Q4 2021 Altice USA Inc Earnings Call

Yeah.

Speaker 1: Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin shortly. Please continue to stand by. Thank you for your patience. Again, today's conference is scheduled to begin shortly. Please continue to stand by. Thank you for your patience.

Ladies and gentlemen, this is the operator did each country is scheduled to begin shortly please continue to standby. Thank you for your patience again did he spun French is scheduled to begin shortly please continue to standby. Thank you for your patience.

[music].

Speaker 2: And.

Speaker 2: ["Pomp and Circumstance"]

Okay.

Speaker 1: Good day and thank you for standing by. Welcome to the AlticeUSA Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone keypad. And if you require any further assistance, please press star 0.

Good day, and thank you for standing by welcome to the Altice USA fourth quarter and fiscal year 2021 earnings conference call.

This time, all participants are in a listen only mode. After the Speakers' remarks, there will be a question and answer session to ask a question during that session you will need to press star one on your telephone keypad and if you require any further assistance. Please press star zero. Thank you I would now like to hand, the conference over to your first speaker today.

Speaker 1: Thank you. I would now like to hand the conference over to your first speaker today, Mr. Nick Brown. Sir, please go ahead.

Mr. Nick Brown, Sir Please go ahead.

Speaker 3: Hello everyone, thank you for joining. In a moment I'll hand over to LTC USA's CEO , Dexter Gueye, and CFO , Mike Grau, who will take you through the presentation and then we'll have time at the end for Q&A. As today's presentation may contain forward-looking statements, please read the disclaimer on page...

Hello, everyone and thank you for joining in a moment I'll hand over to outpaced USA see I think the guy and CFA might grow it would take you for your presentation and then we'll have time at the end for Q&A.

As today's presentation may contain forward looking statements. Please read the disclaimer on page two.

Speaker 3: Dexter, please go ahead. Hello everyone. I'm going to start today by summarizing the full year and Q4 results.

Please go ahead.

Hello, everyone I'm going to start today by summarizing the full year and Q4 result.

Speaker 4: And then I'll provide a recap on our strategy to accelerate investments.

And then I will provide a recap on our strategy to accelerate investment plan.

Speaker 4: Starting on slide three, revenue growth for the full year in 2021 was 2% year over year, with a strong recovery in news and advertising and business services.

Starting on slide three revenue growth for the full year in 2021 was 2% year over year with a strong recovery news and advertising and business services.

Speaker 4: Organic broadband customer net losses were $3,000 for the full year. This is a bit better than I previewed in December as we finish the quarter better than expected.

Organic broadband customer net losses were 3000 for the full year. This is a bit better than I previewed in December as we finished the quarter better than expected.

Speaker 4: We just launched more competitive internet plus mobile converged offerings in January as planned, and have begun expanding our sales distribution channels to support additional growth.

We just launched more competitive internet plus mobile converged offerings in January as planned and have begun expanding our sales distribution channels to support additional growth.

Speaker 4: Full year adjusted EBITDA grew 0.3% year over year with a margin of 43.9%.

Full year, adjusted EBITDA grew 0.3% year over year with a margin of 43, 9%.

Speaker 4: We delivered another strong year of free cash flow at $1.6 billion in line with our target.

Would you delivered another strong year free cash flow of $1 6 billion in line with our target.

Speaker 4: This supported share of purchases of $805 million for the year, although in Q4 we shifted capital deployment to heavier investment in the business to drive future growth.

This supported share repurchases of $805 million for the year, although in Q4, we shifted capital deployment to heavier investment in the business to drive future growth.

Speaker 4: Lastly, I want to highlight that we announced today a new plan to bring 100 cent fiber broadband, delivering multi-gig speeds, to more than two-thirds of our entire footprint over the next four years, reaching a total of six and a half million FTTH passings by the end of 2025.

Lastly, I want to highlight that we announced today, a new plan to bring 100% fiber broadband delivering multi gig speeds to more than two thirds of our entire footprint over the next four years, reaching a total of $6 5 million ft th passing by the end of 2025.

Speaker 4: This will include about 4 million fiber passings at optimum, covering all the areas where we overlap with Fios and Frontier, and 2.5 million fiber passings at sudden length.

This will include about 4 million fiber passing that optimum covering all of the areas, where we overlap with violence and frontier and $2 5 million fiber passing that sudden link fiber.

Speaker 4: Fiber is the future and given the progress we have made at optimum with our fiber build, we're excited to build on that success and break ground later this year at Sunlink to bring our state-of-the-art network to more customers and community.

Fiber is the future and given the progress we have made at optimum with our fiber build we're excited to build on that success and break ground. Later this year at suddenly to bring our state of the art network to more customers and communities. We strongly believe this is the right approach to improve customer experience and enhance the value of the business.

Speaker 4: We strongly believe this is the right approach to improve customer experience and enhance the value of the business.

Speaker 4: Turning to slide four, looking at the revenue growth in more details, you can see the reported full year revenue growth of 2%. Reported Q4 revenue declined slightly by 0.6% year over year due to the absence of political advertising revenue and recent pressure on the residential business.

Turning to slide four looking at the revenue growth in more detail. So you can see the reported full year revenue growth of 2%.

Reported Q4 revenue declined slightly by <unk>, 6% year over year due to the absence of political advertising revenue and recent pressure on the residential business.

Speaker 4: We also showed here a couple of adjustments worth mentioning to see our underlying trends.

We also show here a couple of adjustments worth mentioning to see our underlying trends.

Speaker 4: Adjusting for RSN credits, which impacted revenue in 2020, total revenue growth was 0.8% for the full year and declined 1.2% in Q4 of 2021.

Adjusting for RF and credits witnessed which impacted revenue in 2020 total revenue growth was <unk>, 8% for the full year and declined one 2% in Q4 of 2021.

Speaker 4: Further adjusted for an incremental $100 million of Airstrend revenue, which we recognized in the second half of the year for the early termination of a backhaul contract.

Further adjusted for an incremental $100 million are strained revenue, which we recognized in the second half of the year for the early termination of our backhaul contract.

Speaker 4: Revenue growth would have been closer to flat for the full year at minus 0.2% and down 2.4% in Q4.

Revenue growth would have been close to flat for the full year at minus <unk>, 2% and down two 4% in Q4.

Speaker 4: Residential revenue grew 0.3% for the full year, but declined 1% adjusting for RSN credit.

Residential revenue grew <unk>, 3% for the full year, but declined 1% adjusting for ours and credits.

Speaker 4: Business Services grew 9% for the full year on a reported basis. However, excluding the RSN credits and $100 million of R-X-Drain revenue, Business Services revenue was up 2%.

Business services grew 9% for the full year on a reported basis, however, excluding the Orissa and credits and $100 million of Orange Strand revenue business services revenue was up 2%.

Speaker 4: News and advertising grew 6.1% for the full year, supported by strong recovery across local, regional and national advertising.

News and advertising grew six 1% for the full year supported by strong recovery cost local regional and national advertising.

Speaker 4: Turning to slide five to look at Q4 customer trends in a residential business.

Turning to slide five to look at Q4 customer trends in our residential business.

Speaker 4: We report a net loss of 13,000 residential customers in Q4 and broadband net loss of 2,000.

We reported a net loss of 13000 residential customers in Q4 and broadband net loss of 2000.

Speaker 4: This is an improvement from Q4 last year where remember we saw some pressure from storms across Louisiana as well as volatility from pandemic related regulatory program.

This is an improvement from Q4 last year will remember we saw some pressure from storms across Louisiana as well as volatility from pandemic related regulatory programs.

Speaker 4: It's also an improvement from the prior quarter as we aligned our acquisition offers more closely with Fios and pushed harder on marketing in Q4.

It's also an improvement from the prior quarter as we aligned our acquisition offers more closely with vials and pushed harder on marketing in Q4.

Speaker 4: On slide six, we show the annual customer trends in a residential business.

On slide six we show the annual customer trends in our residential business we.

Speaker 4: We report an organic net loss of 51,000 residential customer relationships in 2021. Although if you include the Morris broadband acquisition, which we completed last year, our unique customer base reduced by 16,000.

We reported organic net loss of 51000 residential customer relationships in 2021, although if you include the Morris broadband acquisition, which we completed last year, our unique customer base reduced by 16000.

Speaker 4: The organic broadband customer net loss was $3,000 in 2021, although increased by $27,000 if you include the Morris broadband acquisition.

The organic broadband customer net loss was 3000 in 2021, although increased by 27000. If you include the Morris broadband acquisition.

Speaker 4: Clearly, the pandemic has meant we've been operating in an unusual environment for the past couple of years, seeing exceptional customer gains in 2020, which in hindsight was partially a pull forward of demand which depressed growth in 2021.

Clearly the pandemic has meant we've been operating in an unusual environment for the past couple of years.

Exceptional customer gains in 2020, which in hindsight was a partially a pull forward of demand, which depressed growth in 2021.

Speaker 4: This has also reduced visibility into our business trends, which have not yet fully normalized, including lower gross ad activity for the past two to three quarters. In higher move turn than normal across the New York tri-state area.

This has also reduced visibility into our business trends, which have not yet fully normalized including lower gross add activity for the past two to three quarters and higher move churn than normal across the New York Tristate area.

Speaker 4: However, we remain confident that we will see more benefit from our accelerated pace of footprint expansion, fiber rollouts, other investments in customer experience, and expanding our sales distribution. These growth and investment initiatives are likely to build cumulatively through the year, so we expect to see a greater impact in the second half.

However, we remain confident that we will see more benefit from our accelerated pace of footprint expansion fiber rollout other investments in customer experience and expanding our sales distribution.

These growth and investment initiatives are likely to build cumulative through the year. So we expect to see a greater impact in the second half.

Speaker 4: I want to highlight again that we continue to see growth at optimum and non-FIOS areas and across sudden link in 2021, which was close to 2018 and 2019 levels. We only saw customer losses in optimum areas where we overlap with FIOS and that's the main area where we started to see improvements already in Q4.

I want to highlight again that we continue to see growth at optimum non <unk> areas and across sudden link in 2021, which was close to 2018 in 2019 levels, we only saw customer losses, and optima areas, where we overlap with files and that's the main area, where we start to see improvements already in Q4.

Now on slide seven on business services.

Speaker 4: Revenue growth continues to trend towards pre-pandemic levels as markets reopen and customer growth has been much better than in 2020.

Revenue growth continues to trend towards pre pandemic levels as markets reopen and customer growth has been much better than in 2020.

Speaker 4: Reported revenue growth for business services was up 2.2% for the full year, excluding rare strand revenue, and up 3.6% in Q4 on the same basis.

Reported revenue growth for business services was up two 2% for the full year, excluding rare strand revenue and up three 6% in Q4 on the same basis.

Speaker 4: We also saw an improvement in revenue growth at Life Path up 2% for the year and 3.2% in Q4.

We also saw an improvement in revenue growth at Lightpath up 2% for the year and three 2% in Q4.

Speaker 4: On our news and advertising business on slide 8 revenue grew 6.1% for the year or 15% excluding political advertising. With an easy comparison given the peak COVID impact on a sector within the middle of 2020.

On our news and advertising business on slide eight revenue grew six 1% for the year or 15%, excluding political advertising with an easy comparison, given the peak COVID-19 impact on our sector was in the middle of 2020.

Speaker 4: In Q4, revenue was down 11.7%, although it grew 4.2% ex-political, which was better than expected.

In Q4 revenue was down 11, 7%, although grew four 2% ex political which was better than expected.

Speaker 4: We will hopefully see more normalized advertising trends going forward now with more of a political benefit this year in the second half.

We will hopefully see more normalized advertising trends going forward now with more of a political benefit this year in the second half.

Speaker 4: Local, regional, and national advertising markets have been all recovering with the notable exception of the auto segment which remains weak.

