Q2 2025 Altice USA Inc Earnings Call

Greetings and welcome to the altice. USA second quarter 2025 earnings results conference call at this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Freedman, vice president investor relations. Thank you ma'am. You may begin.

Thank you. Welcome to the LTC USA, Q2, 2025 earnings call. We are joined today by Alice, USA's chairman and CEO, Dennis, Matthew and CFO Mark serona who together will take you through the presentation and then be available for questions.

As today's presentation may contain forward-looking statements please carefully review. The section titled forward-looking statements on slide 2 now turning over to Dennis to begin.

Thank you, Sarah. Good morning, and thank you all for joining us today as we reached the midpoint of the Year, our transformation Journey continues to gain momentum. Our 2025 priorities, remain, clear and firmly on track unlocking Revenue opportunities. Driving greater operational efficiency, continuing to enhance our award-winning networks and ensuring our capital structure supports our long-term operating goals.

These priorities are enabling us to enhance investment returns and operate with discipline as we drive toward approximately 3.4 billion dollars of adjusted Eva in full year 2025.

Turning to the next slide. I will review key highlights from the quarter that demonstrate our progress against our 2025 priorities and reinforce our commitment to delivering long-term shareholder value.

First we remain focused on capturing new growth opportunities through Innovation product expansion and tailored go to market strategies. Our goal has been to improve Broadband subscriber Trends and in the second quarter, we delivered both sequential and year-over-year improvements to 35,000 Broadband subscriber, net losses. And we continue to grow Broadband our proof, which increased by 9% year-over-year,

We increased penetration of new and existing products, and value, added services, including fiber and mobile.

Each of which accelerated net additions, year-over-year, as we continue to reach more of our customer base.

Additionally, we are optimizing our video business, which saw the best subscriber PSU Trends in the last 10 quarters with 58,000 videos. Subscriber net losses. Creating more choice and flexibility for our customers, while. Also expanding video margin.

Next on operate operational efficiency, we continue to take deliberate disciplined steps to streamline how we operate while maintaining our focus on quality and growth.

This includes, Workforce optimization to ensure that our structure resources and capabilities squarely, support our business priorities.

Similarly, we continue to improve service, call and service visit rates and our expanding our use of AI across key functions.

We're building an agentic, AI ecosystem. A smarter more adaptive way of using AI intended to support our team streamline operations and enhance the customer experience.

In parallel, we're taking a smarter data-driven approach to video content, distribution through new programming agreements that provide us with more flexibility and our go to market, efforts and packaging.

We are proud to be recognized for the enhancements. We've made to our Network to deliver a superior experience to our customers.

Additionally, we've expanded our footprint by 1.5% year-over-year, enabling us to bring high-speed connectivity to even more communities.

And within our light path business, we continue to secure new contracts, with both hyperscalers and large carriers, building, a strong foundation for additional Revenue growth over time.

Finally on delivering a sustainable capital structure in July. We partnered with Goldman Sachs and tpg Angelo Gordon to raise an inaugural 1 billion dollar asset back loan. The first of its kind securitized primarily by hfc assets, this Innovative transaction marked a major industry, Milestone unlocking, significant asset value and expanding our access to additional sources of capital. Most importantly, this new structure delivers improved pricing relative to our most recent high, yield issuance reflecting the Market's recognition of the strength and stability of our hfc. Asset backed cash flows.

Next on slide 5, we'll review our Broadband subscriber performance in Greater detail.

In the second quarter, we reported Broadband subscriber. Net losses of 35,000.

A year-over-year Improvement of 16,000 or 31%.

The actions. We've taken over the past 24 months are beginning to show in our subscriber friends.

We've strengthened churned reduction programs, expanded localized offers improved sales Channel performance and invested. In our networks. All contributing to our continued progress in Broadband performance.

In our East footprint, we delivered our best net, add Trend in 10, quarters driven by stronger, wind, share performance against ACS and fixed Wireless along with lower churn in the west while competition remains strong, especially from fiber over Builders and fwa performance, improved year-over-year, including fewer seasonal disconnects.

This progress is especially notable given that the second quarter typically brings seasonal softness.

