Q3 2023 Altice USA Inc Earnings Call

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[music].

Greetings and welcome to the Altice USA third quarter 2023 results.

At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

My pleasure to introduce your host Sarah Friedman Investor Relations. Thank you you may begin.

Hello, and welcome to our Q3 2023 earnings call. We are joined today by Altice, USA, Chairman and CEO, Dennis Matthew and CFO, Mark Sara put together, we'll take you through the presentation and then be available for Q&A.

Today's presentation may contain forward looking statements. Please carefully read the section entitled forward looking statements on slide two Denis. Please go ahead.

Thank you Sarah kicking off on slide three the close of the third quarter marks one year since I joined Altice USA as CEO.

It has been a year of transformation for the company as we established and began to deliver against our core pillars of having the best customer experiences best customer relationships Best network and the best people I'm incredibly proud of what we've accomplished over the last 12 months and specifically during the third quarter.

In Q3, we saw quarter over quarter and year over year advancements across a variety of operational metrics, which correlate with the continued improved health of our business.

For example, we saw improvements in broadband subscriber relationship trends mobile net additions fiber customer growth financial performance customer satisfaction scores and operational metrics, such as reduced call volume and truck rolls to name a few.

Specifically Q3 marks the second quarter in a row of improve broadband net adds on a year over year basis.

The progress demonstrates that we are competing better in our markets and we are particularly pleased that we are seeing our wind share improve against many competitors across our footprint as we drive high quality services value and experiences with our networking products on.

On mobile line net additions we grew Q3 mobile net adds at five times the pace as we did in the third quarter of last year and had our third straight quarter of mobile lines growth acceleration.

We continue to sell mobile across our base emphasize our converged optimum complete bundle and enhance the optimal mobile experience with better device offers an optimization of our sales channels to more effectively sell mobile.

Turning to fiber, we continue to see growth in fiber customer net additions reporting our best quarter in fiber customer growth in Q3, and we will continue to see penetration of our fiber network grow overtime.

Committed to expanding the availability of eight gig symmetrical speeds in our fiber footprint by year end and I'm pleased to say that we achieved that in Q3, we now have more customers than ever experiencing our best in class fiber network, delivering multi gigabit symmetrical broadband speeds of up to eight.

Gig, so all fiber passing in our eastern footprint.

In Q3, we also continued to make progress on our customer experience transformation.

Making enhancements to our service and support channels with a focus on digital self service and a first time right approach all of which are resulting in improved customer satisfaction.

Our financial performance during the quarter was equally as strong with quarterly sequential residential our pool growth reduced decline in both revenue and adjusted EBITDA compared to the first half of the year, a step down in Capex spend and a return to positive free cash flow in the quarter.

These highlights are the result of several factors that we will walk through during today's presentation, but I want to first and foremost recognize our employees, including our strong executive regional and frontline teams, who are driving performance and working day in and day out to deliver exceptional experience.

Yes.

You know I just cannot express enough my gratitude for their unwavering commitment to our telecommunications news and advertising businesses that enable millions of customers to stay connected and informed together.

Together, we have strengthened our network and product value proposition.

<unk>, how we compete in our local markets and improve the experiences we deliver to our customers and employees.

While we have more work to do our results from the quarter affirm our strategy is working our discipline is paying off and we are moving fast to transform our business and be the connectivity provider of choice in every community that we serve.

Since I joined the company I've been traveling across our footprint meeting with our frontline employees and getting to know the people and the communities who make up our 21 state footprint from West Virginia to Texas to Louisiana, That's in New Jersey to North Carolina, New York and more there is an incredible amount of end.

<unk> and fight in our local teams.

And that's what we've been leaning into we've been harnessing their local energy combined with our new leadership team and our top performing assets network and product portfolio folio.

We are acting smarter and with disciplined and the results are proving that out.

Turning to slide four I want to spend a moment on reviewing some of the operational improvements that are driving cost out of the business and resulting in greater customer satisfaction.

When it comes to customer care, we know several troops.

We know that customers want reliability of their services and we know that if they have to contact us the transaction needs to be painless and solve the very first time.

To meet what our customers what we have been implementing a digital first approach to customer care.

Not only reduce the number of total customer interactions, but also shifts more of those interactions towards digital channels as opposed to traditional support channels.

Our attention to improving customer care is resulting in higher satisfaction scores across the number of N. P. S metrics, including our transactional NPS score, which is increased by 22 points in Q3 compared to the prior year we.

We expect these cores to continue to improve as we put more emphasis on quality service and support.

When we look at self service, we've been focused on shifting more installs to self install in Q3 self installs for qualified new customers increased by 71% year over year satisfaction scores on our self installation Onboarding continue to increase as we get better at making this setup experience.

More clear simple and seamless for our customers and it's cost effective for both our field operations and our customers. We're also expanding our digital and self service tools available to customers to bring them solutions and troubleshooting help quicker than ever.

For example, our text message communication to customers increased by 19% year over year as we have become more proactive in updating customers about outages upcoming bill and technician arrivals.

We saw a 51% increase in the use of our Chatbot service, which allows customer resolution without having to speak with our customer care representatives.

And we saw a 16% increase in engagement with our customer portal, which allows customers to directly manage their accounts by moving more interactions to digital we're also taking the weight off of our field and care teams by driving fewer truck rolls and inbound customer calls.

And so to that end, we saw 300000 fewer truck rolls over the last 12 months and $1 3 million fewer inbound calls and the same time period.

Which both reflect a lower subscriber base, but more notably lower rates per customer.

A key tenant in driving topline growth maximizing margins and a sustainably grow and sustainably growing our subscriber base is having a keen focus on doing right by our customers by ensuring that every interaction is simple easy and done right. The first time and that is exactly what we are focused on.

Yeah.

Now before I turn it to mark for a deep dive into our subscriber and financial results I want to again reinforce the key pillars of our strategy that are on slide five and highlight how we are going to continue to deliver against these in Q4 and beyond.

Start with inspiring to the best people as I mentioned on our last earnings call. We brought in new key leaders across the business each bringing their expertise and leadership from decades of experience in the cable and telecommunications industry.

Late August Nate had words, formerly from lumen and before that AT&T joined as EVP of field operations with responsibility for our field service construction and plant close need.

He has significant experience, leading field and operations organizations through times of transformation and we could not be more thrilled to have him be on the ops team optimal to drive our field performance.

Luciano Ramos joined from Rogers Communications in early 2023, and was recently elevated to the Chief Technology and information Officer Lucie.

Luciano its focus is on quality and reliability and he's already making an incredible impact on the technology experience both for our customers and our employees.

Finally, we recently welcomed our new Chief marketing officer for optimal Gen, Gary who joined US from charter last week.

<unk> is leading our efforts to strengthen and differentiate the optimum brand across our markets. She will also lead our acquisition customer base management and retention lifecycle program.

I'm excited for Jan and her team to amplify and enhance awareness around optimum products and services through all marketing channels and develop strategies and plans to maximize loyalty growth retention and profitability across the business.

These are just a few examples of the incredible new talent, joining our existing teams and they're making an immediate impact on our operations and culture.

We also know that what drives sales as people and we've been investing in our sales force and channel performance. So that we are optimized to sell our optimum services in every interaction.

The changes we've made recently enhancing our incentive programs new Prequalification for optimum mobile better training performance management and communications for frontline sales and more have had a positive impact on our ability to increase sales opportunities and we will continue to prioritize.

Is this so there are fewer barriers to onboard new customers to optimal.

These actions have not only helped improve our subscriber numbers, but they are having a direct impact on our employee experience as teams are working more closely than ever to sell install and support our customers.

We are breaking down the silos to work as one optimum team.

Now turning to our customer relationship pillar, we are building a world class data and analytics function within the company. We began rolling out AI based programs in the third quarter and we will continue to expand on these capabilities to maximize our customer lifetime value for C. L V. Specifically.

Specifically, we're putting in place a C. L V model that provides a full end to end understanding of the customer journey, capturing and understanding each customer interaction to ensure we are maximizing the value of the services, we deliver fostering loyalty and creating long term sustainable and profitable customer relationships.

We will continue to advance this work with data driven decision, making through artificial intelligence and machine learning capabilities led by our new chief data and analytics officer have been lifted.

A large part of C. L E driven decision, making is revamping our pricing and packaging strategy.

Specifically in 'twenty 'twenty, four we will be introducing new lower rate card pricing, a more transparent approach to promo roll off and a speed gifting program that will bring faster speeds to customers.

Well begin by broadly implementing this new pricing strategy with our next generation fiber rate card.

New rate cards on fiber will go into effect in the first half of 'twenty, 'twenty, four and will reduce rates for new and existing customers.

<unk> does not have a notable impact on revenue is a very small portion of our primary customers are close to paying full rate.

New rate cards on HFC will also be available in 2024 to new customers and legacy HFC customers will move to new rate cards overtime to speed here I'll, just adjustments to match existing customer prices preserving revenue.

In conjunction we are simplifying our speed tiers structure, while also finding opportunities to proactively get speed tier increases to customers to drive greater value with that well begin to retire low end speed tiers in various communities across our network and lastly on our C. L V and packaging strat.

<unk>, we are leveraging AI and our retention accused to ensure that our customer relationships. Our net profitable through tailored offers early results from several of our pilots are indicating double digit percentage level list and customer level profitability after a customer interacts with our retention.

We are encouraged by these results and expect to continue to experiment and rollout these capabilities in 2024.

