Q3 2024 Cable One Inc Earnings Call
Hello, and welcome to the cable one incorporated Q3 2024 earnings call. All participants are in a listen only mode. At this time later, we will conduct a question and answer session to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: Hello and welcome to the Cable 1 Incorporated Q3 2024 earnings call. All participants are in a listen-only mode at this time. Later, we will conduct a question-and-answer session.
Speaker Change: To ask a question, please press star followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question, again, just press star and the number one. As a reminder, this conference is being recorded. At this time, I would like to turn the conference over to Jordan Morkert, Vice President of Investor Relations. Please go ahead.
Speaker Change: To withdraw your question again, just press Star and then.
Speaker Change: Number one as a reminder conference is being recorded at this time.
Speaker Change: I would like to turn the conference over to Jordan, Vice President of Investor Relations. Please go ahead.
Jordan Morkert: Good afternoon and welcome to Cable 1's third quarter 2024 earnings call. We're glad to have you join us as we review our results.
Speaker Change: Good afternoon, and welcome to cable one's third quarter 2024 earnings call. We're glad to have you join us as we review our results before we proceed I would like to remind you that today's discussion contains forward looking statements relating to future events that involve risks and uncertainties, including statements regarding future broadband revenue.
Jordan Morkert: Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties.
Jordan Morkert: including statements regarding future broadband revenue and customer growth, customer losses due to the end of the Affordable Connectivity Program, future ARPU, future levels of wired competition, growth in carrier, wholesale, and enterprise market segments,
Jordan Morkert: Customer growth customer losses due to the end of the affordable connectivity program future our future levels of wired competition, both in carrier wholesale and enterprise market segments.
the future capabilities of our network.
Jordan Morkert: Capabilities of our network the anticipated benefits from AI, the timing and anticipated benefits of our new billing system implementation capital expenditures purchase price payable if the MBA put option is exercised and the anticipated timeline to consummate such transaction, our ability and sources of capital to fund the MDI.
Jordan Morkert: The purchase price payable if the MBI put option is exercised in the anticipated timeline to consummate such transaction.
Jordan Morkert: Our ability and sources of capital to fund the MBI put price, and our future financial performance. Capital allocation, dividend policy, leverage ratios, and financing plans.
Jordan Morkert: Price and our future financial performance capital allocation dividend policy leverage ratios and financing plans.
Speaker Change: You can find factors that could cause Cable 1's actual results to differ materially from the forward-looking statements discussed during today's call, in today's earnings release, and in our SEC filings, including our annual report on Form 10-Ka.
Jordan Morkert: You can find factors that could cause cable one's actual results to differ materially from the forward looking statements discussed during today's call and today's earnings release and in our SEC filings, including our annual report on Form 10-K, a cable one is under no obligation and expressly disclaims any obligation except as required by law to update or.
Speaker Change: Table 1 is under no obligation and expressly disclaims any obligation except as required by law to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
Speaker Change: Ultra its forward looking statements, whether as a result of new information future events or otherwise.
Speaker Change: Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with the U.S. Generally Accepted Accounting Principles, or GAAP.
Speaker Change: Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U S. Generally accepted accounting principles or GAAP reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at <unk>.
Speaker Change: Cable one dot net joining me on today's call is our president and CEO, Julie Lewis and Todd <unk>, our CFO with that let me turn the call over to Julie. Thank you Jordan and good afternoon, everyone. We appreciate you joining us for today's call.
Jordan Morkert: Joining me on today's call is our President and CEO, Julie Laulis, and Todd Koetje, our CFO. With that, let me turn the call over to Julie. Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us for today's call.
Julie Laulis: In the third quarter, we continue to execute on our phased plan for long-term broadband growth.
Jordan Morkert: In the third quarter, we continued to execute on our plan for long term broadband growth.
Julie Laulis: As expected, residential ARPUs stabilized, and our customer base remained essentially unchanged after excluding the impact of customer losses from the expiration of the Affordable Connectivity Program and minimal customer gains from a small acquisition in July.
Julie Laulis: As expected residential RP stabilized and our customer base remains essentially unchanged after excluding the impact of customer losses from the exploration.
Julie Laulis: Portable connectivity program and minimal customer gains from a small acquisition in July.
Julie Laulis: Business broadband growth also accelerated, driven by rising demand across enterprise segments.
Julie Laulis: Business broadband growth also accelerated driven by rising demand across the enterprise segment.
Julie Laulis: Looking ahead, we are confident in our ability to grow broadband revenue over the long term. This confidence is rooted in insights we've gained with new go-to-market tactics.
Julie Laulis: Looking ahead, we are confident in our ability to grow broadband revenue over the long term.
Julie Laulis: Confidence is rooted in insights we've gained with new go to market tactics recent talent additions and organizational changes new product offerings and the resilience of our highly secure network, which has maintained significant capacity limits double digit increases in data demand.
Julie Laulis: recent talent additions and organizational changes, new product offerings, and the resilience of our highly secure network, which has maintained significant capacity amidst double-digit increases in data demand.