However, despite this expected headwind, we delivered, both sequential and year-over-year improvements driven by improved churn and a moderation in Gross. Add declines.

Total churn across our footprint remains low supported by operational. Improvements that have reduced, voluntary non-pay and in footprint move churn.

For example, we've strengthened non-pay retention through more personalized and timely outreach to proactively engage customers. We are offering tailored support to those moving within our footprint to make staying with us a seamless experience.

As a result, we achieved our lowest second quarter churn in the past 3 years.

On the acquisition side, macroeconomic pressures low move activity and increased competition from fiber and fixed Wireless continue to weigh on growth editions. However, we're seeing encouraging signs of improvement. While growth ads, remain below prior year levels. The pace of decline is slowing to the lowest quarterly year-over-year index in the last 2 years reflecting improved sales Channel performance and early Traction in our go to market execution.

Our income constrained program in hyperlocal offers are resonating with customers in income constrained markets. We saw over 10% lift in sales, volume in our inbound and Ecom channels versus control markets.

And in fiber competitive areas where we've deployed, tailored offers sales were 12% higher.

Our refresh focus on our MDU footprint. Also resulted in positive Broadband, net adds of over 2,000 customers in the quarter within this footprint, which compared to almost 7,000 net losses in the prior year period.

With enhanced tools and focused management. We've gained a deeper understanding of our MDU base and refined our go to market strategy to drive penetration across our more than 2 million MDU passings, a key opportunity for us going forward.

Overall, our sales Channel performance is improving particularly in our inbound channels.

Where we're seeing higher yields. And as we continue to enhance our product portfolio, with new value added Services, where increasing Broadband Customer stickiness, and setting the stage to drive, long-term RP food growth,

Additionally, we're seeing meaningful progress in several historically underperforming markets where subscriber Trends have turned from negative to flat.

Or positive year-over-year in Q2.

for example, in several markets in Texas and parts of our Northeast footprint, we saw material improvements from subscriber losses to subscriber gains

Over Builder competition, particularly across the West.

these examples underscore the momentum building from our localized strategies and improved on the ground execution, especially in markets, where we've previously lagged,

In summary, our Broadband performance is showing clear. Signs of stabilization the initiatives. We've put in place are gaining traction and the results are just beginning to materialize.

Turning to slide 6, we continue to expand our product portfolio and drive penetration of new and existing products, and value added services to drive stickier customers compete more effectively, and drive additional Revenue over time.

To begin on Fiverr, we added approximately 56,000, customers to our fiber Network in the second quarter, through a combination of new customer Acquisitions and migrations of existing customers.

we ended the quarter with 663,000, fiber, customers representing a penetration rate of 22% across our fiber Network

on a year-over-year basis. The pace of fiber net additions accelerated to 1.4 times the rate we saw in the second quarter of last year.

While there was a sequential slowdown compared to the first quarter, this was expected. As we intentionally manage the pace of fiber migrations to maximize customer lifetime value and ensure a high-quality, seamless customer experience.

Our mobile line. Net additions were approximately 38,000 in the second quarter representing year-over-year acceleration in Mobile line growth.

But similarly, a sequential Slowdown.

This quarter's mobile performance. Reflected typical seasonal Trends ongoing macro and competitive pressures and a focus on customer quality. Specifically we are prioritizing higher quality Acquisitions, strengthening verification processes and emphasizing mobile offerings designed to support long-term retention.

Such as primary number porting unlimited plans and device financing.

This strategy is delivering results in the second quarter 57% of mobile mobile line, gross editions ported their phone number.

Compared to 34% a year ago.

And 31% of mobile line. Editions purchased a finance device with us compared to 25% in the prior year period.

At the end of the second quarter, 74% of total mobile lines were on unlimited or unlimited Max plans up from 65% last year.

Together, these improvements contributed to a stronger mobile churn profile, with annualized churn improving by nearly 600 basis points year-over-year.

We remain focused on driving convergence and maximizing customer lifetime value through a disciplined and strategic approach. We anticipate the pace of mobile additions will continue to accelerate year-over-year as we turn to the second half of 2025.

In 2024, we introduced a simplified video offering with 3, new tiers, entertainment TV, Extra TV and everything TV.