Local regional and national advertising markets have been all recovering with the notable exception of the auto segment, which remains weak.

Speaker 4: Excluding autos, our news and advertising revenue is actually up about 26% versus Q4 2019 levels.

Excluding autos, our news and advertising revenue was actually up about 26% versus Q4 2019 levels district.

Speaker 4: This recovery continues to begin the year with the gaming sector providing a boost at the moment.

This recovery has continued to be end of the year with the gaming sector, providing a boost at the moment.

Speaker 4: Slide 9 is a recap of strategic measures we announced at the end of last year to enhance the company's network, product portfolios, and customer experience on an accelerated basis.

Slide nine is a recap of strategic measures, we announced at the end of last year to enhance the company's network product portfolios and customer experience on accelerated basis.

Speaker 4: First, we are significantly accelerating our fiber rote network rollout and expanding the availability of multi-gig service.

First we are significantly accelerating our fiber route network rollout and expanding the availability of multi gig services.

Speaker 4: With a more differentiated broadband service, we expect to drive higher gross additions and help reduce churn given the reliability of fiber network service, reducing our long-term network maintenance and technical service costs as well.

With a more differentiate broadband service, we expect to drive higher gross additions and help reduce churn given the revive ability of fiber network service, reducing our long term network maintenance and technical service costs as well.

Speaker 4: Just as a side note, technical calls are down 30% on a like for like basis versus HFC.

Just as a side note technical calls are down 30% on a like for like basis versus HFC.

Speaker 4: NPS scores are up 44% which is our HFC.

NPS scores are up 44% versus our HFC.

Speaker 4: gross ad ARPUs are increasing 6 to 8% on our fiber gross ads.

Gross add <unk> are increasing 6% to 8% on our fiber gross adds.

Speaker 4: And early churn is one and a half to two percent better after three to four months, which on an annualized basis gets us closer to five to six percent. We are also accelerating our new build activity, edging out to the sudden link footprint to drive customer growth with a shift to more fiber new build construction where practice.

And early churn is one 5% to 2% better after three months to four months, which on an annualized basis gets us closer to 5% to 6%.

We are also accelerating our newbuild activity edging out to suddenly footprint to drive customer growth with a shift to more fiber newbuild construction where practical.

Speaker 4: I mentioned already we have accelerated investments in mobile and converged offerings which became available last month and we expect this will help improve broadband customer turn as well.

Mentioned already we have accelerated investments in mobile and converged offerings, which became available last month and we expect this will help improve broadband customer churn as well.

Speaker 4: On the customer experience side, we have begun expanding our sales and distribution channels to pre-pandemic levels to support additional customer growth.

On the customer experience side, we have begun expanding our sales and distribution channels to pre pandemic levels to support additional customer growth.

Speaker 4: Finally, as our operational performance improves, we will rebrand Sunlink to Optimum to drive a consistent marketing message and customer experience across the entire footprint. This should start in April of this year.

Finally, as our operational performance improves we will rebrand sudden linked to opt to them to drive a consistent marketing message and customer experience across the entire footprint. This should start in April of this year.

Speaker 4: Slide 10 is a good illustration of how we're in the early innings of the growth we expect from selling high quality, high speed broadband services that we can support very high levels of data use.

Slide 10 is a good illustration of how where are the early innings of the growth we expect from selling high quality high speed broadband services that we can support very high levels of data usage.

Speaker 4: Our 1 gig customer penetration increased to 15% in Q4, almost doubling from a year ago, with close to 50% of new customers now taking 1 gig speed.

Our one gig customer penetration increased to 15% in Q4, almost doubling from a year ago with close to 50% of new customers now taking one gig speeds.

Speaker 4: The average download speeds customers take now increase to 352 megabits, which continues to accelerate as customers are increasingly taking the 1 gig service.

Average download speeds customers take now increased to 352 megabits.

Which continues to accelerate as customers are increasingly taking the one gig service.

Speaker 4: Still, about 50% of our customer base takes speeds of 200 megabits per second or lower. So we still see a lot of growth to come here.

Still about 50% of our customer base take speeds of 200 megabits per second or lower so we still see a lot of growth to come here.

Speaker 4: average monthly data usage for broadband only customers was 556 gigabits in Q4 with video streaming remaining the biggest driver.

Average monthly data usage for broadband only customers was 556 gigabit.

In Q4 with video streaming remaining the biggest driver at.

Speaker 4: At the high end, 14% of our broadband only customers are actually using more than 1 terabyte of data per month.

At the high end, 14% of our broadband only customers are actually using more than one terabyte of data per month.

Speaker 4: All of this gives us confidence we're making the right decision focusing on fiber to future-proof our network, given it's the best technology that exists to support high levels of throughput and data usage with very low latency and very high reliability of service.

All of this gives us confidence, we're making the right decision and focusing on fiber to proof to future proof our network given its the best technology that exist to support high levels of throughput in data usage with very low latency and very high reliability of service.

Speaker 4: You can see in the lower left of this slide, our fiber penetration of total fiber passings was about 6% at the end of 2021 with around 70,000 customers.

You can see in the lower left of this slide our fiber penetration of total fiber passing was about 6% at the end of 2021 with around 70000 customers are.

Speaker 4: Our focus has been on selling fiber to new customers, but we will start to do more migrations later this year to accelerate penetration and bring the benefits of this new network to a wider part of our customer base.

Our focus has been on selling fiber to new customers, but we will start to do more migrations later this year to accelerate penetration and bring the benefits of this new network to a wider part of our customer base.

Speaker 4: Slide 11 summarizes our updated fiber roadmap as we announced today a new multi-year plan to bring 100% fiber broadband to more than 6.5 million passings across the optimum and sunlit perspective.

Slide 11 summarizes our updated five year roadmap as we announced today, a new multi year plans to bring 100% fiber broadband to more than $6 5 million passing.

Across the optimum and suddenly.

Speaker 4: As a starting point, we reached 1.2 million total fiber passings at the end of 2021, which were available for sale to customers across the Optima footprint, adding just under 300,000 passings for the year.

As a starting point, we reached $1 2 million total fiber passing at the end of 2021, which were available for sale to customers across the optimum footprint.

Adding just under 300000 passengers for the year.

Speaker 4: This differs slightly from our previously reported fiber homes past metrics, which showed the fiber passings ready for service, or in other words, constructed, but not necessarily yet available for marketing to customers.

Differs slightly from our previously reported fiber homes passed metrics, which showed the fiber passing is ready for service or in other words constructed but not necessarily yet available for marketing to customers.

Speaker 4: The difference relates to issues such as power connectivity, which can delay lighting up the network by a couple of months.

The difference relates to issues, such as power connectivity, which can delay lighting up the network by a couple of months.

Speaker 4: We believe this ready for sales number is a better reference to measure success in customer penetration, so we intend to report this figure going forward.

We believe this ready for sales number is a better reference to measure our success in customer penetration. So we intend to report this figure going forward.

Speaker 4: This means that we actually now expect to reach an additional 1.3 homes passed ready for sales in 2022 as we close the gap to what we already constructed last year. So we're on track to reach a prior target of 2.5 million total fiber passings by the end of 2022, which will be ready for sale.

This means that we actually now expect to reach an additional one three homes past ready for sales in 2022, as we close the gap to what we already constructed last year. So we are on track to reach our prior target of $2 5 million total fiber passing by the end of 2022, which will be ready for sales.

Speaker 4: We expect a total peak in incremental fiber passings in related capex in 2023 and 2024 at around 1.6 million new passings in both years, especially as we expand across the Sunlink footprint and accelerate pace.

We expect a total peaking incremental fiber passing some related capex in 2023, and 2024 at around $1 6 million new passengers in both years, especially.

Especially as we expand across the sudden link footprint at an accelerated pace.

Speaker 4: However, this note, this includes reallocating some new build capex towards new build FTTH passings, as well as fiber homes we may build with government broadband subsidies. So we'll have some items offsetting our total capex spend.

However, this note. This includes reallocating some newbuild capex towards Newbuild FTE th passing.

As well as fiber homes, we may build with government broadband subsidies. So we will have some items offsetting our total capex spend.

Speaker 4: Specifically, we now expect to build out fiber to about two and a half million homes at Sunlink over the next four years.

Specifically, we now expect to build out fiber to about $2 5 million homes that suddenly over the next four years with approximately 200000 passing is focused initially this year in Texas growing.

Speaker 4: with approximately 200,000 passings focused initially this year in Texas, growing to 600,000 additional passings in 2023, 900,000 in 2024, and 800,000 in 2025.

Growing to 600000 additional passengers in 2023, <unk> 2024, and 800000 in 2025.

Speaker 4: By the end of this period, we will have covered about 1 million homes in Texas with fiber and another 1 and a half million homes across the settling states, as listed on the right of the slide.

By the end of this period, we will have covered about 1 million homes in Texas with fiber and another one 5 million homes across the suddenly states as listed on the right of the slide.

Speaker 4: At the same time, we will continue to roll fiber across the optimum footprint, targeting an incremental 1.7 million passing from 2023 to 2024 primarily to reach a total of 4 million fiber passings in the New York Tri-State area by the end of the period.

At the same time, we will continue to roll fiber across the optimum footprint targeting an incremental $1 7 million passing from 2023 to 2024, primarily to reach a total of 4 million fiber passing in the New York Tristate area by the end of the period.

Speaker 4: Moving to slide 12, you can see we added 141,000 new homes built last year, mostly edging out around the suddenly footprint. With Morris broadband inorganically adding another 89,000 pounds.

Moving to slide 12, you can see we added 141000, new homes built last year, mostly edging out around the suddenly footprint with Morris broadband inorganically, adding another 89000 passing.

Speaker 4: We are still achieving about 40% penetration after the first year of expanding our network into new areas, so our mains a great driver of new customer growth.

We are still achieving about 40% penetration after the first year of expanding our network into new areas. So it remains a great driver of new customer growth.

Speaker 4: We're still targeting additional 175,000 plus passings in 2022 of new homes bill.

We're still targeting additional 175000, plus passing and news out in 2022 of new homes built.

Speaker 4: Separately in 2021, we completed the upgrade of over 300,000 stunning HFC homes in areas where customers previously only received a maximum download speed of about 150 megabits per second, taking this up to either 400 megabits or 1 gig.

Early in 2021, we completed the upgrade of over 300000 suddenly HFC homes in areas, where customers previously only received a maximum download speed of about 150 Megabits per second taking this up to either 400, megabits or one gig.

Speaker 4: We're planning on a similar HFC upgrade of more than 100,000 additional homes during 2022, but beyond this we'll be focused on moving straight to fiber wherever possible.

We're planning on a similar HFC upgrade of more than 100000 additional homes during 2022, but beyond this will be focused on moving straight to fiber wherever possible.

Speaker 4: Lastly, so far, we've applied for broadband subsidies totaling for over 150,000 homes where we could get support for new FTTH bills.

Lastly, so far we've applied for broadband subsidies totaling for over 150000 homes, where we could get support for new ft th build.

Speaker 4: We are close to completing our first win here on about 30,000 homes passed, which we hopefully will shortly announce.

We are close to completing our first win here on about 30000 homes passed which we hopefully will shortly announce.

Speaker 4: We should be able to apply for additional subsidies for close to $500,000 and potentially up to $1 million under unserved or underserved homes by the end of this year. And believe we're in a strong position to win good proportion of these funds. These will all be built out in FDT.

We should be able to apply for additional subsidies for close to 500000 and potentially up to $1 million under unserved or underserved homes by the end of this year and believe we are in a strong position to win good portion of these funds.

These will all be built out from FTC.

Speaker 4: Slide 13 summarizes our new mobile converged offerings with up to $30 monthly savings if you take both a broadband and mobile service from us. This positions us much better versus our competition and should support improved customer growth this year. But as I alluded to earlier, we think we'll be able to be even more aggressive here in the coming months. Optimum Mobile had approximately 186,000 lines at the end of December , reaching 4% penetration of LTC USA's residential customer base.

