Q2 2022 Consolidated Communications Holdings Inc Earnings Call
[music].
Ladies and gentlemen, good morning, My name is Abby and I will be your conference operator today.
At this time I would like to welcome everyone to the consolidated Communications second quarter earnings Conference call.
Please be advised that today's conference is being recorded and all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question Press Star one once again.
Thank you and I will now turn the call over to Jennifer Saudi Senior Vice President of Investor Relations and corporate Communications, Jennifer you May begin your conference.
Good morning, and thank you for joining the consolidated Communications' second quarter 2022 earnings call.
We announced a material event yesterday afternoon with the sale of our wireless investments and therefore, we're moving our earnings call up to speak to you all sooner.
Our earnings release financial statements and presentation are all posted on the Investor Relations section of our website at consolidated Dot com.
Please review the Safe Harbor provisions on slide two of the presentation.
Today's discussion includes forward looking statements about expected future events and financial results that involve risks and uncertainties that may cause actual results to differ materially from those expressed today.
A discussion of factors that may affect future results is contained in consolidated its filing with the S. E C.
In addition, during this call we'll refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation and press release.
With me today on the call are Bob <unk>, our President and Chief Executive Officer, and Steve Childers, Our Chief Financial Officer.
Following their prepared remarks, we will open the call up for questions.
I'd now like to turn the call over to Bob you Don.
Thank you Jennifer and good morning, everyone I'm excited to share second quarter results, which include a very a few very important milestone associated with our company's transformation to a fiber broadband company first and the second quarter, we delivered a record record number of consumer fiber ads and turned net positive.
Our broadband connections offsetting DSL declines this was an important milestone our build machine continues to execute well and produced a record 142000 additional fiber passing constructed in the recent quarter and the first six months of the year, we built fiber to 226000 locations and we are.
On track to achieve roughly $1 million total fiber locations. This year as we upgrade over 400000 passengers by the end of 2022 each of these.
Milestones reflect key inflection points and position us for a return to revenue growth with our fiber build execution. Additionally, we took an important step subsequent to the end of the quarter and announced the sale of our wireless partnership investments for $490 million, the proceeds of which will be invested in our fiber expansion and growth plan. This.
Transaction enabled consolidated to further advance its transition to a fiber one broadband company and is consistent with our strategic priorities focused on creating long term value by simplifying our business and fully executing on our fiber expansion plans, Steve will provide some more details on the sale in his remarks.
In the recent quarter, we added 9600 fiber <unk> subscribers of three times increase from a year ago, and 25% increase from a record first quarter ads. We also achieved total consumer positive broadband adds for the year. Most importantly, this fiber customer gains outpaced DSL losses for the first time in <unk>.
Seven years, the vast majority 80% of our net adds are new fiber subscribers with over 65% of those subscribers using our one gig service for the full year 2022, we are on track to add three times the fiber net adds from 2021.
<unk> is now available in 150 communities and we launched two gig symmetrical speeds at the end of June while it is still early we are pleased with the customer interest and reaction of our two gig promotions and importantly medium two gig further solidifies our position as the technology leader in the markets we serve.
We continue to see significant growth in data consumption, our fiber customers consume two to three times more data per month than DSL customers and upstream bandwidth usage and demand is continuing to increase and opening vault study noted upstream bandwidth has tripled over the past three year period fiber is clearly the superior.
And critical to satisfy future market demand.
And our fiber product is design to make broadband easy. This means simple plans transparent pricing and a digital customer experience, which makes it easy for customers to do business with us.
Our symmetrical speeds premium whole home mesh Wi Fi no data caps and no contract services.
Service is game changing for the markets we serve.
We offer convenient installation appointment and have a dedicated premium customers customer support channel. All of this is to create the best experience possible for our customers.
We expect customer satisfaction closely and <unk> has been very well received as measured by our industry, leading net promoter score of over 50. This high score reflects all the elements. We have been working so hard on to ensure iridium delivers the best customer experience possible.
In fiber broadband is really a game changer.
Turning to cohort penetrations, our cumulative 2021, new fiber build cohorts.