These packages deliver great value by, including the most watched content. Offering customers more flexibility and choice while also enhancing our video margin profile.

These tears have become our Flagship video offerings for new customers and are actively offered to existing subscribers in the second quarter. We added 68,000 video, customers to these new tiers and ended the quarter with approximately 168,000 residential video customers on 1 of these new packages, which brings the penetration of residential video customers a new tiers to 10%.

Our new tier support improvements in our video attachment rates, which grew 40 basis points from q1 to Q2 and drove Improvement in video. Net losses, which was our best quarterly net loss. In 10 quarters.

In addition, we continue to evolve our video offerings last quarter. We announced our collaboration with Disney to offer eligible customers the Disney+ Hulu bundle basic option.

And we have opportunities to expand other Ott streaming Partnerships to bring additional video streaming service add-ons to our offerings.

We also continue to expand the availability of our Optimum stream product to additional markets.

And enhance stream capabilities and offerings. Optimum stream is currently available to all of our East footprint markets and is expected to be available to almost 70% of our West markets by year end.

More broadly. We've launched. Other new value added services and products over the last few quarters, which are continuing to scale.

Is a premium support add-on for residential Broadband customers, which launched in Q2 of 2024 priced at $15 per month. In the second quarter, we launched additional tiers, Total Care, Plus and Total Care. Max priced at 20 and 30 per month.

At the end of the second quarter, we reached over 90,000 Broadband subscribers. Taking a to Total Care add-on.

Whole home Wi-Fi is another residential broadband service add-on, which provides seamless in-home coverage and ongoing tech. Support whole home Wi-Fi, which is priced at $10 per month. Launched in the second quarter of this year and in just a few months has already reached approximately 31,000 Broadband customers,

Within our B2B business as we committed in the past, we've launched a comprehensive Suite of services to support small and medium-sized businesses.

These include connection backup a reliable automatic internet backup designed specifically for point of sale systems. We also launched secure internet plus which offers built-in, customizable cyber security features tailored to business needs at the end of the second quarter. We also brought our B2B fiber product up to parody relative to our hfc product offerings.

Enabling us to. Now, sell a full Suite of products on fibre which will allow us to accelerate B2B fiber Nets.

Together, our growing fiber and mobile bases, and Suite of value. Added services are strengthening our competitive position and enhancing the overall customer experience.

As we scale and expand these Services, we expect them to be accretive to our food and supportive of overall long-term Revenue performance.

We expect growth in value added Services, inclusive of mobile to contribute up to 500 million dollars of incremental Revenue over time, as we reach penetration targets.

Turning to slide 7 we're making solid progress on our transformation Journey with disciplined execution. Driving improved operational, efficiency.

These efforts are key to enhancing our operations and customer experience to support our long-term growth plans. While moderating other operating expenses by 4 to 6% in full year, 26 compared to full year 24.

First, we continue to focus on optimizing our programming agreements in the second quarter. We reached a new agreement with a major content partner and are pleased with the outcome reflecting our ability to negotiate on behalf of our customers for greater flexibility, choice and value.

We continue to take a data-driven analytical approach to these negotiations ensuring that our content strategy aligns with customer preferences and viewing Behavior.

This approach combined with continued adoption of our new video. Tears supported video growth margin expansion of over 300 basis, points year-over-year in the second quarter.

Next annualized service call rate decreased by almost 3%. And importantly, we've improved our ability to address customer concerns during calls with fewer calls required, in a subsequent truck rule. This has led to an annualized service visit rate Improvement of almost 19% year-over-year in the second quarter.

This also resulted in improvement in our average service, visit dispatch, rate of approximately 22% year-over-year, reaching near record lows.

Supporting these Trends is the ongoing infusion of AI into our business. Our AI virtual assistant for Ava tool, uses machine learning to help Frontline agents. Make smarter customer offers and is designed to adapt over time with continuous data, driven updates.

This tool launched last year and continues to scale in our residential sales and customer care centers.