Slide 13 summarizes our new mobile converged offerings with up to $30 monthly savings. If you take both our broadband and mobile service from US this positions us much better versus our competition and should support improved customer growth this year.

But as I alluded to earlier, we think we'll be able to be even more aggressive here in the coming months. After mobile had approximately 186000 lines at the end of December reaching 4% penetration of LTE <unk> residential customer base.

Speaker 4: On slide 14, I want to remind you how we pulled back on sales distribution channels during the pandemic. Necessitated by stay at home orders and social distancing protocols, but we're now extremely focused on getting back to pre-pandemic levels here.

On slide 14, I want to remind you how we pulled back on sales distribution channels during the pandemic nacelle.

Necessitated by stay at home orders and social distancing protocols, but we're now extremely focused on getting back to pre pandemic levels here.

Speaker 4: On the left you can see we're targeting approximately double the number of door to door sales representatives we have in 2022. Up to 4 to 500 and on the right you see we can targeting an additional 50 to 75 new retail stores in 2020.

On the left you can see we're targeting approximately double the number of door to door sales representatives. We have in 2020 to up to four to 500 and on the right. You can see we can targeting an additional 50 to 75, new retail stores in 2022.

Speaker 4: Most of these new stores should open the second half of this year as it takes time to secure the locations and get the stores up and running. But we feel confident about hitting these targets in 2020.

Most of these new store should open the second half of this year as it takes time to secure the location and get the stores up and running but we feel confident about hitting these targets in 2022.

Speaker 4: And now I'll hand this over to Mike for the financials in more detail. Thank you, Dexter. Good afternoon, everybody.

And now I will hand, it over to Mike for the financials in more detail.

Thank you Dexter and good afternoon everybody.

Speaker 5: Turning to slide 15, you can see our adjusted EBITDA margin was 43.9% in 2021 or 44.8% ex-mobile, which is slightly ahead of 2019 level.

Turning to slide 15, you can see our adjusted EBITDA margin was 43, 9% in 2021 or 44, 8% ex mobile which is slightly ahead of 2019 levels.

Speaker 5: Remember that we had some temporary savings in 2020 at the peak of the pandemic, making 2019 a better comparison.

Remember that we had some temporary savings in 2020 at the peak of the pandemic, making 2019, a better comparison.

Speaker 5: Full year adjusted EBITDA was 0.3% year over year, although Q4 EBITDA declined 5.9% year over year with the revenue decline and higher marketing.

Full year adjusted EBITDA grew 0.3% year over year, Although Q4, EBITDA declined five 9% year over year with the revenue decline and higher marketing spend.

Speaker 5: Our EBITDA less CapEx, or operating free cash flow margin, of 31.7% in 2021 was also ahead of 2019 levels, although a bit below last year, driven by increased network investment.

Our EBITDA less capex, our operating free cash flow margin of 31, 7%. In 2021 was also ahead of 2019 levels, although a bit below last year driven by increased network investments.

Speaker 5: I do want to remind you that some of the areas where we are increasing investment will include higher operating costs, as well as higher capex, which will likely negatively impact margins in 2022 to drive better customer growth and higher medium to long-term revenue and capex.

I do want to remind you that some of the areas, where we are increasing investment will include higher operating costs as well as higher capex, which will likely negatively impact margins in 2022 to drive better customer growth and higher medium to long term revenue and cash flow growth.

Speaker 5: Specifically, we're looking at over $100 million of additional OpEx, including rebrand costs, which are more of a one-off, expanded door-to-door sales and retail store distribution, and higher marketing spend around our revamped mobile and converged office.

Specifically, we're looking at over $100 million of additional opex, including rebrand costs, which are more of a one off expanded door to door sales and retail store distribution and higher marketing spend around our revamped mobile and converged offerings.

Speaker 5: On slide 16, you can see our capital intensity was 12.2% in 2021, up from 10.9% in the prior year.

On Slide 16, you can see our capital intensity was 12, 2% in 2021 up from 10, 9% in the prior year.

Speaker 5: Without fiber and new home-built growth investment, this would have been closer to 9% in 2021.

Without fiber and new home build growth investment this would have been closer to 9% in 2021.

Speaker 5: Our CapEx target in 2022 remains between $1.7 billion and $1.8 billion on a cash basis.

Our capex target in 2022 remains between $1 7 billion and $1 $8 billion on a cash basis, including $300 million to $400 million of additional FTE th Capex and 100 million to $200 million of additional Newbuild capex.

Speaker 5: including 300 to 400 million of additional FTTH CapEx and 100 million to 200 million of additional new build CapEx.

Speaker 5: Note this excludes any cap-acts associated with potential subsidized rural broadband construction, as this is more uncertain right now.

Note. This excludes any capex associated with potential subsidize rural broadband construction as this is more uncertain right now.

Speaker 5: However, as Dexter said, we are pursuing this opportunity aggressively as we are experienced in fiber construction and well positioned with a cost advantage to help cover the unserved and underserved areas around us.

However, as <unk> said, we are pursuing this opportunity aggressively as we are experienced in fiber construction and well positioned with a cost advantage to help cover the unserved and underserved areas around our footprint.

Speaker 5: We still see the same opportunity to reduce CapEx after 2024 once our fiber build starts to scale back. We are just accelerating spend here to bring forward the benefit.

We still see the same opportunity to reduce capex. After 2024 once our fiber build starts to scale back. We're just accelerating spend to you to bring forward the benefits.

Speaker 5: Slide 17 highlights the annual free cash flow trend. We have another strong year of free cash flow generation at over $1.6 billion in line with our target.

Slide 17 highlights the annual free cash flow trend, we had another strong year of free cash flow generation at over $1 $6 billion in line with our target.

Speaker 5: Recall we exhausted our tax Commonwealths, so cash taxes have been higher this year, and our cap-backs increased year over year given the construction restrictions that we had in 2020.

Recall, we exhausted our tax Nols, so cash taxes have been higher this year.

And our Capex increased year over year, given the construction restrictions that we had in 2020.

Speaker 5: We do expect free cash flow to be lower in 2022 with the accelerated investments we're planning to drive growth.

We do expect free cash flow to be lower in 2022 with the accelerated investments we're planning to drive growth.

Speaker 5: But also note that we should see improved EBITDA growth from 2023 and reduced CapEx after 2024 as we scale back the FIBA bill, supporting medium-term free cash flow.

But also note that we should see improved EBITDA growth from 2023 and reduced Capex. After 2024, as we scale back the fiber build supporting medium term free cash flow.

Speaker 5: Lastly, slide 18 shows our COC holdings leverage trends since the acquisition of Cablevision completed in mid-2016. When that death to Ibadal was created, we were able to

Lastly.

Slide 18 shows our CSC holdings leverage trend since the acquisition of Cablevision completed in mid 2016, when net debt to EBITDA was closer to seven times.

Speaker 5: We've been trending to our leverage target of 4.5 to 5 times in the last few years with a couple of exceptions being the $1.5 billion dividend we paid in mid-2018 in conjunction with the spinoff of Altice USA and the $2.3 billion tender offer at the end of 2020 following the life path minority stakes.

We've been trending to our leverage target of four 5% to five times in the last few years with a couple of exceptions being the $1 $5 billion dividend, we paid in mid 2018 in conjunction with the spinoff of Altice USA.

And the $2 $3 billion tender offer at the end of 2020, following the Lightpath minority stake sale.

Speaker 5: We remain committed to reduce leverage to this target range, even as we are accelerating investments to support all of our key strategic initiatives.

We remain committed to reduce leverage to this target range, even as we are accelerating investments. This full support all of our key strategic initiatives.

Speaker 5: We did not do any share repurchases in Q4, instead opting to pay down debt and invest more heavily in our business.

We did not do any share repurchases in Q4, instead opting to pay down debt and invest more heavily in our business.

Speaker 5: And I do want to highlight that our balance sheet remains very strong and in very good shape right now.

And I do want to highlight that our balance sheet remains very strong and in very good shape right now.

Speaker 5: At the end of Q4, we had liquidity of over $1.7 billion on top of a very healthy level of free cash flow generation.

At the end of Q4, we had liquidity of over $1 7 billion.

On top of a very healthy level of free cash flow generation.

Speaker 5: The weighted average life of our debt is currently 6.2 years, and our weighted average cost of debt was 4.6% at the end of 2021.

The weighted average life of our debt is currently six two years and our weighted average cost of debt was four 6% at the end of 2021.

Speaker 5: We have no annual bond maturities greater than 1 billion before 2025, all of which can be covered by free cash flow generation and or capacity from our revolve.

We have no annual bond maturities greater than 1 billion before 2025, all of which can be covered by free cash flow generation <unk> capacity from our revolver.

Speaker 5: We will continue to proactively and opportunistically manage our liabilities, although we really don't need to go to the market for anything right now.

We will continue to proactively and all participate opportunistically manage our liabilities, although we really don't need to go into the market for anything right now.

Speaker 5: As a final comment before we proceed to Q&A, I would note that we will not be giving any additional financial guidance for 2022 today as we want to maintain maximum flexibility to invest more in our various growth initiatives.

As a final comment before we proceed to Q&A I would note that we will not be giving any additional financial guidance for 2022 today as we want to maintain maximum flexibility to invest more in our various growth initiatives.

And with that we will now take any questions.

Speaker 1: Thank you, Mike. As a reminder, to ask a question, you will need to press star 1 on your telephone keypad. And to withdraw your question, just press the pound key. Please stand by while we compile the Q&A.

Thank you Mike as a reminder to ask a question you will need to press star one on your telephone keypad and so we do all your question just breast account. Please standby, while we compile the Q&A roster.

Speaker 1: Your first question comes from the line of Philip Cusick with JP Morgan. Sir, your line is open. Hey guys, thanks. First, the faster fiber build in 23 and beyond.

Your first question comes from the line of Philip Cusick with Jpmorgan, Sir Your line is open.

Hey, guys. Thanks, a couple first faster fiber build in 'twenty three and beyond do you think that leads to higher capex in those years as well or is the one seven to one eight range.

Phil.

Speaker 4: The math isn't perfect here, given that, you know, there's going to be some HFC-related maintenance and growth CapEx that's going to be coming down. But I think it's probably fair to say that we probably will be a couple hundred million dollars at the most higher in CapEx.

The math is in perfect here given that there is.

It's going to be some HFC related maintenance and growth Capex, that's going to be coming down, but I think it's probably fair to say that we probably will be a couple of hundred million dollars.

At the most higher in Capex.

Speaker 4: for a couple of years, like in 2023, 2024, and then it starts coming down in 2025 and obviously 2026, it's a massive reduction in capex. And then you said you ended December , but on a.

For a couple of years like in 2023, and 2024 and then it starts coming down.

In 2025, and obviously 2026, it's a massive reduction capex.

That helps and then you said you ended December better unexpected can you just talk about what youre seeing in the market.

Expound on that a little bit.

Whether it's moves or new interest what do you see out there. Thank you.

Speaker 4: Well, I think, you know, it depends on our markets, but broadly speaking, you know, even coming into January and February . Gross activity is lower, but it's relatively stable. Relative to last year, so, but not not at all back to 2018 or 2019.

Well I think it depends on our market, but broadly speaking even coming into January and February .

Gross activities lower.

But it's it's relatively stable relative to last year, so not at all back to 2018 or 2019 levels.

Speaker 4: And depending where we are in our footprint, from a competitive standpoint, churn rates are in line to slightly higher depending on if we're seeing increased competitive intensity or not.

And depending where where we are in our footprint from a competitive standpoint churn rates are are in line to slightly higher depending on foreseeing increased competitive intensity or not.

