Q4 2023 Altice USA Inc Earnings Call
Hello, and welcome to the Altice USA Q4, and full year 2023 earnings results conference call and webcast.
Operator: Hello, and welcome to the Altice USA Q4 and full year 2023 earnings results conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad.
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Operator: A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad. And we ask that you please ask one question and one follow-up. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Sarah Friedman, Investor Relations. Please go ahead, Sarah.
And answer session will follow the formal presentation.
He may be placed in the question queue at any time by pressing star one on your telephone keypad and we ask you. Please ask one question and one follow up.
As a reminder, this conference is being recorded.
My pleasure to turn the call over to Sarah Friedman Investor Relations. Please go ahead Sir.
Speaker Change: Hello, and welcome to the Altice, USA Q4, and full year 2023 earnings call.
Sarah Friedman: Hello and welcome to Altice USA's Q4 and full year 2023 earnings presentation. We are joined today by Altice USA Chairman and CEO, Dennis Matthew, and CFO, Mark Sirota, who together will take you through the presentation and then be available. As today's presentation may contain forward-looking statements, please carefully review the section titled Forward-Looking Statements on the slide. Dennis, please go ahead.
Sarah Friedman: Joined today about Houston, MSA, as chairman and CEO, Dennis Matthew and CFO, Mark Sirona put together, we'll take you through the presentation and then be available for questions.
Sarah Friedman: As today's presentation may contain forward looking statements. Please carefully review the section entitled forward looking statements on slide two Denis. Please go ahead.
Dennis Matthew: Thank you, Sarah. I'm pleased to be here with all of you to review our Q4 and full year performance. Before we start, I want to express my gratitude to our dedicated teams and their families. In 2023, Optimum began a transformative journey marked by the introduction of a new mission and strategic priorities to deliver improved customer and employee experiences. It's only because of their dedication and support that we were able to deliver on the commitments we set forth. We did what we said we were going to do, and it took everyone to do it.
Dennis Matthew: Thank you Sarah I'm pleased to be here with all of you to review, our Q4 and full year performance.
Dennis Matthew: Before we start I want to express my gratitude to our dedicated teams and their families.
Dênis: In 2023 optimum began a transformative journey marked by the introduction of a new mission and strategic priorities to deliver improved customer and employee experiences.
Dênis: It's only because of their dedication and support that we were able to deliver on the commitments we set forth we.
Dênis: We did what we said we were going to do and it took everyone to do it.
Dennis Matthew: I remind you that at the beginning of the year, we established our new Optimum Mission to be the connectivity provider of choice in every community that we serve, and we introduced the four strategic priorities that would position us to return to sustainable customer, revenue, and cash flow growth. They are to delight with the best customer experience, grow with the best customer relationships, connect with the best networks, and inspire with the best people. Throughout this year, we took steps to lay the foundation for these pillars.
Dênis: I remind you that in the beginning of the year, we established our new optimum mission to be the connectivity provider of choice in every community that we serve.
Dênis: And we introduced the four strategic priorities that will position us to return to sustainable customer revenue and cash flow growth.
Dênis: They are to delight with the best customer experience grow with the best customer relationships connect with the best networks and inspire with the best people.
Dênis: Throughout this year, we took steps to lay the foundation against these pillars and while we were in we are in the very early innings of our turnaround.
Dennis Matthew: And while we are in the very early innings of our turnaround, I'm incredibly proud that we achieved our full year objectives and began transforming every area of the business, which has set the stage for 2024. Let's review some of the achievements, beginning on slide three. Priority number one was to transform the culture, and we did just that. We brought in amazing talent to complement our teams and to lead through operational, financial, and cultural transformation. The successful integration of a new CFO and a new telecom executive leadership team, including more than 100 new leaders across our organization, has equipped Optimum with a best-in-class team with decades of global and U.S. broadband, mobile, and video experience. We introduced a regional operating and leadership model with a localized go-to-market approach, paving the way for a hyper-local presence in the communities we serve.
Dênis: Incredibly proud that we achieved our full year objectives and began transforming every area of the business, which has set the stage for 2024.
Dênis: Let's review some of the achievements beginning on slide three.
Dênis: Priority number one was to transform the culture and we did just that we brought in amazing talent to complement our teams and to lead through operational financial and cultural transformation.
Dênis: Successful integration of our new CFO, and a new telecoms executive leadership team, including more than 100, new leaders across our organization is equipped optimum with a best in class team with decades of global and U S broadband mobile and video experience.
Dênis: We introduced a regional operating and leadership model with a localized go to market approach paving the way for our hyper local presence in the communities we serve.
Dennis Matthew: And we drove employee engagement by listening and acting so all of our employees are empowered to represent Optimum at its best. Second, we acted with finance. We changed how our finance organization works with our operational teams, embedding a culture to help drive the business and make smarter decisions. And as a result, we have seen stabilization in our adjusted EBITDA margin, with a full-year 2023 EBITDA margin of 39.1%. We drove capital intensity down throughout the year, from the recent peak in Q1 of over 25% down to under 13% in Q4 of 2023.
Dênis: And we drove employee engagement by listening and acting so all of our employees are empowered to represent optimum at its best.
Dênis: Second we acted with financial discipline.
We changed how our finance organization works with our operational teams embedding a culture to help drive the business and make smarter decisions and.
Dênis: As a result, we have seen stabilization in our adjusted EBITDA margins with full year 2023, EBITA margin of 39, 1%.
Dênis: We drove capital intensity down throughout the year from.
Dênis: From the recent peak in Q1 of over 25% down to under 13% in Q4 of 2023.
Dênis: We committed to being positive free cash flow in the full year and delivered $122 million of free cash flow to improve top line EBITDA and capex trends in the back half of this year.
Dennis Matthew: We committed to being positive free cash flow for the full year and delivered $122 million of free cash flow to improve top line, EBITDA, and CapEx trends in the back half of this year. We were proactive in our debt maturity management, clearing out the 2024, 25, and 26 maturities, giving us runway to focus on operating the business with no maturities until 2027. And we managed our operations and financial profile with a focus on our core growth businesses. As evidenced by the recent sale of Cheddar News, we will continue to strategically evaluate our operations to maximize our focus on the core business, positioning ourselves for sustained growth and success. Next,
Dênis: We were proactive in our debt maturity management clearing out the 'twenty 'twenty four 'twenty, five and 26 maturities, giving us one way to focus on operating the business with no maturities until 2027.
Dênis: And we managed our operations and financial profile with a focus on our core growth businesses as evidenced by the recent sale of Cheddar News, we will continue to strategically evaluate our operations to maximize our focus on the core business positioning ourselves for sustained growth and success.
Dênis: Next we introduced and improved base management strategy that will enable us to profitably evolve the price value equation for our base.
Dennis Matthew: We introduced an improved base management strategy that will enable us to profitably evolve the price value equation for our base. Specifically, you saw a few weeks ago, we announced changes to our fiber and HFC rack rates for everyday prices and began right sizing speeds for customers as part of our efforts to simplify and normalize pricing and packaging. We also introduced artificial intelligence and machine learning capabilities, leveraging customer lifetime value models to advance our frontline's ability to more effectively manage our base. Looking ahead, we will continue to take a disciplined approach to profitability while ensuring we offer the best value for each customer so we can reduce churn and grow ARPU over the long term. On the customer front, I'm pleased that we meaningfully accelerated mobile and fiber growth. We set a new mobile strategy this year that enabled mobile line net additions of 34,000 lines in the fourth quarter, an acceleration of more than eight times in our pace of mobile growth compared to Q4 of the prior year.
Dênis: Specifically you saw a few weeks ago, we announced changes to our fiber and HFC rack rates or everyday pricing and began right sizing speeds for customers as part of our efforts to simplify and normalized pricing and packaging.
Dênis: We also introduced artificial intelligence and machine learning capabilities, leveraging customer lifetime value models to advance our frontline's ability to more effectively manage our base <unk>.
Dênis: Looking ahead, we will continue to take a disciplined approach to profitability, while ensuring we offer the best value for each customer. So we can reduce churn and grow our <unk> over the long term.
On the customer front I am pleased that we meaningfully accelerated mobile and fiber growth, we set a new mobile strategy. This year that enabled mobile line net additions of 34000 lines in the fourth quarter and acceleration of more than eight times and our pace of mobile growth compared to Q4 of the prior year.
Dênis: A year.
Dennis Matthew: We also sustained improvements in fiber penetration, now reaching over 12% at the end of 2023. The growth in both mobile and fiber is supported by our sales optimization efforts. Driven by a new winning sales strategy, stronger channel performance, and a Clear Retail Strategy.
Dênis: We also sustained improvements in fiber penetration now reaching over 12% at the end of 2023.
Dênis: The growth in both mobile and fiber are supported by our sales optimization efforts driven by a new winning sales culture stronger channel performance.
Dênis: Clear retail strategy improved compensation models.
Dennis Matthew: Improved Compensation Models, Disciplined Performance Management, and Attractive Clear Offers like Optimum Complete. And finally, we made significant improvements in the customer experience, advancing CX as our best product at op... We prioritize delivering top-tier network quality and providing exceptional experiences for our customers, precisely when they depend on us the most, be it for school, work, healthcare, or family moments. This year, we also launched 8-gig symmetrical speeds on our fiber network to more than 2.7 million customers, making us the nation's largest 8-gig provider.
Dênis: Disciplined performance management and attractive clear offers like optimum complete.
Dênis: And finally, we made significant improvements in the customer experience advancing CX is our best product at optimum.
Dênis: We prioritize delivering top tier network quality and providing exceptional experiences for our customers precisely when they depend on us the most feared for school or health care or family moments.
Dênis: This year, we also launched eight gig symmetrical speeds on our fiber network to more than $2 7 million customers, making us the nation's largest eight gig provider. This continues to be a strong competitive advantage everywhere, we overlap with our fiber competitor in the northeast.
Dennis Matthew: This continues to be a strong competitive advantage everywhere we overlap with a fiber competitor in the Northeast. We successfully implemented new self-service tools such as the MyOptimum app, and we advanced other self-service options like chat and a more customer-friendly portal. We also place greater emphasis on self-installation, and we've seen the number of self-installations nearly double in the full year 2023 compared to the prior year.
Dênis: We successfully implemented new self service tools, such as the my optimum App and we advanced other self service options like chat and a more customer friendly portal.
Dênis: We also placed greater emphasis on self install and we've seen the number of self installations nearly double in the full year 2023 compared to the prior year.
Dênis: Everything we have improved in terms of quality products quality network quality service and quality teams is translating into better NPS.