We're also embedding AI into our network operations with Access Network automation or Anna. A new tool designed to automate detection and repair of hard to find service issues at scale.

by ingesting Network, Telemetry customer interactions and operational data Anna pinpoints where faults are likely to occur and is expected to enable faster, more precise fixes

Additionally, we're rolling out a next-gen Omni Channel customer experience platform toward the end of this year. This customer platform utilizes, Google AI technology, to unify Bots, agents, and AI insights into 1 seamless system to improve. First Contact resolution by creating more personalized and emotionally, intelligent customer interactions.

As a result. Our relationship net promoter score improved by 8 points year-over-year in the second quarter.

Finally we have been focused on optimizing our Workforce over the last 2 years, we have made meaningful investments in our employee experience and Technology transitioning from Legacy systems to digital platforms.

These efforts along with leadership development, Automation and AI tools have enabled us to work faster, more strategically and with greater discipline.

Building on this Foundation, we've identified opportunities to streamline, our organizational structure eliminate redundancies and better. Align our Resources with our key priorities. All while enhancing the customer experience.

As a result we've infused a high performance culture while right. Sizing our Workforce by approximately 5%, which will help improve our operating expense trajectory in the second half of this year and into 2026.

Collectively these initiatives, reflect our discipline, focus on execution enabling, a more agile, efficient organization, while delivering a better experience for our customers. We are seeing the impact of this work take hold and we remain confident in our ability to deliver continued operational and financial improvements over time.

I'd now like to turn it over to Mark to review our financials in more detail.

Thank you. Dennis. Let's begin on. Slide 8 with a review of our financial performance.

Total revenue declined, 4.2% year-over-year and was relatively flat quarter over quarter.

Year-over-year, Revenue, declines continue to be impacted primarily from video cord cutting.

Accounting for about 85% of total revenue, declines.

However, as noted we have slowed, the rate of video declines, as we drive incremental video units onto our new tiers

news and advertising Revenue growth of 12.8%.

Was driven by Continuum momentum in our Ad Agency Services business along with incremental political revenue from the New York Mayoral race.

A full year, 2025 faces, a headwind from lower political advertising, compared to a presidential election year.

The second quarter was less effective. Given the heavier weighting of political ad, Revenue in the back half of 2024.

Video also Remains the main driver of our residential are poop pressure.

Rpu declined, 1.7% or by 2 dollars and 228 to 133.68 cents.

With video contributing a 3.74 cent decline.

Or a 2.8% decline year-over-year.

Is primarily driven by lower video penetration within our customer base, partially offset by higher video rate.

Video remains an important part of our business, helping to create stickier broadband relationships and delivering value to the customers who choose it.

We remain focused on evolving our video offerings to meet changing customer needs while optimizing performance and margins, to ensure video remains a profitable and attractive add-on to our broadband service.

Turning to broadband arpu, we continue to see year-over-year growth in the second quarter.

Broadband, rpu, grew 0.9%, to 74 dollars, and 777 cents. Reflecting the continued strength of our Broadband products.

Gross margin expanded by 120 basis points to 69.1% reaching our highest level in recent history driven by a continued shift in product, mix towards broadband and our focus on optimizing video margins.

Adjusted Eva 804 million decline, 7.3% year-over-year, but grew slightly. Sequentially reflecting continued operating discipline inefficiency.

Adjusted ibida margin of 37.4% declined, 130 basis points but notably improved sequentially, 30 basis points.

Adjusted even at Trends are driven by lower Revenue which is partially offset by lower programming and direct costs and higher Opex. Year-over-year

including the integration of new AI Tools in our sales channels.

Advertising campaigns.

The quarter author, reflected an increase in employee health and wellness, expense of approximately 12 million dollars, year-over-year in the quarter, in an increase of almost 23 million in the first half of the year.

These impacts are partially offset by lower bad. Debt expense, a decrease in certain managed service costs, primarily due to a 1-time credit as well as lower truck roll costs.

As Dennis highlighted, we anticipate other operating expenses to moderate in the second half of 2025 and into 2026.

through our operational, efficiency efforts specifically, the impact of Workforce transformation, lower service visits and call rates and reduce third-party transformation costs,

Adjusted evida is expected to improve sequentially over the next 2 quarters with the most significant impact of our transformation, reflected in the fourth quarter.