Overall, we expect that our new pricing and packaging strategy will not have a negative impact on our go forward revenue. Our goal here is to reduce bill related call volume churn in our poor erosion.

Close the gap between promo rates and rate card grades and remove offer and other bill related complexities to provide clear transparent pricing to our customers.

Turning to be to be as we discussed last quarter optimum business represents a significant opportunity for us and we are focused on product enhancements and expansion of product offerings to further penetrate our markets.

We're already seeing strong growth in the take rate of our bundled solutions, which add services such as professional Wi Fi and business hosted voice and we're focused on continuing to expand our b to b product portfolio, notably with voice solutions for.

For example, we're enabling voice solutions to some SMB customers, who previously could not receive voice, who number portability and we are improving our business hosted voice products, which have already seen growth in the past quarter.

Additionally, we are improving the b to b customer experience through upgraded Wi Fi technology, and offering greater protection to SMB customers through a multi layered internet security.

Turning to optimum mobile will be expanding the service in a variety of ways, including launching mobile for B to b customers.

We are proud that for the iPhone 15 launch we were able to deliver deals and match the competitiveness of many major carriers with a free iPhone 15 offers for trade ins and on select plans.

Looking ahead, we will continue to leverage our relationship with T mobile and our ability to offer a multi product savings to continue to drive mobile growth.

Moving to our network pillar, our focus this year and into 'twenty 'twenty four is on quality and reliability.

We currently deliver fiber at more than $2 7 million passengers.

As I mentioned during the quarter, we expanded our eight gig fiber service to be available across our entire fiber footprint in the New York Tri State area, which is the largest availability of residential eight gig service in the nation.

Exploring solutions to adapt to consumers changing viewing habits, including more flexible packages tailored to our consumers interest with convenience and value of a bundle.

More on that in the quarters ahead.

And finally, I'll close with our customer experience pillar.

I touched on this earlier, but I want to reinforce that our focus remains on digital self serve and first time right as we head into the queue for and beyond and.

In summary, we continue to deliver across every area of the business that I laid out when I joined the CEO, one year ago, and I couldn't be prouder of the team's progress and their ability to drive these investments and operational and advancements with a focus on financial discipline as we transform our <unk>.

<unk> to enable future growth.

Now I will turn it over to Mark.

Thank you Dennis turning the slides seven I liked to begin with our broadband subscriber trends last quarter, we began to close the gap on our subscriber net losses year over year.

I'm pleased to share in Q3, we continue to see fewer net losses reporting broadband customer, let losses of 31000 compared to losses of 43000 in Q3 of last year.

13000 improvement is driven by better trends across our footprint.

Breaking down the Q3 broadband trends, we continued to be impacted by a slow housing market in a low move environment.

And we have ongoing pressure from competitive fiber operators and fixed wireless.

Despite these headwinds, we receiving improve underlying trends and competing through better fiber network upgrades and more strategic go to market activities.

For example, although we see muted gross and activity due to the low move environment is Dennis mentioned earlier of the pool of potential gross heads, we so improve rates of wind sure at optimum gaining four percentage points of wind shear quarter over quarter. According to open signal data.

This is mainly due to our stronger competitive approach against fixed wireless DSL and legacy fiber operators in our footprint.

Consumers, who have the choice of fixed wireless in our footprint are now choosing optimum.

More often as we can offer speeds up to 32 times faster than fixed wireless competitors.

The attribute this shift to a few things stronger sales performance across all channels.

And having strengthens our competitive marketing and advertising to highlight our network speed experienced in product superiority, ensuring customers know that the quality and value of optimum is top tier.

It's just one of the factors driving or improve broadband subscriber performance.

But it's also meaningful because it demonstrates that were competing on the quality of our service and not just price.

As we continued to focus on delivering quality and value. We are optimistic that we can increase wind sure even further.

Churn is also improving.

In addition to lower move turn Nonpay churn is better year over year by almost 10%.

As we continue to improve customer collection practices and have become more proactive and communications around customer billing.

We still have more work to do but our goal is to continue to close the gap on a year on year basis subscriber losses until we get back to positive customer growth trends.

As a reminder, in Q4 of last year, we had a subscriber net added benefit from the Big Apple connect program, we launched in partnership with the New York City's Mayor's office.

On a reported basis, we lost 9000 broadband subscribers in Q4 of 2022, although on an underlying basis. We would have reported net losses of 17000 broadband subscribers if not for a 9000 forever benefit from this program moving.

Moving to slide eight we are seeing acceleration and non optimal mobile grow in Q3, we added 24000 line net additions.

Compared to 5000 Nunez in Q3 of last year.

Note that in Q1 and Q2 of 2022, we added 8000, 28000 mobile lines, respectively, which were receiving free one gigabit mobile data plans for a 12 month period.

A majority of those customers rolled off of that promotion last quarter and we had about 6000 in Q3 2023 enrolled off the promotion.

We continue to see around 60% of those customers previously on free data plans convert to a paying plan. We have remained disciplined around preserving mobile <unk> as we move away from free promotions.

We've previously reported the adjusted mobile line additions to exclude churn from free lines and to adjust the line additions to the cooler and we should the became a paying subscriber. Therefore in Q3, the adjusted mobile lying additions would have been 6000 higher than at 30000.

After Q3, we will not have any more subscribers on this legacy free data plan.

Since the launch of optimal complete and May our mobile growth has accelerated and we are in a strong trajectory our momentum and mobile is supported by better sales training and incentives to help our employees promote and so optimal mobile and through the expansion of dis distribution channels. As we are now selling mobile through care.

Sure.

Retention and door to door sales in addition to traditional sales channels.

You may have seen in September we teamed up with baseball Hall of Fame legend, Derek Jeter to law.

Launched a new marketing campaign around the company's greatest software of all time, which has been getting great traction in our markets and has been one of our best performing campaigns at optimal.

We see churn benefits when customers take fixed plus mobile reducing annualized turns by over 20% compared to fix only customer base.

This represents a significant opportunity to further reduce churn as we expand mobile penetration and our customer base and drive higher take rates of our mobile product.

Last month with the launch of the new.

<unk> 15, we offered a valued customers and iPhone 15 on us and up to $800 off other iPhone 15 models with trading.

This compelling offer stacked up against other episodes and lead to additional load multiple growth through our sales channels. We are pleased with our pre order in the first four weeks of sales growth year over year for above the market average of iPhone sales driven by our very competitive mobile promotions.

There are not only driving global growth deriving mobile growth of high quality mobile customers was support better mobile <unk> and stickiness at.

At the end of September 33% of our mobile base subscribed to unlimited mobile plans up from 20% last year.

In Q3, the majority of the customers on legacy free mobile plans rolled off the promotion, which yielded a 13% year over year increase in mobile service <unk>.

We remain disciplined around our mobile pricing strategy going forward with a focus on maintaining profitability and sustaining higher mobile <unk>.

In addition, we are working to deliver a beat or be mobile product in queue for politically launches optimum complete SMB offering next year.

Dennis shared we have a lot of opportunity to continue to drive mobile growth through more predominantly offering mobile from our sales channels drive penetration of mobile into our fix internet customer base by leveraging optimal complete and targeting high quality mobile subscribers.

Next on slide nine we will review our best in class optimum network and how we are continuing to drive network improvements.

We added 45000, new fiber customers in the quarter through a combination of gross additions and voluntary migrations of existing customers.

We ended Q3 with 295500 customers.

At the end of Q3, we had $2.7 million fiber passings, adding 61000 passengers in the corner as expected.

To continue to see performance and satisfaction benefits out of our fiber cohort.

We are seeing over a 10% point differential a better survivability. After the first 12 months on fiber versus HFC, which indicates a significant churn reduction opportunity is more of our customers use fiber.

Operator: Greetings and welcome to the Altice USA 3rd quarter, 2023 results. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Monthly broadband revenues per customer for a new fiber customer range consistently higher than for new HFC customers.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

And broadband product MBS continues training higher on fiber versus HFC, which reflects our improved customer trends in fiber markets.

Sarah Freedman: It is now my pleasure to introduce your host, Sarah Freedman, Investor Relations. Thank you, you may begin. Hello and welcome to our Q3 2023 earnings call.

We mentioned last quarter that were temporarily slowing our fiber construction as we evaluated certain vendor relationships is part of our internal investigation.

Sarah Freedman: We are joined today by Altice USA's Chairman and CEO, Dennis Matthew and CFO, Marc Sirota, which together will take you through the presentation and then be available for Q&A. Today's presentation may contain forward looking statements. Please carefully read the section entitled forward looking statements on slide two.

We are redesigning many of our processes and procedures relating to vendor onboarding performance and monitor.

I'm also pleased by the team's ability to very quickly onboard new partners and scale some existing partners to resume our fiber strategy to that and we expect to reach approximately 600000 fiber passings for the full year.

Dennis Mathew: Dennis, please go ahead. Thank you, Sarah.

Dennis Mathew: Taking off on slide three, the close of the third quarter marks one year since I joined Altice USA as CEO. It has been a year of transformation for the company. As we established and began to deliver against our core pillars of having the best customer experiences, best customer relationships, best network and the best people. I'm incredibly proud of what we've accomplished over the last 12 months and specifically during the third quarter.

At this point, our internal investigation is substantially complete.

And the investigation and its results are not expected to have a material financial impact on our business. We will of course evaluate any additional information that becomes available to us and we will assess whether and what remedies we may pursue.