Speaker 4: But what we're seeing is that where we are providing 1 gig service, where we are providing now good distribution on the mobile side.

But what we're seeing is that.

Where we are providing.

One gig service.

Where we are providing now.

Good.

Good distribution on the mobile side.

Speaker 4: and where we're starting to start delivering better distribution channel productivity.

And and where we're starting to to start delivering better distribution channel productivity.

Speaker 4: We're seeing better performance there on the sales side of our of our equation. So. You know, the, the reason why Mike and the team, we've agreed to not drive too much financial forecasting at this point. Is because we are starting to see some nice, some nice returns on investment. And we'd like to just maintain some flexibility here if we need to for the next couple of quarters.

We're seeing better performance there on the sales side of our <unk>.

Equation so.

The the reason why Mike and the team we've agreed to not.

Drive too much.

Financial forecasting at this point is because we are starting to see some nice some some nice returns on investment and we'd like to just maintain some flexibility here if we need to for the next couple of quarters.

Speaker 4: But you know, I think it depends, Fios is not being hyper competitive as much as it was being in the better part of 2021. They've raised the prices on data.

But I think it depends files does not being hyper competitive as much as it was being in and the better part of 2021, they've raised their prices on data.

Speaker 4: Where you have seen some aggressive marketing and pricing is on the AT&T side, but AT&T fiber only overlaps with about 400,000 of our homes passed on about 12% in our suddenly footprint today. That will increase obviously as AT&T increases its fiber footprint. So we're not seeing any massive competitive pressures here, but it's...

You have seen some aggressive marketing and pricing is on the AT&T side, but AT&T fiber only overlaps with about 400000 of our homes passed.

About 12% and our suddenly footprint today that will increase obviously as AT&T increases its fiber footprint.

So we're not seeing any any massive competitive pressures here, but it's.

Speaker 4: It is a month-to-month kind of change of pace, depending on if something new comes up.

It is it is a month to month kind of change of pace, depending on on if something new comes up.

Got it thanks Dexter.

Speaker 1: Thank you. Your next question comes from the line of Jonathan Chaplin with New Street Research. Sir, your line is open.

Thank you. Your next question comes from the line of Jonathan Chaplin with New Street Research Sir Your line is open.

Speaker 6: Thanks. Two for you, Dexter, if I may. So first on ARPA, it looks like it was down a little bit year over year. I'm wondering if you can talk through just the dynamics of where your lead offer pricing is relative to ARPA.

Thanks.

Q3 extra if I may so first on <unk>.

<unk> looks like it was down a little bit year over year I'm wondering if you can talk through just the dynamics of where your lead offer pricing is relative to our peers.

Speaker 6: And as you sort of rectify the business over the course of the next few quarters, where you think ARPU washes out.

And as you saw.

Rectify the business over the course of the next few quarters, where you think <unk> washes out.

Speaker 6: And then my second question is, it's been a long time since you've...

Then my second question is it's been a long time since you've.

Speaker 6: Given us a thought of where capex and margins would be once you get through the fiber upgrade. I recognize a lot has changed since you last gave that guidance.

Given us a thought of where capex and margins would be once you get through.

The fiber upgrade.

I recognize a lot of it a lot.

This change.

Since you last gave that guidance. We're now do you think in 2026 once the upgrades done so.

Speaker 6: Where now do you think in 2026, once the upgrade's done, sort of business as usual, capex and margins would land? Correct, counter

So business as usual capex and margins would land.

Okay.

Speaker 4: So, on the RPU side, you know, even though our overall residential RPU from a fourth quarter standpoint, year over year, or from an annual standpoint is slightly down. Obviously, that's driven primarily by the impact of what's happening on our video side of our business.

So on the <unk> side.

Even though our overall residential are approved from a.

Fourth quarter standpoint year over year from an annual standpoint is slightly down.

Obviously, thats driven primarily.

By the impact of what's happening on our video side of our business.

Speaker 4: and also what we're doing in terms of a promotional standpoint in the third and fourth quarter.

And also what's what we're doing in terms from a promotional standpoint in the third and fourth quarter.

Speaker 4: where you know the gift with purchases which is whether it's either gift cards

Where the gift with purchases, which is whether it's either gift cards.

Speaker 4: Or is contra revenue and so that impacts obviously our crew numbers, but non recurring in many respects. So, you know, we still feel good about our broadband. I think what I what I had mentioned. In on 3rd quarter.

For OTT as Contra revenue and so that impacts obviously.

Our <unk> numbers, but nonrecurring in many respects so.

We still feel good about our broadband <unk> I think what I, what I had mentioned in our third quarter earnings is that even if we stayed as promotional as we were in the third and fourth quarter of last year throughout this year, we'd be flattish on on broadband <unk>.

Speaker 4: Is that even if we stayed as promotional as we were in the 3rd and 4th quarter of last year throughout this year. We'd be flattish on on broadband. And so we feel good still about that, those levels and then, you know, I can't call where where video is going to go, but we continue to see some decent attrition and and low levels of attachment. On gross ads there with regards to.

So we feel good about that those levels and then you know I can't call, where where video <unk> is going to go but we continue to see some decent nutrition and and low levels of attachment on gross adds there.

With regards to Capex.

Speaker 4: If you looked at our non-fiber capex today, we're probably close to about a billion one, a billion one fifty type number. But if you were to extrapolate

If you if you looked at our non fiber capex today.

We'll probably close to about 1 billion, one 1 billion $1 50 type number.

But if you were to <unk>.

Strapped relate to a pretty much a full fiber network by 2025 of $6 5 million homes.

Speaker 4: to a pretty much a full fiber network by 2025 of six and a half million homes.

Speaker 4: Our non fiber related to HFC is going to come down materially from there. So I think it's fair to say that we're looking at a sub 1B. Type of number from 2026 onwards. And probably already in 2025, we'll start seeing numbers. In the mid to lower teens of the billions.

Our non fiber capex related to HFC is going to come down materially from there. So I think it's fair to say that we're looking at a sub $1 billion.

Type of Capex number from 2026 onwards.

And probably already in 2025, we will start seeing numbers.

In the mid to lower teens of the $1 billion.

Speaker 4: And from a margin standpoint, that's a little bit difficult one for us to call, Jonathan, given that video plays havoc with margins here. But clearly, the gross margins on data are very strong. And given that we continue to migrate more and more to a heavier weighting on data, you'd expect to be able to get to significantly higher margins to where we are today. Dexter, if I could just follow up on the ARPU comment.

And from a margin standpoint, that's a little bit difficult one for us to call Jonathan given that Vin.

Video plays plays havoc with margins here, but clearly the gross margins on data are very strong and given that we continue to migrate more and more to two.

A heavier waiting on data.

Would expect to be able to get to to significantly high margins to where we are today.

Thanks, if I could just follow up on the <unk> comment.

When we look at the where the needle coke pricing gains.

Speaker 6: I forget the numbers, I think it's 40, 50, 60, or 45, 55, 65 on broadband, which is all below where average ARPU is for broadband.

I forget the numbers I think it's 40, 50, 60 or $45 $55 65 on broadband which is all below where your.

Where average outflows for broadband.

Speaker 6: How do you, with bringing customers on it at these rates on what looks like flat pricing plans, how do you maintain our approve in that sort of 60, sorry, 74, $75 range?

We are.

Bringing customers all of that at these rates on what looks like flat.

Pricing plans, how do you maintain or approved in that sort of 60, sorry, 70 $475 range.

Speaker 4: Well, I think, you know, our gross ad ARPUs today on data, you know, given that we are seeing 50% plus.

Well I think our gross add <unk> today on data.

Given that we are seeing 50% plus.

Speaker 4: of our gross ad subscribers taking one gig. We're seeing those numbers in the kind of mid-60s in terms of the gross ad ARPUs.

Of our gross add.

Our subscribers, taking one gig.

Seeing those numbers in the kind of mid sixties.

In terms of the growth at our booth.

Speaker 4: on data and so we're not too far off from where our average is. And then obviously, you know, rate action and the fact that 50% of our subscriber base continues to be at 200 megabits or less, continues to drive some nice upsell. And you have to remember we're in a heavier promotional time period right now. I don't expect our pricing relative to Fios, which is about...

On data and so we're not too far off more of our averages and then obviously rate action and the fact that 50% of our subscriber base continues to be at 200 megabits or less.

<unk> continues to drive.

Some some nice upsell and you have to remember we're in a we're in a heavier promotional time period right now I don't expect our pricing relative to files, which is about $20 to $25 cheaper today on one gig 400 gig.

Speaker 4: $20 to $25 cheaper today on 1 gig for us to maintain those levels. So, we'd expect to continue to be able to drive ARPU growth here on data for the near term and as we go into multi gig, which we'll start announcing in the middle of this year, we'll have that product roadmap to go up to higher speeds and higher ARPUs.

To maintain those levels.

So we would expect to continue to be able to drive <unk> growth year on data for.

For the for the near term and as we go into multi gig, which will start announcing in the middle of this year, we will have that product roadmap to go up to higher speeds and higher offers.

Thanks Dexter.

Speaker 1: Thank you. The next question comes from the line of Craig Mossett with Mossett-Nathanson. Your line is open.

Thank you. The next question comes from the line of Craig Moffett with Moffett Nathanson. Your line is open.

Speaker 4: Hi, two questions if I could, Dexter. First, the wireless strategy, your peer cable operators have obviously made it a very large part of the business and you've had a lot of fits and starts. I wonder if you could just...

Hi, two questions if I could dexter.

First the <unk>.

Wireless strategy.

Our peer cable operators have obviously made it a very large part of the business and <unk> had a lot of fits and starts I Wonder if you could just.

Speaker 4: put a little more meat on the bones of why we should be confident that now is the time we can start to see some acceleration in the wireless strategy and what you can accomplish with wireless. And then second, there is, I think, a concern that

Put a little more meat on the bones of why we should be confident that now is the time, we can start to see some acceleration in the wireless strategy and and what you can accomplish with wireless and then second.

There is I think a concern that.

Speaker 4: that so much of your share count is held privately that there may not be a near-term incentive for you to get your stock price up. I wonder if you could speak to that and maybe provide some reassurance about.

So much of your share count is held privately that there may not be a near term incentive for you to get your stock price up I Wonder if you could speak to that and maybe provide some.

Some reassurance about.

Speaker 4: about your own ambition in the stock price and Patrick's as well perhaps.

How about your own.

Ambition in in stock price and and Patrick's as well perhaps.

Speaker 3: Well, I'll take the first question first, and I'll take the loaded question second after. On the first one, wireless, I think we've been clear that wireless is very important to our strategy, Craig.

Well I'll take the first question first and I'll take the loaded question second after.

On the first one.

Wireless.

I think we've been clear that wireless is is a very important to our strategy Craig.

Speaker 3: You're exactly right. You have to use the right terminology, fifth and start.

Yes, Youre exactly right I think you used the right terminology fits and starts.

Speaker 3: It's been a year now that we've been re-homed on the Timo network.

It's been a year now that we've been rehomed on the on the TMO network.

Speaker 3: And we've seen our churn rates come down from, you know, mid-60s to 70% down to mid-30s today, and continue to improve month over month. And so we are at that stage where, one, we weren't going to talk about publicly, but we are, you know, in the one-yard line, even though football season's over, to talk about announcing a new agreement with Timo.

And we've seen our churn rates.

Come down from mid 60% to 70%.

<unk> to mid <unk> today continued to improve month over month, and so we are at that stage where one.

We weren't going to talk about publicly but we are in the in the.

On the one yard line, even though football seasons over.

To talk about announcing a new a new agreement with T Mo.

Speaker 3: And so, you know, we're very pleased. I think our partners are very pleased with our commitment as well and our financial commitment. And we'll be able to talk about that a little bit more once we announce it.

