but not least to your point Theres theres, probably some broadband others that have have added service. The last we didn't make a comment about this in the script Zach but the other the other.
[noise] aspect of the growth is we added 700 net prepaid subs in the quarter, that's part of that overall number.
And thats to deal with our more credit challenged subscriber base and Weve.
Added a rate plan and I missed the cobot that weve allowed to persist here through the through the year and we're in the midst of revamping over overall prepaid strategy and expect to see good growth through a through through through those investments as well.
Got it that's helpful. Thanks, guys.
Once again, if you have a question. Please press star followed by the number one on your telephone keypad.
Your next question comes the line of Manny Korchman with VW and financial.
Hi, Good morning, just building on that competition theme.
Have you guys done any analysis and what are your expectations as far as the cost of acquisition beyond just the cost per passing.
Yeah.
Of course, good morning on that.
For it for which which which category are you questioning all all three where it really just the global fiber on the beam.
Yes, so the cost the cost to connect the glow fiber customer is in the in the eight to $900 range Ahmed.
All in.
And on on beam, it's roughly half of that.
What's usually the enticement as the to get.
Customer switch over or is it just your faster.
We're faster we've got a a a much more straightforward go to market strategy with respect to our value proposition. We've got three three speech choices.
We're not playing games or gimmicks on introductory prices.
That that raise after expiration.
People recognize that this offering is coming from a regional company and generally around here folks like to.
Spend their dollars with with companies that that reinvest in their communities.
And candidly Theres, just Comcast city.
Folks are very pleased to have a have a choice.
All of these markets are a non files for rising markets, thus far that we've launched in and so there there there.
Their option is really if they want to have a robust high speed broadband product, it's either us or Comcast.
Okay and then.
Having multiple options what are the chances here just.
Expanding your coverage region beyond what we're used to.
Well I think with our global strategy.
You know, we've we've clearly demonstrated a track record here of adding new markets every quarter.
And we'll continue to do that and I. If you take a look at the map and you just look at where we started and where we are now you're seeing us edge out further and further beyond.
Home base so to speak.
So I think there is a strong likelihood that when you look at the combination of the spectrum footprint.
On that map and the presentation and you look at the markets that Weve added for glow.
Thank you can expect for us to continue to grow the footprint.
Having said that we're very conscious of.
Taking advantage of operating leverage and operating synergies and we you know we don't want to plot, a pickup and plunk down five states away with a greenfield build that probably.
We would not be something you should expect us to do but edging out from kind of the home base the center of our universe.
This is something we're very focused on.
Okay. Thank you.
Your next question comes from the line of can't NUKEM with Wells Fargo.
Hi, Good morning can you hear me okay.
Yes, yes, yes, 40 kit.
Good morning.
My question is on the dividend you recently raised to.
Quite a bit I guess, I guess I'm under the assumption that you expect to.
Maintain that dividend after the sale of wireless and I guess the question would be.
Or the cash flows a person could do that and continue your investment build out or.
Perhaps your.
Obviously the news.
Proceeds from the sale to to invest as well.
Right.
Yeah, Ken we have a long history of.
Having an annual dividend, we will probably right sized that according to the broadband our businesses that.
That we own that will open at this time next year.
So it will likely adjust according to the cash flows and are in the earnings coming from those businesses, but yes, we think we're in a strong liquidity and cash.
Cash generation prospect here that we can do though.
We could return value to shareholders and we can continue to invest in our new clothes.
Hello fiber products.
Thank you.
You have a follow up question from the line of Ric Prentiss with Raymond James.
Thanks, guys.
I find slide 19, really interesting I think it lays that out quite well.
Couple of questions related there what kind of speeds will you be offering the beam customers.
Hey, Rick its a our initial rate plan is entry at 25, Megabits download and then up to 100 megabits download depending on.
What oh.
Where you are with respect to the tower and what our signal propagation characteristics look like.
Click over over time, we expect to offer higher speeds when CP advancements continue.
To to develop here, but out of the gates were offering three tiers 25, 50 and 100.
Okay, Great and then as you think about what markets get global fiber versus what could be is there a breakpoint worth fiber density as far as.
Appalachian per square mile says no time to go be versus fiber and what would that breakpoint basically be.
Yes look there is a combination of factors here that we evaluate certainly density.
And route whether its route miles per square mile density is one of them.
Another.
Another factor we look at is just with the competitive landscape looks like so for instance, we are not targeting cable areas.
In other words, the folks that have.
A choice from Comcast or Cox or someone with our with our fixed wireless strategy. We're.
We're targeting.
Areas that that only would have maybe DSL or where satellite for a local unlicensed spectrum wireless I SP as their as their viable most viable broadband choice. So it's a function of density it's a function of competition and it's also a function of.
Other so its economic factors.
And poverty rates and all kinds of other factors as we as we look at the level of investment as you can appreciate and that slide.
It's a much greater upfront investment deploying fiber.
<unk>.
Than than it is the point to point being which is a much more capital efficient technology. So.
We want to have.
Greater certainty on the glow fiber side of achieving our penetration rate objectives as a result.
Right, because I think the addressable market you've laid out is that theres much larger addressable market for the beam side, then niccolo sales is right now.
Yeah, that's right and and the other the other factor Rick that we consider candidly is in these franchise permits were getting those are those are for our ability to offer video service.
Obviously, a theres going to be a point in time in the not too distant future. We're not entirely certain when that is you're probably not either but we all have a pretty good inclination that that we're heading to a streaming only universe, but but to date, we have not wanted to to put ourselves in a position where we didnt have.
The Bible video product in the bundle, particularly when competing with Comcast, but I imagine there will be a point in time at which you know data only.
Would be a viable strategy and that we could achieve the kinds of penetration rates and churn rates and.
And.
Broadband data ARPU is that that would support the kind of IR ours, we expect to get.
With a with a three.
Three product bundle strategy and to that extent.
It would enable us to get out of some of these more urban centers and into.
Suburban areas that might be out in the county.
Which to date, we've been reluctant to do because that would obligate us to.
A build strategy for the video franchise for the whole County, which we obviously don't want to obligate ourselves to doing giving the given the density characteristics.
So I think you can expect that to the changeover overtime as the market evolves.
Yeah, and obviously T mobile has launched the T. vision product, which is content related for streaming but also to kind of be a poll for fixed wireless broadband.
You see entering kind of that the content side of the business or offering content bundles to try and push.
The penetration rates are you going to need it given you can put competition level that going against.
For the fixed wireless strategy, we don't have any plans right now to offer a bundled video offering of any kind that could change over time, but we don't have any plans at present.
Okay. Thanks, guys.
It appears there are no additional questions I would now like to turn the conference back to Jim bulk.
Any remarks.
I'd like to thank everyone for joining our call. This morning, and we will keep you posted as we progress.
Though we are on the wireless side with the appraisal process and of course, our broadband and power businesses. Thank you for joining the call today have a good day.
Ladies and gentlemen, this does [noise].
The conference call. Thank you for your participation you may now disconnect.
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