We expected this to be supported by seasonally stronger. Subscriber performance incremental Revenue opportunities and our light path and news and advertising businesses despite lower political Revenue.

As well as continued operating expense efficiencies towards your end.

Together. These are reinforced our goal of delivering approximately 3.4 billion dollars in adjusted Ava in full year 2025.

Next turning the slide 9, I'll walk through our Network Investments and how we're driving greater efficiency across our Capital envelope.

In the second quarter, we added 35,000 total passings in 28,000, fiber passings.

We added 61,000 passings in the first half of the year and continue to Target. 175,000 total new passings in the full year.

as we've discussed on previous calls, the majority of our passing growth in 2025, will come from new fibre, deployments

Cash Capital expenditures in the second quarter were 384 million up approximately 10% year-over-year.

Increase reflects the timing of lower capex in the prior year as well as front weighted investments in 2025.

We continue to expect approximately 1.2 billion dollars of cash, Capital expenditures for the full year with additional Bill to network maintenance. Efficiencies expected to take hold and the second half.

In addition, the capital we invested in the first half of the Year reflects construction activity that is expected to translate into additional serviceable passing and lower Capital, spend in the second half.

As Dennis mentioned, we've implemented new AI power network monitoring tools and help reduce service calls and visits by proactively addressing potential problems and efficiently serving multiple Homes at once.

And we continue to deploy midsplit upgrades across our portion of the HFC network, which will enable multigig speeds on HFC in 2026.

Our multi-year Network strategies focused on building future proof, infrastructure to meet growing customer data demands across both our hfc and fiber footprints.

We're investing in expanding passings primarily through new fiber, builds while also enhancing our hfc Network to support faster, speeds and improved performance.

Our late path business continues to expand within the hyperscaler community with additional contracts secured and a strong pipeline in place.

We expect additional light path Capital spend in the second half of the year, which will be offset by Network building and maintenance efficiencies in our broader capex envelope in summary, our networks are stronger and more capable than ever consistently recognized with industry Awards and purpose-built to meet accelerating customer demand.

Average monthly data usage per broadband customer has grown to 782 gigabytes, an increase of nearly 30% in the past 3 years. Our network is well equipped to support increased customer demand in the years ahead.

Turning the slide 10. I'd like to highlight our recently completed, 1 billion dollar asset back receivables. Facility loan.

This first-of-its-kind securitized transaction is back, primarily backed by our HFC assets and representing a new, innovative approach to capitalizing on the strengths of our broadband networks in the industry.

The asset back loan is secured by receivables and network assets from our Bronx and Brooklyn service areas.

The perimeter has additional debt capacity and most importantly, the structure is scalable. It may offer us pests to address our 2027 and 2028 maturities.

We are pleased to have partnered with Goldman Sachs and tpg Angelo Gordon on this transaction, which diversifies funding sources.

Offers improved pricing compared to our last high-yield notes offering and provides an opportunity to unlock leverage value in our HFC assets.

Turning to slide 11 will review our debt maturity profile. Proforma for the new asset back loan.

At the end of Q2, our proforma, weighted average cost of debt is 6.9%.

Our weighted average life of debt is 3.6 years and 73% of our total debt stack is fixed.

Proforma for our recent transaction. Liquidity is approximately 1.5 billion dollars and our leverage ratio is 7.8 times. The last 2 quarters, annualized adjusted evida

And we remain focused on exploring all opportunities. To ensure our capital structure supports our long-term operating goals.

Before we close, I would like to provide an update on our tax Outlook. A recent tax reform has enabled benefits from both bonus depreciation interest deductibility and R&D deductions.

We estimate 250 to 350 million dollars of savings over the period of 2025 to 2027.

With full year 2025 cash, tax of under $200 million.

As we continue to enhance our Capital efficiency, we expect to realize less relative tax reform benefits.

In closing, we remain confident in our strategic Direction and committed to discipline execution. As we build towards sustainable, long-term growth, and enhance value for our shareholders,

With that, we will now take any questions.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, 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 to remove yourself from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Once again, that's star 1 at this time, 1 moment, while we post our first question,

The first question comes from cut down with morale from evercore, isi, please proceed.