And so we're very pleased I think our partners are very pleased with our commitment as well on our financial commitments and we will be able to talk about that a little bit more once we announce it.

Speaker 3: But it will allow us a little flexibility and it will provide, you know, our partners over at Timo with some good financial incentives as well.

But it will allow us to both flexibility and it will provide.

Partners of our T Mo with some good financial incentives as well.

Speaker 3: And we think that we can mimic and do better than our peers over at Comcast and Charter who are starting to grow their mobile subscriber bases nicely. We don't see there's any reason why we can't achieve as good of results, if not better than our peers there and you'll start seeing some of those strategies unfold over the next couple months.

And we think that we can.

Mimic can do better than our than our peers over at Comcast and charter who are who are starting to grow their mobile subscriber basis nicely. So we don't see there's any reason why we can't achieve as good a results if not better.

And then our peers, there and Youll start seeing some of those strategies unfold over the next couple of months.

Speaker 3: as we start being more promotional and obviously as we lead into a rebranding of Suddenlink in April throughout the rest of the year and a real reinvestment in the optimum brand throughout the year. So those strategies you'll start seeing unfolding in the second quarter all the way through the end of the year and you'll understand where we are there.

As we start being more promotional and and obviously as we lead into a rebranding of.

Suddenly in April throughout the rest of the year and a real reinvestment.

Reinvestment in the optimum brand throughout the year. So those strategies, you'll start seeing unfolding in the second quarter all the way through the end of the year.

And you'll understand where we are there.

Speaker 3: In terms of the second question, I can't really speak for Patrick, but as you may know, I'm heavily incentivized. I've got a very large shareholding, at least I believe it's a very large shareholding in LTC USA. That's a big part of my personal net worth.

In terms of the second question I can't really speak for Patrick but.

As you May know.

I am heavily incentivize I've got a very large.

Shareholding.

At least I believe it's a very large shareholding in LTC USA.

That's a big part of my personal net worth.

Speaker 3: and I'm very focused on making sure that the stock price goes up. As you, I don't think it has been announced, actually I'm looking at my lawyer in my room, but I don't think we've announced the new incentive program for the management team. It has been. So you'll see that we've got a heavily RSU and option weighted.

And I am very focused on making sure that the stock price goes up.

As you I don't think it has been announced actually I'm looking at my lawyer.

In my room, but I don't think we've announced the new incentive program for the management team it has been.

So and so you'll see that we've got a.

Heavily rsum option weighted.

Speaker 3: incentive plan for the next three years for the top 200 employees at LTC USA, very focused on the stock price, right? So I couldn't emphasize how much the management team is focused on making sure that the share price reacts the right way, which is why we're doing the things we're doing today, because it is clear in our minds.

Incentive plan for the next three years for the top 200 employees at LTC USA.

Very focused on the stock price right. So.

I Couldnt I couldnt emphasize how much the management team is focused on making sure that.

The share price reacts the right way, which is why we're doing the things we're doing.

Today, because it is clear in our minds that investing in the infrastructure and upgrading it significantly is going to drive a tremendous amount of value and growth for this business.

Speaker 3: that investing in the infrastructure and upgrading it significantly is going to drive a tremendous amount of value and growth for this business.

Speaker 3: given all the early statistics we've had that are meaningfully better than HFC across all of the operational KPI.

Given all of the early statistics, we've had that are meaningfully better than HFC.

Across all of the operational Kpis.

Speaker 3: And so we just have to continue to execute here. And this is a big year of execution. We feel good about our initiative. So we started in the second half of last year and we feel good about 2022 in terms of executing our operational goals.

And so we just have to continue to execute here and this is a big year of execution, we feel good about our initiatives that we started in the second half of last year.

We feel good about 2022 in terms of executing on our operational goals.

That's helpful. Thank you.

Speaker 1: Thank you, your next question comes from the line of Brett Seldman with Goldman Sachs.

Thank you. Your next question comes from the line of Brett Feldman with Goldman Sachs. Your line is open.

Speaker 7: But yeah, thanks for taking the question and thanks for the update on your plans for the Fiverr deployment. You obviously have very specific targets for where you expect to get.

Yes, thanks for taking the question and thanks for the update on your plans for the fiber deployment. You. Obviously have very specific targets for where you expect to get from a fiber passing standpoint, I was wondering if you'd be willing to share any any ambitions or targets that you have for fiber penetration and what is the penetration strategy.

Speaker 7: from a Fiverr passing standpoint. I was wondering if you'd be willing to share any ambitions or targets that you have.

Speaker 7: for fiber penetration and what is the penetration strategy? Is it primarily about making sure that you can get as many of the gross ads as possible connected or do you have an intent to go out there and try to proactively move existing customers over and then just as a component of that, you use articulated CapEx is likely to be elevated by a certain degree as a result of the passing.

Is it primarily about making sure that you can get as many of the gross adds as possible connected.

Or do you have an intent to go out there and try to proactively move existing customers over and then just as a component of that.

<unk> articulated capex is likely remain elevated by a certain degree as a result of the <unk>.

Speaker 7: Are you also budgeting a certain degree of I guess fiber connect capex in there if there's a lot of demand For the product or would you think of that as a?

Are you also budgeting a certain degree of I guess fiber connected capex in there there's a lot of demand for the product or would you think of that as all success based thank you.

Speaker 3: Yeah, I mean, Brett, the goal here is better experience for our customers, leading to significantly reduced churn and reduced off X cost on customer touch.

Yeah.

Brett the goal here is a better experience for our customers leading to.

Significantly reduced churn and reduced opex cost on on customer touch points right now.

Speaker 3: And then ultimately, obviously, a significant reduction in our capex went forward.

And then ultimately obviously a significant reduction in our capex going forward.

Speaker 3: And so today where we had been focused on gross ad fiber clients and not so much focus in terms of migration.

And so today, where we had been focused on gross add.

<unk> fiber clients and not so much focus in terms of migration.

Speaker 3: because of the stability of some of our CPEs and our installation processes. Those have materially improved over the last three months, which is why we're about to launch in March.

Because of the stability of some of our CPE used in our installation processes.

These have materially improved over the last three months, which is why we're about to launch in March.

Speaker 3: We're going to start aggressively migrating 1P customers from HFC onto Fiber, and then we will move into the 3P world over the course of the year. And that will be, you know, capitalized CapEx.

We're going to start aggressively migrating one P customers from.

From HFC onto fiber and then we will we will move into the <unk> world over the course of the year.

That will be.

Capitalized capex.

Speaker 3: from a new install standpoint. But from our perspective, if we are seeing already on 70,000 customers.

From a new install.

Standpoint, but from our perspective, if we are seeing already on 70000 customers and.

Speaker 3: and even smaller cohorts of that and annualized improvement in turn of 5 to 6 percentage points.

And even smaller cohorts of that.

An annualized improvement in churn of 5% to six percentage points.

Speaker 3: After 3 months, you know, that is. That is boding well for all of the things that we have put into our financial model.

After three months.

Is that that is boding well for all of the things that we have put into our financial model.

Speaker 3: you know, 45% better NPS scores, 30%

45% better NPS scores, 30%.

Speaker 3: uh, better calls, uh, less calls into the technical call center.

Better calls less calls into the technical call Center.

Speaker 3: Our poo rates of 6 to 8% higher in terms of gross at our poos, right? So. If you throw all that math into the cookie box.

<unk> rates of 6% to 8% higher in terms of gross add <unk> right. So.

If you throw all of that math into the cookie box it looks pretty good as we start to continue to grab volume, even though from a customer connection standpoint.

Speaker 3: It looks pretty good as we start to continue to grab volume, even though from a customer connection standpoint.

Speaker 3: It may be expensive to move people who are producing very good cash flows just on HFC. But the goal here is to move as many people over to fibre as possible over the next couple of years.

It may be expensive.

To move people.

Who are producing very good cash flows just on HFC, but the goal here is to move as many people over to fiber as possible.

Over the next couple of years.

Speaker 3: and go after all customers, existing and new customers, and try and put them on Fiverr.

And go after all customers existing and new customers and try and put them on fiber.

Okay. Thank you.

Speaker 1: Our next question comes from the line of Ben Swinburne with Morgan Stanley . Your line is open.

Our next question comes from the line of Ben Swinburne with Morgan Stanley . Your line is open.

Speaker 8: Thank you. Good afternoon. Just following up on fiber and I had a wireless question as well, but first on the fiber side.

Thank you good afternoon.

Just following up on fiber and wireless question as well, but first on the fiber side.

Speaker 8: Dexter, you got to been at this for some time on the fiber front, but you're obviously scaling up significantly. Can you talk a little bit about sort of the operational areas that you're focused on or any uncertainty around scaling the build level this quick, this this substantially? I'm thinking about just like.

You guys have been at this for some time.

On the fiber front, but youre, obviously scaling up significantly can you talk a little bit about sort of the operational areas that you're focused on or any uncertainty around scaling the build level. This quick this substantially I'm thinking about just like <unk>.

Speaker 8: you know, red tape and labor supply and supply chain, you know, a lot of companies in the US are ramping fiber builds. And, you know, these are not in

Red tape and labor supply and supply chain.

A lot of companies in the U S are ramping fiber build.

These are not insignificant.

Speaker 8: work projects, as I'm sure you know way better than I do. So, I'm just going to talk a little bit about that and sort of how much confidence you have in your ability to hit these passing numbers. And then just on the on the Op-EdX savings.

Work projects as I'm sure you know way better than I do so I guess, if you could talk a little bit about that and sort of how much confidence you have in your ability to hit these passing numbers.

And then just on the on the Opex savings can you talk a little bit about the timeline to pick those up in other words are you sort of running two networks for a period of time, DOCSIS and fiber and so do you sort of cut it over node by node.

Speaker 8: Can you talk a little bit about the timeline to pick those up? In other words, are you sort of running two networks for a period of time, DOCSIS and...

Speaker 8: fiber and so do you sort of cut it over node by node and that leads to the drop in maintenance cost etc. Just help us think about that too as well. Thank you.

That leads to the drop in maintenance costs et cetera, just help us think about that too as well. Thank you.

Speaker 3: Sure, you know, on the 1st point you're spot on Ben. We've gone through fits and starts here. And obviously, it was probably the worst thing. That could have happened to us in terms of trying to accelerate on the side, but, you know, the big red tape stuff for us has been the state of New York.

Sure.

The first point you are spot on Ben we've gone through fits and starts here.

And obviously COVID-19 was probably the worst thing that could have happened to us in terms of trying to accelerate on the capex side.

Got it.

The big Red tape stuff for US has been the state of New York.

Speaker 3: We have about 700, 750,000 homes that we're waiting on effectively at the Governor's Office.

We have about 700 750000 homes that were waiting on effectively the Governor's office.

Speaker 3: to approve. We feel very comfortable that half of those we will get very shortly and the other half we will get also this year. So that has been one of the biggest red tape . . .

To approve.

We feel very comfortable that half of those we will get very shortly.

And the other half we will get also this year. So that has been one of the biggest red tape.

Speaker 3: initiatives to overcome over the last really year and a half.

Initiatives to overcome.

Over the last really year and a half was.

Speaker 3: was some of the oversight from the state of New York, which has changed the dynamic in terms of permits.

Some of the oversight from the from the state of New York, which has changed the dynamic in terms of permits, but we feel good about getting those done those requirements.

Speaker 3: But we feel good about getting those requirements. Connecticut does not have those types of permanent approvals.

Connecticut does not have.

Those types of permit approvals.

Speaker 3: From from the governor's office, and so we've got three to four hundred thousand in the Connecticut area coming out this year Which is the balance of our our optimum footprint this year?

From from the Governor's office, and so we've got $3 to 400000 in the Connecticut area coming out this year, which is the balance of our optimum footprint this year.

Speaker 3: And so we feel good about the pipeline going into 2024.