Dennis Matthew: Everything we have improved in terms of quality products, quality network, quality service, and quality teams is translating into better NPS. Furthermore, it's resulting in significantly fewer service calls and truck rolls, which are leading indicators of improved performance, giving us confidence that our strategy is working, and we will return to broadband customer growth over time. In summary... 2023 was about people, strategy, and process.
Dênis: Furthermore, it's resulting in significantly fewer service calls and truck rolls, which are leading indicators of improved performance, giving us confidence that our strategy is working and we will return to broadband customer growth over time.
Dênis: In summary.
Dênis: 2023 was about people strategy and process.
Dênis: I am pleased that we have vastly more capabilities more operational rigor more tools and more execution discipline to be able to drive a more effective go to market strategy deliver high quality experiences enhance our base management and stabilize our business with.
Dennis Matthew: I'm pleased that we have vastly more capabilities, more operational rigor, more tools, and more execution discipline to be able to drive a more effective go-to-market strategy, deliver high-quality experiences, enhance our base management, and stabilize our business. With all of this in place, we have strong levers to pull in 2024 as we pave the way to return to long-term sustainable growth. Let's turn to slide four to review them
Dênis: With all of this in place we have strong levers to pull in 2024 as we pave the way to return to long term sustainable growth.
Dênis: Let's turn to slide four to review them.
Dennis Matthew: First, we will continue to evolve our connectivity portfolio and value proposition to meet changing customer demands while driving improved ARPU trends across our residential and business divisions. Broadband and mobile remain our anchor products, supported by an attractive bundle offer with Optimum Complete. As we move through 2024, we will better leverage assets like fiber as we sell it in gig and multi-gig speeds, combined with mobile, to give customers the best connectivity experience for the best value. On the video side, in 2023, we launched Optimum Stream as our main video product, which blends a streaming experience with a linear video viewing experience through the Optimum TV app.
Dênis: First we will continue to evolve our connectivity portfolio and value proposition to meet changing customer demands, while driving improved ARPA trends across our residential and business divisions.
Dênis: Rod banded mobile remain our anchor products supported by an attractive bundle offer with optimum complete as we move through 2024, we will better leverage assets like fiber as we sell in gig in multi gig speeds combined with mobile to give customers the best connectivity experience for the best.
Dênis: <unk>.
Dênis: On the video side in 2023, we launched optimum stream as our main video product, which plans are screaming experience with our linear video viewing experience to the optimum TV app.
Dênis: We will continue to carefully evaluate how we go to market with our video product to maximize both customer experience and profitability and have plans to launch new video package options later, this year, giving our customers greater flexibility and choice.
Dennis Matthew: We will continue to carefully evaluate how we go to market with our video product to maximize both customer experience and profitability and have plans to launch new video package options later this year, giving our customers greater flexibility and choice. With respect to our business services segment, I previously mentioned that we have significant potential on the horizon. In Q4, we saw B2B revenue grow 1% year over year. We launched Optima Mobile for SMB last month, and we will continue to expand the B2B portfolio over the year, which will give us additional runway to support ARPU expansion in our B2B segment.
Dênis: With respect to our business services segment I previously mentioned that we have significant potential on the horizon in.
Dênis: In Q4, we saw <unk> revenue grow 1% year over year.
We launched Optima mobile for SMB last month, and we will continue to expand the <unk> portfolio over the year, which will give us additional runway to support <unk> expansion and our <unk> segment.
Dênis: We are confident we will continue to see improvement with additional products and a new dedicated team led by our president of business services, Mike Parker, who joined the organization in December as.
Dennis Matthew: We are confident we will continue to see improvement with additional products and a new dedicated team led by our President of Business Services, Mike Parker, who joined the organization in December. As we continue to evolve our operational approach, we are working in parallel to infuse innovation across the business. For example, we're exploring a host of digital engagement and generative AI tools to better engage and interact with our customers.
Dênis: As we continue to evolve our operational approach we are working in parallel to infuse innovation across the business.
Dênis: For example were exploring a host of digital engagement and generative AI tools to better engage and interact with our customers. Our aim is to have margins industry leaders dedicated to seamlessly embedding innovation into every aspect of our business.
Dennis Matthew: Our aim is to emerge as industry leaders dedicated to seamlessly embedding innovation into every aspect of our business. This commitment extends across customer experience, product development, operations, and beyond.
Dênis: This commitment extends across customer experience product development operations and beyond.
Dênis: Next as I shared earlier in 2023, we took initial steps to introduce a more thoughtful approach to pricing and packaging in.
Dennis Matthew: As I shared earlier, in 2023, we took initial steps to introduce a more thoughtful approach to pricing and packaging. In 2024, we will drive this new strategy even further with a base management program focused on retaining profitable customers, improving our food trends, strengthening our competitive position, and reducing churn. Mark will review this in more detail shortly.
Dênis: In 2024, we will drive this new strategy, even further with a base management program focused on retaining profitable customers, improving <unk> trends strengthening our competitive position and reducing churn.
Dênis: Mark will review this in more detail shortly.
Dênis: Third we are focused on fiber penetration growth and strategic network expansion in 2024.
Dennis Matthew: Third, we are focused on fiber penetration growth and strategic network expansion in 2024. We continue to see positive trends in churn reduction, ARPU, and increased satisfaction scores amongst our fiber customers. Given the trends and performance, we will continue to increase the penetration of our fiber network and strengthen the experience of fiber migrations for our customers. Our current footprint today covers some of the fastest-growing cities in the country. That, combined with our more proactive approach to how we go to market in new communities, sets us up well to drive growth by expanding our footprint through new builds and education. This brings us to our fourth lever, which is our segmented, hyper-local, go-to-market approach and a new brand strategy. In support of these plans, in Q4, we hired an experienced Chief Marketing Officer to elevate our go-to-market and brand strategy.
Dênis: We continue to see positive trends in churn reduction our pool and increased satisfaction scores amongst our fiber customers.
Dênis: Given the trends in performance, we will continue to increase penetration of our fiber network and strengthen the experience of fiber migrations for our customers.
Dênis: Our current footprint today cover some of the fastest growing cities in the country.
Dênis: That combined with our more proactive approach in how we go to market and new communities sets us up well to drive growth by expanding our footprint through new builds and edge outs.
Dênis: This brings us to our fourth lever, which is our segmented hyper local go to market approach and our new brand strategy in support of these plans in Q4, we hired an experienced chief marketing officer to elevate our go to market and brand strategy. We also brought on a new leading.
Dennis Matthew: We also brought in a new leading advertising agency of record and plan to reintroduce our brand and a new platform, new values, and evolved creative positioning to enhance our brand image in the market. This new optimum brand and marketing approach, combined with our newly formed regional optimum market structure, will ensure that we are responding with customers and that we are competing for every jump ball to drive growth. Next, we will continue to simplify customer interactions and experiences. We made great progress in 2023 on this front and will continue to upgrade tools, processes, and technology to simplify how our customers interact with us and how we communicate with them. We remain focused on enhancing our reputation as a company that's easy to do business with and one that will solve issues right the first time, every time. And this customer-centric approach will contribute to us structurally reducing operating expenses. CX remains foundational to all the work we do across the company and is embedded in our company culture.
Dênis: Advertising agency of record and plan to reintroduce our brand and our new platform, new values and evolve creative positioning to enhance our brand image in the market.
Dênis: This new optimum brand and marketing approach combined with our newly formed regional optimum market structure. We will ensure that we are resonating with customers and that we are competing for every jump ball to drive growth.
Dênis: Next we will continue to simplify customer interactions.
Dênis: And experiences.
Dênis: We made great progress in 2023 on this front and continue to upgrade tools processes and technology to simplify how our customers interact with us and how we communicate with them.
Dênis: We remain focused on enhancing our reputation as a company that's easy to do business with and one that will solve issues right. The first time every time.
Dênis: And this customer centric approach will contribute to us structurally reducing operating expenses.
Dênis: <unk> remains foundational to all the work we do across the company and is embedded in our company culture.
And last as we continue to focus on fiber upgrades DOCSIS upgrades and total passing expansion we are committed to doing so with financial discipline.
Dennis Matthew: And last, as we continue to focus on fiber upgrades, DOCSIS upgrades, and total passing expansion, we are committed to doing so with financial discipline, aiming to keep capital intensity stable year over year in line with 2023 levels. Now, before I hand it over to Mark, I want to reiterate that the strategy we put in place one year ago is already driving operational improvements and positioning us for growth. We will continue to operate with financial discipline, with deliberate capital allocation and balance sheet management.
Dênis: Aiming to keep capital intensity stable year over year in line with 2023 levels.
Dênis: Now before I hand, it over to Mark I want to reiterate that the strategy. We put in place one year ago is already driving operational improvements and positioning us for growth.
Dênis: We will continue to operate with financial discipline with deliberate capital allocation and balance sheet management.
Mark Sirota: We are focused on execution and efficiency as we continue to take the actions necessary to improve our performance and strengthen the business. This includes a heightened focus on our core operations and a strategic effort to maximize our total asset portfolio. I am extremely proud of the goals we accomplished in 2023, and building off this foundation, I am fully confident that we are on the right path to return to sustainable long-term customer revenue and EBITDA growth over time. And in 2024, we will take another step in the right direction. With that, I'll turn it over to Mark to review our Q4 and full year performance in detail. Thank you, Dennis.
Speaker Change: We are focused on execution and efficiency as we continue to take the actions necessary to improve our performance and strengthen the business.
Mark Sirona: This includes a heightened focus on our core operations and a strategic effort to maximize our total asset portfolio.
Mark Sirona: I am extremely proud of the goals, we accomplished in 2023 and building off This foundation I am fully confident that we're on the right path to return to sustainable long term customer revenue and EBITDA growth over time.
Mark Sirona: And in 2024, we will take another step in the right direction.
Mark Sirona: With that I'll turn it over to Mark to review, our Q4 and full year performance in detail.
Mark Sirona: Thank you Dennis turning to slide six I'd like to begin with a review of our financial performance. In Q4, 2023 reported total revenue down two 9% or down 2%, excluding the news and advertising segment.
Mark Sirota: Turning to slide six, I'd like to begin with a review of our financial performance. In Q4 2023, we reported total revenue down 2.9% or down 2% excluding the news and advertising segment. This was driven by a 2.8% year-over-year decline in our residential... a 1% growth in our business services segment, and a 15.7% decline in our news and advertising segment. It's worth noting, however, that excluding political ad revenue, news and advertising revenue grew 8.9% in the fourth quarter.
Mark Sirona: This was driven by a two 8% year over year decline in our residential business, a 1% growth in our business services segment, and a 15, 7% decline in our news and advertising segment.