<unk> to exceed our penetration target of 14% at 12 months 12 month Mark. In addition, our prebuilt base cohort penetration has increased 80 basis points to 21% year over year. This increase in our pre build fiber base reflects the positive receptivity we've experienced in our communities.
As a reminder, our cohort penetration target for year, two is 24% and year three is 33% terminal penetration will be closer to the 40% range over a five year horizon, where we have a duopoly parity.
I thought it might be useful to give you some additional context on our fiber markets, we'll break it out into three tiers, 65% have a population of 10000 or less roughly 25% of the population between 10050 thousand in our largest markets.
Our over 50000 make up 10%.
As a higher as a reminder, 90% of our markets have just one cable competitor and no other fiber provider and by introducing fiber we are providing an alternative superior technology that didn't exist previously in these communities.
That said, we're not seeing anything notably different from last quarter as far as the competitive environment.
There is no new entrants are significant responses, where we have upgraded to the <unk> fiber product and we are building the best fiber network and have the best product with the best customer experience.
We continue to generate very strong pre sign up activity, where we are launching iridium, we're using a targeted digital and local media strategy to introduce video and provide easy options to pre sign ups via our self service and enhanced website June was our best month for net adds since we started the bill and July looks to be.
Well exceeding it.
Turning to our fiber build plan, which is outlined on slide five we are on track to upgrade over 400000 locations. This year by the end of 2022, we'll have roughly 1 million fiber passing and we will have 2 million fiber locations. When we complete our planned fiber upgrades.
Our fiber expansion plan represents a significant transformation and growth opportunities for our consumer commercial and carrier channels that provides us the opportunity to leverage these assets for multiple revenue streams, our network architecture and core upgrades enabled 10 gig capabilities and will enable 100 okay.
<unk> services to the edge in the future.
Really future proofing, our product portfolio.
We see additional opportunity in 2023, we're up to $100 million in broadband partnership in grant funding projects across just a few of our states. We're actively pursuing all opportunities that align with our build plan and help offset rural high cost pass things, allowing a return consistent with our model as demonstrated by our very successful <unk>.
<unk> record in securing and executing public private partnerships, we are well positioned to capitalize on incremental government programs.
There continues to be strong demand for faster speeds and fiber services, which we believe is a superior product. Our plan is clear and we are executing well on it we have several meaningful fiber deployment advantages, including our incumbent position. We know these markets very well and have a fiber rich carrier class network that we can cost effectively extend we.
Have existing conduit capacity for Berry facilities, and pull access where we have aerial fiber <unk>.
Proximately, 80% of our fiber is aerial in northern new England and in close proximity to our existing fiber backbone facilities and we have very experienced teams and access the contract workforce, which allows us to flex ensuring we complete our builds on time.
Turning to our commercial and carrier channels, we continue our long track record of growing data transport revenue across both channels in the second quarter, our commercial commercial go to market strategy Leverages, our extensive fiber network.
And our solutions based sales approach, allowing us to become a trusted adviser to our customers, while providing simple solutions to complex problems. Once success I'd like to highlight in the second quarter was with the Champaign, Illinois based educational network, we designed and delivered a 10 gig switch Ethernet network across 23 locations. This is a great example of solving a customer.
<unk>.
Bandwidth pinpoint and delivering a diverse scalable network solutions.
Carrier revenue benefit from timing related to contract negotiations and a onetime fiber <unk> booked in the second quarter as we have previously discussed the fiber to the tower business is under some rate re rate pressure, but as a result of these negotiations we are seeing an opportunity to bid and win on new towers.
New fiber passing within our unique routes provides opportunities for us to leverage the same fiber to grow commercial revenues, we increased our lit buildings, 10% in the second quarter and had 90% of our new sales activity on our network, which correlates to higher margins increased opportunity to upsell and a greater flexibility to ensure the best customer experience.
Now, let me address something on everyone's mind.
Economic conditions we.
We are beginning to see some slower decision, making on the part of enterprise customers. However, our sales funnel remains solid.
From quote to signing is taking a little longer in addition, fuel and energy costs are increasing and we're taking steps to mitigate these increases we are fortunate that we built up our inventory and worked ahead on our fiber build where possible, allowing us to accelerate some of this year's build while keeping our unit costs down and overall build.