And so we feel good about the pipeline going into 2024.

Speaker 3: which we're going to get closer to completing the entire opt-in footprint in 2024.

Which we're going to get closer to completing the entire optimum footprint in 2024 on the labor side and the raw materials side on the raw material side. We have currently nine to 12 months.

Speaker 3: On the labor side and the raw materials side, we have currently 9 to 12 months of enough

Of enough inventory.

Speaker 3: So we've got enough inventory for this year. As you do know, we're the larger group of Patrick and his sister companies.

So we've got enough inventory for this year.

As you do know where the larger group of <unk>.

Patrick and its sister companies.

Speaker 3: are big acquirers of raw materials and inventory, and so we feel good about our ability to fulfill our 2023 and onwards capacity there.

Our big acquirers of of raw materials, and inventory and so we feel good about our ability to fulfill.

Our 2023 and onwards capacity there.

Speaker 3: So we're not worried about that. That's obviously a focus. It's been a focus of ours for many, many quarters to make sure that we're maintaining at least 12 months of inventory on that. The labor shortage is something

So we're not worried about that that's obviously a focus it's been a focus of ours for many many quarters to make sure that we're maintaining at least 12 months of inventory.

At the labor shortage is something a little bit less predictable.

Speaker 3: But you know, we've got our own workforce where on the field ops side about 20% of our workforce is fiber related.

But we've got our own workforce.

Where on the field upside about 20% of our workforce is fiber related.

Speaker 3: And then we work with, in the New York Tri-State area, about three or four contracted, incentivized, and onboarded subcontractors.

And then we work with.

In the New York Tri State area.

<unk> three or four contracted incentivized.

And on boarded subcontractors.

And in the suddenly footprint the <unk>.

Speaker 3: The ones that we're going to do for this year, the 200,000 that is already done in the back in terms of contracted. And we're getting ready to accelerate the sudden excited to see from our chart on I don't know what page it was on.

One's that we're going to do for this year that 200000 that is already done in the bag in terms of contracted and we're getting ready to accelerate suddenly excited as you could see from our chart on I don't know what page it was on.

Speaker 3: Uh, but, um, for 2023, uh, that's in the, that's in the pipeline today, right now to make sure we fill that. So, you know, the, the, the fits and starts has always been about.

But for 2023 debt that's in the pipeline today right now to make sure we fill that so.

The fits and starts has always been about whether or not we believed in the in the return.

Speaker 3: whether or not we believed in the return.

Speaker 3: and getting the machine up and running with all the permits.

And getting the machine up and running with all the permits.

Speaker 3: We've gone through all the hard slog here on both of those. We truly believe that this is the right thing for doing our business to drive a tremendous amount of value and we see it in all of our KPIs.

We've gone through all of the hard slog here.

On both of those we truly believe that this is the right thing through doing our business to drive a tremendous amount of value and we see it in all of our Kpis.

Speaker 3: We've gotten through the red tape issues, we are properly prepared on the inventory side and on the labor side for the next 12 to 24 months, so we feel good about our ability to execute now.

We've gotten through the red tape issues.

We are properly prepared on the inventory side and on the labor side for the next 12 to 24 months. So we feel good about our ability to execute now.

Speaker 3: Now, it's really just following this on a daily basis and making sure that we're executing properly and hopefully we won't have too many natural disasters out there that'll slow us down. But we're in a we're in a good pace right now. January and February have been above budget in terms of our deliveries. We're trying to get ahead of the curve and then we start accelerating as the weather gets better in the spring in the summer.

Now, it's really just following that on a daily basis, and making sure that we're executing properly and hopefully we won't have too many natural disasters out there that will slow us down but we're in a we're in a good pace right now.

During February have been above budget in terms of our deliveries were trying to get ahead of the curve and then we start accelerating as the weather gets better in the spring into summer.

Speaker 8: And anything on the savings? Do you run two networks, etc.? Yeah, I think the savings is, there are obviously savings from shutting down one network, which relate to power and to maintenance. But the biggest savings are related to customer touch points.

And anything on the savings.

Do you run two networks et cetera.

I think the the savings is there are obviously savings from shutting down one network, which relate to power and some maintenance, but the biggest savings are related to customer touch points.

Speaker 3: You know, we've seen our sister companies deliver 40 to 50% less customer touch points on fiber versus cable. And if you look at the OPEX that's related to customer servicing, it's about a billion dollars.

We've seen our sister companies deliver 40% to 50% less customer touch points.

On fiber versus versus cable and if you look at the Opex thats related to customer servicing it's about $1 billion.

Speaker 3: And so if we can start reducing that over time.

And so if we can start reducing that over time.

Speaker 3: by 40 to 50 percent because it's just mathematical in terms of the amount of calls and truck rolls that you do. That's a massive number. I mean, obviously the things that you can't quantify are NPS and customer satisfaction and churn rates that go along with that, right? So, we know that we've seen cable versus fiber in a European context.

40% to 50% because it's just mathematical in terms of the amount of calls.

And in truckload that you do that's a massive number.

Obviously, the things that you can't quantify our NPS and customer satisfaction.

And churn rates that go along with that right. So we know that.

We've seen cable versus fiber in a European context be 7% to eight percentage points better on churn and so our early read of an annualized number of 5% to 6% is not off the mark.

Speaker 3: Be 7 to 8 percentage points better on turn and so our early read of an annualized number of 5 to 6% is not off the mark.

Speaker 3: and we're already seeing 30% less calls versus the 40 to 50% numbers that we've seen from other companies who've run dual networks. And so we're on track. We're on track to delivering what we think is going to be pretty standard in the industry in terms of the customer experience. And that's going to translate into some very, very large OpEx savings. CapEx.

And we're already seeing 30% less kohl's.

Versus the 40% to 50% numbers that we've seen from from other companies.

Who've run dual network and so we're on track we're on track to delivering what we think is pretty going to be pretty standard in the industry in terms of the customer experience and that's going to translate in some in some very very large opex savings capex.

Speaker 3: after we finish the rollout, and then on the revenue side, I think it'll be very interesting to see how much translates to increased revenue by better NPS scores and reduced returns, right? Right.

After we finish the rollout.

And then on the revenue side I think it'll be very interesting to see how much translate into increased revenue by better NPS scores and reduced churn right right.

Speaker 8: And just if I can sneak one in on wireless, just going back to Craig's question, as we watch you relaunch this product and accelerate the customer growth in 22 and beyond, any help thinking about wireless service ARPUs that you guys expect? Because I know you're selling a lot of buy-the-gig plans and you've got some promotions out there. It's hard for us to see that in the historical financials. I don't know if you had any thoughts that would help us think about that business as it scales here on the ARPUs front. Yeah, I mean, we're kind of in the low to mid 20s in terms of ARPU.

And just if I can sneak one in on wireless just going back to Craig's question, because we watch you relaunched this product in and accelerate.

The customer growth in 'twenty, two and beyond.

Any help thinking about wireless service our foods that you guys expect because I know you are selling a lot of by the gig plans and you've got some promotions out there it's hard for us to see that in the historical financials. I don't know if you had any thoughts it would help us think about that business as it scales here on there.

We're kind of in that low to mid <unk> in terms of <unk>.

Speaker 3: And that has been tailing lower during 2021 because by the gig plans were more popular than the unlimited plan.

And that has been tailing lower during 2021, because by the gig plans were more popular than the unlimited plan.

Speaker 3: But with our new agreement, which pricing will be, you know, active as of gen one this year, we're going to be driving much more on the unlimited packages.

But with our new Ah.

Agreement, which pricing will be.

Active as of Jan one this year were going to be driving much more on the unlimited packages and so we suspect that the that the RP levels will be.

Speaker 3: And so we suspect that the ARPU levels will be firmly ensconced in the mid-20s and hopefully higher as we continue to grow.

Firmly ensconced in that mid Twenty's, and hopefully higher as we continue to grow.

Very helpful. Thanks, so much.

Speaker 1: Our next question comes from the line of John Hodulek with UPS, your line is open.

Our next question comes from the line of John Hodulik with UBS. Your line is open.

Okay.

Speaker 6: Great. Thank you. Just a quick clarification to start off with, Dexter, on the $6.5 million

Great. Thank you.

Just a quick clarification to start off with.

Almost six 5 million.

Speaker 6: And I know you guys talked about it a little bit, but did that include any subsidies you expect to get?

And I know you guys talked about it in or did that include any any you expect to get.

Speaker 6: from the government and if things go well, could that number creep higher? If you could size that first, that would be great. Then, related to that, can you quantify the extent to which you guys think you can do at Giles and increase the footprint?

From the government.

And if things go well I mean could that number creep higher and if you could sort of size that place that'd be great and then sort of related to that can you quantify that.

The extent to which you guys think you can do at edge outs and increase the footprint.

Speaker 6: That's sort of all one question. And then just really unrelated questions. And yeah, I think you've answered this basically as part of every other question. But I mean, have you, did you look at DOCSIS 4.0 deployment, especially in the new Suddenlink territories where you're sort of looking at Greenfield and.

That's sort of all one question and then just really handled related question and then I think you've answered. This basically is part of every other question Benjamin.

Have you did you look at DOCSIS Ford auto deployment, especially in the new suddenly territories, where youre sort of looking at Greenfield in and I guess, obviously you decided against it.

Speaker 6: And I guess obviously you decided against it, but I guess is it your view that eventually the rest of the cable industry will have in the same direction with you guys and just go full fiber.

Your view that eventually.

The rest of the cable industry.

Having the same direction with you guys and just go full fiber. Thanks.

Yeah.

Speaker 3: So on the first one, John , listen, we've identified two and a half million homes.

So on the first one John listen we've identified $2 5 million homes.

Speaker 3: in the sun link footprint, which we'd like to fiberize. And that's really based on scale mainly. And some competitive natures in some areas which we think we argue can drive penetration even higher by putting in fiber.

In the suddenly footprint, which wed like to <unk> and that's really based on scale mainly.

And some competitive natures in some areas, which we think we argue can drive penetration even higher.

By putting in fiber.

Speaker 3: whether that $2.5 million is all going to be funded by us or some portion of it will be funded with some subsidy money, I couldn't tell you. We're in the early innings of the subsidies game. We've done 150,000 applications for Homes Pass. We think we've won 30,000 here. And so if we use that same ratio, let's call it, and we're applying for about a million, maybe we can end up getting 200,000 homes.

Whether that $2 5 million is all going to be funded by us or some portion of it will be funded with some.

Some subsidy money I Couldnt tell you we're in the early innings of the subsidies game.

We've done 150000 applications for homes passed we think we have 130000 here.

And so if we're if we use that same ratio, let's call it and we're applying for about 1 million may.

Maybe we can end up getting 201000 homes.

Speaker 3: there which will be part of that six and a half but it may take it to 6.7 because the 200,000 homes were homes we were never going to upgrade given that they're in much more unserved underserved or non-served areas.

There, which will be part of that six and a half but it may take it to $6 seven because the 200000 homes were homes that were never going to upgrade given that theyre in much more unserved underserved or non served areas.

Speaker 3: uh... out there uh... uh... but what we do know is that we are definitely going to have two and a half million homes uh... and suddenly

Out there.

But what we do know is that we are definitely going to hit $2 5 million homes and suddenly Inc.

Speaker 3: And, you know, around the edges of 100,000 here or there, plus or minus, I couldn't tell you where we end up landing, but I suspect it'll be higher than 6.5 million by maybe a couple hundred thousand homes.

Around the edges of a 100000 here, there plus or minus I Couldnt tell you, where we ended up landing, but I suspect it will be higher than $6 5 million by maybe a couple of hundred thousand homes.