Julie Laulis: This quarter also marks several significant milestones, including advancements in digital transformation and expanded use of AI strategic rebranding and ongoing organizational alignment.
This quarter also marked several significant milestones.
including Advancements in Digital Transformation and Expanded Use of AI.
a strategic rebranding, and ongoing organizational alignment.
all guided by a customer-first mindset.
Julie Laulis: <unk> guided by a customer first mindset.
Speaker Change: Before Todd reviews our financial performance in detail, I'll dive deeper into topics of broadband growth, product and network enhancements, and strategic initiatives.
Speaker Change: Before Todd reviews, our financial performance in detail I'll dive deeper into topics of broadband growth product and network enhancements and strategic initiatives.
Speaker Change: I want to emphasize that despite the early stages of a phased plan for long-term growth, we remain confident that our steadfast approach will help us successfully navigate the evolving competitive landscape while delivering shareholder value.
Speaker Change: I want to emphasize that despite the early stages of a phased plan for long term growth. We remain confident that our steadfast approach will help us successfully navigate the evolving competitive landscape, while delivering shareholder value.
Speaker Change: Starting with residential broadband HFC subscribers were essentially flat for the quarter, excluding the impact from the discontinuation of ACP, which ended in April.
Speaker Change: Starting with residential broadband, HSD subscribers were essentially flat for the quarter, excluding the impact from the discontinuation of ACP, which ended in April.
Speaker Change: We're able to accomplish this despite the ongoing transition to our new billing system, which has required a suspension of price adjustments for more than a quarter limiting our ability to make marketing adjustments to approximately 20% of our HFC customers.
Speaker Change: To support our growth and drive our strategy in the upcoming quarters. We've also made significant enhancements to our marketing team, which I will detail a bit later.
Specific to the third quarter, while we saw a decrease of 3400 customers on a sequential quarterly basis discontinuation of the ACP program cost us 300 customers.
Speaker Change: I'd also like to call out that while we took proactive measures to support our customers. After ACP ended which helped maintain our commitment to offer affordable services, we consciously avoided extreme tactics to retain customers at any cost.
Speaker Change: Looking ahead, we believe the accelerated churn due to the discontinuation of the program is behind US and we will consider any further churn from this cohort as part of the normal customer lifecycle.
Speaker Change: One example of how we're working to deliver affordable service to value conscious customers is our pilot pay as you go internet offering a service tailored for residential customers, who seek flexibility in managing their internet expenses.
Speaker Change: First of all through our user friendly mobile app that allows customers to purchase high speed Internet and increments as well as the freedom to adjust their speed is needed ensuring they only pay for what they require.
Speaker Change: This product provides a true pay as you sell experienced with no long term commitment contracts or extra fees for the customer.
Speaker Change: A lower cost basis for the company.
Speaker Change: This is a pilot program and we are just starting to gather insights from it which will inevitably lead to program evolution as we refine how to best serve this cohort of customers moving forward.
Speaker Change: As anticipated our ARPA has stabilized sequentially and we expect this trend to continue for the remainder of the year, notably new customer selection of speed tiers of 600, megs or higher increased significantly by 900 basis points year over year, and 300 basis point sequentially.
Speaker Change: Reaching an all time high of 62%.
Speaker Change: <unk> benefited from this higher sell in as well as our ongoing refinement of competitive responses promotional roll offs and the successful implementation of our pay plus program.
Speaker Change: Turning to competitive dynamics, we believe there are early signs that competition is stabilizing.
Speaker Change: Typically we have observed more rational pricing from some of our competitors, reflecting the economic realities of our markets.
Speaker Change: We believe the economics required for viable returns for wired operators in our markets effectively discourages long term aggressive pricing strategies.
Speaker Change: Material costs construction costs from challenging topography and limited Labor resources also act as a barrier to new entrants and a host of our markets. Most importantly, our deep local knowledge gives us a competitive edge in these communities, enabling us to maintain a strong market position.
Speaker Change: Even in areas with elevated competition.
This does broadband continues to be an important driver of our long term growth strategy with revenues up two 9% year over year, an acceleration from the previous quarter's year over year growth rate, we are observing significant demand across our carrier wholesale and enterprise segments.
Speaker Change: These business segments are in earlier stages of growth and continued to show consistent progress.
Speaker Change: And all segments, we are taking action to improve our position whether through pricing customer experience.
Speaker Change: And 10, new product types.
Speaker Change: I would like to take a few minutes to elaborate on the importance of our strong network. Our senior leadership recently gathered at the National FCP conference and the excitement around the future of HFC networks was palpable.
Speaker Change: The DOCSIS forgotten makes the future looks brighter than ever as it will be able to deliver up to 10 gig speeds during an intelligent capital efficient infrastructure future.
Speaker Change: Future advancements promise, even greater capabilities with potentially reaching 25 gigabits or more today.