Mark Sirona: It's worth, noting however that excluding political AD revenue news and advertising revenue grew eight 9% in the fourth quarter.
Mark Sirona: Total revenue trends were mainly driven by decreases in our residential subscriber base over the last 12 months, but notably in the second half of 2023, we showed significant improvement in the rate of revenue decline across segments. This was driven by successfully implementing a disciplined approach to rate and volume.
Mark Sirota: Total revenue trends were mainly driven by decreases in our residential subscriber base over the last 12 months, but notably, in the second half of 2023, we showed a significant improvement in the rate of revenue decline across segments. This was driven by successfully implementing a disciplined approach to rate and volume, preserving more ARPU, as well as tactfully employing AI tools, better base management strategies, and maximizing profitability in our retention. We also saw significant improvement in our year-over-year declines in EBITDA, with Q4'23 adjusted EBITDA just down over 1% in the fourth quarter. In comparison, we reported an adjusted EBITDA decline of 15.7% in Q4 of 2022 versus 21, demonstrating a significant moderation in the rate of year-over-year adjusted EBITDA decline.
Mark Sirona: Preserving more <unk> as well as tactfully, employing AI tools, better base management strategies, and maximizing profitability and our retention centers.
Mark Sirona: We also saw significant improvement in our year over year declines in EBITDA.
Mark Sirona: Q4 dollars 23, adjusted EBITDA, just down over 1% in the fourth quarter.
Mark Sirona: In comparison, we reported an adjusted EBITDA decline of 15, 7% in Q4 of 2022 versus 21.
Mark Sirona: Demonstrating a significant moderation in the rate of year over year adjusted EBITDA decline.
Mark Sirota: In 2023, we stabilized our operating expenses compared to the prior year, which peaked in Q4 of 2022 at $680 million. In comparison, our operating expenses for Q4 of 2023 were $653 million, a 4% decline in OPEX year-over-year, and improved adjusted EBITDA trends yielded better free cash flow trends in the back half of 2023. In the full year, we generated $122 million of free cash flow and $322 million in the second half of the year, offsetting the losses from the first half. In addition to improved adjusted EBITDA trends, free cash flow is supported by a step down in cash CapEx. In the fourth quarter, cash capex declined to $295 million, marking a consistent quarterly decline in our capital spend throughout the year.
In 2023, we stabilized our operating expenses compared to the prior year, which peaked in Q4 of 2022 at $680 million excluding share based compensation.
Mark Sirona: Comparison of our operating expenses for Q4 of 2023.
Mark Sirona: $653 million, a 4% decline in opex year over year.
Mark Sirona: Improved adjusted EBITDA trends yielded better free cash flow trends in the back half of 2023.
Mark Sirona: In the full year, we generated $122 million of free cash flow and $322 million in the second half of the year offsetting the losses from the first half.
Mark Sirona: In addition to improved adjusted EBITDA trends free cash flow is supported by a step down in cash capex in the fourth quarter cash capex declined to $295 million, marking a consistent quarterly decline in our capital spend throughout the year.
Mark Sirota: Turning to slide 7, we saw stable adjusted EBITDA margins, a step down in capital intensity, and a corresponding step up in our operating free cash flow margin. Adjusted EBITDA margins in Q4 2023 were 39.2% and 39.1% for the full year. Our goal in 2024 is to keep margins relatively stable compared to 2023. Turning to capital intensity, you can see that it peaked this year in Q1 at over 25%, and I'm pleased to report that we nearly halved this to 12.8% in the fourth quarter. This is a result of fewer fiber passings constructed and a more disciplined approach to capital spending through thoughtful governance practices around capital project prioritization.
Mark Sirona: Turning to slide seven we saw a stable adjusted EBITDA margins stepped down in capital intensity and a corresponding step up in our operating free cash flow margins.
Mark Sirona: Adjusted EBITDA margins in Q4, 2023 were 39, 2% and 39, 1% for the full year our goal in 2020 for us to keep margins relatively stable compared to 2023.
Mark Sirona: Turning to capital intensity, you can see that at peak this year in Q1 at over 25% and I am pleased to report that we nearly have this to 12, 8% in the fourth quarter.
Mark Sirona: This is a result of fewer fiber passing constructed.
Mark Sirona: And a more disciplined approach to capital spending to the thoughtful governance practices around capital project prioritization.
Mark Sirota: Full year capital intensity was 18.5%, which we believe is the right level to efficiently run the business today while also continuing to invest in upgrading the network to support future growth. Our outlook for the full year 2024 capital expenditure is to moderate versus 2023 in the range of $1.6 to $1.7 billion. We are strategically investing capital in the best growth areas for the business to drive both near-term improvements and long-term sustainable growth. We are taking a more disciplined approach to our fiber construction by targeting markets that yield the best ROIs, recognizing we have a low move environment which limits how quickly we can grow on this front. To that end, we will expand fiber passings to about 3 million homes by year-end and focus more on driving migrations of customers to this incredible network. Additionally, we will add a total of 175,000 new premises compared to 165 new premises in 2023. And we will continue to invest in network quality improvements and in best-in-class product development across the business within our CapEx envelope. Last, on our operating free cash flow margins, or EBITDA less CAPEX margins, Q4'23 margins were 26.4% or 20.6% in the full year.
All year capital intensity was 18, 5%, which we believe is the right level to efficiently run the business today, while also continuing to invest in upgrading the network to support future growth.
Mark Sirona: Our outlook for the full year 2020 for capital is to moderate versus 2023 in the range of one six to $1 7 billion.
Mark Sirona: We are strategically investing capital in the best growth areas for the business to drive both near term improvements and long term sustainable growth.
Mark Sirona: We're taking a more disciplined approach to our fiber construction.
Mark Sirona: We're targeting markets that yield the best Rois.
Mark Sirona: Recognizing we have a low move environment, which limits how quickly we can grow on this front.
Mark Sirona: To that end, we will expand fiber passing so about 3 million homes by year end and focus more on driving migrations of customers to this incredible network.
Mark Sirona: Additionally, we will add a total of 175000, new passenger compared to 165, new passengers in 2023.
Mark Sirona: And we will continue to invest in network quality improvements and best in class product development across the business within our Capex envelope.
Mark Sirona: Last on our operating free cash flow margins or EBITDA less capex margins Q4, 'twenty threes margins were 26, 4% or 26% for the full year.
Mark Sirota: Again, we saw a significant step up over the course of Q4'23 driven by stable adjusted EBITDA margins and a notable step down in CAPEX. Turning to slide 8, I'd like to review our recent ARPU trends and base management strategy that Dennis previewed. Q4 2023 ARPU grew 0.1% year-over-year or 15 cents higher than Q4 ARPU of the prior year.
Again, we saw significant step up over the course of 'twenty three driven by stable adjusted EBITDA margins on a notable step down in Capex.
Mark Sirona: Turning to slide eight I'd like to review, our recent <unk> trends in base management strategy that Dennis previewed.
Mark Sirona: Q4, 2023, <unk> grew 1% year over year or 15 cents higher than Q4 are two of the prior year.
Mark Sirona: Even with the headwinds have continued losses of video subscribers, we've been able to offset <unk> declines by driving mobile penetration, reducing churn and implementing AI into our care and retention centers to maximize profitability with advanced customer lifetime model.
Mark Sirota: Even with the headwinds of continued losses of video subscribers, we've been able to offset ARPU declines by driving mobile penetration, reducing churn, and implementing AI into our care and retention centers to maximize profitability with advanced customer lifetime models. Accordingly, as we mentioned during the last earnings call, we have been evolving how we price and package services, as well as how we strengthen our customer relationships by providing the best price and value package. Our overall goal is to provide clear, transparent pricing while driving meaningful increases in profitable customer relationships. A few weeks ago, we introduced new rational everyday pricing as our new RAC rates, resulting in offer and bill transparency. For broadband services, new everyday prices will be lower than prior RAC rates across most B-Tiers.
Mark Sirona: But clearly as we mentioned during the last earnings call. We have been evolving how we price and package services as well as how we strengthen our customer relationships by providing the best price and value packages.
Mark Sirona: Our overall goal is to provide clear transparent pricing, while driving meaningful increases and profitable customer relationships.
Mark Sirona: A few weeks ago, we introduced new rational everyday pricing as our new rack rates, resulting an offer and build transparency for broadband services, new everyday prices will be lower than prior rack rates across most speed tiers, it's worth pointing out that historically less than 10% of our customers were paying full rack rates.
Mark Sirota: It's worth pointing out that historically, less than 10% of our customers were paying full RAC rates, and specifically on broadband, less than 5% were paying full RAC rates. We also began speed rightsizing to provide more value to our customers. Specifically, in Q4, we reached more than 100,000 subscribers in the Northeast with this approach. Overall, the re-speed was received well by customers, with very few requesting a downgrade.
Mark Sirona: Specifically on broadband less than 5% were paying full rack rates.
Mark Sirona: We also began speed right sizing and provide more value to our customers specifically in Q4, we reached more than 100000 subscribers in the northeast with this approach overall, the restatement was received well by customers with very few requesting downgrades. Additionally, we saw both churn reductions and lower contact rates and customers who.
Mark Sirota: Additionally, we saw both churn reductions and lower contact rates in customers who were upgraded compared to a measure control group. These results underscore that moving customers to higher speed tiers strengthens the price-value equation, leading to lower churn and improved customer satisfaction, which will ultimately translate to higher customer lifetime value for the business. At the core of our current and future-based management strategy is the integration of artificial intelligence and machine learning capabilities to create sophisticated models and customer programs.
Mark Sirona: We're upgrading compare to a measure control group. These results underscore that moving customers to higher speed tiers strengthens the price value equation.
Mark Sirona: Leading to lower churn and improved customer satisfaction, which will ultimately translate to stronger customer lifetime value for the business at.
Mark Sirona: At the core of our current and future base management strategy is the integration of artificial intelligence and machine learning capabilities to create sophisticated models and customer programs.
Mark Sirota: This will allow us to make smarter Custom Data-Driven Decisions and how we interact with our customers. We have been testing the deployment of AI capabilities in some of our retention centers using data to predict churn propensity based on specific retention.
Mark Sirona: Allow us to make smarter.
Mark Sirona: Customized data driven decisions and how we interact with our customers.
Mark Sirona: We have been testing the deployment of AI capabilities in some of our retention centers using data to predict churn propensity based on specific retention offers as a result, we have seen an increase in the profitability of customers who engage within our retention centers. This work will continue and will expand across the care centers and other areas.