Speaker 3: On the edge-outs, we continue to see abilities for us to edge-out. You know, we're going to do 175,000 plus of edge-outs this year. I hope that we'll be hitting a run rate of closer to 200,000 a year by 2023, and we'll be fiberizing as much of that as we can. Some of it is going to be plant extensions on HFC, so it's going to be difficult to do fiber in isolation.

On the edge outs, we continued to see our abilities for us to edge out.

To do 175000 plus of edge outs this year.

I hope that that will be hitting a run rate of closer to 201000, a year by 2023.

And we'll be fiber rising as much of that is we can some of it is going to be plant extensions on hfcs is difficult to do fiber in isolation.

Speaker 3: But we also have intermediate steps where we do RFoC technology, which allows us to quickly pivot to fiber at a much lower cost when we do decide to put in a fiber head end and overlay fiber across the entire HFC network.

But we also have intermediate steps, where we do our fog technology.

Which allows us to quickly pivot to fiber at a much lower cost when we do decide to.

To put it in a fiber head and overlay fiber across the entire HFC network.

Speaker 3: We looked at DOCSIS 4.0, but I have to tell we looked at it briefly because of two things. Number one is we continue to be driven by the herd mentality that fiber is the technology of choice.

We looked at DOCSIS four zero.

Tell we looked at it briefly.

Because of two things number one is.

We continued to be driven by.

The herd mentality that <unk>.

Fiber.

Is the technology of choice.

Speaker 3: for anyone investing significant amounts of capital into the ground to upgrade their networks or to deploy new networks.

For anyone investing significant amounts of capital.

Into the ground to upgrade their networks or to deploy new networks.

Speaker 3: and we just don't believe that the isolated US market

And we just don't believe that the isolated U S market.

Speaker 3: can continue to drive a very US-centric technology. Even the DOCSIS networks in the European context or around the world.

Can continue to drive a very U S centric technology, even the DOCSIS.

Networks in the European context, or around the world are all driving themselves to to fiber as well right. So.

Speaker 3: are all driving themselves to to fiber as well, right? So we think that the OEM support is going to be a lot lower. The R&D is going to be a lot lower. We think that the cost as we

We think that the OEM support is going to be a lot lower the R&D is going to be a lot lower.

We think that the costs as we looked at it are quite expensive to drive up to to DOCSIS, because it's not just the line extension on fiber.

Speaker 3: are quite expensive to drive up to DOCSIS because it's not just a line extension on fiber.

Speaker 3: There is a lot more fiber to drive into the entire network than just line extensions. And so we think the costs are, could be even higher than really building as we're doing over building our own network with fiber.

There is a lot more fiber to drive into the entire network than just line extensions and so we think the costs are could be even higher than really.

Building as.

As we're doing overbuilding, our own network with fiber.

Speaker 3: and by definition if there's any active components into the network it's going to be more susceptible to latency issues and worse customer experience than having an end-to-end glass network.

And by definition, if there's any active components into the network, it's going to be more susceptible to.

Latency issues and worst customer experienced and having an end to end glass network.

Speaker 3: So, you know, we don't want to be the smartest guy in the street, but we think that following the tried and tested technology, which is available everywhere, and which everyone is pushing towards, and which I think consumers, by definition, are gravitating towards, even if they don't even know the difference between HFC and fiber, is going to be meaningful in terms of the success of our business.

So we don't we don't want to be the smartest guy in the street, but we think that following the tried and tested technology, which is available everywhere in which everyone is pushing towards and which I think consumers by definition are grabbing gravitating towards even if they don't even know the difference between HFC and fiber.

Is going to be meaningful in terms of in terms of the success of our business.

Speaker 3: So we're committed here, we know the numbers, we have the cash to do it. It's not going to be prohibitively expensive. It's just we need to be able to execute here over the next couple years. And we feel really good about the performance of business.

We're committed here, we know the numbers.

We have the cash to do it it's not going to be prohibitively expensive.

It's just we need to be able to execute here over the next couple of years and we feel really good about it.

The performance of the business.

Great. Thank you.

Speaker 1: Thank you. Your next question comes from the line of James Ratcliffe with Evercore ISI. Your line is open.

Thank you. Your next question comes from the line of James Ratcliffe with Evercore ISI. Your line is open.

Speaker 9: Great. Thanks for taking the question. Two, if I could. Michael, just give us an idea of ballpark how much that one-off component of the extra $100 million in OPEX is for a 22 and how much is really run rate. And just secondly, Dexter, sort of conceptually, you know, last year, the company was buying back stock in the mid-30s,

Great. Thanks for taking the question two if I could Michael just give us an idea ballpark how much that.

One off component if the extra 100 million Opex is for 'twenty, two and how much is really run rate and just secondly, extra sort of conceptually last year.

He was buying back stock in the mid thirties.

Speaker 9: where the stock is now, the accretive impact on free cash flow per share is more than twice what it was a year ago. So is it the

Where the stock is now the accretive impact on free cash flow per share is more than twice what was it.

A year ago.

So is it the.

Speaker 9: your view on the returns on fiber have gotten dramatically better in the last year, or is there something else that's saying even at half the price, fiber is the better play than the stock now?

Your view on the returns on fiber or.

Have gotten dramatically better than the last year or is there something else, that's saying even at half the price fiber is a better place than when the stock now thanks.

Speaker 5: So James, in answer to your first question, I would say the one-off element, which is the rebranding of our incremental effects, a placeholder enabled at 30 million would probably work fine.

So James and I have to answer to your first question I would say the one off element, which is the rebranding of our incremental opex.

There's a placeholder enabled a $30 million would probably work funds.

Thanks.

Speaker 3: I think on the return side, there is a financial engineering element and the Excel spreadsheet would suggest that buying back our stock today at 15 relative to the mid-30s is not a bad bet.

Yes.

Listen I think on the return side.

There is a financial engineering element, which.

Any excel spreadsheet would suggest that buying back our stock today.

At 15 relative to <unk> is not a bad debt.

Speaker 3: But in order to continue to aspire to mid-30s and higher values.

But in order to continue to aspire to mid <unk> and higher values.

Speaker 3: You've got to understand that the underlying operations need to be dynamic and you need to be able to react appropriately.

Got to understand that the underlying operations need to be dynamic and you need to be able to react appropriately.

Speaker 3: on the capital allocation decision. And the capital allocation decision for us is very clear, even if maybe the year-over-year returns are maybe not as good as buying back our shares.

On the capital allocation decision and the capital allocation decision for US is very clear even if maybe the year over year returns are maybe not as good as buying back our shares.

Speaker 3: the longer term returns or even the medium term returns are exponentially higher by investing in our network today as quickly as possible. One for organic growth and the customer experience issues.

The longer term returns or even the medium term returns are exponentially higher.

By investing in our network today as quickly as possible.

One for organic growth.

The customer experience issues.

Speaker 3: of our existing customers, but also from a competitive dynamic standpoint where markets are getting more competitive. Not all markets, but some markets are and getting ahead of that curve and being proactive here is going to drive our views of asset value and terminal value exponentially higher than just buying biker shares.

Of our existing customers.

But also from a competitive dynamic standpoint, where.

Markets are getting more competitive not all markets, but some markets are and getting ahead of that curve and being proactive here is going to drive our views of asset value and terminal value exponentially higher than just buying back our shares right. So.

Speaker 3: you know, if we get back down to a sub 1 billion CapEx number in 2016,

If we get back down to a sub 1 billion Capex number in 2026.

Speaker 3: We're really looking at, you know, if we get back to EBITDA numbers that are similar to last year's or the years before, we're looking at $1.7 billion to $2 billion of free cash flow.

We're really looking at if we get back to EBITDA numbers that are similar to last year. So the year before.

We're looking at $1 72 billion of free cash flow.

Speaker 3: uh... and on you know four hundred and fifty million shares

And on 450.

<unk> 50 million shares.

It's not a bad kind of $4 per share of free cash flow.

And growing if we if we've invested correctly in our network and growing nicely that seems like a pretty nice return.

For us and for all shareholders going forward. So we feel good about the investment profile today and as I just mentioned.

To John and the last question he asked.

The fiber performance.

Speaker 3: is showing everything that we thought it was going to show and as we continue to drive bigger volume numbers we're confident in being able to drive some very good operational KPIs here.

Showing everything that we thought it was going to show and as we continue to drive bigger volume numbers were confident in being able to drive some very good operational kpis here.

Alright, thank you.

Thank you. Your next question comes from the line of Michael Rollins with Citigroup. Your line is open.

Speaker 1: Thank you. Your next question comes from the line of Michael Roland with Citigroup. Your line is open.

Speaker 7: Hi. Good afternoon. Just a follow-up and then a question.

Hi, Good afternoon, just a follow up and then a question on the competitive landscape. So.

For the follow up with the guidance for higher cost of $100 million. During 2022 should that be taken on the fourth quarter run rate or on the full year 2021 cost base and then.

Speaker 7: should that be taken on the fourth quarter run rate or on the full year 2021 cost base? And then just curious if you're

Just curious if you're seeing any early impacts from fixed wireless access products and when you look at the <unk>.

Speaker 7: wireless access products and when you look at the combination of expanding fiber competition over time.

Combination of expanding fiber competition over time.

Speaker 7: and the possibilities of fixed wireless. When you're underwriting the business case to upgrade the fiber, are you incorporating

And the possibilities of fixed wireless when you're underwriting the business case to upgrade to fiber are you incorporating any significant market share increases for the broadband business.

Thanks.

Speaker 5: Michael, in answer to your first question, the incremental OPEX that we're approximating would be versus a full year 21.

Michael in answer to your first question the incremental Opex that we're approximating would be versus a full year 'twenty one.

Speaker 3: And I think on market dynamics, you know, what we had first envisioned was no revenue enhancement on FTTH versus HFC and really just a free cash flow return because the off X numbers and ultimately the cap X numbers were to come down significantly.

And I think on on market dynamics.

What we had first envisioned was no revenue enhancement on FTE th versus HFC.

And really just a free cash flow return because the opex numbers and ultimately the capex numbers when it come down significantly.

Speaker 3: But we're starting to see the early signs both through gross ad-hocs and reduced churn numbers that will see a nice revenue impact. Taking market share is probably the wrong way, but just to think about it, but reduced churn by definition we should be able to take market share.

But we're starting to see the early signs both through gross out our <unk> and <unk>.

And reduced churn numbers that we'll see a nice revenue impact.

Taking market share is probably the wrong way, but just to think about it but reduced churn by definition, we should be able to take market share.

Speaker 3: And so, if we're seeing annualized reduced turn numbers already at 5 to 6%.

And.

And so of course, if we're seeing annualized reduced churn numbers already at 5% to 6%.

Speaker 3: You know, we should be able to take that incremental market share over time in the areas where we have fiber, and if not better, because we're seeing more like seven to eight percent in other markets around the world in terms of in terms of head to head competition. So.

We should be able to take that incremental market share over time.

In the areas, where we have fiber.

And if not better because we're seeing more like 7% to 8% in other markets around the world in terms of in terms of the head to head competition. So.

Speaker 3: You know, that is where we think that we'll be able to drive incremental market penetration and not by, you know, being aggressive from a promotional or approved gross ad standpoint. And are you seeing any early impacts from fixed wireless and have you...

That is where we think that we will be able to drive incremental.

Market penetration and not by by being aggressive from a promotional <unk> gross adds standpoint.

And are you seeing any early impacts from fixed wireless and have your views of that product and the competitiveness of that product evolved as you've seen some of the new offers hit the market.

Speaker 3: In our areas, no. Where we are seeing potential threats on fixed wireless is in MDU contracts.

In our areas no.

Where we are seeing potential threats on fixed wireless is in MDU contracts.

Speaker 3: where some of the fixed wires providers are aggressively going after MDU contracts.

Where some of the fixed wireless providers are aggressively going after MDU contracts across I think fixed land.