Speaker Change: Today, we offer gigabit speeds across our entire footprint with multi gig capabilities available in over 40% of our markets.
Speaker Change: We plan to expand these products to all markets as we transition from linear video to IP TV.
Speaker Change: But our story isn't just about speed our network surpasses the performance and security of telephone Internet competitors positioning us to meet the growing data demands of our customers now averaging 730 gigabits of data per month, notably 25% of our customers exceed one terabyte of <unk>.
Speaker Change: As such per month up from 21% last year.
Speaker Change: Even with this rising demand our network's peak utilization remains low at just 19% downstream and 18% upstream demonstrating our ability to support continued growth without capacity limitations or substantial increase in capital intensity.
Speaker Change: We also understand that seamless and secure connectivity within the home is essential.
Speaker Change: While we offer intelligent Wifi designed to ensure customers enjoy the best possible online experience at all times, our intelligent Wi Fi continuously adapt to the user's needs optimizing speed and ensuring secure connectivity, even with a large number of devices online.
Speaker Change: This smarter network as part of our commitment to delivering technology that enhances our customers' day to day lives and even more exciting things lie ahead for our customers and a more adaptive error on our network will become increasingly proactive intuitive.
Speaker Change: We're laying the groundwork for this future by integrating AI machine learning data analytics and smart equipment into our infrastructure.
Speaker Change: First thing in our network that anticipates the needs of our customers delivering speed the liability and adaptability that transform the customer experience.
Speaker Change: These advancements position us not only to meet market demand.
Speaker Change: <unk> the future of broadband.
Speaker Change: But our through our investment in multi gig capabilities intelligent Wi Fi or cyber security solutions, we are committed to driving sustained growth through innovation reliability and an unwavering focus on our customers.
Speaker Change: I was wondering example, we recently introduced a top tier security package for $8 a months designed to protect our customers from and why.
Speaker Change: Mid range of online threats, including viruses malware and phishing attacks.
Speaker Change: This package and others like it will create meaningful opportunity for our <unk> growth, while enhancing customer loyalty and retention.
Speaker Change: Aligning the interests of our customers and the company.
Speaker Change: Can create a more integrated and valuable experience for all stakeholders.
Speaker Change: Shifting to the strategic initiatives, we plan to go live next week, our new billing system consolidating our fidelity.
Speaker Change: Net and cable America customers onto a single billing platform.
Speaker Change: This will dramatically streamline operations for associates and customers accelerate product launches and strengthen our spark light brand presence as we have noted previously this enables us to retire more than 30 disparate software platforms, yielding several million dollars and anticipated.
Speaker Change: Annual savings. Additionally.
Speaker Change: Additionally, we successfully transitioned our hard grade brand to our financial ERP streamlining our financial operations and decreasing cost.
Speaker Change: We have also made substantial progress and rebranding fidelity hard great unit and cable America to our spark light brand on our website and customer billing systems.
Speaker Change: It's across the company are proudly wearing sparklet uniforms, and badges and we are updating our vehicle reps and signage as well consolidating all customers under the sparkling brands and packages leverages the strength of our brand across the footprint and secures efficiencies by fully integrating.
Speaker Change: <unk> our operations.
Speaker Change: Collectively these efforts are designed to drive operational excellence and create a unified brand experience positioning us well for exciting growth opportunities ahead.
Speaker Change: Transitioning from operational enhancements to technological advancement, we're pleased to share a significant development in our approach to customer interactions, we've begun integrating and advanced AI module into our customer experience framework, representing the first phase of a broader strategy.
To transform our approach to improve customer interactions and drive greater efficiency.
Speaker Change: AI powered system allows us to harvest actionable customer insights, enabling our leaders to gain a deeper understanding of our customer needs and continuously elevate overall customer journey.
Speaker Change: We continue to recognize the importance of adding talent to our team to achieve our strategy. So I would like to welcome Tony Mercury as our new SVP of residential services, Tony brings more than 25 years of experience in the telecommunications industry to his new role.
Speaker Change: Before joining us cable one he served as vice President and Chief Marketing Officer at cricket Wireless and AT&T subsidiary, where he led cross functional teams to enhance brand awareness identify market trends and drive revenue growth.
Speaker Change: Earlier in his career Tony held several senior roles at AT&T, including Vice President of both States, where his leadership was instrumental in leading market share growth through innovative marketing strategies based on data driven insights.
Speaker Change: Tony's addition, complements the reorganization, we announced last quarter, bringing expertise that will enhance our ability to serve customers.
Speaker Change: Foster sustainable long term growth and adapt to the evolving demands of today's competitive landscape we.
Speaker Change: We are pleased with the new talent, we brought in across the organization.
Speaker Change: They are deep expertise strengthens our executive team and Fortifies, our strategic direction.
Speaker Change: Before turning the call over to Todd I want to recognize the incredible dedication of our associates during this challenging hurricane season.
Speaker Change: Hurricane Helene one of the deadliest to strike the U S. In over 50 years significantly affected communities in the southeast, including our markets in South Carolina and Georgia.