Turning to slide 10, I like to review our revenue trends in Q3 total revenue declined 3.2% year over year, driven mainly by declines in our residential Ah news and advertising businesses.

Dennis Mathew: In Q3, we saw quarter over quarter and year over year advancements across a variety of operational metrics, which correlates with the continued improved health of our business. For example, we saw improvements in broadband subscriber relationship trends, mobile net additions, fiber customer growth, financial performance, customer satisfaction scores, and operational metrics such as reduced call volume and truck rolls to name a few. Specifically, Q3 marks the second quarter in a row of improved broadband net ads on a year over year basis.

But notably all revenue segments have shown improve year over year comps versus the first half of this year presidential revenue was down 3.4% year over year, mainly driven by the impact of cumulative video and broadband subscriber losses, we've seen over the last year.

We grew business services revenue year over year for the first time in six quarters reporting 0.1% growth. This is driven by lightpath growth of 2.3% and improvements in our SNB in other segments, which declined 1.7%. This.

Dennis Mathew: The progress demonstrates that we are competing better in our markets and we are particularly pleased that we are seeing our wind share improve against many competitors across our footprint as we drive high quality services, value, and experiences with our network and products. On mobile line net additions, we grew Q3 mobile net ads at five times the pace as we did in the third quarter last year and had our third straight quarter of mobile line growth acceleration.

This quarter or be debate team is focused on improving retention and based management with new customer success team new implementation team dedicated simplifying customer on boarding and an increased number of sales engineers to guide customers through the technical aspects of pre sales process and we are beginning to see results in this <unk>.

Progress.

With Ah within other news and advertising revenue declined 10.8% year over year in Q3, despite macro slowdown in advertising spend normalising for political cycles, losing advertising grew 4.9% excluding political revenue in Q3.

Dennis Mathew: We continue to sell mobile across our base, emphasize our converged optimum complete bundle, and enhance the optimal mobile experience with better device offers and optimization of our sales channels to more effectively sell mobile. Turning to fiber, we continue to see growth in fiber customer net additions, reporting our best quarter in fiber customer growth in Q3, and we will continue to see penetration of our fiber network grow over time. We committed to expanding the availability of 8GB symmetrical speeds in our fiber footprint by year end, and I'm pleased to say that we achieved that in Q3.

These improving revenue trends support strong margins as shown on slide 11 third quarter adjusted EBITDA margin of 39.5% with stable compared to last quarter. We said that Q2 would be the peak of EBITDA margins as Opex would translate the higher in the back half of the year compared to the first half I'd have come broadly in line with <unk>.

Margins as we remain discipline around moderating opex and balancing right in the volume to support improve revenue trends.

In Q3, we reported Opex, excluding sure based compensation decline of approximately 1% year over year. The first year over year decline in 10 quarters proving our focus on operating improvements as driving towards structurally reducing our costs to operate the business.

Dennis Mathew: We now have more customers than ever experiencing our best in class fiber network delivering multi gig of its symmetrical broadband speeds above to 8GB to all fiber passings in our In Q3, we also continue to make progress on our customer experience transformation, making enhancements to our service and support channels with a focus on digital, self-service, and a first-time right approach, all of which are resulting in improved customer satisfaction. Our financial performance during the quarter was equally strong, with quarterly sequential residential RPU growth reduced decline in both revenue and adjusted EBITDA, compared to the first half of the year, a step down in cap expend and a return to positive free cash flow in the quarter.

Operating the free clash of margins increased five percentage points sequentially to $24, 3% as we saw capital intensity in Q3 step down significantly supporting better free cash flow, which I'll come back to in a moment.

Turning to slide 12 on capital Q3, <unk> $353 million represented capital intensity of just over 15, 2%, excluding FTE th and nubile Capex capital intensity would have been eight 8% <unk>.

Capital spending is down 28% year over year in Q3, and a step down of $120 million or 25% sequentially versus Q too as we said Capex will step down on the back half of the year driven by Capex timing and fewer fiber passing is constructed.

Dennis Mathew: These highlights are the results of several factors that we will walk through during today's presentation, but I want to first and foremost recognize our employees, including our strong executives, regional, and frontline teams who are driving performance and working day in and day out to deliver exceptional experiences. You know, I just cannot express enough my gratitude for their unwavering commitment to our telecommunications, news, and advertising businesses that enable millions of customers to stay connected and informed.

Year to date capital spend is one $4 billion and we continue to expect to come in on the lower end of our initial guidance of 1.7% a $1.8 billion as we take down the run radio Capex in the back half of this year driven by timing of span and fewer fiber passings, while continuing to invest in other growth capex opportunities.

And Q3, we added 61 fiber passing as in the quarter, we continued to edge out our footprint, adding 30000, new build passings.

Dennis Mathew: Together, we have strengthened our network and product value proposition, enhanced how we compete in our local markets and improved the experiences we deliver to our customers and employees. While we have more work to do, our results from the quarter of firm our strategy is working, our discipline is paying off, and we are moving fast to transform our business and be the an activity provider of choice in every community that we serve.

And we have upgraded 61000, passing <unk>, bringing the optimum west footprint over 90% upgraded to DOCSIS three Taiwan.

In summary, we remain focus on making strategic capital investments and growth opportunities with discipline around the highest roy's focus to bring down capital intensity.

And last slide 13 is a breach of our free cash flow free cash flow for the quarter was $121 million the terminal principally to hire operating free cash flow EBITDA.

Dennis Mathew: You know, since I joined the company, I've been traveling across our footprint, meeting with our frontline employees, and getting to know the people in the communities who make up our 21 state footprint. From West Virginia, to Texas, to Louisiana, to New Jersey, to North Carolina, New York and more, there is an incredible amount of energy and fight in our local teams. And that's what we've been leading into. We've been harnessing their local energy combined with our new leadership team and our top performing assets, network, and product portfolio. We are acting smarter and with discipline, and the results are proving that out.

<unk> less capex and working capital benefits, we saw street strong free cash flow this quarter displaced slightly higher cash interest expense.

The timing of semiannual bond payments in floating rate exposure, although recall taking into account interest rate hedges in place about 80% of our debt schedule is fixed.

The continued expect positive free cash flow for Q4 and to be positive for the full year.

In summary in Q3, we continued to deliver on many of our commitments and we are seeing results through improving trends in subscriber revenue EBITDA and free cash flow, which will allow us to continue progressing towards sustainable future growth and a return to our target leveraged levels and with that thank you all for.

Dennis Mathew: Turning to slide four, I want to spend a moment on reviewing some of the operational improvements that are driving cost out of the business and resulting in greater customer satisfaction. You know, when it comes to customer care, we know several truths. We know that customers want reliability of their services, and we know that if they have to contact us, the transaction needs to be painless and solved the very first time. To meet what our customers want, we have been implementing a digital first approach to customer care.

Your time will now take questions.

Thank you.

And ladies and gentlemen at this time will conduct a question and answer session. If.

If you would like to ask a question. Please press star one on your telephone keypad.

Dennis Mathew: This has not only reduced the number of total customer interactions, but also shifts more of those interactions towards digital channels, as opposed to traditional support channels. Our attention to improving customer care is resulting in higher satisfaction scores across the number of NPS metrics, including our transactional NPS score, which is increased by 22 points in Q3 compared to the prior year. We expect these scores to continue to improve as we put more emphasis on quality, service, and support.

A confirmation tolerant indicate that your line is in the question queue.

You May press the Star key followed by the number two if you would like to remove your question from the queue.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the stockings one moment, please while we pull for questions.

Our first question comes from still key sick with J P. Morgan. Please state your question.

Thanks, a lot guys.

Jennifer dig into the new rate card that you discussed how should we think about that impacting subscriber trends.

Dennis Mathew: When we look at self-service, we've been focused on shifting more installs to self-install. In Q3, self-installs for qualified new customers increased by 71% year over year. Satisfaction scores on our self-installation onboarding continue to increase as we get better at making the setup experience more clear, simple and seamless for our customers. And it's cost-effective for both our field operations and our customers. We're also expanding our digital and self-service tools available to customers to bring them solutions and troubleshooting health quicker than ever.

Sort of promoting around that should.

Should we think about lower gross adds with a little less promotion upfront some companies do things like.

Never changing our Pooh things like that and impacting churn later or do you anticipate sort of a less of an impact.

And then second you talked about Stabilising broadband subscribers do you think that's feasible in 2024 or may be beyond that thanks very much.

Thanks, Phil the new rate card is all about simplicity transparency predictability and so as we move forward, we really want to be able to reduce the complexity for our customers. This.

Dennis Mathew: For example, our text message communication to customers increased by 19% year over year as we have become more proactive in updating customers about how it is upcoming bills and technician arrivals. You know, we saw a 51% increase in the use of our chatbot service which allows customer resolution without having to speak with a customer care representative. And we saw a 16% increase in engagement with our customer portal which allows customers to directly manage their accounts.

This will reduce the delta between.

Gross AD offers that are in the marketplace versus a rate card, but we believe we have the right offers and market today and so we have a great value.

We've got the right offers and with optimum complete and the converged offer we really do think we have a great value.

Will start to roll this out in queue and first half of next year with the fiber and then for our HFC customer base, it's really all about getting the right speeds at the right price and so we will be.