Mark Sirota: As a result, we have seen an increase in the profitability of customers who engage within our retention system. This work will continue and will expand across the care centers and other areas of the business. Last but not least, we will continue to drive self-selling and connectivity products with broadband and mobile at the forefront. At 97% mobile penetration of our broadband base, we have a significant opportunity to drive additional mobile take rates within our existing customer base and sell into new customers. Overall, this transformation of our base management strategy will lead to long-term benefits in churn, customer satisfaction, and customer lifetime value and will have a de minimis impact on our near-term revenue and residential R2 trajectory. For more information, visit www. FEMA.gov Turning to slide 9, I'd like to review our balance sheet position under recent proactive management. In January of this year, we issued $2 billion of Senior Guaranteed Notice, due January of 2029 at a rate of $11.75 to pay down the outstanding Term B loan and the incremental Term Loan B-3, which were due in 2025 and 2026.
Mark Sirona: Of the business.
Mark Sirona: And lastly, we'll continue to drive self selling and connectivity products for broadband and mobile at the forefront with 7% mobile penetration of our broadband base, we have significant opportunity to drive additional mobile take rate within our existing customer base and sell into new customers.
Mark Sirona: Overall this transformation of our base management strategy will lead to long term benefits to churn customer satisfaction and customer lifetime value and we will have a de minimis impact on our near term revenue in residential <unk> trajectory.
Mark Sirona: With a more disciplined and thoughtful approach to how we implement these changes we are better positioned to improve our food trends over time.
Turning to slide nine I'd like to review our balance sheet position and recent proactive management in January of this year, we issued $2 billion of senior guaranteed notes due January 2029 at a rate of 11% and three quarters to pay down the outstanding term b loan and the incremental term loan b three.
Mark Sirona: Which were due in 2025 and 2026.
Mark Sirona: In conjunction with this transaction, we announced that we would pay down the $750 million senior note due in June of 2024 with a draw from our revolving credit facility for which we had previously earmarked capacity.
Mark Sirota: In conjunction with this transaction, we announced that we would pay down the $750 million senior note due in June of 2024 with a draw from our revolving credit facility, for which we had previously earmarked to pass. These two proactive refinancing activities have successfully cleared out all near-term maturities until 2027, giving us the runway to continue to operate and drive the business toward growth. Our weighted average cost of debt pro forma for these transactions is $6.5 billion.
Mark Sirona: These two proactive refinancing activities has successfully cleared out all.
Mark Sirona: All near term maturities until 2027, giving us the runway to continue to operate and drive the business towards growth or.
Mark Sirona: Our weighted average cost of debt pro forma for these transactions at six 5% and our weighted average maturity is five one years, our fixed rate to total debt is 86% inclusive of floating to fixed interest rate swaps and pro forma at the end of 2023, we have $1 $2 billion of liquidity.
Mark Sirota: And our weighted average maturity is 5.1 years. Our fixed rate to total debt is 86%, inclusive of the floating to fixed interest rate swap. In pro forma at the end of 2023, we have $1.2 billion of liquidity, providing us with flexibility in our daily operations. We will continue to be proactive in managing our debt maturities and evaluate how our capital structure best supports our operating goal. Next, on slide 10, I'd like to review our subscriber tens, highlighting the acceleration of our fiber and mobile growth. In Q4 2023, we added 46,000 fiber customers through both new net additions and migrations of existing customers.
Mark Sirona: Riding us a flexibility in daily operations.
Mark Sirona: We will continue to be proactive in managing our debt maturities and evaluate how our capital structure and best supports our operating goals.
Mark Sirona: Next on slide 10, I'd like to review, our subscriber tunes highlighting by the acceleration of our fiber and mobile growth in Q4, 2023, we added 46000 fiber customers.
Mark Sirona: Through both new net additions in migrations of existing customers.
Mark Sirota: We previously said we would put more focus on migrations, and by doing that, we achieved penetration of over 12%, which is an increase of almost 5 percentage points from the end of the prior year. Plus, with a more disciplined focus on growing our fiber penetration, we've identified opportunities to improve processes and systems related to fiber migrations, which we believe will allow us to accelerate our rate of fiber deployment even further in the coming months. Regarding mobile, we continue to accelerate the pace of net ads each quarter, adding 34,000 lines in the fourth quarter. This growth is over eight times better than Q4 of 2022, when we added just 4,000 lives.
Mark Sirona: We previously said, we would put more focus on migrations and by doing that we achieved penetrations of over 12%, which is an increase of almost five percentage points from the end of the prior year.
Mark Sirona: Plus with a more disciplined focus on growing our fiber penetration, we've identified opportunities to improve processes and systems related to fiber migrations, which we believe will allow us to accelerate our rate of penetration even further in the coming months.
Mark Sirona: Regarding mobile we continue to accelerate the pace of net adds each quarter, adding 34000 lines in the fourth quarter.
Mark Sirona: This growth is over eight times better than Q4 of 2022. When we added just 4000 lines. We are pleased with the trends we are seeing in mobile.
Mark Sirota: We are pleased with the trend we are seeing in mobile. For example, when customers take mobile in addition to our broadband product, we see a 20% annualized turn reduction compared to the fix-only customer. This presents a significant opportunity to further reduce churn as we expand mobile penetration in our customer base and drive higher takeover. Next, on our Total Broadband Subscriber Trends, as we mentioned last quarter, similar to our peers, we saw heightened competition around the holiday season in Q4. That, in addition to the continued challenging macroeconomic environment and low move activity, impacted our broadband performance as we reported a loss of 27,000 total broadband subscribers.
Mark Sirona: For example, when customers take mobile in addition to our broadband product, we see a 20% annualized churn reduction compared to the fixed only customer base.
Mark Sirona: This results a significant opportunity to further reduce churn as we expand mobile penetration in our customer base and drive higher take rates.
Mark Sirona: Next on our total broadband subscriber trends as we mentioned it last quarter similar to our peers, we saw heightened competition around the holiday season in Q4.
Mark Sirona: That in addition to continued challenging macroeconomic environment and a low move activity impacted our broadband performance as reported a loss of 27000 total broadband subscribers.
Mark Sirona: Although we saw some incremental head ways headwinds in Q4, which may carryover into the beginning of 2024. We are confident that we have the right strategy in place with broadband and mobile combined with enhanced base management programs, a strategic region regional and hyper local go to market approach network upgrades dedicate.
Mark Sirota: Although we saw some incremental headwinds in Q4, which may carry over into the beginning of 2024, we are confident that we have the right strategy in place. With broadband and mobile combined with enhanced base management programs, a strategic regional and hyper-local go-to-market approach, network upgrades, dedicated customer care focus, and financial discipline, we are well positioned to return to positive broadband subscriber trends over time. Before we turn to the next slide, I would like to touch on our participation in the Federal Affordable Connectivity Program. We remain committed to bridging the digital divide by providing affordable and accessible internet and mobile services to our customers. And we are fully supportive of continued funding for the program. At the end of Q4, we had 125,000 customers receiving a subsidy on their broadband or mobile services through ACP. Given our limited exposure, we do not foresee a significant impact if federal funding ends.
Mark Sirona: Customer care focus and financial discipline, we are well positioned to return to positive broadband subscriber trends over time.
Speaker Change: Before we turn to the next slide I would like to touch on our participation in the federal affordable connectivity program.
Speaker Change: We remain committed to bridging the digital divide by providing affordable and accessible internet and mobile services to our customers and we are fully supportive of continued funding for the program at.
Speaker Change: At the end of Q4, we had 125000 customers receiving a subsidy on their broadband or mobile services through ACP.
Speaker Change: Given our limited exposure, we do not foresee a significant impact if the federal funding concludes it.
Speaker Change: Additionally, we will be proactive in our efforts to engaging with these customers and providing compelling retention offers.
Speaker Change: We also see this as a potential tailwind and an opportunity to attract new customers with plans in place to go after.
Mark Sirota: Additionally, we will be proactive in our efforts to engage with these customers and provide compelling retention. We also see this as a potential tailwind and an opportunity to attract new customers with plans in place to go after every jump. Turning to slide 11, I'd like to wrap up with some of the key performance drivers that give us confidence that we can have the right long-term plan and that underscores our commitment to delivering the best network experiences and services to our customers. NPS scores across our base continue to improve, with TNPS growing 21 points in Q4 2023, year over year. We also continue to drive increased use of self-service tools across technical support, customer care, and onboarding. In fact, self-installation has grown 68% year-over-year in Q4.
Speaker Change: Every jump ball.
Speaker Change: Turning to slide 11, I'd like to wrap up with some of the key performance drivers that gives us confidence that we can have the right long term plan and that underscores our commitment to delivering the best network experiences and services to our customers.
Speaker Change: NPS scores across our base continuing to improve with <unk> growing 21 points in Q4 2023 year over year. We also continued to drive increased usage of self service tools across technical support customer care and Onboarding.
Speaker Change: Self installation has grown 68% year over year in Q4.
Speaker Change: Furthermore, self service tools improved customer communications and enhanced network quality experiences led to $1 7 million fewer inbound calls and 300000 fewer truck rolls and full year 2023 compared to the prior year.
Mark Sirota: Furthermore, self-service tools, improved customer communications, and enhanced network quality experiences led to 1.7 million fewer inbound calls and 300,000 fewer truck rolls in full year 2023 compared to the prior year. While a portion of these improvements are driven by fewer customers in our base, more notably, the rates per customer continue to improve. On our network achievements, we launched 8 gigabit symmetrical speeds in 100% of our East fiber footprint in the early part of 2023, and now customers can take speeds of 1 gigabit or higher in 96% of our total footprint.
Speaker Change: While a portion of these improvements are driven by fewer customers in our base more notably the rates per customers continued to improve.
Speaker Change: On our network and achievements, we launched eight gig symmetrical speeds of 100% of our <unk> fiber footprint and the.
Speaker Change: Early part of 2023, and now customers can take speeds of one gig or higher than 96% of our total footprint.
Speaker Change: Additionally, as of Q4, we had upgraded 93% of the west to DOCSIS three one with plans to reach nearly 100% by the end of 2024 in summary, we are pleased with our achievements in 2023 and our capital investment plans for 2024, our strategically designed for both near.
Mark Sirota: Additionally, as of Q4, we had upgraded 93% of the West to DOCSIS 3.1, with plans to reach nearly 100% by the end of 2024. In summary, we are pleased with our achievements in 2023, and our capital investment plans for 2024 are strategically designed for both near-term and long-term returns for the business, ensuring we sustain excellence in our network, customer experience, and business growth. With that, we will now take questions. Thank you. We will now be conducting a question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.
Speaker Change: Term and long term returns for the business, ensuring we sustained excellence in our network customer experience and business growth.
Speaker Change: We will now take questions.
Speaker Change: Thank you well now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue.