Fortunately all of our associates and their families are safe and our exposure was limited our team swiftly restored services to more than 95% of the approximately 15000 impacted cableone customers within a week demonstrating remarkable resilience and commitment to our.
Speaker Change: Customers.
Tom: And now Tom.
Speaker Change: Todd will provide a recap of our third quarter financial performance and further discuss our outlook for the future.
Todd Koetje: Thanks, Julien starting off with revenue for the third quarter of 2024, our total revenues were $393 6 million.
Todd Koetje: Compared to $423 million in the third quarter of 2023.
Todd Koetje: Year over year decrease was due primarily to lower residential data RP.
Todd Koetje: Attrition within our lower margin video product line.
Todd Koetje: After declining sequentially over the first half of the year residential data our boost stabilized for the Q2 Q3.
Speaker Change: As Julie noted we expect this to continue through the end of this year.
Speaker Change: Q3 residential data revenues decreased by $17 1 million or six 9% year over year.
Speaker Change: Driven by a seven 1% decrease in our midst.
Speaker Change: Decline was due to targeted pricing and product strategies in specific markets to address select competitors, along with a focus on the value customer segment, which generally has lower selling rates.
Speaker Change: Shifting the business services third quarter business data revenues grew by $1 6 million or two 9% compared to the same period last year.
Speaker Change: And this data psus grew by 1100 over the past 12 months.
Speaker Change: This growth is fueled by strong demand across the carrier wholesale and enterprise customer segments, which generate our highest revenues per customer and benefit from long term contracts high renewal rates.
Speaker Change: Operating expenses were $104 6 million a decrease in expense was driven largely by a $7 $6 million decrease in programming and franchise costs as well as our ongoing focus on optimizing cost structures within our labor base.
Speaker Change: Selling general and administrative expenses were $88 4 million or 22, 5% of revenues for the third quarter of 2024 compared to $92 $7 million and 22, 1% in the third quarter of last year.
Speaker Change: The decrease in expense was driven in large part by lower labor and other compensation related costs due to organizational changes implemented during the second quarter, partially offset by increased expenses related to new platform implementations and rebranding.
Speaker Change: Net income was $44 2 million for the third quarter of 2024 compared to $33 million in the third quarter of 2023.
Speaker Change: Adjusted EBITDA was $213 $6 million or <unk> 54, 3% of revenues in Q3, 2024 compared to $230 million or <unk> 54, 7% of revenues in the prior year quarter.
Speaker Change: Our adjusted EBITDA margin improved 50 basis points on a sequential basis.
Speaker Change: Capital expenditures were $77 million in Q3 of this year compared to $77 $8 million last year.
Speaker Change: During the third quarter of 2024, we invested approximately $7 million and new market expansion projects and $3 million and the integration activities sequentially.
Speaker Change: Sequentially, our capital investment increased by $5 $4 million.
Speaker Change: Primarily due to our ongoing investment in leading intelligent Wi Fi technology.
Speaker Change: Adjusted EBITDA less capital expenditures was $136 $6 million in the third quarter of 2024, a $15 6 million or 10, 2% decrease from the prior year.
Speaker Change: Year to date, our adjusted EBITDA less Capex was $428 6 million a one 4% decrease from the comparable prior year period.
Speaker Change: We remain committed to a disciplined and balanced capital allocation strategy.
Speaker Change: On four key areas enhancing network and platform infrastructure as Julie detailed earlier capitalizing on organic growth opportunities within our existing markets pursuing strategic inorganic growth opportunities, both investments and through acquisitions and return of capital commitment that has been and will continue to be focused on debt repay.
Speaker Change: <unk>.
Speaker Change: As you May have seen recently two of our investments Metro and ZIP Lee.
Speaker Change: That they have entered into definitive agreements to sell their businesses. These transactions, which are slated to close in 2025 will yield attractive returns well in excess of our targeted annual parameters and provide pre tax proceeds in excess of $100 million.
Speaker Change: In Q3, we distributed $17 million in dividends to shareholders repaid $54 $6 million of debt, including a $50 million voluntary repayment of our revolving credit facility.
Speaker Change: Our approach to capitalization and balance sheet management is guided by a conservative mindset, emphasizing discipline debt repayment and a demonstrated ability to reduce leverage since early 2023, we've repaid nearly $400 million of debt, including $350 million of the initial $488 million.
Speaker Change: Drawn under our revolving credit facility.
Speaker Change: As of the end of the third quarter, we had approximately $227 million of cash and cash equivalents on hand, and our debt balance was approximately $3 5 billion.
Speaker Change: Consisting of approximately $1 8 billion in term loans $920 million in convertible notes $650 million unsecured notes $188 million of revolver borrowings and $5 million of finance lease liabilities.
Speaker Change: Our weighted average cost of debt for Q3 of 2024 was $4, one 6% with over 75% of our borrowings either fixed issuance or synthetically fixed and underlying base rates that are approximately half the prevailing floating rates are.