Great. Good morning, and thanks for taking the questions. Um, you have a lot of initiatives underway, but I wanted to specifically ask about mobile, um, line that adds continue to improve year-over-year, though. Your penetration Still Remains relatively low, suggesting a healthy Runway ahead. So I was hoping you could expand on the trajectory and opportunity that you see ahead and relatedly some of your peers have expanded, their MVA know Partnerships. So so I wanted to see if there's anything you can share about how you're viewing your wholesale partnership and if there's a scope or an appetite for a potential change, thank you.

Hey cotton. We are very excited about mobile and uh the trajectory we did some incredible work. This past quarter to really improve the quality of every uh sale. And every net. Add, you know, this is a a machine that we're still uh, continuing to evolve. And so as we uh, went into Q2, we had laser focus on really just elevating that quality. So you'll see that our Port ported phone numbers have increased, uh meaningfully uh we you know a year ago we were in the 34% range. Now we're at 57% devices that are being financed uh have gone from 25% to 31%. Unlimited has gone from 65% to 74% and so this is all translated into a 600 basis. Point Improvement in churn. We've also, uh, are evolving our, uh, credit strategies so that we can uh,

Over the next couple of quarters. And that's only going to increase our velocity, uh, in terms of driving mobile. And so, mobile is critical, the convergence is critical it. It really delivers an even improved churn benefit when we look at folks that are taking mobile. And so, we have some exciting offers coming up over the next couple of months, as we get ready for the new iPhone launch, we have new family plans. We have, um, you know, just a new new offers, uh, even buy 1, get 1 free and free. Uh, we're going to be testing free in uh different uh, demographics, and different, uh, base, uh, management strategies. And so uh we're going to hit the accelerator and keep driving mobile and we're excited to do it.

Very helpful. Thank you. Very

The next question comes from Frank lalton with Raymond James. Please proceed.

Sorry about that. Uh, great. Thank you. Um, can you talk to us about the, the typical profile of a new Mobility subscriber are they knew to all keys? And is there any difference in the fiber subscribers versus those in, uh, in the coax? Um, and then as a follow-up, uh, are you how are you are, are there any limitations with what you can sell to, uh, to larger customers as life able to sell Mobility? I'm just curious how that works? Thanks?

Sure from a Mobility perspective. We have, uh, you know, 50%, uh, coming as new customers, 50% of our sales are coming from the base. You know, we we've implemented this in all of our acquisition channels. But as I mentioned, we're rolling this out in all of our, uh, our call centers care, retention retail, which really have, uh, the most at bats, uh, with our existing customers. And so, uh, we're excited to continue to expand. Uh, the offerings and uh, continue to grow the portfolio and make these, uh, offerings available. You know, from a fiber perspective. Uh, we're excited about fiber, we continue to drive it because we see better NPS, we see improved uh churn profile. We see strong arpus and so we're going to continue to drive fiber. We've been seeing uh, from uh, uh uh, new new connect, and migration perspective we have about 80%. In this past quarter, we're uh through migrations uh we've been

Embedded, uh, migration activity uh in our call centers and Retail and making that available, we're really focused on customer lifetime value here. So we want to be smart about when we offer a migration, how we offer migration. Uh, I've talked about in the past that we've done incredible work to make that a more efficient and smooth process. And so now we have the, the levers to be able to accelerate uh, in different channels. Uh, when we when we think it,

Makes sense to maximize customer lifetime value.

Uh, Mark, do you want to talk a little bit about light path?

You know, just regarding the limitations around Mobility selling. We're again, we're pleased with our end of, you know, relationship that we have with T-Mobile. And so we do have flexibility there and uh, we see that as a path forward as well.

All right, great. Thank you.

The next question comes from Jim Snider. With Goldman Sachs, please proceed.

Hi. This is Josh on, for Jim, thanks for taking the question, um, just on the, on the Broadband side of the business. Um, could you give some incremental detail on how some of your bigger more? Well, capitalized competition is. Treating competition versus more. The upstart over Builders and secondly as you think about your subscriber trajectory, are you willing to spend incremental capital on advertising and promotion? And retention offers to drive even better sub Trends even if it slows. Um some of your profitability Ambitions. Thanks.