Speaker Change: As a reminder, we ask you. Please ask one question and one follow up.
Speaker Change: One moment, please while we poll for questions.
Our first question is coming from Michael Rollins from Citi. Your line is now live.
Michael Rollins: Thanks, and good afternoon curious if you can unpack a bit more of what youre seeing in terms of broadband volume and some of the headwinds that carryover early into 2024.
Operator: As a reminder, we ask that you please ask one question and one follow-up. One moment, please, while we poll for questions. Our first question is coming from Michael Rollins from Citi. Your line is now live. Thanks, and good afternoon. Transcribed by https://otter.ai, The Bulletproof Exodus 2013, And then, just secondly... For more information, visit www.fema.gov. Hey, Michael, I hope you are well.
Michael Rollins: And then just secondly, if you could discuss a bit more about the pricing strategy.
Speaker Change: And just maybe some additional details on how you are managing the change in price relative to the <unk> performance.
Michael Rollins: Hey, Michael I Hope you are well.
In terms of the broadband headwinds.
Michael Rollins: As we had mentioned early in the.
Michael Rollins: Early in the quarter last year, we expected to see some headwinds and that's exactly what we saw we saw some of the.
Dennis Matthew: In terms of the broadband headwinds, you know, as we had mentioned early in the quarter last year, we expected to see some headwinds, and that's exactly what we saw. We saw some of the competition early in the quarter really outspending us in advertising and marketing, particularly in that October and November timeframe, effectively reducing our share of voice in the market. And we also saw some more aggressive promotions during key mobile switching windows and really more aggressive offers driving existing mobile customers to low-end data plans, particularly when you look at some of the fixed wireless providers. You know, we also saw some impact in the West as we think about the fiber overbuilders in the back half of the year, you know, more fiber build activity. I think the last time I commented on this, we were at about 30 to 35 percent overbuilt.
Michael Rollins: Competition early in the quarter really outspending us in advertising and marketing, particularly in that October and November timeframe.
Michael Rollins: Secondly, reducing our share of voice in the market and we also saw some more aggressive promotions during key mobile switching windows and really more aggressive offers driving existing mobile customers to low end data plans, particularly when you look at.
Michael Rollins: Some of the fixed wireless providers.
Michael Rollins: We also saw some impact on in the west as we think about the fiber overbuild or is in the back half of the year.
Michael Rollins: More fiber build activity and I think the last time I commented on this we were at about 30% to 35% overbuilt now we're at about 40% and some fairly aggressive.
Dennis Matthew: Now we're at about 40 percent and have some fairly aggressive offers in the market. All being said, I'm very excited about our optimum market structure and local leadership that we've put in place. And these teams are just coming online and really starting to share some insightful feedback with us in terms of the competitive landscape and really informing how we can compete much more effectively at a hyperlocal level. I think we're very well positioned. Optimum Complete continues to perform very well.
Offers in the market.
Michael Rollins: That all being said I'm very excited about our optimum market structure and local leadership that we've put in place.
Michael Rollins: And these teams are just coming online and really starting to share some insightful feedback.
Michael Rollins: With us in terms of competitive landscape.
Michael Rollins: Really informing how we can compete much more effectively at a hyper local level.
Michael Rollins: I think we're very well positioned optimum complete continues to perform very well we've seen a <unk> increase in mobile attach since we've launched optimum complete.
Dennis Matthew: You know, we've seen a 3x increase in mobile attach rates since we launched Optimum Complete. We are really excited about the new chief marketing officer that we brought on board, and she's helping us with hyperlocal go-to-market playbooks so that we can compete more effectively in our new optimum market areas that we've established. And so, these teams, you're going to see more of that, those playbooks come online, and we're also planning to really do a better job of telling our story from a brand and just an overall marketing perspective. On the pricing side,
Michael Rollins: We are really excited about the new chief marketing officer that we brought on board.
Michael Rollins: And she is helping us with hyper local go to market playbook. So that we can compete more effectively in our new optimum market areas that we've established.
Michael Rollins: And so these team youre going to see more of that those playbooks come online and were also planning to really do a better job of telling our story from our brand.
Just the overall marketing perspective.
Michael Rollins: On the pricing side.
Dennis Matthew: As you saw, we've made some adjustments, and we talked about this pricing evolution. And the pricing strategy is really to address what our customers are telling us. They've told us they want simplicity, transparency, and predictability. They want the right value for what they're paying, and we believe that the new structure will do just that. And I think Mark mentioned some of it is tied to just right-sizing folks.
Michael Rollins: As you saw we've made some adjustments and we've talked about this pricing evolution and the pricing strategy is really to address what our customers are telling us they've told us they want simplicity transparency predictability.
They want the right value for what they are paying.
We believe that the new structure, we'll do just that and I think Mark mentioned some of it is tied to just.
Michael Rollins: Just right sizing folks over 100000 customers received a speed upgrade.
Dennis Matthew: Over 100,000 customers received a speed upgrade tied to this evolution, and we're seeing improved churn, fewer calls from those customers, and that journey is going to continue. We're also leveraging AI so that we can equip our teams in our call centers with both care and retention so that when an existing customer calls, we can right-size them and put them into the right packages and make sure that they're getting the right value. And this is actually helping us reduce our pool erosion while not sacrificing our ability to save customers. So we're continuing to drive that strategy forward, and we believe that, long-term, this will help us actually grow our pool and really help in our mission to stabilize and ultimately drive customer revenue and cash flow growth. You're very welcome.
Michael Rollins: Ride to this evolution.
Michael Rollins: And we're seeing improved churn and fewer calls from those customers in that journey is going to continue.
Michael Rollins: We're also leveraging AI, so that we can equip our teams in our call centers.
Michael Rollins: Both care and retention so that when an existing customer calls, we can rightsize them and put them into the right packages.
Michael Rollins: And make sure that they're getting the right value and this is actually helping us reduce our pool erosion while not.
Michael Rollins: Sacrificing our ability to save customers. So.
Michael Rollins: We're continuing to drive that strategy forward and we believe that long term. This will help us actually grow <unk> and really helping our mission to stabilize and ultimately drive customer.
Michael Rollins: Revenue and cash flow growth.
Dennis Matthew: Thank you. The next question is coming from Ben Swinburne from Morgan's Family. Your line is now live. Thank you, Dennis.
Michael Rollins: Thanks.
Speaker Change: Very welcome.
Speaker Change: Thank you next question is coming from Ben Swinburne from Morgan Stanley. Your line is now live.
Benjamin Daniel Swinburne: Thank you.
Dennis Matthew: Thanks for all the commentary around the base management and pricing stuff. Very helpful. I guess I was wondering if you could talk a little bit about how far along you are in getting your customer base to a place where you don't have a back book, front book issue anymore, and price increases yield ARPU growth. It seems like you've been working a lot on this over the past year, and the ARPU was definitely stronger than expected in Q4, so I'm curious if you could give us a little more of And then, I guess on the fiber build for 24, I guess I'd be curious, one, where that's focused. Is that all optimum for each?
Benjamin Daniel Swinburne: Dennis Thanks for all the commentary around the the base management and pricing stuff very helpful. I guess I was wondering if you could talk a about how far along you are and getting your customer base to a place where you don't have a back book front book issue anymore.
Benjamin Daniel Swinburne: Price increases yield ARPA growth.
Benjamin Daniel Swinburne: It seems like you've been working a lot on this over the past year and the ARPA was definitely stronger than expected in Q4.
Benjamin Daniel Swinburne: So I'm curious if you could give us a little more of a sense of timing and sort of what's ahead.
Benjamin Daniel Swinburne: For that project and then I guess on the fiber build for 24.
Benjamin Daniel Swinburne: I guess I'd be curious one aware that's focus does that all off to him East I think you said 3 million homes by the end of the year.
Dennis Matthew: You said 3 million homes by the end of the year. And did you guys consider slowing it down more, just to prioritize the balance sheet and sell more into the existing footprint? Just wondering if you could talk about your thought process there.
Benjamin Daniel Swinburne: And did you guys consider slowing it down more just to prioritize the balance sheet.
And sell more into the existing footprint just wondering if you could talk about your thought process. There. Thank you.
Dennis Matthew: Oh, Ben, thank you... Hope you're doing well. Let me take the fiber question and then I'll throw it back over to Mark to expand a bit more on the front book, back book, and pricing. But, you know, our fiber strategy. We remain committed to fiber. As we mentioned, we're gonna deliver 3 million homes, primarily in the East. We're excited about having these homes and the performance of the customers that we're able to add to that network, improved ARPU trends, improved churn, and improved customer satisfaction. You know, we have customers that are just incredibly excited and thrilled with the performance of that network. And so we want to lean in and focus on driving more customers to that network. And that's going to be our mission for this year.
Benjamin Daniel Swinburne: Ben Thanks.
Speaker Change: Hope Youre doing well, let me take the fiber question and then I'll throw it back over to Mark to expand a bit more on the front book back book and the pricing.
Benjamin Daniel Swinburne: But our fiber strategy, we remain committed to fiber as we mentioned, we're going to deliver 3 million homes passed primarily in the east now we're excited about having these homes in the performance of the customers that we're able to add onto that network.
Benjamin Daniel Swinburne: Improved <unk> trends improved churn improve customer satisfaction.
Benjamin Daniel Swinburne: We have customers that are just incredibly excited and thrilled with the performance of that network and so we want to lean in and focus on driving more customers to that network and that's going to be the mission for this year, we're prioritizing migrations in particular.
Dennis Matthew: We're prioritizing migrations in particular. We've been on that journey. We've been able to, you know, if you look year over year in terms of fiber additions, we've accelerated by 1.7x. And there's more room to grow.
Benjamin Daniel Swinburne: We've been on that journey, we've been able to if you look year over year in terms of fiber additions, we've accelerated by $1 seven X.
Benjamin Daniel Swinburne: And there is more room to grow.
Dennis Matthew: We've been doing an exhaustive audit of the migration process, and as we brought in my new CTIO organization and field organization, they've identified a whole host of opportunities to improve the process, make it more efficient, and help us accelerate our fiber migrations. And so there are some systems and process issues that we need to resolve over the next couple of months. But I'm confident as we enter into late 2.2 and the second half, we're going to be able to accelerate. And then we're excited about new builds as well.
Benjamin Daniel Swinburne: We have been doing an exhaustive audit of the migration process.
Benjamin Daniel Swinburne: And as we brought on.
Benjamin Daniel Swinburne: The new CTO organization and field organization, they've identified a whole host of opportunities to improve the process make it more efficient and help us accelerate our fiber migrations and so.