Speaker Change: Our net leverage ratio on a last quarter annualized basis was at 385 times, while our secured net leverage ratio was approximately two times.
Speaker Change: After the end of Q3 with the support of many of our long term loyal lenders in the banking community, we were able to successfully upsized, our revolving credit facility by $250 million, bringing the total committed capacity to 125 billion.
Speaker Change: We also voluntarily repaid an additional $50 million under this facility. After the end of the third quarter, bringing total available liquidity over $1 1 billion.
Speaker Change: As previously disclosed the MDI put exercise window will occur in Q3 of next year based on the MDI is past performance and current forecast and certain estimates and assumptions, we estimate the price to acquire the remaining 55% of MDI that we did not already own.
Speaker Change: Put were exercised.
Speaker Change: Queen approximately $760 million and $900 million.
Speaker Change: <unk> total net indebtedness at the time of acquisition pursuant to the put is estimated to be between $775 million and $825 million. Please.
Please note. These figures represent our current estimates and the actual amounts may differ.
Speaker Change: <unk> total revenues for the 12 months ended September 32024 were approximately $320 million with approximately 225000 residential and business data customers across a network footprint of approximately 675000 passage.
Speaker Change: As we've said before David put option is exercised we believe that our existing cash balances, we anticipated available capacity under our revolver at that time.
Speaker Change: That transaction and our operating cash flows will be sufficient to fund the purchase price without needing to raise additional incremental capital.
Speaker Change: Before we open it up for questions I'd like to reiterate our commitment to executing a phased approach for sustainable long term growth our strong network and dedicated team are key to this strategy as we stay focused on maximizing our unique assets to provide seamless connectivity to an expanding customer base.
Speaker Change: Across our service areas we.
We are always working for you we are making significant progress and we're just getting started our commitment to all stakeholders remains unwavering.
Speaker Change: That we are now ready for questions.
Speaker Change: Alright, Thank you and just as a reminder to ask a question today simply press star followed by the number one.
Speaker Change: Our first question comes from the line of <unk> <unk> from Jpmorgan. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hi, Thanks for taking the question one a couple of quick housekeeping questions and maybe a broader strategic question, but drilling can you just clarify the billing system comment that you made with the.
Speaker Change: If you are unable to change pricing packaging for 20% of your base does that have any financial or subscriber impacts in the quarter.
Speaker Change: And then secondarily.
Speaker Change: On the pay as you go pilot I understand it is still a pilot but seems.
Speaker Change: It might be dilutive to our two I mean, just trying to take us through the puts and takes that you are considering on that as you kind of test that.
Speaker Change: And then lastly, thinking about the broader ecosystem, we are seeing fiber consolidation tar.
Speaker Change: <unk> targeted convergence M&A from some of the wireless players as you look across the industry in Cabos current strategic positioning.
Speaker Change: Do you still believe it makes sense for Cabo to be a consolidator of rural cable as has kind of been the thought over the last several years or does it make sense to perhaps be.
<unk>.
Speaker Change: Larger be part of a larger enterprise.
Speaker Change: Thank you.
You bet.
Speaker Change: So billing system great question Bastian.
Speaker Change: Is it did not have an effect on customers or the company with the exception that when you're getting ready to convert customers from one system to another you arent allowed to make changes in the existing system. So that means that when you want to market.
You don't have the ability to change rates for long periods of time in this case.
Speaker Change: Everything was frozen as it was in those in those billing systems, because it's multiples as we bring those family of brands and thus far cry from.
Speaker Change: Really mid summer two two right now.
So if we wanted to react or change or do anything differently, we could not be we're literally locked into those rates.
Speaker Change: And.
Speaker Change: That's something you live with when you do a billing conversion and ideally you plan way in advance so that that is not an issue, but quite honestly in this case, that's not what happened.
Speaker Change: Okay. What's next pay as you go well that that too again brand new program.
Speaker Change: Really pretty innovative I think I don't see anything exactly like it in the marketplace.
Speaker Change: And we're going to learn a lot.
Speaker Change: And we really imagine that this is the place. This is the place for value conscious customers.
Speaker Change: And that would specifically point to cell phone internet competitors as well.
Speaker Change: This gives customers the ultimate freedom they can sign up for a day they can sign up for a month whatever they have.
Speaker Change: Funds are the needs for they can change their speeds.
Speaker Change: And have a gig one day and 300 megs another.
Speaker Change: And this is.
Speaker Change: Is not targeted at just one type of product that is to say, we have 100, Meg 300, Meg 100, Meg and a gig that you can get because even if I'm a value conscious customer.
Speaker Change: I might decide to spend my fund because of what my family needs and does for one gig service and so time will tell.
Speaker Change: About your question, but what I can tell you. So far it is not dilutive and I know that because the <unk>. The average ARPA from the group of customers that have already signed up it's higher than our entry level price. So.
Speaker Change: We're going to learn more and we're going to evolve as we go.