Thanks Josh. We're really excited about our go to market strategies. And uh, whether the competition is the, the larger Telos, or the uh, fiber overbuild, or fixed Wireless. Uh, you know, we're seeing improvements in Wind share across all of these, uh, cohorts, uh, particularly as we've implemented, our hyperlocal strategies. Uh, We've deployed that across uh almost 600,000 homes. And we're already seeing a 13% connect list.

So, uh, we are willing to invest where we need to invest, but we're doing that in a very surgical fashion, and that's in our acquisition channels, that's in our, uh, retention channels. And we're using our hyperlocal strategies, our, uh, income constraint strategies as well. We're seeing really, uh, great results there. 10%, lift. We know that, uh, some of the fiber overbuild, have become very aggressive in pricing across the west, and, uh, income constrained as a demographic that they're going after. And we're seeing that our products are resonating and that we're able to see a lift in connects, but we're able to balance the arpu impact as well. We are seeing a higher take rate of the lower-end packages but we saw it improved take rate in our 500 Meg packages, which is offsetting that arpu Decline. And so as we build this muscle, we're just getting stronger and stronger in terms of how we balance rate and volume. And I have full confidence that we're going to be able to do that. Uh,

Even more effectively going forward in terms of investing in marketing. We're very happy with our investments in marketing. We actually have a new marketing team that we put in place towards the end of last year. We have more command of marketing than we've ever had. Uh before we are evolving, our media mix model, we're driving efficiency. Uh in the way that we're uh delivering across digital and social, um, we're leveraging AI. We, we were not leveraging AI or not even fully.

effectively leveraging, our partners like and so now we're able to leverage AI, leverage, these tools to be able to drive efficiency and effectiveness of our marketing dollars,

Got it. Thank you.

The next question comes from Craig Moffat with Moffitt Nathan. Please proceed.

Hi. Thank you. Uh, Dennis, I wonder if you and Mark could just comment a little bit about the 2027 maturities wall. Um, as you as you get a little closer and, as some of the trends in your business changed, when is the right time to think about trying to turn some of that out is, is, is the window open for Touring that out? Or do you think there are specific things? You kind of have to prove to the credit markets before you're able to do that? And then how does the um, the reason ABS transaction change that calculus, uh, or does it?

Hi Craig, I'll take a good. It's Mark. Uh yeah, I guess first. It's holistically. We're really pleased with our partnership with tpg in Goldman Sachs on this. First of a Kind hfc, asset back securitization. As we discussed previously, we're focused on managing our capital structure to ensure more sustainable costs, leverage maturity of profile. Uh, we're, we're excited that this new structure provides additional capacity and flexibility to do just that

Uh we're excited about the diversity of this, brings to the capital structure. Uh very pleased to see the cost of debt coming in significantly better than our last High year issuance.

Ultimately, we're going to continue to explore all options that help deliver sustainable capital structure that aligns to these objectives. Uh, we have the runway, uh, We've cleared that out and we feel like we can operate, uh, really beyond that. We're not going to comment at this point. Certainly, as we have more information to share, we will. Uh, but we feel like we're well positioned. Uh, we have significant flexibility in our capital structure to pursue the right range of transactions.

We intend to use this flexibility to achieve our capital structure goals.

Our next question comes when V Harlock with new Street, research, please proceed.

Hi, can you hear me?

Yes.

Hi. Thanks so much for taking the question too. If I can. Um, it it looks like you did better on broadband Subs, but you know, artwork growth sort of slowed sequentially.

How do you sort of think about subscribers growth in the back house and carpool growth, uh, in the back office as well? And then 2 on the ABS set phrase, um, how much more capacity do you have on the hfc side? And um, are you planning to raise the, uh, ABS data, light path, and, and sort of um, move the proceeds over to the, uh, parent company?