Cost lower than they otherwise might be.
I will now turn the call over to Steve who will provide more insight on our second quarter financial results. Thanks, Bob and good morning to everyone. Today I'll begin with an update on the sale of our interest in a Verizon wireless and limited partnerships yesterday after market closed we announced the sale of these investments to Verizon wireless for gross proceeds of 490 <unk>.
As a reminder, consolidated had interest in five limited partnerships with Verizon with our ownership ranging from two 3% to almost 24% three of these partnerships. We are located in Pennsylvania two were in our Texas market, we have no employees operating expense or capital supporting these assets, which generate approximately.
<unk> $39 million to $41 million in annual cash distributions.
Related to the tax impacts of the sale, we estimate the federal taxable gain is fully shielded by our Nols and we estimate potential incremental state income statement cash taxes of between $10 million to $15 million. The closing timeline on one of the partnerships as promptly following the agreement being signed and the remaining <unk>.
Ships are expected to close by year end 2022.
Net proceeds, which we estimate to be approximately $470 million will be used and invest to investment in our fiber expansion and growth plan.
Cash distributions from these investments are paid one quarter in arrears, we received $11 3 million in the second quarter and expect normal distributions. In Q3. We currently estimate that our Q4 distribution distributions will be reduced by $3 million to $5 million based on the actual time to close each transaction.
I'll now provide an overview of our second quarter results and I'll update our 2022 full year guidance.
Total operating revenue for the second quarter was $298 4 million and adjusted EBITDA was $107 5 million, representing a 36% adjusted EBIT margin for the quarter as.
As previously disclosed effective January one of this year the annual $48 million in Caf II funding, we had received transitioned to $6 million under the rural digital opportunity fund the subsidy reduction impacts revenue and EBIT by approximately $10 5 million on a quarterly basis in 2022.
Capex for the quarter was $179 1 million I'll.
I will update our full year capex guidance in just a bit but first I want to call out a few things.
The second quarter is typically a peak construction period, and we took advantage of favorable weather conditions to deliver a record quarter with more than 142000 upgrades.
This will be approximately 40000 or 40% more than our original Q2 target and our average cost of past what account for roughly $24 million of Q2 Capex. Additionally, we continue to do substantial pre work on locations that will be completed and released to marketing in the last half of the year with them.
And added estimated cost of $40 million to our construction work in process.
Construction and engineering teams are actually working about two quarters Ed.
This work ahead focus is critical to making inventory available to sales on a ratable basis each month.
Also with consideration of supply chain challenge challenges in the current inflationary economic environment, we continue to build inventory and selectively accelerate the bill.
Now I'll review revenue by customer channel.
Turning to our consumer channel total revenue was $118 6 million down five 1% compared to a year ago normalizing for the impact of the sale of our IL assets revenue declined three 9% year over year.
Overall consumer brand consumer broadband revenue in the second quarter was $67 6 million up approximately.
For <unk>.
<unk>, sorry, 4%, 4% I get it right in a second after normalizing for our Ohio sale consumer fiber net adds were up three times from a year ago as our customer acquisition engine ramps consumer fiber revenue was $19 2 million up $4 2 million or 28% year over year.
And we have added almost 26000 consumer fiber connections in the last 12 months. So in just six quarters of the build plan and for the first time in years, we have achieved total company consumer net positive broadband adds.
Consumer fiber revenue was $64 95 in the second quarter up sequentially by almost a dollar driven by speed mix as customers are taking higher speeds and promotional pricing is rolling off after the first year of service.
Consumer voice revenue was down three 5 million or almost 9%.
Primarily due to the continued erosion with access lines and associated services.
Video revenue declined $2 4 million.
Our 14, 5% year over year, our transition to over the top video services has enabled us to cap linear video deployments.
Video programming costs are down $4 8 million, improving margins and free cash flow.
Commercial revenue was 100 point $104 2 million down 852000 for the quarter data services revenue was 50, $57 1 million in the second quarter up 4% year over year, primarily driven by growth in dedicated Internet services.