Speaker Change: But we're excited about this product.
Speaker Change: Let's see your last question.
Speaker Change: Do I see combo as a consolidator going forward versus being part of something larger.
Speaker Change:
Speaker Change: In part that's incredibly speculative I think.
Speaker Change: That we are as a place for.
Speaker Change: Markets like ours, we deeply understand what it's like to do business in markets that average about 20000 customers, where we are neighbors with our customers.
Speaker Change: We know how to operate in disparate regions, where we're not all concise consolidated how to bring focus and get.
Speaker Change: Yet almost scale like efficiencies.
Speaker Change: Through the way that we operate I think that we can be good and do good for our communities our customers and our associates.
Speaker Change: No.
Speaker Change: Those reasons I think we are in natural.
Speaker Change: Great data, what will we be going forward.
Speaker Change: I used to be able to predict exactly what we would do five years in advance.
Speaker Change: That's.
Speaker Change: And shrinking down.
Speaker Change: As the environment is changing incredibly rapidly so so let's wait and see.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Greg Craig Moffett from Moffett maintenance and please go ahead.
Speaker Change: Hi, Thank you.
Speaker Change: Julia.
Speaker Change: Through your broadband dark blue.
Speaker Change: Come back to your question.
Speaker Change: I've asked a lot in the past and Thats.
Speaker Change: How do you think about the prospect of wireless, particularly adding Tony with real wireless expertise.
Speaker Change: Increasingly competing against.
Speaker Change: Wireline players who are offering a converged bundle do you think thats hurting you in the marketplace.
Speaker Change: Or is that still not really a part of the competitive set that you are facing.
Speaker Change: That's a good question that we think about quite a bit as well Craig.
Speaker Change: We examine mobile specifically on at least a biannual basis at least and when we look at it we're taking into account what our customers express needs and wants and our market specifically.
Speaker Change: The financial impact of doing a product launch like that.
Speaker Change: And I see us embarking on a whole range of projects and products that bring value to our customers and ultimately our shareholders.
Speaker Change: I also can think back to the past, where we didnt jump.
Speaker Change: And right away on some things we took time to study them pretty thoroughly and that mentality has served us well two quick examples our video on demand and home security or a region. We did not do those two products we did not.
Speaker Change: We didn't do them.
Speaker Change: Does it mean that we're not going to do mobile I mean, we are looking at it.
Speaker Change: Even.
More intensely.
Speaker Change: Not just Tony but are studying what our peers have done, but we have to be able to articulate the west what's in it for me for the customer for the company for the shareholder.
Speaker Change: Before we jump into that and and I would just say.
Speaker Change: Think we're very open to bundling of all sorts, putting together items that bring value to our customers is something that we are going to continue to explore whether that is.
Speaker Change: Products.
Speaker Change: Italy attached to the HFC product.
Speaker Change: To wireless to mobile.
Speaker Change: Possibly even till fall off your chair Craig video.
Speaker Change: So okay.
Speaker Change: If I could just ask a quick follow up do you think that whether it's directly or through the ACA or something that that attractive wholesale rates for wireless are available to you or is it simply that there aren't attractive enough rates out there to make it particularly compelling.
Speaker Change: Wholesale rates I mean to make it particularly compelling for you to offer at this point.
Speaker Change: I think its holistic it's about what it can do in terms of.
Speaker Change: <unk>.
Speaker Change: Generating revenue at what capital and operating costs as well as are there benefits related to churn, it's the whole picture.
Speaker Change: Greg we have the access.
Speaker Change: As Julie said, it's got to be evaluated through that lens of all the other assumptions as well, but the access is there I won't say that cost is extremely compelling.
Speaker Change: Overtime that also potentially could change.
Speaker Change: Alright. Thank you that's helpful.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Sam Mchugh from BNP Paribas. Please go ahead.
Speaker Change: Hey, good evening guys. Thanks for the questions first one just on offer.
Speaker Change: Thanks, you guys.
Speaker Change: Staying pretty stable relative to Q3, and then what's implied for Q4, but also has a big pickup in kind of.
Speaker Change: Residential net additions do you feel like Youre getting in the marketplace now where you can get back to nice subscriber growth at the same time as delivering stable to maybe growing often that's the first question.
Speaker Change: And then secondly, just on fiber overlap I know you'd given us some numbers last quarter any update on how much fiber footprint. Thank you.
Julie Laulis: Okay, Sam it's Julie.
So, yes, <unk> has stabilized and we believe it will stay that way through Q4.
Julie Laulis: Yes, as you say, if we had several things that affected it our autoplay plus program promotional roll offs and high selling as we articulated.
Julie Laulis: Your question is a good one one that I've been thinking a lot about can you move both levers at the same time and certainly in the past that was quite honestly a walk down a.
Julie Laulis: Beautiful path.
Julie Laulis: Recently, if you look at peers, you noticed I'm doing one or the other.
Julie Laulis: I will note that year to date.