Dennis Mathew: By moving more interactions to digital, we're also taking the weight off of our field and care teams by driving pure truck rolls and inbound customer calls. And so to that end, we saw 300,000 fewer truck rolls over the last 12 months and 1.3 million fewer inbound calls in the same time period which both reflect a lower subscriber base but more notably lower rates per customer. A key tenant in driving top line growth, maximizing margins and a sustainably growing our subscriber base is having a keen focus on doing right by our customers by ensuring that every interaction is simple, easy and done right the first time. And that is exactly what we are focused on.

Moving forward with the speed gifting and making sure that all of our customers have the right speeds based on their rate cards, and that's going to be a process that will undertake over the next few over 24 aggressively so really make sure that we've got everybody.

<unk> sized and in terms of our broadband subscriber.

Growth and sustainability, we're very optimistic we're seeing all of the right trends and especially as we look at our Kpis, we're focused on delivering a great customer experience and so as we look at NPS then improvements we have seen their reduced contact rate reduced service visit right.

Dennis Mathew: Now before I turn it to Mark for a deep dive into our subscriber and financial results, I want to again reinforce the key pillars of our strategy that are on slide five and highlight how we are going to continue to deliver against these in queue four and beyond. Now let's start with inspiring to the best people. As I mentioned on our last earnings call, we brought in new key leaders across the business, each bringing their expertise in leadership from decades of experience in the cable and telecommunications industry.

These are all leading metrics that we know are going to help us have a healthier business healthier foundation, we're able to execute much more effectively with self install in digital now that being said there are still a whole host of macroeconomic challenges when we look at moves being down.

Almost at all time levels inflation and so we're very focused on controlling what we can control so that we can.

Dennis Mathew: In late August, Nate Edwards formerly from Mumen and before that AT&T joined as EVP of field operations with responsibility for our field service, construction and plant teams. Nate has significant experience leading field and operations organizations through times of transformation and we could not be more thrilled to have him be on the team optimal to drive our field performance. Now Luciano Ramos joined from Rogers Communications in early 2023 and was recently elevated to the chief technology and information officer.

Get back to long term subscriber revenue and EBITDA growth.

Thank you Yep.

Yep.

Our next question comes from could come around with Evercore ISI taste your question.

Good afternoon, and thanks for taking the questions. If I could just follow up on the broadband side, you talked about your wind share improving against a number of your competitors. It sounds like that was mostly in the Ottoman footprints in broad based against different competitive technologies is there anything you could share on the suddenlink side as well.

Dennis Mathew: Luciano's focus is on quality and reliability and he's already making an incredible impact on the technology experience both for our customers and our employees. Finally, we recently welcomed our new chief marketing officer for optimum Jen Garrett who joined us from Carter last week. Jen is leading our efforts to strengthen and differentiate the optimum brand across our markets. She will also lead our acquisition, customer-based management and retention lifecycle program. I'm excited for Jen and her team to amplify and enhance awareness around optimum product and services through all marketing channels and develop strategies and plans to maximize loyalty, growth, retention and profitability across the business.

I know maybe you didn't want to talk about 2024 too much in terms of getting back to stable on the broadband side, but is there anything you could share on whether or not in queue for you could continue the trend of improving the year over year Ah results on broadband net ads against the 19000.

Adjusted loss and and just briefly on the fiber passing side Mark I believe you've talked about new fiber pass things to be at roughly 600002 thousand 23 can you help us think about that builds plan for 2024, and maybe 2025 as well. Thank you.

Thanks KUC on the good thing is that we've seen.

Improvements across the entire footprint when I look at trends both in the east and the west when we look at a year over year trends we are seeing.

Dennis Mathew: These are just a few examples of the incredible new talent joining our existing teams, and they're making an immediate impact on our operations and culture. We also know that what drives sales is people, and we've been investing in our sales force and channel performance, so that we are optimized to sell our optimum services in every interaction. The changes we've made recently, enhancing our incentive programs, new prequalification for optimum mobile, better training, performance management, and communications for frontline sales, and more have had a positive impact on our ability to increase sales opportunities, and we'll continue to prioritize this, so there are fewer barriers to onboard new customers to optimum.

Seeing improvements and.

Part of that is tied to implementing our new local market structure, we have five areas and we have five new general managers that we've put in place and these folks are living and breathing the business every day from <unk>.

Competitive perspective subscriber perspective customer experience operating metrics.

Employee engagement community engagement, and that's making an impact and they are empowered to drive the business.

We are supporting the <unk>.

Travel the country, we visited.

Each of these areas they've been in place for quite frankly less than 90 days one is brand new just starting in the role.

But we are starting to see.

Dennis Mathew: These actions have not only helped improve our subscriber numbers, but they are having a direct impact on our employee experience that teams are working more closely than ever, to sell, install, and support our customers. We are breaking down the silos to work as one optimum team.

Improvements across the board.

Cross the footprint.

At Q4.

The competition is very aggressive in as we head into the holiday season, and so that's putting some pressure on queue for trends, but it's too soon to commit to that Q for performance, but our goal is absolutely to continue to drive improvement year over year, and so as I see the channels performing.

Dennis Mathew: You know, turning to our customer relationship pillar, we are building a world-class data and analytics function within the company. We began rolling out AI-based programs in the third quarter, and we'll continue to expand on these capabilities to maximize our customer lifetime value or CLV. Specifically, we're putting in place the CLV model that provides a full end-to-end understanding of the customer journey, capturing and understanding each customer interaction to ensure we are maximizing the value of the services we deliver, fostering loyalty, and creating long-term sustainable and profitable customer relationships.

Whether it's door to door, whether it's inbound whether it's retail.

<unk>, we're continuing to see improved performance in terms of yield and productivity.

But we are going to be disciplined we're going to be disciplined around driving profitability and sustained growth.

Mark.

Yeah as it relates to the 600000, passing this year, you're right as far as our plans for next year and beyond we won't give specific guidance, but we're still very much.

Dennis Mathew: We'll continue to advance this work with data driven decision-making through artificial intelligence and machine learning capability. Led by our new chief data and analytics officer, then listeners. A large part of CLV driven decision-making is revamping our pricing and packaging strategy. Specifically, in 2024, we'll be introducing new lower-rate card pricing, a more transparent approach to promo or loss, and a speed-gifting program that will bring faster speeds to customers. We'll begin by broadly implementing this new pricing strategy with our next generation fiber-rate card.

Bullish on the fiber.

Plan and with the benefits.

We see it coming off of the fire plan as we've talked about previously.

But as we said each year will evaluate the capital intensity of the business certainly the level of fiber upgrade will be a part of that equation and we will take a very disciplined and balanced approach to make sure we're maintaining the right level of capital intensity.

Understood. Thank you both.

Thank you.

Our next question comes from Jonathan Chaplin with New Street police to your question.

Dennis Mathew: New rate cards on fiber will go into effect in the first half of 2024, and we'll reduce rates for new and existing customers. This does not have a notable impact on revenue as a very small portion of our fiber customers are close to paying full rates. New rate cards on HFC will also be available in 2024 to new customers. And legacy HFC customers will move to new rate cards over time through speed tier adjustments to match existing customer prices for serving revenue.

Jonathan Chaplain your line is open to go ahead.

Oh I'm sorry.

I was on mute.

Just.

Blowing up on the last question on the fiber deployment Dennis I'm just.

Wondering if it doesn't actually make sense to continue just sort of a postponement of fiber process.

As you just walk through some deleveraging next year.

Dennis Mathew: In conjunction, we are simplifying our speed-tier structure while also finding opportunities to proactively gift speed-tier increases to customers to drive greater value. With that, we'll begin to retire low-end speed-tier in various communities across our network. And lastly, on our CLV and packaging strategy, we are leveraging AI and our retention cues to ensure that our customer relationships are net-profitable, who tailored offers. Early results from several of our pilots are indicating double-digit percentage-level lists in customer-level profitability after a customer interacts with our retention cues.

And you know potentially kick it off again, when subscribers and EBITDA grubbing in a sort of a convincing sustainable fashion and I'm wondering if you could give us some contacts for like the reason not to do that obviously would be if it would have on the <unk> impact on the.

The recovery and subscriber growth and add so maybe you could give us some context around that.

Yeah.

The trends in <unk> in fiber markets versus non fiber market <unk>.

How much postponing fiber deployment might might might impact the chance.

Thanks, Jonathan we are evaluating the pace at which we want to continue that program. The good thing is we've got the right partners now in place.

Dennis Mathew: We are encouraged by these results and expect to continue to experiment and roll out these capabilities in 2024. Overall, we expect that our new pricing and packaging strategy will not have a negative impact on our go-forward revenue. Our goal here is to reduce bill-related call volume, churn, and arpoor erosion, close the gap between promo rates and rate card rates, and remove offer and other bill-related complexities to provide clear, transparent pricing to our customers.

As we've gone through the process. The last couple of months, we've identified some great partners great quality.

We are ready to continue our fiber construction, we are evaluating the pace at which we'd like to do that going forward.

It will likely not be at the same pace that we had initially planned.

Dennis Mathew: Turning to B2B, as we discussed last quarter, our optimum business represents a significant opportunity for us and we're focused on product enhancements and expansion of product offerings to further penetrate our markets. We're already seeing strong growth in the take rate of our bundled solutions which add services such as professional Wi-Fi and business-hosted voice, and we're focused on continuing to expand our B2B product portfolio notably with voice solutions. For example, we're enabling voice solutions to some SMB customers who previously could not receive voice to number portability and we are improving our business-hosted voice products which have already seen growth in the past quarter.

Planned for as we entered into the year, but still.