Business systems equipment, and customer custom job installation revenue was up $2 3 million in Q2 compared to last year building on the momentum our sales teams realized throughout 2022.
Offsetting this growth is continued voice erosion, which is occurring at a slightly higher rate in Q2 access line erosion combined with lower slick and long distance usage charges drove the decline.
Consumer data and transport revenue was $36 3 million up two 3% or $6 $8 $2 3 million or six 8%. Our carrier revenue included $3 1 million of onetime fiber IR used sale carrier revenues revenue also benefited by the delayed impact of recognizing new pre.
Icing on fiber to the tower contract renewals that had been expected to be a revenue reduction in the range of $10 million to $12 million for 2022 is now estimated to be in the range of $7 million to $9 million, primarily in the last six months of this year.
Our carrier team is actively trying to minimize the impact in 2022 wells for the run rate going into 2023 as Bob mentioned as a result of the ongoing negotiations we have the opportunity to add new towers and other business opportunities with the major carriers.
Network access revenues totaled $24 8 million down $6 $3 million year over year over 60% of the decline was driven by lower Universal Service fund revenue with the balance primarily coming from special access.
As a reminder, the PUC charges a pass through so is EBIT neutral.
Operating expenses were $211 4 million, an improvement of $2 9 million or one 4% from a year ago. The primary drivers were $4 $8 million decline in video programming expense of $3 million decline in the Universal service fees, which was offset by $2 1 million in fuel utilities travel expenses combined with one.
Time expense related to the carrier IR you sell.
Net interest expense was $30 2 million a decrease of $15 three compared to a year ago, primarily as a result of noncash interest of $10 9 million on the search light note, which has now converted perfect perpetual perpetual preferred stock in late December .
The remaining reduction in interest expense was primarily the result of the maturity of an interest swap agreement in July 2021.
Given the current rate environment, we want to remind you that approximately 77% of our debt is fixed we have a $500 million interest rate hedge against our $1 million term loan for $1 billion term loan and when combined with our $1 1 billion senior notes with fixed coupons are and our our overall cost of debt is five 8%.
Additionally, you can see our capital structure on slide nine our slide eight along with the pro forma view of our liquidity, giving effect to the net proceeds of the sale of our limited wireless limited partnership wireless interests.
Our net debt leverage was 446 times at June 30, and on a pro forma basis, our liquidity improves from $293 million to over $850 million.
Additionally, we have no debt maturities until 2027, and the additional capital infusion puts us in a very strong position to support our fiber expansion plan.
As a reminder, we announced an agreement to sell our Kansas City assets in March, which we estimate to generate net proceeds of approximately $90 million and is expected to close by year end.
<unk> routine regulatory approvals is currently under review with the FCC team Telecom.
Additionally, we continue to review all markets in our portfolio for investment or monetization. We believe we have the ability to raise additional capital through potential asset divestitures. Our criteria criteria. In this review includes evaluating the fiber build opportunities market level competition and potential valuations.
Today, we are updating our 2020 to guidance our outlook is outlined on slide nine first adjusted EBIT for the year is now expected to be in the range of $400 million to $410 million.
Our updated outlook for adjusted EBITDA.
<unk>, primarily the following three factors first our Q4 cash distributions will be impacted due to the sale of the Verizon wireless investments. We currently estimate that the wireless cash distributions.
Be $3 million to $5 million less in the fourth quarter based on the time to close each transaction.
We are seeing inflationary pressures on primarily utility and fuel costs and expect our operating expenses to increase between four and $5 million in the last half of the year. We are taking all steps necessary to minimize the impact of these increased costs.
Third. Additionally, we are experiencing slightly higher erosion of our voice access revenues.
This will impact earnings by approximately $3 million to $5 million.
Capital expenditures are now expected to be in the range of $565 million to $585 million the higher capex level, primarily reflects additional investments to reconstruction work and securing inventory for fiber upgrades to be released in 2023 and also for some inflationary cost pressures.
There is no change to our plan to upgrade over 400000 locations. This year and we are on track to achieve this target.