Julie Laulis: Absent ACP losses, we have grown broadband and we're now stabilizing our two recall, we talked several quarters ago about what we were all about in 'twenty, four which was shifting from our high LTV strategy to a growth strategy.
Julie Laulis: <unk>.
Julie Laulis: And in the midst of that we knew that we would be attacking some some very specific competitors in markets and re rating in that that would have a problem or a pull down excuse me and in <unk>, which we've now stabilized.
Julie Laulis: We fully expect to be growing broadband revenue that is that is our imperative.
Julie Laulis: Yes.
Todd Koetje: Todd on the fiber overlap.
Todd Koetje: We reported last quarter low 40%.
Todd Koetje: The overall network and that remains very consistent.
Speaker Change: Our next question comes from the line of Gregory Williams from TD Cowen. Please go ahead.
Gregory Williams: Great. Thanks for taking my questions.
The first one as Julian mentioned competition is stabilizing and I think positive alluded to in the last answer is that in the fiber to the home world and fixed wireless because in fixed wireless we saw some of the carriers increasing their sub targets in one.
Gregory Williams: Your peers, all he said that theyre seeing expansion of fixed wireless, but charters that im saying its peak ish. So I'm curious.
Gregory Williams: The compensation stabilizing is on both technologies and then the second question is just on the Opex investments that you are doing I think last time, we talked you expect them to mitigate in mid 2025 and I'm just wondering if that's still the case.
Speaker Change: I'll take the first one.
Speaker Change: So bizarre.
Speaker Change: Yes.
Speaker Change: Fiber and.
Speaker Change: Cell phone and Internet.
What are we seeing well Todd talked about the <unk>.
Speaker Change: Ever overlap.
Speaker Change: Specifically, we've been watching and Trialing and learning and the whole competitive realm.
Speaker Change: It's starting to feel pretty normal to us now.
Speaker Change: I think we're seeing some cumulative effect of the adjustments that we've taken over the past quarters and what I mean by that is we're seeing.
Speaker Change: Some of the markets with the highest levels of competition actually have positive growth positive growth in the quarter outperforming even less competitive markets.
Speaker Change: And we've been watching.
Speaker Change: Markets that we have done different tactics to one of them being re rating to see how quickly. They normalize how quickly do they go through their peak and pull back down into normal levels and it's it's actually pretty fascinating summit cost of six months that means we get through.
Speaker Change: I'm going out for some segment of the marketplace getting some level of penetration and then dropping back down into normal levels within six months.
Speaker Change: As long as 18 months.
Speaker Change: But we definitely feel like we've seen the spike that can come along with new entrants being blunted.
Speaker Change: With some of our recent re rates, we've also seen competitive disconnects.
Speaker Change: Go down 14% to 323% to 24.
Speaker Change: We are watching to see what the competitors do when we make moves.
Speaker Change:
Speaker Change: Heartened to see many of them increasing their rates.
Speaker Change: Which we think does to their need for returns.
Speaker Change: But that's dynamic and so we track that we're not endeavoring to follow suit, we're just tracking it.
Speaker Change:
Speaker Change: In the end.
Speaker Change: The competition has made us focus on being better.
Speaker Change: So when we talk about cell phone internet customers or competitors excuse me my phone's ringing, even though I thought I'd put it on do not disturb.
Speaker Change: We really think our pay as you go product and some of our newer marketing tactics and development can assist us versus a competitor.
Speaker Change: And when you think about data usage being at an average of 730 gigs in the quarter and 25% of our customers using a terabyte or more.
Speaker Change: That that really speaks to a wireline reliable provider.
Speaker Change: Our largest I think it was our largest traffic.
Speaker Change: Sedans in two years when the most recent call of duty that released and actually eight out of the last 10 months have had spikes in traffic and they're related to.
Speaker Change: Gaming.
Speaker Change: And sports and that's only going to grow so that that points to the stability of our network and so.
Speaker Change: I also look at our churn, which is lower than pre pandemic levels. So I do not think that our existing customers are going.
Speaker Change: Two cell phone internet providers with the exception of potentially those ACP losses that we've had.
Speaker Change: Clearly they efficient the same pond that we do and have a have an effect on connect and that is our puzzle to solve.
Speaker Change: And we are trying all sorts of tactics and.
Speaker Change: Pay as you go is one of those.
Todd Koetje: Greg It's Todd I would just add on the churn we made the comment last quarter not reiterated again this quarter.
Todd Koetje: Even with the ACP losses were at five year lows for churn or customer retention. So when you think about the increasing competitive environment, which is increasing both on the wired and the <unk>.
Speaker Change: Cell phone and Internet.
Speaker Change: We believe that Thats, a very strong testimonial of our customer satisfaction and the long term relationships, we have with them.
Speaker Change: Laughs ACP that number.
Speaker Change: Lou everything away relative to where that where that churn level. If you extract out the ACP.