Working crew, what that should be and what that what makes sense as we enter into 2024.

That being said fiber is just one of the tools that we have in our toolkit to drive Ricky.

Recovery and long term sustainable.

Subscriber growth, we have a whole host of tools, we know that customers want quality and they want value and so we are doubling down on quality quality network quality product quality service. We're looking at every element of this business in terms of the CPE in terms of training.

<unk> training in terms of making sure we fix the issue is the first time.

Dennis Mathew: Additionally, we're improving the B2B customer experience to upgraded Wi-Fi technology and offering greater protection to SMB customers through multi-layered internet security. Turning to optimum mobile will be expanding the service in a variety of ways, including launching mobile for B2B customers. We are proud that for the iPhone 15 launch, we were able to deliver deals and match the competitiveness of many major carriers with the three iPhone 15 offers for trade-ins and on select plans. Looking ahead, we'll continue to leverage our relationship with T-Mobile and our ability to offer multi-product savings to continue to drive mobile growth.

And that is having a meaningful payoff and benefit in terms of reducing contact rate, increasing NPS, which we know is foundational to helping us drive long term growth and then on the value side with optimum complete.

We're seeing that really resonate in the market, we're seeing that resonate in our sales channels and so we know that that also is a great tool.

Additionally, as we look at the entire footprint, you've heard me talk about <unk> and continuing to invest there and we want to continue that journey to make sure that we have one gig avail.

Available throughout the footprint, we have it available 95% of the footprint, but we want it to be at 100% and so we're going to continue to drive that and so all of these are tools that.

Dennis Mathew: Moving to our network pillar, our focus this year and into 2024 is on quality and reliability. We currently deliver fiber at more than 2.7 million passings. As I mentioned during the quarter, we expanded our 8GIG fiber service to be available across our entire fiber footprint in the New York Tri-State area, which is the largest availability of residential 8GIG service in the nation. 8GIG provides a huge competitive and marketing advantage for us and will continue to tout our fast symmetrical speeds to reinforce the strength of our network.

That will allow us to get back to that objective of long term revenue subscriber and EBITDA growth and so.

Fiber is one of those tools and we'll decide.

In the coming days that at the right level right pace, where we needed. The good thing is we have 2.7 million homes and so we are going to be focused also on driving.

Further penetration against those $2.7 million.

Alright, Thanks Dennis.

Dennis Mathew: Fiber penetration remains a focus. Any new customer in a fiber-ready area gets fiber installed by passing our agency products. Our video strategy is evolved with our optimum-screen product, which is available over fiber and is expanding to more markets over our agency network. Video is an important part of our product portfolio, and around half of our customers take video. In addition to the expansion of optimum-screen, we're actively exploring solutions to adapt to consumers changing viewing habits, including more flexible packages tailored to our consumers' interests with convenience and value of abundance. More on that in the quarters ahead.

Thank you. Our next question comes from Jessica Ehrlich with Bank of America Securities Police to your question.

Thank you too.

Two questions.

Can I ask you to call talking about you know.

Just.

Highlighting that it's been a year and how much has been done and.

Obviously, the first year, Todd heavy lifting and restructuring a lot of management changes as you look at the year ahead can you talk about like remaining priorities in any other significant changes you think he's still need to make and then secondly, I think they just said that have yourself just don't take video.

Can you just kind of gives you a longer term view on video and maybe a comment on just charters deal with Disney indicate.

Anything about how contracts will be dealt with going forward, how you're thinking about contracts with program is going forward.

Thanks Jessica.

Quite a bit of an incredible year.

We've.

As I look at the accomplishments the number one objective my number one objective was to transform the culture and to transform the culture, we needed the right team.

In place and we have 50, plus new vice President's and above that are driving this business forward folks from all over the industry. In every part of the organization from sales to marketing to field to care to finance the program management.

Dennis Mathew: And finally, I'll close with our customer experience pillar. I touched on this earlier, but I want to reinforce that our focus remains on digital, self-serve, and first-time right as we head into Q4 and beyond. In summary, we continue to deliver across every area of the business that I laid out when I joined the CEO one year ago.

List goes on procurement.

Dennis Mathew: I couldn't be prouder of the team's progress and their ability to drive these investments and operational advancements with a focus on financial discipline as we transform our business to enable future growth.

Et cetera, and we still have some more work to do and so as we close out the year.

And get ready for next year, we really need to make sure that we have all the right people on the bus and they're all on the right feet and so that is still by top priority because.

Marc Sirota: Now I'll turn it over to Marc. Thank you, Dennis.

That is what is going to enable us to continue to drive this business in this transformation and as I look at quality and value, we're going to continue to lean into quality. There is still more work to be done.

Marc Sirota: Turning to slide seven, I'd like to begin with our broadband subscriber trends. Last quarter, we began to close the gap on our subscriber net losses year over year. I'm pleased to share in Q3, we continue to see fewer net losses reporting broadband customer net losses of 31,000 compared to losses of 43,000 in Q3 of last year. This 13,000 improvement is driven by better trends across our footprint.

And we're going to lean into driving our quality programs, whether it's on the network whether it's on the product whether it's on the service, making sure we have the right business partners and that they're delivering the right level of quality and holding folks to SLA, then really making sure across every part of.

Marc Sirota: Breaking down the Q3 broadband trends, we continue to be impacted by a slow housing market and a low move environment. We have ongoing pressure from competitive fiber operators and fixed wireless. Despite these headwinds, we are receiving improved underlying trends in competing through better fiber network upgrades and more strategic go-to-market activities. For example, although we see muted gross ad activity due to the low move environment, as Dennis mentioned earlier, of the full potential gross ads, we saw improved rates of wind shear at optimum gaining four percentage points of wind shear quarter over quarter according to open signal data.

This business, we are firing on all cylinders when it comes to quality and first time right.

We're also going to lean into digital and continuing to drive that journey as I think about programs like self installed we've improved that by 71% and we have more room to go and we need to lean more into self install particularly as we think about video and other solutions.

Other priorities, though that excited about from a growth perspective as BBB we have.

Built a brand new b the B team in terms of sales in terms of product and we're excited to build out that product portfolio. We're excited to drive execution everything from sale everything from funnel management to driving sales and quota to installation and so.

Marc Sirota: This is mainly due to our stronger competitive approach against fixed wireless DSL and legacy fiber operators in our footprint. Consumers who have the choice of fixed wireless in our footprint are now choosing optimally, and more often as we can offer speeds up to 32 times faster than six wireless competitors. We attribute this shift to a few things, stronger sales, performance across all channels, and having strengthens our competitive marketing and advertising to highlight our network, speed, experience, and product superiority, ensuring customers know that the quality and value of optimum is top tier.

A lot a lot of work to do and that's why.

But it's a lot of fun and we're we've got the right team to do it as I think about video.

The model is broken I, just have to say for the last 10 years the.

Consumers.

Made it clear that there is a significant shift from linear to screaming and yet the cost per linear have just continued to rise.

Marc Sirota: It's just one of the factors driving our improved broadband and subscriber performance, but it's also meaningful because it demonstrates that we are competing on the quality of our service and not just price. As we continue to focus on delivering quality and value, we are optimistic that we can increase windshare even further. Charter is also improving, and in addition to lower-move-turn, non-pay-turn is better year over year by almost 10%. As we continue to improve customer collection practices and have become more proactive in communications around customer billing.

US as distributors need to find a way to.

Work with our programming partners to put the customer at the center, we need to give them great value, we need to give them. The right content as we look at these programming deals were bundling in content that basically nobody wants to watch along with the content that consumers actually want to watch they want more access.

Availability to direct to consumer products they want simplicity.

We are hearing from our customers, it's challenging to have so many different apps and log in and building relationships and so those will be part of our conversations as we go forward that we need to put the customer at the center and there needs to be a business model. That's a win win the customer wins and we have distributors.

Marc Sirota: We still have more work to do, but our goal is to continue to close the gap on a year-on-year basis subscriber losses until we get back to positive customer growth trends. As a reminder, in Q4 last year, we had a subscriber net ad benefit from the Big Apple Connect program. We launched in partnership with the New York City's mayor's office. On a reported basis, we lost 9,000 broadband subscribers in Q4 of 2022. Although on an underlying basis, we would have reported net losses of 17,000 broadband subscribers, if not for a 9,000 subscriber benefit from this program.

And programmers Nguyen and so that will be part of the discussions.

As we go forward.

Thank you.

And our next question comes from Breath Feldman with Goldman Sachs. Please state your question.

Thanks to you if you don't mind. The first one is if we get it.

Take a step back and think about the past.

Getting your broadband business back to growth I'm talking about broadband revenues and you look at the sum total of things you've done and the anticipated benefits of that ultimately what is that path look like meaning.

Marc Sirota: Moving to slide 8, we are seeing acceleration in an optimal mobile growth. In Q3, we added 24,000 line net ad additions compared to 5,000 net ads in Q3 of last year. Note that in Q1 and Q2 of 2022, we added 8,000 and 28,000 mobile lines respectively, which were receiving free one gigabit mobile data plans for a 12-month period. The majority of those customers rolled off of that promotion last quarter, and we had about 6,000 in Q3, 2023 that rolled off the promotion.

Anticipate that you could begin to see a tailwind reemerge in your broadband <unk>, where is this really all about driving growth and subscribers in as a subscriber base grows you're inevitably going to return to broadband revenue growth. So any help in terms of thinking about the next day or if you get everything right.