Benjamin Daniel Swinburne: There are some systems and process issues that we need to resolve over the next couple of months, but I am confident as we enter into late Q2 in the second half, we're going to be able to accelerate.
Benjamin Daniel Swinburne: And then we're excited about new build as well and so as we think about just capital intensity and how we're going to.
Dennis Matthew: And so as we think about just capital intensity and how we're going to spend capital and where the best return is, we're really fortunate to have four of the fastest growing markets in our footprint. And we've had to do some work in terms of streamlining our ability to identify, approve, and execute new builds. And I think we're going to start seeing some of the benefits of that and be able to go faster as we enter into this year. And so that's going to be a huge priority for us as well. And we're going to look to prioritize migrations and new builds while continuing to have a balanced approach to building fiber in the East.
Benjamin Daniel Swinburne: Spend capital and where the best return is where we.
Benjamin Daniel Swinburne: Really fortunate to have.
Benjamin Daniel Swinburne: Four of the fastest growing.
<unk> in our footprint and we've had to.
Do some work in terms of streamlining our ability to identify.
Benjamin Daniel Swinburne: Approve and execute new build and I think we're going to start seeing some of the benefits of that and be able to go faster as we enter into this year and so that's going to be a huge priority for us as well and we're going to look to prioritize.
Benjamin Daniel Swinburne: Migrations and Newbuild, while continuing to have a balanced approach in building fiber in the east.
Mark Sirota: Mark, and then Ben, to your question around how far along we are, as you see, we're pleased with the trajectory that we've been able to put on the board here in the second half of the year around slowing the rate of rate erosion, and really, for the first time in nine quarters, we had a positive quarter on ARPU, so really pleased about that. But I would still say that we are very much in the very early innings of this transformation around pricing. We are launching our advanced AI capabilities to each of our call center reps and field sales reps, and that's going to take a little bit of time over the course of this first half of the year. And so we still have work to do, and we do think that will ultimately close any potential issues we have on back book or front book.
Benjamin Daniel Swinburne: Mark and Ben to your question around how far along we are.
Benjamin Daniel Swinburne: As you see we're pleased with the trajectory that we've been able to put on the board here in the second half of the around slowing the rate of rate erosion.
And really for the first time in nine quarters, we had a positive quarter on <unk>. So really pleased about that but I would still say that we are very much in the very early innings of this transformation around pricing.
Benjamin Daniel Swinburne: We are launching our advanced AI capabilities to each of our call center reps and <unk>.
Benjamin Daniel Swinburne: Field sales reps and that's going to take a little bit of time over the course of this first half of the year.
Benjamin Daniel Swinburne: So we still have work to do and we do think that we will ultimately close any potential issues. We have on back book front book.
Mark Sirota: And we feel like we can compete with the right offers, with optimal completeness, and provide real value to acquire customers, and then also provide the right value for our existing customers as well. So, still early, early days, but optimistic on the trends that we see. Thanks a lot.
Benjamin Daniel Swinburne: And we feel like we can compete with the right offers with optimal complete and provide real value to acquire customers.
Benjamin Daniel Swinburne: And also provide the right value for our existing customers as well so still early early days, but optimistic on the trends that we see.
Speaker Change: Thanks, a lot.
Mark Sirota: Thank you. The next question is coming from Kut Gernmural from Evercore ISI. Your line is now live.
Speaker Change: Thank you next question is coming from Kookmin morale from Evercore ISI. Your line is now live.
Mark Sirota: Good afternoon, and thanks for taking the questions. I appreciate that you're not providing explicit guidance for EBITDA or free cash flow for 2024. But I was hoping you could help us think about some of the moving pieces. First on EBITDA, given the top line trends and your outlook for relatively stable margins, it sounds like 2024 will be another transition year with EBITDA decline. Is that the right way to think about it?
Kookmin Morale: Good afternoon, and thanks for taking my questions I appreciate that you're not providing explicit guidance for EBITDA and free cash flow for 2024, but I was hoping you could help us think about some of the moving pieces first on EBITDA, given the topline trends and your outlook for relatively stable margins. It sounded like 2024 will be another transition year.
Kookmin Morale: With EBITDA declines is that the right way to think about it or could we see some of the positive momentum you've shown at the end of last year, maybe carry into 2024 and manifest in more flattish to perhaps positive EBITDA trends.
Mark Sirota: Or can we see some of the positive momentum you showed at the end of last year maybe carry into 2024 and manifest in more flattish to perhaps positive even thought? And relatedly, on free cash flow, it's certainly encouraging that you've cleared up all the maturities until 2027. So now we'll see a bit more of an interest burden. Your CapEx guidance implies it'll be flat, perhaps down a bit. I am not really sure how cash taxes will shake out.
Kookmin Morale: And relatedly on free cash flow, it's certainly encouraging that you've cleared up all the maturities until 2027. So now we will see a bit more of an interest burden. Your capex guidance implies it will be flat to perhaps perhaps down a bit not really sure how cash taxes shakeout. So just going through all of these puts and takes can you talk about your confidence in keeping free cash.
Mark Sirota: So just going through all these puts and takes, can you talk about your confidence in keeping free cash flow maybe relatively steady year-over-year or at least having it be positive again? Thank you. Absolutely. I'll take that. Good to hear from you.
Cash flow, maybe relatively steady year over year or at least having it be positive again. Thank you.
Kookmin Morale: Yeah.
Speaker Change: Absolutely I'll take that good.
Speaker Change: Good to hear from you from an EBITDA perspective again, we're pleased on the stabilization that you've seen in the margin over the course of the back half of this year.
Mark Sirota: From an EBITDA perspective, again, we're pleased with the stabilization that you've seen in the margin over the course of the back half of this year. Really excited about how we are being disciplined around operating costs, and then the rate discipline that we just talked about. So that does give us optimism around how we're performing going into 2024. I would expect EBITDA to be slightly down year over year, but we'll continue to moderate our capital spend, as we talked about. And so from a free cash flow perspective, we are still optimistic that we will be positive for the full year of 2024, despite the higher interest rate cost.
Speaker Change: Really excited about how we are being disciplined around up operating costs.
Speaker Change: And then the right discipline that we just talked about.
So that does give us optimism around.
Speaker Change: We're performing going into 2024.
Speaker Change: I would expect EBITDA to be slightly down year over year, but we will continue to moderate our capital spend as we've talked about and so from a free cash flow perspective.
Speaker Change: We are still optimistic that we will be positive for the full year of 2024.
Speaker Change: Despite the higher interest rate costs, some of the cash timing on that should.
Mark Sirota: Some of the cash timing on that should be more later into 2025, actually, so we should feel like we are in a good position to have positive free cash flow for 2024. Thank you.
Speaker Change: To be more in later into 2025 actually and so we should feel like we're in a good position to be positive free cash flow for 2024.
Speaker Change: Understood. Thank you.
Dennis Matthew: Thank you. Our next question is coming from John Hodulik from UBS, who is now live. Yeah, great.
Speaker Change: Yes.
Speaker Change: Thank you. Our next question is coming from John Hodulik from UBS. Your line is now live.
Dennis Matthew: A couple of follow-ups, if I could. First of all, just the commentary on everyday pricing and the pressure on ARPU. Are you guys suggesting that we could go back to sort of the similar two to 3% declines where we were just a few quarters ago? You know, after the moderate growth that we saw today and then on the mobile big ramp in net ads? I guess if you can boil it down, what's really driving that ramp?
John C. Hodulik: Yes, great couple of follow ups, if I could first of all just the commentary on the everyday pricing and the pressure on on <unk>.
John C. Hodulik: Are you guys sort of suggesting that we could go back to sort of the.
John C. Hodulik: The 2% to 3% declines where we were just a few quarters ago. After after the moderate growth.
John C. Hodulik: Saw today and then on the mobile big ramp in net adds.
John C. Hodulik: Yes, you can boil it down what's what's really driving that ramp and do you expect it to continue.
Dennis Matthew: And do you expect it to continue? Thanks. Thanks, John. I'll take the mobile piece, and then, Mark, you are welcome to chime in on the pricing and ARPU elements. But mobile, we're very pleased with the transformation and the acceleration. This has really been, you know, inspecting and optimizing every area of the business. We've transformed our retail centers into sales centers, and we've really prioritized, as we've said, to be the connectivity provider of choice, which includes broadband and mobile. And so we've updated our compensation plans. We've updated our sales goals. We've transformed performance management and participation, Optimum Complete, and, you know, including that as an offer and a package has been really well received, both by our frontline teams as well as our customers.
Speaker Change: Thanks, John I'll take the mobile piece and then Marc welcome to chime in on.
Speaker Change: On the pricing and <unk> elements, but.
Speaker Change: Mobile, we're very pleased with the transformation and the acceleration.
Speaker Change: This has really been.
Speaker Change: Inspecting and optimizing every area of the business.
Speaker Change: Transformed our retail centers into sales centers.
Speaker Change: And we've really prioritized as we've said to be the connectivity provider of choice, which includes broadband and mobile and so we've updated our compensation plans, we've updated our sales goals.
Speaker Change: We've transformed performance management and participation.
Speaker Change: Optimum complete.
Including that is an offer in a package has been really well received both by our frontline teams as well as our customers and so as I think about this year I think about <unk>.
Dennis Matthew: And so, you know, as I think about this year, I think about continuing to drive acceleration and growth in that space. I think we've seen others, some of our peers, set the standard in terms of net add, net additions per quarter, and customer penetration of their base. And I think those are all achievable, you know, long-term, and that's the journey that we're on.
Speaker Change: Continuing to drive acceleration in growth in that space I think we've seen others. Some of our peers set the standard in terms of.
Speaker Change: Net add net additions per quarter end.
Speaker Change: Customer penetration of their base and I think those are all achievable.
Speaker Change: Long term and that's the journey that we're on.
Dennis Matthew: And so, you know, the 8X acceleration. We're going to continue to drive that across the business. And, you know, I think, you know, we're at 7% mobile penetration of our base today. I think there's more opportunity.
So the eight X acceleration.
Speaker Change: We're going to continue to drive that across the business and.
Speaker Change: I think we're at 7% mobile penetration.
Speaker Change: Our base today, I think there's more opportunity I'm, particularly excited as Mark I believe mentioned, 20% annualized churn reduction with mobile and so there's lots of reasons to continue to drive mobile and we will continue to drive acceleration throughout the year.
Dennis Matthew: I'm particularly excited as Mark, I believe, mentioned a 20% annualized churn reduction with mobile. And so there are lots of reasons to continue to drive mobile, and we'll continue to drive acceleration throughout the year.
Speaker Change: Mark and then John on.