Speaker Change: You asked about the Opex investments and the timetable. So just to address that that is still consistently in that timeframe of what has been late 'twenty four and into the mid 2025 timeframe.
Speaker Change: Got it thank you very much.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Steven Cahall from Wells Fargo. Please go ahead.
Thank you.
Speaker Change: Stabilization of <unk> that you saw in the quarter and the focus on driving towards broadband revenue growth over the long term and some positive trends around big sell in and data consumption.
Speaker Change: Do you think about your ability to get back into maybe a cadence of pricing power or price increases on the majority of the base. So that's something that you think could be on the horizon or is it something you think is going to take some time due to other issues and I wonder how you're competitively benchmark yourselves one of your peers targets, 3% to 4%.
Speaker Change: <unk> growth annually I'm, just wondering what you think is different about maybe their customer footprint than than yours. That's contributed to some of this <unk> differential.
Speaker Change: And then the competitive stabilization seems constructive.
Speaker Change: I think you said that what <unk> seen is some more rationale pricing any sense of what's happening on the build front I'm wondering if that slowed down as well. Thank you.
Speaker Change: Okay.
Speaker Change: So related to <unk>.
Speaker Change: <unk> and pricing.
Do you think that there is.
Speaker Change: To allow us to city.
Speaker Change: The upper end.
Speaker Change: Maybe in just a quote unquote.
Speaker Change: Naked rate adjustment, but also if you can add value.
Added perks.
Speaker Change: Absolutely room, there I think that if you segment out.
Speaker Change: The customer base there are absolutely segments.
Speaker Change: That.
Speaker Change: Could there a rate adjustment.
Speaker Change: We also did autopay, but only the Autopay plus program, but only to a portion of our customers and so.
Speaker Change: For some of those people that ended up being a rate adjustment right because they did not choose to.
Speaker Change: Do ACTH and sign up for.
Speaker Change: Billing to be paperless et cetera, and automatic.
Speaker Change: So that was an effective rate adjustment for them.
Speaker Change: Have our family of brands and about 350000 customers and spark white that have not had that yet.
Speaker Change: And so that's obviously.
Speaker Change: And it can show up as a rate adjustment if the customer doesn't choose to neutralize it.
Speaker Change: When it comes to our <unk> differential I mean, we.
Speaker Change: That one's easy we had a high LTV strategy, we went after.
Speaker Change: High end with a premium product we.
Speaker Change: We had lower penetration, leading our <unk> and so of course, when you go into an environment, where you're no longer than what we used to term safe Harbor.
Speaker Change: And you're going to go compete youre going to likely give up some <unk> in those cases, whereas others are coming from a much lower base and have room.
Speaker Change: To grow up so we are very different by design.
Speaker Change: We were very different by design.
Speaker Change: I think over time, where we continued to penetrate in that value segment recall, it's really only about a year that we've really been.
Speaker Change: More targeted to customer acquisition in that segment, and we had to really monitor and measure it very closely relative to not only the cost to install the cost to serve but also the retention of that customer to be able to.
Speaker Change: Reevaluate the unit economics, the way that we would want from an accretive contribution perspective, and as I've mentioned in the past correlation of that retention is very very high to our premium customer base, which is very encouraging and then over time that base also has an opportunity for whether it be organic upgrades.
Speaker Change: Or potential some price elasticity as well as Julian alluded to but to be clear. We tried a lot of things in the past nine months 12 months and not all of the things that we tried worked and we learned from them. So.
Speaker Change: And then on the build front.
Speaker Change: You were asking about the build front.
Speaker Change: From a competitive stabilization.
Speaker Change: You talked about the access to capital the cost of capital I think what youre seeing in the M&A environment right now as large scale consolidation.
With some of these super regional platforms.
Speaker Change: And obviously cost of capital and access to capital is going to be less of an issue for those large many of them investment grade.
Speaker Change: Issuers.
Speaker Change: But at the same time, the needle moving impacts for those large companies.
Speaker Change: Is going to be probably less focused on our small communities.
Speaker Change: For the <unk> and the horizons in the Bce's to move to build needle, it's either going to be upgrading in larger markets or ability into larger markets in our opinion.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Alright that is all the time, we have for questions today, So I'd like to turn it back over to Julie in the cable one team for closing remarks.
Julie Laulis: Thank you Jeremy.
Julie Laulis: Before we conclude I want to extend my sincere gratitude to our associates for their relentless efforts throughout our recent billing conversion your dedication around the clock and it literally has been around the clock is making this milestone possible unlocking significant opportunities for the company's future.
Julie Laulis: None of this would be achievable without your unwavering commitment.
Julie Laulis: Thank you and we look forward to speaking with you all again next quarter.
Julie Laulis: That does conclude today's presentation have a pleasant evening.
Julie Laulis: Okay.
Julie Laulis: [music].
Julie Laulis: Okay.
Yeah.
Julie Laulis: Okay.
Julie Laulis: Yes.
Julie Laulis: Yes.
Julie Laulis: Yes.
Julie Laulis: [music].