Be helpful. And then the second is it's great to see that you are still converting about 60% of customers and to paint lines. When they come to the end of the promotional period, what have you learned about the 40% that orange.

Marc Sirota: We continue to see around 60% of those customers previously on free data plans convert to a paying plan. We've remained disciplined around preserving mobile ARTO as we move away from free promotions. We previously reported the adjusted mobile line additions to exclude churn from free lines and to adjust line additions to the quarter in which they became a paying subscriber. Therefore, in Q3, the adjusted mobile line additions would have been 6,000 higher than at 30,000 net ads.

How good are you getting at predicting that in D C an opportunity to either tweak the offer or tweak the upselling.

To kind of get to a higher pay rate on that thank you.

Yeah, let me jump in thanks spread out let me jump in on the mobile and then I'll hand, it off to Mark to talk a little bit about broadband.

<unk>, but on the mobile side, we're excited that we were able to sell convert 60% and we were able to proactively reach out to customers make them aware have great conversations it's a testament.

Marc Sirota: After Q3, we will not have any more subscribers on this legacy free data plan. Since the launch of optimal complete in May, our mobile growth has accelerated, and we are on a strong trajectory. Our momentum in mobile is supported by better sales training and incentives to help our employees promote and sell optimal mobile through the expansion of distribution chain, as we are now selling mobile through care, retention and door-to-door sales in addition to traditional sales channels.

Really too great products, Great service, they see the value in the converged bundle we were we offer them.

Optimum complete offer and that really brought that value together.

Quite frankly for the 40% that received it.

When I think about.

The approach last year, there was some opportunity in terms of really making sure the folks that were taking the product.

Marc Sirota: You may have seen in September, we teamed up with baseball, Hall of Fame legend, Derek Guter, to launch a new marketing campaign around the company's greatest author of all time, which has been getting great traction in our markets and has been one of our best performing campaigns at optimal. We see churn benefits when customers take fixed plus mobile, reducing annualized churns by over 20% compared to fixed only customer base. This represents a significant opportunity to further reduce churn as we expand mobile penetration in our customer base and drive higher take rates of our mobile products.

Understood what they were getting why they were getting it when.

When we look at the usage rates things like that.

There was definitely opportunity in terms of how we were going to market last year with that free offer and so we have those learning.

Team everyone I brought in Cup comes in with those learning so that we don't repeat the mistakes of the past and going forward, it's about selling the value selling.

Mobile and really making sure that we're selling solutions that our customers want and need.

We've transformed the retail environment as well we've transformed it from our service centre to a sales experience and and that's going to allow us to make sure that we're properly solutions selling going forward with mobile.

Marc Sirota: Last month, with a launch of the new I-15, we offered a valued customers an I-15 on us and up to $800 off other I-15 models we traded. This compelling offer stacked up against the other MSOs and led to additional mobile growth through our sales channels. We are pleased with our pre-order in the first four weeks of sales growth year of year or above the market average of iPhone sales driven by our very competitive mobile promotions.

Mark.

Guards to broadband revenue it will be a balance between subscribers and right and so you see we're starting to chunk.

Chunk into some of the subscriber losses, and we liked the trend that we have there, but more importantly on the on the right side, you've seen we've stabilized the broadband or poo rates and in fact, the past two quarters, we've actually grown.

Marc Sirota: We are not only driving mobile growth, the driving mobile growth of high quality mobile customers will support better mobile R2 and stickiness. At the end of September, 33% of our mobile base subscribed to unlimited mobile plans up from 20% last year. Incute to the majority of customers on legacy free mobile plans rolled off the promotion, which yielded a 13% year over year increase in mobile service R2. We remain disciplined around our mobile pricing strategy going forward with a focus on maintaining profitability and sustaining higher mobile R2.

The rates and we're.

We're improving that year over year, 22 cents, which is fantastic and so.

See that will continue to strike the right balance between rate and volume to ultimately drive top line growth.

In addition, we're very optimistic around what fiber actually brings to the table.

<unk> see when customers migrate onto the network from Ah HFC platform, we're seeing uplift in those customers. We're also seeing from just so gross adds perspective on pricing customers want the highest value and they're willing to pay for one gig symmetrical speeds and beyond.

Marc Sirota: In addition, we are working to deliver a B2B mobile product in Q4, which we launch as optimum complete SMB offering next year. As Dennis shared, we have a lot of opportunity to continue to drive mobile growth through more predominantly offering mobile for our sales channels, drive penetration of mobile into our fixed internet customer base by leveraging optimum complete and targeting high quality mobile subscribers.

And so they're paying us over $10 versus an HFC connect and so.

We think we think that there is a path for both.

Right and volume to drive sustainable broadband revenue and that's how we will think about it and continue to kind of monitor it.

On the.

On the other side in the back book as well or being very disciplined.

We have introduced a lot of AI functionality into the business and we're just beginning to scale that and so we're going to take a very disciplined customer specific approach to managing.

Marc Sirota: Next on slide nine, we will review our best in class optimum network and how we're continuing to drive network improvements. We added 45,000 new fiber customers in the quarter through a combination of gross additions and voluntary migrations of existing customers. We ended Q3 with 295,000 fiber customers. At the end of Q3, we had 2.7 million fiber passings adding 61,000 passings in the corner as expected. We continue to see performance and satisfaction benefits out of our fiber cohort.

The book and we're optimistic about what some of those early trials are yielding and so I think we will continue to be disciplined on the front book as well as the back book to ultimately drive broadband growth.

Thank you.

Our next question comes from Craig Moffett with Moffat Nathan Please state your question.

Hi, Yes, I'm going to stay with the same topic of of the new rate card guys.

Just to make sure I understand.

Marc Sirota: We are seeing over a 10% to this point differential of better survivability after the first 12 months on fiber versus HSC, which indicate the significant turn reduction opportunity as more of our customers use fiber. Monthly broadband revenues per customer for a new fiber customer range consistently higher than for new HSC customers, and Broadband product NBS continues trending higher on fiber versus HFC, which reflects our improved customer trends in fiber markets.

What you were just describing should we read that as you are going to try to Opportunistically Raytheon right at the low end of the.

Of the customer base that while you're presumably cutting some prices for our customers that are very higher end of your range and sort of try to bring everybody.

Into the middle and does that mean that you're any customer losses that you see are more likely to be concentrated in lower our food types of customers and then I have one.

Separate question and that's just as I think about the growth rate of the footprint, where you had been growing in that 2% plus range.

Marc Sirota: We mentioned last quarter that we are temporarily slowing our fiber construction as we evaluated certain vendor relationships as part of our internal investigation. We are redesigning many of our processes and procedures relating to vendor onboarding performance and monitor. I'm also pleased by the team's ability to very quickly onboard new partners and scale some existing partners to resume our fiber strategy. To that end, we expect to reach approximately 600,000 fiber pastings for the full year.

Is that what should we expect that to continue to decelerate isn't that a bit in the quarter as you sort of refocused capital budget too.

To potentially a slower path of rural edge out and the like.

Craig on the on the pricing and the base management strategy again as I mentioned, it's all about making sure that we have simplicity reduce the complexity and provide transparency and predictability as we move forward.

Marc Sirota: At this point, our internal investigation is a substantially complete and the investigation and its results are not expected to have a material financial impact on our business. We will, of course, evaluate any additional information that becomes available to us and we will assess whether and what remedies we may pursue.

And we believe we have the right offers from a go to market perspective.

Mark was talking about was really as we move forward just doing a much better job than channels like care like retention.

Marc Sirota: Turning this slide 10, I like to review our revenue trends. In Q3, total revenue decline 3.2% year of a year, driven mainly by declines in our residential and news and advertising businesses. But notably, all revenue segments have shown improved year of your accounts versus the first half of this year. Residential revenue was done 3.4% year a year, mainly driven by the impact of cumulative video and broadband subscriber losses. We've seen over the last year. We grew business services revenue year for the first time in six quarters reporting 0.1% growth. This is driven by light path growth of 2.3% in improvements in our SMB and other segments which declined 0.7%.

To make sure that we're disciplined when we are having a conversation with a customer that we are providing them the right value leveraging R. C. L V tools. So it's not about going back in and figuring out how do we cut at the low end.

Increase at the low end caught at the high and get into the middle It's all about leveraging customer lifetime value in being disciplined about the offers in the save rates in the in the <unk>.

Erosion.

Which quite frankly, when I walked in the door was at an all time high and so we just have to become much more disciplined both on the front end in terms of our go to market offers as well as in our channels retention and others and we do want to reduce the delta between the go to market offers and the.

Marc Sirota: This quarter, our B2B team is focused on proving retention and base management with new customer success team, new reputation team, dedicated to simplifying customer onboarding and an increased number of sales engineers to guide customers through the technical aspects of pre sales process and we're beginning to see results on this progress. Within other news and advertising revenue declined 10.8% year of a year in Q3. Despite macro slowdown and advertising spend, normalizing for political cycles, news and advertising grew 4.9% excluding political revenue in Q3.

Great card and make sure that folks understand what's happening in year, one and year two so that there isn't.

Confusion and that I believe will actually reduce call volumes it'll increase customer loyalty. It will remove some of the noise that's within our system today on confusion on the billing complexity.

I'm, just not understanding kind of what's the end game here, let's give everybody clear transparency there.

In terms of market growth, we're very bullish on Newbuild and we're going to rapidly get back to the pace that we were at and we're already hitting the accelerator, where we can in queue for we have the right partners now in place and we're very bullish on continuing to drive.