Cash interest expense is now expected to be in the range of $125 million to $129 million and cash income taxes are now expected to be in the range of $12 million to $17 million.
Adjustments considers potential $10 million to $15 million state income taxes associated with the wireless investment sale.
And we still do not expect to be a full cash taxpayer until 2020 with that I'll now turn it back over to Bob.
Thanks, Steve.
Executing well on our <unk>.
Consumer fiber expansion plan, having achieved record fiber subscribers and net positive total broadband connections this quarter.
Quite frankly, the first time in over seven years, we've continued our long track record of growing commercial and carrier data transport revenue, we're enhancing the customer experience across all channels as shown by our industry, leading NPS scores and we're disciplined and focused on ensuring we have a capital structure to support our growth.
We significantly improved our liquidity and added flexibility with over 600 million aggregate divestitures of noncore assets announced in the past year as.
As we look to the future we are focused on growth and creating long term value for our shareholders.
Operator, we will now take questions at this time.
Thank you.
I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and we will pause for just a moment to compile the Q&A roster.
And we will take our first question from Greg Williams with Cowen Your line is open.
Great. Thanks for taking my questions.
One on the fiber builds you mentioned and you reiterated the 400000 barrels for the year I'm. Just curious does this Verizon sale, maybe help accelerate that other carriers have noted when they've got more capital they've accelerated their bills I'm just wondering if thats. The case and you mentioned your second quarter billed was better than expected.
Second question is just on further divestitures it sounds like Youre still looking I figured you'd maybe would have taken a breather after Kansas City, Ohio now horizon. So you are still exploring other asset sales what does that environment look like given rising rates. Thanks.
Yes, Thanks, Greg.
I'll take the.
Bill question first.
And then get to the.
The focus on divestitures.
We're looking.
<unk> always at the flexibility.
As we execute on our fiber expansion plan, which is absolutely key to our growth.
Right now our plan is to build the 400 for this year solidified continue to solidify our view of where we go.
First to accomplish the full $1 six.
Million build out and so what what I think this does is.
Certainly.
Insurers that build out plan and we will remain opportunistic.
As we pursue public private partnership or the.
The infrastructure funds being made available from a federal government perspective and allocated by the MTA.
A key focus on ours, so we're going to remain.
Flexible and.
And for now we're committed to the $1 6 million looking opportunistically at ways to grow it.
Regarding the dive.
Divestitures.
It's all about focus this is a total transformation of our business and.
And so as we've said.
And we're doing exactly what we said we're going to do we're going to continue to evaluate our portfolio and opportunistically.
Sell or divest of assets that allow us to.
Advance a deeper.
Penetration of our fiber builds and to expand our fiber footprint.
That's our focus in the in the 70% coverage I think we will exceed as we continue to focus our capital structure and.
Our execution on the fiber transition.
Great. Thanks.
And we will take our next question from Michael Rollins with Citi. Your line is open.
Hey, Mike.
Thanks, Hi, this is Anthony on for Mike.
Thanks for taking questions.
Just a follow up as you consider our future asset monetization and impacts EBITDA do you have a leverage neutral target.
On a pro forma basis.
And then also on the macro you talked about elongated decision, making for enterprises on the consumer side are you seeing any impacts on collections activity with inflationary pressures on consumer wallets. Thank you.
Take the first part, yes, Hey, Anthony this is Steve good morning, Thanks for the question.
With respect to the.
Leverage neutral target as we look at the divestitures as I mentioned in my prepared remarks, I mean, we're really evaluating I mean number one we're in 22 states today.
Identified eight 7% to eight that our key fiber investment markets. Today, we have good properties across the footprint everyone. All of them are producing cash none or a distraction to management.
We're just looking at taking the opportunity like where are we going to build next and if we're not going to build what's is there a monetization opportunity to fund maybe in an accelerated build so when we look at those we evaluate based on.
Number one is are we going to build what's it what's the competitive dynamic with the cash flow characteristics of that individual sub competitive environment et cetera et cetera.
Most importantly, we're considering monetizing it really is about valuation and about the impact to leverage I mean, obviously this Verizon transaction really helps us out.
Cash and leverage perspective, I would say are our long term targets are still raising from these.