Mark Sirota: And then John, on the ARPU declines, now we feel like we're in a good position, as you saw with the trends. Certainly, there's going to be continued pressure from video losses on ARPU. But despite that, in our more disciplined approach to leveraging AI tools, we do feel like we have a path to stabilize ARPU and grow it over time. If you look at 2023 for the full year, we were down just 1.5% year over year, relatively flat, especially coming out of the back half. We expect to improve on this in 2024. So we feel like we have the right tools in front of our agents to drive the right outcomes and feel good about it.
Speaker Change: On the <unk> declines.
Mark Sirona: No we feel like we're in a good position as you saw with the trends.
Mark Sirona: Certainly theres going to be continued pressure from video losses on <unk>, but despite that in a more disciplined approach and leveraging AI tools.
Mark Sirona: We do feel like we have a path to stabilize and.
Mark Sirona: And grow it over time, if you look at 2023 for the full year, we were down just one 5% year over year relatively flat, especially coming out of the back half we.
Mark Sirona: We expect to improve on this in 2024.
Mark Sirona: So we feel like we have the right tools in front of our agents to drive the right outcomes.
Mark Sirona: And feel good about that.
Dennis Matthew: Great, thank you guys. Thank you. The next question today is coming from Jessica Reeferlik. From Bank of America, your line is now live. Thank you. Two questions, if it's okay.
Speaker Change: Okay. Thank you guys.
Mark Sirona: Okay.
Speaker Change: Thank you. Your next question today is coming from Jessica Reif Ehrlich.
Speaker Change: From Bank of America. Your line is now live.
Speaker Change: Two questions if it's okay.
Dennis Matthew: One, I just love your views on the sports TV that was announced with Disney, Warner Brothers, Discovery, and Fox and just how you think that impacts your business, video, and broadband, and how it might impact renewal, conversation. And then, separately, you showed good growth in advertising, ex-political, and news. Could you talk about where that's coming from and your outlook on the... I guess a couple of quarters ahead. I hope you're well.
Speaker Change: Just love your views on the sports JV that was announced Disney Warner Brothers Discovery.
Speaker Change: Just how that you think that impacts your business.
Speaker Change: Video and broadband and how it might impact.
Speaker Change: And while the conversation.
Speaker Change: Then separately you said good growth ex advertising ex political and news.
Speaker Change: Could you talk about where that's coming from in your outlook on that.
Speaker Change: Yes couple of quarters ahead.
Speaker Change: Yes.
Speaker Change: I hope you're well I'll take the sports JV question, and then Mark if you want to talk a little bit about news and advertising I think I've said this before but unfortunately I will reiterate that I really do think that the model is broken.
Dennis Matthew: I'll take the sports JB question and then Mark if you want to talk a little bit about news and advertising. I think I've said this before but unfortunately I'll reiterate that I really do think that the model is broken and you know it's really challenging when you think about the fact that viewership is at all-time lows on linear traditional video and yet you know rates are at all-time highs and so I think we as distributors really do need to work with our partners to put the customer back in the in the center and make sure that they're getting the right value and so as we have these conversations and negotiations that's exactly what we're trying to do we're trying to really push hard and make sure that we've got we're fighting for our customers in terms of rate you know historically for you know legacy process has been to include channels with extremely low viewership bundled in with channels with high viewership it's just not the right approach and inflexible packages and so we're fighting for more flexibility as well so that our consumers can ultimately have the types of bundles and packages that they're looking for and then you know the as these direct-to-consumer solutions continue to become available having those conversations making sure that they're available to our customers and that they can be leveraged as part of the portfolio of solutions that we are making available and so these are the conversations that we're having it really does come back to putting the customer at the center and making sure that we're we have the right pricing the right packaging the right channel lineups the right direct-to-consumer offerings, But, you know, ultimately, you know, for all these solutions, you need broadband. So it does strengthen the value of broadband and, you know, we want to be able to provide the highest quality broadband quality and price. And, you know, one of the top applications leveraged on broadband is video.
And.
Speaker Change: It's really challenging when you think about the fact that viewership is at all time lows on linear traditional video in yet.
Mark Sirona: Rates are at all time highs and so I think we as distributors really do need to work with our partners to.
Mark Sirona: Put the customer back in the center and make sure that they're getting the right value and so as we have these conversations and negotiations thats exactly what were trying to do we're trying to really push hard and make sure that we've got.
Mark Sirona: We're fighting for our customers in terms of rate.
Mark Sirona: Historically for legacy process has been to include <unk>.
Mark Sirona: Channel with extremely low viewership bundled in with channels with high viewership.
Mark Sirona: It's not the right approach and in flexible packages and so we're fighting for more flexibility.
Mark Sirona: As well so that our consumers can ultimately have the types of bundles and packages that they're looking for.
Mark Sirona: Then.
Mark Sirona: As these direct to consumer solutions continue to become available.
Mark Sirona: Having those conversations making sure that they are available to our customers and that they can be.
Mark Sirona: Leveraged as part of the portfolio of solutions that we are making available and so.
Mark Sirona: These are the conversations that we're having it really does come back to putting the customer at the center and making sure that.
Mark Sirona: We have the right pricing the right packaging the.
Mark Sirona: The right channel lineups, the Wright direct to consumer offerings.
Mark Sirona: But ultimately for all these solutions you need broadband so it does strengthen.
Mark Sirona: The value of broadband and.
Mark Sirona: We want to be able to provide the highest quality broadband.
Mark Sirona: Quality and price and one.
Mark Sirona: One of the top applications leveraged on broadband as video and so we want to be able to make.
Dennis Matthew: And so we want to be able to make the right video solutions available. And that's what's driving the consumers as they are – if some want to watch traditional linear video, others want streaming, we need to be able to bring that to our consumers at the right price and at the right value. And those are the conversations we're having. Mark?
Mark Sirona: The right video solutions available and Thats whats driving the consumers as they have.
Mark Sirona: Some want to watch and traditional linear video others want streaming we need to be able to bring that to our consumers.
Mark Sirona: At the right price and at the right value and those are the conversations we're having.
Mark Sirona: Mark and then on advertising certainly 2023 was a challenging year for for all of us in the AD space.
Mark Sirota: And then on advertising, certainly 2023 was a challenging year for all of us in the ad space, so I'm really pleased with how the segment operated this year and managed through that. We were able to offset some of those declines by just expanding our customer base and still having more customers. And then really some thoughtful investments in our advanced advertising agency business are really the accelerant to drive the growth that you have seen over the past few quarters. So, as we look ahead to 2024, we feel positive about where we're trending, and certainly going into the new political year, it should be a pretty good tailwind for our news and advertising segment. Bye. Bye.
Mark Sirona: But really pleased.
Mark Sirona: This segment operated this year and manage through that.
Mark Sirona: We were able to offset some of those declines, but just expanding extra that our customer base and so having more customers.
Mark Sirona: And then really some thoughtful investments in our advanced advertising agency business is really where the accelerant.
Mark Sirona: To drive the growth that you have seen over the past few quarters.
Mark Sirona: So as we look ahead to 2024, we feel positive about where we're trending.
Mark Sirona: Going into the new political year, it should be a pretty good tailwind for our news and advertising segment.
Mark Sirona: Okay.
Craig Moffett: Thank you. The next question is coming from Craig Moffett from Moffett & Nathanson. Your line is now live. Hi, thank you. I'm going to see if I can squeeze in two as well.
Mark Sirona: Thank you. Your next question is coming from Craig Moffett from Martha Nathan Your line is now live.
Craig Moffett: Hi, Thank you.
Craig Moffett: I'm going to see if I can squeeze into as well first I know you guys, especially Tony you've spent a lot of time talking about.
Craig Moffett: First, I know you guys, especially Tony, have spent a lot of time talking about ARPU. I wonder if I could just dig in one last time, maybe on just broadband ARPU specifically. Even though it's growing year over year, it took about a 1.6% sequential decline. Granted, the bundling allocations and that sort of thing can fluff that up a little bit, but I wonder if you could just talk about whether that is indicative of anything that's happening with respect to the base management program that you described. And then second, if you could just talk a little bit about your mobile economics. We don't know much about your MVNO, and the larger MV&O in the industry is shrouded in a lot of secrecy. I wonder if you could just share some, at least directional guidance on the kind of margins you expect to be able to make in that business, at least at the gross margin level. Craig, hope you're well. Let me let Mark jump in on the broadband ARPU question, and I'll talk a little bit about mobile. Yeah, hi Craig.
Craig Moffett: <unk>.
Craig Moffett: I Wonder if I could just again, one last time, maybe on just broadband our foods, specifically, even though it's growing year over year. It took a about a one 6% sequential decline.
Craig Moffett: Granted that bundling allocations and that sort of thing can fuzz that up a little bit, but I wonder if you could just talk about whether that is indicative of anything that's happening with respect to the base management program that you described and then second if you could just talk a little bit about your mobile economics, we don't know much about your in Vietnam.
Craig Moffett: And the larger and Vito in the industry is shrouded by a lot of secrecy I Wonder if you could just share some.
Craig Moffett: At least directional guidance on the kind of margins you expect to be able to making that business at least at the gross margin level.
Craig Moffett: Craig Hope, you're well, let me, let mark jump in on the broadband <unk> question and I'll.
Talk a little bit about mobile.
Mark Sirona: Yes, Hi, Craig.
Mark Sirota: From a fourth quarter perspective, this is usually a low point for the year as far as customer roll-off and promotional roll-off increased promotional activity happens typically in the fourth quarter. So this is usually a seasonally low quarter for us in this space. I'm pleased to see that we were able to moderate the fourth quarter seasonality that we've seen traditionally pretty meaningfully.
Mark Sirona: From a fourth quarter perspective, this is usually.
Mark Sirona: Our low point for the year as far as.
Speaker Change: Customer roll offs and promotional roll off increased promotional activity happens typically in the fourth quarter. So this is usually a seasonally low quarter.
Speaker Change: For us in this space I am pleased to see that we were able to moderate.
Speaker Change: The fourth quarter seasonality that we've seen traditionally.
Speaker Change: Pretty meaningfully and so although down let's say, it's not indicative of the price changes that we announced here at the beginning of the year.
Mark Sirota: And so, although down, I would say it's not indicative of the price changes that we announced here at the beginning of the year. So I feel good that we have the right tools in place to manage through that. Yeah, we're very happy with our mobile MVNO and our partner and having access to the largest 5G network. You know, our mobile margins, we're also happy that we are gross margin positive. You know, we don't break out additional detail, but we're really happy with the performance. You know, we continue to see acceleration, as I mentioned, meaningful acceleration in our sales activities. Also, in terms of attaching lines, we've been able to grow that to now one and a half lines. And there's more upside as we just continue to get our legs under us. You know, we have about 50-50 in terms of BYOD and device attach, and so there's opportunity there to continue to, you know, right-size that and continue to lean in as we, again, get our sea legs under us. And so we're in the early innings.