Marc Sirota: These improving revenue trends support strong margins as shown on SWI-11. Third quarter, adjusted EBITDA margin of 39.5% with stable compared to last quarter. We said that Q2 would be the peak of EBITDA margins as UPEX would transparently hire on the back half of the year compared to the first half. But I've come broadly in line with Q2 margins as we remain disciplined around moderating, updax in balancing rate and volumes to support improved revenue trends.

New build an edge out as.

As we go forward that is a key elements of our strategy.

It has been and will continue to be.

Marc Sirota: In Q3, we reported opx excluding share-based compensation to the client of approximately 1% year over year. The first year of year decline in 10.4%. Proving our focus on operating improvements is driving towards step structurally reducing our cost to operate the business. Operating the free class should margins increase five percentage points sequentially to 24.3%. As we saw, capital intensity and Q3 step down significant.

Do you think you can keep that north of 2% sustainably.

Yes, absolutely.

Thank you yes.

Yes.

Thank you and ladies and gentlemen, that's all the time, we have left today for questions I'll hand, the floor back to management for closing remarks.

Marc Sirota: Williams, supporting better free cash flow, which I'll come back to in a moment.

Thanks, everyone for joining have a good evening.

Thank you. This includes today's conference all parties may disconnect have a good day.

Marc Sirota: Turning to slide 12 on capital, Q3 spend of 353 million represented capital intensity of just over 15.2%. Excluding FTT age and new build capex, capital intensity would have been 8.8%.

Marc Sirota: Capital is spended down 28% year over year in Q3 and is stepped down of 120 million or 25% sequentially versus Q2. As we say capex will step down on the back half of the year, driven by capex timing and fewer fiber passings constructed.

Marc Sirota: Here today, capital spend is 1.4 billion and we continue to expect to come in on the lower end of our initial guidance of 1.7 to 1.8 billion dollars. As we take down the run rate of capex in the back half of this year, driven by timing of spend and fewer fiber passings, well continuing to invest in other growth capex opportunities.

Marc Sirota: In Q3, we added 61,000 fiber passings in the quarter. We continue to edge out our footprint adding 30,000 new build passings. And we have upgraded 61,000 passings to doxist3.1 bringing the optimum west footprint to over 90% upgraded to doxist3.1.

Marc Sirota: In summary, we mean focus on making strategic capital investments in growth opportunities with discipline around highest ROI and focus to bring down capital intensity.

Marc Sirota: In last slide 13 is a bridge of our free cash flow. Free cash flow for the quarter was $121 million. The total principally to higher operating free cash flow or EBITDA less capex in working capital benefits. We saw strong free cash flow this quarter, despite slightly higher cash interest expense due to timing of semi-annual bond payments and floating rate exposure. Although recall, taking into account interest rate hedges in place about 80% of our debt schedule is fixed free.

Marc Sirota: We continue to expect positive free cash flow for Q4 and to be positive for the full year. In summary, in Q3, we continue to deliver on many of our commitments and we are seeing results through improving trends in subscriber revenue EBITDA and free cash flow. Which will allow us to continue progressing towards sustainable future growth and return to our target leverage levels.

Marc Sirota: And with that, thank you all for your time.

Operator: We'll now take questions. Thank you.

Operator: And ladies and gentlemen, at this time we'll conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation told me indicate that your line is in the question queue. You may press the star key followed by the number 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hands at before pressing the star keys. One moment, please while we pull for questions.

Phil Q6: Our first question comes from Phil Q6 with JP Morgan, please stay your question. Thanks, like us. Dennis, let's dig into the new rate card that you discussed. How should we think about it? That impacting subscriber trends. And sort of promoting around that. Should we think about lower gross ads with a little less promotion upfront? Some companies do things like, you know, never changing our poo, things like that. And impacting churn later, or do you anticipate sort of a less of an impact? And then second, you talked about stabilizing broadband subscribers. Do you think that's feasible in 2024 or maybe beyond that? Thanks very much. Thanks Phil.

Dennis Mathew: You know the new rate card is all about simplicity, transparency, predictability. And so as we move forward, we really want to be able to reduce the complexity for our customers. This will reduce the delta between gross ad offers that are in the marketplace versus rate card. But we believe we have the right offers in market today. And so we have a great value. We've got the right offers and with optimum complete and the converged offer.

Dennis Mathew: We really do think we have a great value. We'll start to roll this out in Q in first half of next year with fiber. And then for our HFC customer base. No, it's really all about getting them the right speed that the right price. And so we will be moving forward with the speed gifting and making sure that all of our customers have the right speeds based on their rate cards. And that's going to be a process that will undertake over the next few over 24 aggressively to really make sure that we've got everybody right size.

Dennis Mathew: And in terms of our broadband subscriber growth and sustainability were very optimistic. We're seeing all of the right trends. And especially as we look at our KPIs, we're focused on delivering a great customer experience. And so as we look at NPS and the improvements we've seen there reduced contact rate, reduced service visit rates. These are all leading metrics that we know are going to help us have a healthier business, healthier foundation, we're able to execute much more effectively with self install and digital.

Dennis Mathew: Now, that being said, there's still a whole host of macroeconomic challenges when we look at moves being down almost at all time levels and inflation. And so we're very focused on controlling what we can control so that we can get back to long term subscriber revenue and EBITDA growth. Thank you. Yep.

Kutgun Maral: Our next question comes from Kutka Moral with Evercore ISI, please. Your question. Good afternoon and thanks for taking the questions. If I could just follow up on the broadband side, you talked about your wind share improving against a number of your competitors. It sounds like that was mostly in the optimum footprint and broad based against different competitive technologies. Is there anything you could share on the suddenly side as well? And I know maybe you didn't want to talk about 2024 too much in terms of getting back to stable on the broadband side, but is there anything you could share on whether or not in Q4, you could continue the trend of improving the year over year results on broadband that adds against the 19,000.

Kutgun Maral: And adjusted loss and just briefly on the fiber passing side, Mark, I believe you've talked about you fiber passing to be at roughly 600,000 in 2023. Can you help us think about the build plan for 2024 and maybe 2025 as well? Thank you. Thanks, Kutgun. The good thing is that we've seen, you know, improvements across the entire footprint. When I look at trends both in the east and the west, when we look at year over year trends, we are seeing improvements.

Kutgun Maral: And, you know, part of that is tied to implementing our new local market structure. We have five areas and we have five new general managers that we put in place. And these folks are living in breathing the business every day from competitive perspective, subscriber perspective, customer experience, operating metrics, employee engagement, community engagement. And that's making an impact. And they are empowered to drive the business. We are supporting them. We traveled the country.

Kutgun Maral: We visited each of these areas. They've been in place for quite frankly less than 90 days. One is brand new, just starting in the role. But we are starting to see improvements across the board, across the footprint. Now, when I look at Q4, you know, the competition is very aggressive in as we head into the holiday season. And so that's putting some pressure on Q4 trends, but it's too soon to commit to that Q4 performance.

Kutgun Maral: But our goal is absolutely to continue to drive improvement year over year. And so as I see the channels performing, whether it's door to door, whether it's inbound, whether it's retail. We're continuing to see improved performance in terms of yield and productivity. But we are going to be disciplined. We're going to be disciplined around driving profitability and sustained growth. Mark, as it relates to the 600,000 passing this year, you're right. As far as our plans for next year and beyond, we won't give for specific guidance, but we're still very much bullish on the fiber plan and what the benefits that we see coming off of the fire plan as we talked about previously.

Kutgun Maral: But as we said, each year we'll evaluate the capital intensity of the business, certainly the level of fiber upgrade will be a part of that equation. And we'll take a very disciplined and balanced approach to make sure we're maintaining the right level of capital intensity. Understood. Thank you both. Thank you.

Jonathan Chaplin: Our next question comes from Jonathan Chaplin with new street, please state your question. Jonathan Chaplin, your line is open. Go ahead.

Dennis Mathew: Sorry, I was on mute. Just following up on the last question on the fiber deployment, Dennis, I'm just wondering if it doesn't actually make sense to continue the sort of the postponement of the fiber process. As you just worked through some leveraging next year and potentially kick it off again when subscribers and even are growing in a sort of a convincing sustainable fashion. And I'm wondering if you can give us some context for like the reason not to do that obviously would be if it would have a material impact on the recovery and subscriber growth.

Dennis Mathew: And so maybe you could give us some context around that around, you know, the trends and growth you see in fiber markets versus non fiber markets and. How much postponing fiber deployment might impact the chance? Thanks Jonathan. We are evaluating the pace at which we want to continue that program. The good thing is we've got the right partners now in place. You know, as we've gone through the process the last couple of months we've identified some great partners, great quality.

Dennis Mathew: And we're ready to continue our fiber construction. We are evaluating the pace at which we'd like to do that going forward. You know, it will likely not be at the same pace that we had initially planned for as we entered into the year, but still working through what that should be and what that what makes sense as we enter into 2024. You know, that being said fiber is just one of the tools that we have in our toolkit to drive recovery and long term sustainable subscriber growth.

Dennis Mathew: We have a whole host of tools. We know that customers want quality and they want value. And so we are doubling down on quality quality network quality product quality service. We're looking at every element of this business in terms of the CTE in terms of training in terms of making sure we fix the issues the first time and that is having a meaningful payoff and benefit in terms of reducing contact rate increasing NPS, which we know is foundational to helping us drive long term growth.