From Verizon that incremental.
Asset sales every dollar is going to be invested back into the fiber business, but over time as we really execute on the on the fiber build plan, we would ultimately expect to me.
Even as a growth company be kind of in the three range over time.
Okay.
As a reminder, it is star.
Star One if you would like to ask a question.
And we will take our next question from Anna <unk> with Bank of America. Your line is open.
Hi, Thanks, very much so a few questions. So first on the <unk>.
9600 fiber net adds.
I know you mentioned that 80% of those are.
The company.
Could you provide more color on where those are coming from.
And then two I think we've heard quite a bit from some of the other players.
<unk>.
Base about the impact of.
I guess, a grid lock within the housing market.
Limiting moves.
Had there for <unk>.
Limiting the ability to tap.
Capturing new subs would like an update on what you think the housing market is like in your markets.
That's.
Headwind subscriber ads.
Yes, Thanks, Dan.
Let me, let me start with the.
The housing market first.
And.
And then get back to your first question.
With regards to what we see in our markets.
As I described the size of the markets. They are primarily suburban and rural markets and it seems to have been post COVID-19 enduring Cove at an attractive environment for people to migrate to and so.
The move activity has subsided some.
And new move ins certainly help you catch customers, making a change.
We've really got a compelling product that we're bringing to communities that haven't had.
Our one gig symmetrical even a one gig but in many cases, a symmetrical when you consider the size of these markets and.
And the level of competition based on the facilities infrastructure of our competitor and remember 90% of duopoly environment.
And some.
Of our environments don't have any cable overlap at all and very few have a third provider and so I think we're in an excellent position to remain somewhat insulated from.
I wouldn't call it a gridlocked that the slowdown that we've seen in housing sales and moves in.
And as it relates to recession.
We joke privately amongst.
No.
The peer group for years that we've seen recessions.
Actually on a comparable basis treat our industry pretty well.
So that's probably enough on the housing.
Regards to the 9600 fiber net adds.
The new subs are coming from just consistent with what I. Just mentioned this is an attractive product and.
Changing the way people work and live in the small communities in raising the economic prospects of them.
And so it's really something that.
That I think sells itself and our focus on digital advertising and digital.
Acquisition.
I think is helping us get to people and expand the service to those markets.
And so that's that's why we see.
80% new subs.
Okay.
So I think the main question is where you do compete with cable you feel that you are right.
Crafting a winning any share from cable or is it is it really sort of greenfield.
Outside of that.
No I think it's.
Think it's us winning customers from wherever the competitors in our market.
Largely.
Different cable television.
Okay service providers, Okay, great and then I apologize if I missed this but.
I know in the past you had cited an average costs.
Fiber passing.
Which I think has really been kind of industry levels over the past $5 50 to 600.
The average cost to connect it.
700 wondering how that potentially changing one with regards to any inflationary impact.
Two as you move further along in your build plan is either just sort of longer.
<unk>.
Got it.
A more difficult passing.
That.
Are more costly to achieve.
This is Steve I'll start.
Sure Bob will want to jump in here, but I think youre absolutely right. The way we've talked about constant past in the past is that.
Basically $550 to 600 on an aggregate basis, averaging across our entire footprint as Bob mentioned in the FCT.
FCT.
Steve <unk> earlier, we have a significant cost advantage in northern new England based on the amount of aerial fiber that we have so I think we've been averaging probably the upper end of the 600 as we've done more work in our legacy markets and are doing more buried or underground pipe construction.
In those markets and I think with the.
Inflationary question.
We did increase our guidance modestly for what we think inflation will be for the last half of the year. So I would say there could be a potential.
Say, 5% to 8% increase in.
The average cost to pass here for the duration, but I think over time.
The future cost to build is really going to be dependent upon the market. How we fine tuned to build plan the markets were going to accomplish the.
The balance between Ariel.
Underground the length of the drops et cetera et cetera. So I think we're I think we still have really unique.
Assets that we bought.
I think we'll still be well under the peer group averages for the cost the cost of the past but.
Over time it could go up based on where we are building. So Bob you want to add anything John .