Speaker Change: So feel good we have the right tools in place to manage through that.
Speaker Change: Yes, we're very happy with our mobile <unk>.
Speaker Change: Our partner and having access to the largest.
Speaker Change: <unk> network.
Speaker Change: Our mobile margins. We're also happy that we are gross margin positive. We don't know we don't breakout additional detail, but we're really happy with the performance. We continue to see acceleration as I mentioned meaningful acceleration in our sales activities also in terms of.
Speaker Change: Attaching lines, we have.
Speaker Change: Been able to grow that to now one five lines and Theres more upside as we just start continue to get our legs under US we have about today about 50 50 in terms of BYOB and.
Speaker Change: Device attach and so theres opportunity there to continue to.
Speaker Change: Right size that and continue to lean in as we.
Speaker Change: Again get our sea legs under us and so we're in the early innings, we're really just starting to sell accessories and insurance.
Dennis Matthew: You know, we're really just starting to sell accessories and insurance. But we're excited, particularly about the churn benefit, as I mentioned. And we're excited about continuing to drive mobile as there is, you know, a long-term margin expansion opportunity. And the only thing I would add is just on the ARPUs side from a mobile perspective, we are seeing growth in that as well, one coming from the fact that we're no longer selling free services, but then also with OptumComplete, we're really starting to see meaningful growth in the ARPUs coming out of that bundle So all signs of going in the right direction.
Speaker Change: But we're excited particularly about the churn benefit as I mentioned and we're excited about continuing to drive mobile as there is.
Long term margin.
Speaker Change: Expansion opportunity.
Speaker Change: And the only thing I would add is just on the <unk> side from a mobile perspective, we are seeing growth.
Speaker Change: In that as well one coming off the fact that we're no longer selling free services, but then also with the optum to complete but.
Speaker Change: We're really starting to see meaningful growth in the <unk> coming out of that bundled package up $5 actually sequentially from the third quarter.
Speaker Change: All signs of going in the right direction.
Mark Sirota: Thank you. Thank you. The next question is coming from Vikash Haral from New Street Research. Your line is now live.
Speaker Change: Alright, thank you.
Speaker Change: Thank you. Your next question is coming from the cash for <unk> from New Street Research. Your line is our lives.
Cash for: Hi, Thanks, so much for taking the question.
Mark Sirota: Hi, thanks so much for taking the question. Now that you've raised $2 billion in debt, how do we think about any potential ABS debt? Is that completely off the table, or are you still working on that? And if you do, what would be the potential usage of those funds?
Cash for: <unk> you.
Cash for: <unk> raised $2 billion in debt.
Cash for: How do we think about any potential ABS debt.
Cash for: Is that completely off the table or.
Cash for: <unk> been working on that and if you do what would.
Cash for: B.
Cash for: The potential usage of both funds and such.
Mark Sirota: And second one, if I could, could you give us a sense of what the IRRs are for the new bills versus fiber upgrades and how you sort of decide whether to go for additional new bills versus fiber upgrades during the year? Thank you. Hi Prakash, I can take both of these.
Cash for: Second one if I could.
Cash for: Give us a sense of what the IRR or the new builds versus fiber upgrades on how you sort of decide whether to go for additional new build versus buy.
Cash for: Fiber upgrades during the year. Thank you.
Speaker Change: <unk> I can take both of these.
Mark Sirota: As it relates to the $2 billion refinancing, I'm really pleased that we were proactive and cleared the deck for the next three years for us to operate. This, as you may know, just takes time. And so I still think it's very much a possibility. But now that we've cleared out the near-term maturities, we have a little bit more flexibility in getting the timing and the sizing done properly. So it's still out there, but it just takes time to do that.
Speaker Change: As it relates to the $2 billion refinancing really pleased that we were proactive and we cleared the deck for the next three years for us to operate.
Speaker Change: Especially given the uncertainty around the interest rate markets and where they're heading.
Speaker Change: Into this year.
Speaker Change: As it relates to Avs, we certainly have learned more about the process involved in an avs transaction in just this as you may know just takes time and so I still think it's very much a possibility, but now that we've cleared out the near term maturities, we have a little bit more flexibility in and getting the timing and the C.
Speaker Change: <unk> done properly.
Speaker Change: So still it's still out there, but it just takes time to do that.
Speaker Change: And then as it relates to IRR is we just have not historically disclosed externally.
Mark Sirota: And then as it relates to IRRs, we just have not historically disclosed those externally. But especially as you think about the fiber bills, we're definitely seeing improved results coming out of that, from churn reduction to ARPU lift. All of which are better than our original base case scenario, but again, we'll just remain disciplined around the level of capital intensity to drive free cash flow and invest the next dollar in the spot that's going to give us the highest yield. That's right.
Speaker Change: As you, especially as you think about the fiber builds we're definitely seeing.
Speaker Change: Improved results coming out of that from churn reduction to <unk> lift.
Speaker Change: All of which are better than our original base case scenario, but we'll again, we'll just remain disciplined around the level of capital intensity to drive ultimately free cash flow.
Speaker Change: The next dollar in the spot is going to give us the highest yield.
Speaker Change: That's right the only thing I'll add is that.
Dennis Matthew: The only thing I'll add is that, as we have done with every part of the organization, we are revamping and evolving our ability to identify, deliver, execute, execute, deliver, and drive penetration of new bills. And so, as I mentioned, we have four of the fastest growing markets in our footprint. And so these are good, good problems to have in terms of driving and making investment decisions.
Speaker Change: As we've done with every part of the organization.
Speaker Change: We are revamping and evolving our ability to identify and deliver execute execute deliver and drive penetration of new builds and so as.
Speaker Change: As I mentioned, we have four of the fastest growing markets in our footprint and so these are good.
Speaker Change: Good problems to have in terms of driving.
Speaker Change: Making investment decisions.
Mark Sirota: Thank you. Our final question today is coming from Bryan Kraft from Deutsche Bank. Your line is now live. Hi. Good afternoon.
Speaker Change: Thank you. Our final question today is coming from Bryan Kraft from Deutsche Bank. Your line is now live.
Bryan D. Kraft: Hi, good afternoon.
Bryan D. Kraft: I want to ask you, I guess the $16 to $17 billion CapEx guidance combined with the capital intensity guidance implies a pretty wide range. Just to correct you, $1.6 to $1.7 billion. We're not done yet. Excuse me, sorry. I just forgot the decimal point. It's a point of clarification. We don't want a list situation.
I wanted to ask you a I guess the $16 billion to $17 billion Capex guidance combined with the capital intensity guidance imply.
Bryan D. Kraft: This is the correct one six to $1 7 billion.
Bryan D. Kraft: Sorry, I, just I just forgot the ethanol plant.
Bryan D. Kraft: Just a point of clarity.
Bryan D. Kraft: But we don't want a lift situation.
Mark Sirota: That capital intensity implies a pretty wide range of 2024 revenue if you combine that with the 18.5% capital intensity guidance. I think that implies about $8.65 to $9.19 billion. I just wanted to ask, I guess, first, how much cheddar revenue was in 2023, which would explain some or all of that revenue decline, and then whether you expect 2024 revenue to really be in that wide range, if your expectations are really that wide of a range, or if it's more narrow than that. Yeah, we won't get into that.
Bryan D. Kraft: That capital intensity implies a pretty wide range of of 2020 for revenue if you combine that with the 18, 5% capital intensity.
Bryan D. Kraft: And so I think that implies about a six five to $9 one 9 billion.
Speaker Change: I wanted to ask I guess first how much chatter revenue was in 2023, which would explain some or all of that revenue decline and then whether you expect 2020 for revenue to really be in that why if your expectations are really that wide of a range or if it's more narrow than that thank you.
Speaker Change: Yes, we won't get into.
Mark Sirota: Mark, we won't get into specifics around the Cheddar revenue and all of that, but just say that it was de minimis and not material to the financial results of the company. As we think about capital intensity, again, we've stated that we're going to remain disciplined around how we drive capital intensity. We feel optimistic that we're making the right strategic moves and have the right playbook in place to drive revenue. We won't give specific guidance here today on the revenue outlook, but we feel like we have the right playbook in place to drive our revenue trajectory. And we'll kind of just leave it at that. Mark, could I just ask one quick question on the 18.5% capital intensity? Is that a multi-year comment at this point?
Speaker Change: So mark we won't get into specifics around the Cheddar revenue.
Speaker Change: But just say that it was de minimis and not material to the financial results.
Speaker Change: The company.
Speaker Change: As we think about the capital intensity again.
Speaker Change: <unk> stated that we're going to remain disciplined around how we drive capital intensity.
Speaker Change: We feel optimistic that we're making the right strategic moves and we'll have the right playbook in place to drive.
Speaker Change: Revenue, we won't give specific guidance here today on the revenue outlook.
Speaker Change: But we feel like we have the right playbook in place to drive.
Speaker Change: Our revenue trajectory.
Speaker Change: We'll come to just leave it at that today.
Speaker Change: Mark could I just ask one quick follow up on the 18, 5% capital intensity is that a multi year comment at.
Mark Sirota: Should we, you know, think about that as being long-term guidance, or is that more of a 24-hour thing? Bryan, that's a great question. As we said, and I'll reiterate today, we will re-evaluate capital intensity every year and really be disciplined around how the business is performing to really dictate how much we're going to spend.
Speaker Change: At this point should we think about that as being long term guidance or is that more of a 'twenty Brian.
Mark Sirona: Great question.
Speaker Change: As we've said and I'll reiterate today, we will reevaluate capital intensity every year.
Speaker Change: And really <unk>.
Speaker Change: Disciplined around how the business is performing to really dictate how much we're going to spend.
Mark Sirota: And again, on the 18.5%, we are saying we will moderate slightly from that to... Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further closing comments. Thank you all for joining us. Please reach out to Media Relations or Investor Relations with any additional questions.
Speaker Change: And again, an 18, 5% we are saying we will we will moderate slightly from that too.
Speaker Change: To drive those results.
Speaker Change: Okay. Thank you.
Thank you we reached end of our question and answer session I would like to turn the floor back over to management for any further closing comments.
Speaker Change: Thank you all for joining please reach out to our media relations or Investor relations with any additional question.
Company Representative: Thank you. Have a good day. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation.
Speaker Change: Thank you.
Speaker Change: Have a good day. Thank you that does conclude today's teleconference and webcast. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
Speaker Change: Yeah.