Dennis Mathew: And then on the value side with optimum complete. We're seeing that really resonate in the market. We're seeing that resonate in our sales channels. And so we know that that also is a great tool. Additionally, as we look at the entire footprint, you've heard me talk about 3.1 and continuing to invest there and we want to continue that journey to make sure that we have one gig available throughout the footprint. We have it available 95% of the footprint, but we want it to be at 100% and so we're going to continue to drive that.

Dennis Mathew: And so all of these are tools that will allow us to get back to that objective of long term revenue subscriber and EBITDA growth. And so fiber is one of those tools and we'll decide in the coming days that at the right level right pace where we need it. The good thing is we have 2.7 million homes. And so we are going to be focused also on driving further penetration against those 2.7 million. Thanks, Dennis. Thank you.

Jessica Rice-Earlick: Next question comes from Jessica Rice-Earlick with Bank of America Securities. Thank you. That's two questions.

Dennis Mathew: I'm glad you kicked off the call talking about, you know, it's like just sort of highlighting that it's been a year and how much has been done. And obviously the first year there's kind of heavy lifting and restructuring. A lot of management changes. As you look at the year ahead, can you talk about like remaining priorities and any other significant changes you think you still need to make. And then secondly, I think that you said that half of yourselves are still taking video.

Dennis Mathew: Can you just kind of give us your longer term view on video and maybe a comment on. This chart is deal with Disney, indicate anything about how contracts will be dealt with going forward, how you thinking about contracts with programs going forward. Thanks, Jessica. Been an incredible year.

Dennis Mathew: As I look at the accomplishments, the number one objective, my number one objective was to transform the culture. To transform the culture, we needed the right team in place and we have 50 plus new vice presidents and above that are driving this business forward. Folks from all over the industry in every part of the organization, from sales, to marketing, to field, to care, to finance, to program management, the list goes on, procurement, etc.

Dennis Mathew: And we still have some more work to do. And so as we close out the year and get ready for next year, we really need to make sure that we have all the right people on the bus and they're all on the right seats. And so that is still my top priority because that is what is going to enable us to continue to drive this business and this transformation. And as I look at quality and value, we're going to continue to lean into quality.

Dennis Mathew: There is still more work to be done. And we're going to lean into driving our quality programs, whether it's on the network, whether it's on the product, whether it's on the service, making sure we have the right business partners and that they're delivering the right level of quality and holding folks to SLA's and really making sure across every part of this business. We are firing on all cylinders when it comes to quality and first time right.

Dennis Mathew: We're also going to lean into digital and continuing to drive that journey. As I think about programs like self install, we've improved that by 71% and we have more room to go and we need to lean more into self install, particularly as we think about video and other solutions.

Dennis Mathew: Other priorities though that I'm excited about from a growth perspective is B2B. We have built a brand new B2B team in terms of sales in terms of product and we're excited to build out that product portfolio. We're excited to drive execution, everything from sale, everything from funnel management to driving sales and quota to installation. And so a lot of work to do and that's why, you know, but it's a lot of fun and where we've got the right team to do it.

Dennis Mathew: As I think about video, you know, the model is broken. I just have to say, you know, for the last 10 years, the consumers have made it clear that there is a significant shift from linear to streaming. And yet the costs for linear have just continued to rise and us as distributors need to find a way to work with our programming partners to put the customer at the center. We need to give them great value.

Dennis Mathew: We need to give them the right content. As we look at these programming deals, we're, you know, bundling in content that basically nobody wants to watch along with the content that consumers actually want to watch. They want more access and availability to direct the consumer products. They want simplicity. You know, we're, we are hearing from our customers. It's challenging to have so many different apps and logins and billing relationships. And so those will be part of our conversations as we go forward that we need to put the customer at the center. And there needs to be a business model that's a win-win, the customer win, and we as distributors and programmers win. And so that will be part of the discussions as we go forward. Thank you.

Brett Feldman: And our next question comes from Brett Feldman with Goldman Sachs, please state your question. Thanks, too, if you don't mind. The first one is, if we just take a step back and think about the path to getting your broadband business back to growth, I'm talking about broadband revenues. You look at the sum total of the things you've done and the anticipated benefits of that. Ultimately, what does that path look like? Meaning, do you anticipate that you could begin to see a tailwind, reemerge in your broadband ARPU, or is this really all about driving growth and subscribers, and as the subscriber base grows, you're inevitably going to return to broadband revenue growth.

Brett Feldman: So any help in sort of thinking about the mix there, if you get everything right, would be helpful. And then the second is it's great to see that you're still converting about 60% of customers into paid lines when they come to the end of the promotional period. But what if you learned about the 40% that aren't how good are you getting at predicting that and do you see an opportunity to either tweak the offer or tweak the upselling to kind of get to a higher pay rate on that. Thank you.

Dennis Mathew: Yeah, let me jump in. Thanks, Brad. Let me jump in on the mobile and then I'll hand it off to Mark to talk a little bit about broadband ARPUs. But on the mobile side, we're excited that we were able to convert the 60% and we were able to proactively reach out to customers, make them aware, have great conversations. It's a testament really to great products, great service. They see the value in the converge bundle.

Dennis Mathew: We offer them an optimum complete offer and that really brought that value together. Quite frankly, for the 40% that received it, when I think about the approach last year, there was some opportunity in terms of really making sure the folks that were taking the products understood what they were getting, why they were getting it. You know, when we look at the usage rates, things like that, there was definitely opportunity in terms of how we were going to market last year with that free offer.

Dennis Mathew: And so we have those learnings. I mean, we came everyone I've brought in comes in with those learning so that we don't repeat the mistakes of the past and going forward. It's about selling the value, selling mobile and really making sure that we're selling solutions that our customers want and need and we've transformed the retail environment as well. We've transformed it from a service center to a sales experience and that's going to allow us to make sure that we're properly solution selling going forward with mobile.

Marc Sirota: Mark, as regards to broadband revenue, it will be a balance between subscribers and rate. And so you see we're starting to chunk into some of the subscriber losses and we like to trend that we have there. But more importantly, on the on the rate side, you've seen that we've stabilized the broadband output rates. And in fact, the past two quarters, we've actually grown the rate and we're improving that year over year, 22 cents, which is fantastic.

Marc Sirota: And so you'll see that will continue to strike the right balance between rate and volume to ultimately drive top line growth. In addition, we're very optimistic around what fiber actually brings to the table. We see when customers migrate onto the network from an HFC platform, we're seeing uplift in those customers. We're also seeing from just a gross ads perspective on pricing customers want the highest value and they're willing to pay for one gig symmetrical speeds and beyond.

Marc Sirota: And so they're paying us over $10 versus an HFC connection. We think that there is a path for both rate and volume to drive sustainable broadband revenue and that's how we'll think about it and continue to monitor it. On the other side, on the back book as well, we're being very disciplined. We've introduced a lot of AI functionality into the business and we're just beginning to scale that and so we're going to take a very disciplined customer specific approach to managing the back book and we're optimistic about what some of those early trials are yielding and so I think we'll continue to be disciplined on the front book as well as the back book to ultimately drive broadband growth. Thank you.

Craig Moffett: Our next question comes from Craig Moffett with Moffett nations and please stay your question. I'm going to stay with this same topic of the new rate card guys just to make sure I understand.

Dennis Mathew: So what you were just describing, should we read that as you're going to try to opportunistically raise them rates at the low end of the customer base but while you're presumably cutting some prices for customers that are at a very higher end of your range and try to bring everybody into the middle and does that mean that your any customer losses that you see are more likely to be concentrated in lower our poo types of customers and then I have one separate question and that's just as I think about the growth rate of the footprint where you had been growing in the 2% plus range, should we expect that to continue to decelerate as it did a bit in the quarter as you sort of refocus your capital budget to potentially a slower path of rural Egypt and the like. Craig on the pricing and the base management strategy again as I mentioned it's all about making sure that we have simplicity, reduce the complexity and provide transparency and predictability as we move forward and we believe we have the right offers from a go-to-market perspective.

Dennis Mathew: What Mark was talking about was really as we move forward just doing a much better job in channels like care, like retention to make sure that we're disciplined when we are having a conversation with a customer that we are providing them the right value leveraging our CLV tools so it's not about going back in and figuring out how do we cut at the low end cut you know increase at the low end cut at the high end get into the middle it's all about leveraging customer lifetime value and being disciplined about the offers and the save rates and the and the erosion which quite frankly when I walked in the door was that at all time high and so we just have to become much more disciplined both on the front end in terms of our go-to-market offers as well as in our channels retention and others and we do want to reduce the delta between the go-to-market offers and the rate cart and make sure that folks understand what's happening in year one and year two so that there isn't you know confusion and that I believe will actually reduce call volumes it'll increase customer loyalty it'll remove some of the noise that's within our system today on confusion on billing complexity on you know just not understanding kind of what's the end game here let's give everybody clear transparency there in terms of market growth we're very bullish on new build and we're going to rapidly get back to the pace that we were at and we're already hitting the accelerator where we can in Q4 we have the right partners now in place and we're very bullish on continuing to drive new build and edge out as we go forward that is the key elements of our strategy has been and will continue to be Do you think you can keep that north of 2%, sustainably? Yes, absolutely. Thank you. Yes. Thank you.

Operator: And, ladies and gentlemen, that's all the time we have left today for questions. I'll hand the floor back to management for closing remarks. Thank you.

Operator: This includes today's conference.

Operator: I'll pass.