Yes, I think.
If you look.
Opportunistically, we are building ahead.
And that's working to our advantage as we see headwinds from an inflationary perspective, I can't tell you that that was.
Totally planned.
Third with the opportunistic started with getting in front of the supply chain, but it's resulting in our ability on a unit cost basis to keep.
These costs.
Of homes passed or new addresses low comparatively with those inflation headwinds. So I think we're in a good spot.
Okay. Thanks, and then just are there any updated targets that you have on when you believe you can Dave.
Stabilize.
Either revenue or EBITDA, let's.
Let's say sequential basis, and which we expect to come first.
Well this is Jeff So I guess the way I would look at it is if you talk about if you look at the moving parts on the growth.
Our strategic growth revenues being fiber consumer broadband.
That is starting to outpace our hit is outpacing the drag on DSO erosion.
We're really focused on driving strategic revenues in data and transport for commercial and carrier, but we are working through.
The carrier reset tower repricing that that I mentioned, so I think youll start seeing sequential.
Our revenue growth.
I think revenue and EBITDA growth probably in early 2020.
Three we.
We need that we need to.
Continue to work hard on mitigating.
Voice erosion, but really continue to invest as we are in the fiber to the prem and supporting the commercial and carrier opportunities.
Where we can.
Okay, well that's great. Thanks very much.
Okay.
As a reminder, if you would like to ask a question. It is star one.
And we will take our next question from Joe Choi with FPA. Your line is open.
Congrats on the consumer broadband net add milestone there.
Question for you on the.
The wireless partnership sales.
With questions coming from you from the from the debt side of the World.
So the proceeds will be used will be invested in and to the fiber expansion.
Can you confirm whether or not.
That that that reinvestment that investment will be.
Within the collateral package, that's supporting our credit facility and unsecured notes.
Yes, I mean, all of the assets supporting the fiber build program.
New restricted subs work.
The operating assets are at so yes every dollar coming.
The capital raise from Verizon will.
Go through to the benefit eventually go through the benefit for the restricted group.
And then what's the underlying collateral package for that but just but just to be clear.
Just make sure we're not talking past each other.
For you to the July 1st.
8-K that we've put out we've identified.
Creating the unrestricted sub to transfer the wireless partnership assets, there, but all of the cash is going to come back to over time come back too.
The restricted group to bid for the benefit of the operating properties.
Right right I did read that release.
So so so you created under restricted.
You pulled.
You can click a wireless partnership assets in there.
Effectively out of the cloud package, then you sold correct.
Net cash that cash youre going to use that cash to invest and to the fiber network.
And that and that reinvestment I.
I guess, Mike just just to be clear. The question was that money that cash thats being one vessel in the fiber network.
Occurring within.
Like existing subsidiaries.
Our guarantee.
Securing.
Got it.
The debt facilities as well.
Am I understanding that correctly.
That's okay. So it was removed from the collateral and it's effective.
Yes, probably not at one time, but yes.
Right Okay. Okay.
And it was there so the unrestricted subsidiary.
Designation.
Was there because.
From what I understand there was an ability to do this group. These are the asset sales provision.
Is there a specific.
Rationale behind going with the unrestricted subsidiary was emotional described.
This is Bob.
It was primarily to have maximum flexibility to get the best outcome for.
Raising the capital.
And so we thought the time was right and.
And we didn't know what.
Vehicle, we might use and so the board consider many options and it was just the.
Step to maximize our flexibility.
Got you, Okay, all right well, thank you for taking the questions.
Again, congrats on the on the milestone there.
Thank you.
Okay.
As a reminder, its star one if you would like to ask a question.
Okay.
Okay.
Okay.
And there are no further questions at this time I would like to turn the call back over to Mr. Bob <unk> for any additional or closing remarks.
Thank you.
And thank you all for joining us today.
We think this is a special time to be in this industry.
And very powerful opportunity to be implementing this fiber transformation plan at consolidated and we appreciate your support and your interest and look forward to.
Updating you on our next call have a great day.
And ladies and gentlemen. This concludes today's conference call. We thank you for your participation and you may now disconnect.
Okay.
Yes.