Speaker 3: across, I think, you know, fixed land country where they can deploy, you know, their capital aggressively and be aggressively promotional on our poos. I think we feel very good about our ability to defend our MDUs, particularly since we're upgrading most of them up to fiber quickly, and we've got strategies on loyalty from that standpoint. But that's where we see, let's call it competitive pressure, but not from a gross ad activity standpoint today. Thank you.

Country.

Where they can deploy their capital.

Aggressively and be aggressively promotional on our booth.

We feel very good about our ability to defend our MD use, particularly since we're upgrading most of them up to fiber.

Quickly, we've got strategies on loyalty from that standpoint, but that's where we see let's call it competitive pressure, but not from a gross add activity standpoint today.

Thanks.

Yeah.

Speaker 1: Your next question comes from the line of Katgun Marl with RBC Capital Markets. Your line is open.

Your next question comes from the line of cut Glenn Moro with RBC capital markets. Your line is open.

Speaker 6: Great, thanks for taking the question. Two related ones on asset modernization, if I could. First, you have a multi-year plan to accelerate investments across your core cable business.

Great. Thanks for taking the question two related ones on asset monetization. If I could first you have a multiyear plan to accelerate investments across your core cable business does that change your appetite to monetize any assets that might be considered noncore and.

Speaker 6: Does that change your appetite to monetize any assets that might be considered non-core? And just on the flip side of that, I realize you're embarking on a more meaningful path to driving long-term value with cable assets. So maybe, you know, perhaps this is becoming a less relevant question, but is there an updated view on monetizing some or all of your cable assets?

On the flip side of that I realize youre embarking on a more meaningful path to driving long term value with cable assets, maybe perhaps this is becoming a less relevant question, but is there an updated view on monetizing some or all of your cable assets. Thanks.

Speaker 3: So, I don't think we have anything that we believe is non-core to start off with. You could say maybe the advertising business is maybe non-core, but.

So.

I don't think we have anything that we believe is noncore.

To start off with you could say, maybe the advertising business as maybe non core but.

Speaker 3: since a lot of the advertising business is tied to our video inventory.

A lot of the advertising business is tied to our video inventory.

Speaker 3: It's very difficult to separate those businesses, but that could be something that we definitely could always look at if we could look at bulking up in size or somebody would like to bulk up in size on the advertising business, and it's probably by working with our fellow MBPD in one way or the other.

It's very difficult to separate those businesses, but that could be something that we definitely could always look at if we could.

Look at bulking up in size or somebody would like to bulk up in size on the advertising business is probably by working with our fellow mvpds in one way or the other.

Speaker 3: We do have 50.1% of our Lightpass business.

We do have 51% of our Lightpath business, which is less core let's call. It.

Speaker 3: Which is less core, let's call it, to our business given that it's a different network in many respects.

Our business given that it's a different interest it's just the different network in many respects.

Speaker 3: Than our residential or SMB business, but again, it's in it's in very strategic location.

Then our residential or SMB business, but again, it's in it's in very strategic locations.

Speaker 3: relative to our B2C business so I wouldn't say it's non-core. We were able to arbitrage obviously valuations nicely by selling 50% of that business and so I wouldn't ever rule

Relative to our <unk> business so.

Would say noncore, we were able to arbitrage, obviously valuations nicely by selling 50% of that business and so I wouldn't ever rule that out.

Speaker 3: on there. And then in terms of the cable network, I'm assuming what you're suggesting is maybe selling the HFC network itself as opposed to the HFC network and its customers.

On there and then in terms of the cable network I'm, assuming what you're suggesting is maybe selling the HFC network itself as opposed to the HFC network and its customers.

Speaker 3: I don't think we're in the business of selling the customers. I think it could be interesting given that we would have...

I don't think we're in the business of selling to customers.

I think it could be interesting given that we would have.

Speaker 3: two networks in many areas, whether we would ever say any value or someone would see some value in buying the HFC network.

To networks in many areas, whether we would ever say any value or someone who would see some value in buying the HFC network.

Speaker 3: I'm not so sure we would do that either, given that we'd just bring in another competitor. But I don't see us ever wanting to arbitrage selling some of our cable subscribers to fund a FTTH rollout. There's always going to be things at the edge that make no sense because they're in small

I'm not so sure we would do that either given that we've just bringing another competitor.

But.

I don't see us ever wanting to arbitrage.

Selling some of our cable subscribers to fund a FTE th rollout theres always going to be things at the edge that make no sense because they are in small.

Speaker 3: small jurisdictions and communities that maybe are very inefficient for us to run from very far away. But that's optimization and not about selling.

Small jurisdictions with communities that maybe are very inefficient for us to run from from very far away.

But thats optimization and not about selling businesses.

Speaker 3: So, you know, I think we like the business. And as we grow into a predominantly fiber-to-the-home company, one of the larger ones in the U.S. after AT&T and Verizon, you know, I think we're very well-positioned for the next generation of consumer trends and experiences.

Out there so I think we like the business and as we as we grow.

Into a predominantly fiber to the home company.

One of the larger ones in the U S. After AT&T and Verizon.

I think we're very well positioned.

For them for the next generation of consumer trends and experiences.

And experiences.

That's helpful. Thank you.

Speaker 1: Your next question comes from the line of Greg Williams with Cowen. Your line is

Your next question comes from the line of Greg Williams with Cowen Your line is open.

Speaker 9: Great, thanks for taking my questions. First one's just on the fiber to the home strategy. Obviously, you're getting more aggressive in the Suddenlink territories. Just wondering if you can provide some color on the cost per home passed in the Suddenlink builds. In the past, you said in optimum territory, you can do it rather cheap, $500 to $600 because you have 80 plus percent aerial fiber, dense footprint, etc. But how does that translate into the Suddenlink territories?

Great. Thanks for taking my questions first one is just on the fiber to the home strategy. Obviously, you are getting more aggressive in the southern Linc territories.

I just wanted to provide some color on the cost per home passed in the settling fields in the past you said an optimum territory you can do it rather achieve five to $600. Because you had 80 plus percent aerial fiber dense footprint etcetera.

How does that translate into the settling territories in terms of cost per home pass it as I think about the out of your Capex.

Speaker 9: in terms of cost per home pass as I think about the out of your capex. Second question is just on margins in 2022. Just help us with the trajectory of the margins through the years. We think of the many moving pieces in the 100 million opex increase, in terms of the sales reps, retail stores, mobile investment, and then the advertising political tailwinds in the second half. Thank you.

Second question is just on margins.

In 2022, just help us with the trajectory of the margins through the year as you think of the many moving pieces in the $100 million Opex increased in terms of the sales reps retail stores mobile investment and then the <unk>.

And political tailwind in the second half thank you.

Speaker 3: So, on, you know, I think sudden link footprint is difficult for me to give you just an overall number, because every community is a little bit different, but we do see the areas, obviously, that we're focused on are the, the higher density areas where we do have the bulk of our customers. So, you know, there will be areas, which are gonna be slightly more expensive than optimum, and there'll be probably areas, which are going to be twice as expensive.

Yes.

So.

I think suddenly footprint, it's difficult for me to give you just an overall number because every community is a little bit different.

But we do see the areas obviously that we're focused on are the higher density areas.

And where we do have the bulk of our customers.

So there will be areas, which are going to be slightly more expensive than optimum.

And there'll be probably areas, which are going to be twice as expensive as optimal alright, so probably anywhere between 500 to 1000 per homes passed on average let's call. It.

Speaker 3: So probably anywhere between $500 to $1,000 for homes passed, on average, let's call it, in terms of what we're going to spend in the Southern Neck Front.

In terms of what we're going to spend and then suddenly footprint.

Speaker 3: Um, and then, uh, on margins standpoint, I think back in, um,

And then on margins standpoint, I think back in.

Speaker 3: at the UBS conference in the beginning of December , we talked about 41 to 42% EBITDA margins for 2022. I think those numbers are in the ballpark. Again, we have enough moving pieces in 2022 that we want to reserve the right to be more nimble in terms of how we allocate capital, but directionally, that's probably the right level.

At the UBS conference in the beginning of December .

We've talked about 41% to 42% EBITDA margins for 2022.

Those numbers are in the ballpark again.

We have enough moving pieces in 2022 that we want to reserve the right to them.

To be bolder and nimble in terms of how we allocate capital but directionally.

That's probably the right level.

Great. Thank you.

Speaker 1: And our last question comes from the line of Frank Luthan with Raymond James, your line is open.

And our last question comes from the line of Frank Louthan with Raymond James Your line is open.

Speaker 10: Hey guys, it's Rob Long for Frank. You might've said this earlier, how much CapEx and OpEx do you expect to spend on distribution channels this year? And then separately, on your recent efforts to seek broadband subsidy, how much do you guys think you can get from the government from those subsidies over time? Thank you.

Hey, guys, it's Rob on for Frank.

You might have said this earlier, how much capex and Opex do you expect to spend on distribution channels. This year.

And then separately on your recent efforts to seek broadband subsidy how much do you guys think you can get from the government from those subsidies overtime. Thank you.

Yes.

Speaker 5: Yeah, I think on the distribution channels on the retail stores, it costs about 900,000, say just under a million dollars per store to get a store up and running. That would be the CapEx component. And then once the store is up and running, call it $500,000 to $600,000 annually.

Yes, I will take the under distribution channels on the retail stores.

It costs about 900000, so just under $1 million per store to get a store up and running that would be the capex component and then once the stores up and running call it five to $600000 annually.

Speaker 5: And then on the door-to-door salespeople, you know, we're talking about doubling our footprint from 250 to 500, maybe we get to 400, and I think a fully loaded door-to-door salesperson may be something in the neighborhood of, you know, unit cost of 75k to 100k would be about right.

And then on the door to door salespeople.

Talking about doubling our footprint and from $2 50 to 500, maybe we get the 400 and I think it will fully loaded door to door sales person, maybe something in neighborhood of unit cost of 75, <unk> hundred <unk> would be would be about right.

And I think on the.

On the subsea side listen every community, but different.

Speaker 3: But most of these unserved or underserved markets.

But.

Most of these unserved or underserved markets.

Speaker 3: who are looking to upgrade to at a minimum 100 megs of symmetric fiber up and down in terms of speed, are spending anywhere between $2,000 to $4,000 per homes passed on average.

Or looking to upgrade to at a minimum 100 megs of symmetric fiber up and down in terms of speed.

Our spending anywhere between two to $4000 per homes passed on average.

Speaker 3: and are typically contributing somewhere between $1,000 to $2,000 into the subsidy kitty. And so we're doing the balance of it, so we're spending anywhere from

And our typically contributing somewhere between 1000 to 2000.

Into the subsidy Kitty.

And so we're doing that we're doing the the balance of it so we're spending anywhere from <unk>.

Speaker 3: $1,500 to $3,000 and local communities are spending anywhere from $1,000 to $2,000.

500 to 3000 and.

Local communities are spending anywhere from 1000 to 2000 type numbers.

Speaker 3: And so, you know, depending on how many homes we end up being able to get, you know, if we would.

And so depending on how many homes we ended up.

Are you able to get.

If we would look at the.

Speaker 3: the high end of it where we could get probably a couple hundred thousand we end up probably getting somewhere between two to three hundred million of subsidies.

The high end of it where we could get probably a couple of hundred thousands we ended up probably getting somewhere between $2 million to $300 million of subsidies.

Great. Thank you.

Speaker 1: Thank you. This concludes our question and answer session. Turning the call back to our speakers, sir, please go ahead.

Thank you. This does conclude our question and answer session turning the call back to our speakers sorry. Please go ahead.

Speaker 11: Thank you everyone for joining. Do reach out if you've got any follow-up questions, otherwise we'll catch up with you in the next few weeks. Thank you. Thank you.

Thank you everyone for joining the reach out if you got any follow up questions otherwise, we catch up with you in the next few weeks. Thank you.

Thank you.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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