Still at all-time lows and, uh, you know, uh, new housing, formation part. Particularly SFU formation is, uh, continues to remain at all-time lows. That being said, we're going to continue to control what we can control. We've shown, uh, year-over-year Improvement in Q2 and we continue to drive towards year-over-year Improvement uh in the back half of the year. And I believe that these strategies that I just mentioned in terms of our hyperlocal strategy, that's delivering connect Lyft our income constraint strategy, that's delivering connect Lyft. Uh we are just getting started in terms of evolving. Our MDU strategy, we put in a new team, we have more visibility and more data than ever to help us focus on those buildings that are under penetrated. You know, this is a big opportunity for us. We have 2 million MDU passings in our Footprints. Uh, and we're growing uh, the passing's uh, in 2025 and uh you know, last year at this time.

Time We Lost 2,000. Uh, we, we were net at, uh, 2,000 loss in our MDU footprint, and this year, uh, we grew by 7,000. And so uh I'm confident that these these uh, strategies will help us continue to stabilize, uh Broadband, as we move forward. Uh, but we, there are a lot of headwinds and, and so, we're striving towards year-over-year, uh, growth as we, uh, year-over-year improvements, as we move forward from an our proof perspective. The good news is that we have gone.

And continue to launch, a whole host of, uh, new products. We launched Total Care as I mentioned. Uh, just a few quarters ago and now we have 90,000 Subs. You know, they're providing us, uh, a blended arpu of over $11 60% margin. We just recently, you know, couple months ago launched whole home Wi-Fi. We have 31,000 Subs on on their, paying us ten dollars a month. We just launched uh, on our B2B side of the house, uh, connection backup and so and Security Solutions. And so these are all solutions that are, we're just getting started with that will continue to help us, uh, Drive our poo, as we move forward. Additionally, we have more command of our food than we ever have, in terms of the ability to monetize most effectively uh from an acquisition perspective, to control the offers that we have in uh retention to be able to maximize our promo roles. And and the and the lifts that we're doing in the back half of the year. And so

So with all of this coming together, we'll continue to be disciplined around driving uh, subscribers while managing our poo, most effectively. I don't know. Mark, if you have anything, you'd like to add on our

No, I think you. You captured it on your abs uh questions around capacity. Again, uh, pleased with the offering that we, uh, we launched. We think it's industry setting. Um, launched their um, we have incremental capacity, uh, within the perimeter just holistically. Just a reminder, the Brooks and Brawn system represents around just 700,000, customers, 1.5 million passings,

We have 10 million passings in our ecosystem. So, we feel like there is a more flexibility and capacity in that regard and certainly with our light path business, we'll continue to explore all options on that side to make sure we have the most effective cost structure and capital structure for them as well. But certainly more to come at the appropriate time.

Thank you.

The next question comes from, Sam McHugh with BNP parle, please proceed.

Yeah. Hi guys. Thanks for the question. Um, some of your your peers have talked about having higher market share, um, than 5 providers. Even in Long tenured fiber overbuilt places the way you competed with, you know, fee off another fiber, builders for a long time, the WGC kind of stable market share like as investors think about the medium to long run.

You know, whack me expect um, you know share to stabilize to. And what do you think is the floor in your business? Thanks.

Thanks Sam. Yeah, for us.

Uh, from a gross, add indexing perspective, uh, the best croad indexing in 2 years. And so, it's really all about how do we bring these new products, uh, to Market and continue to drive our value proposition. Uh, from a Verizon perspective, we've been competing with them for a long time, but there was a period where, um, unfortunately we were not delivering and, uh, quality. We were not delivering value. And now we have, uh, regained uh, that are the quality that we believe, uh, our customers deserve, uh, as evidenced through the awards from ukla and PC mag that have stated that our our networks are best in class in New York and New Jersey, uh, and Pennsylvania. And so, uh, this is a journey that we're on. As I mentioned earlier, uh, we're now for the first time growing Subs again, in some of these markets where we were just, uh, losing for years and years. And so I'm confident over the, the the, uh, long term. We're going to get back to

Subscriber growth, as well as revenue and ebit dog growth.

Well, I'll definitely ask 1 small follow up on mobile as well. Can you talk to about improving kind of, um, how to equipment attached rates higher premium unlimited plans, how do we square that with the kind of implied off food Trends in Wireless? Which so that they, they weakened quite a little bit in this quarter?

Mark, you want to talk a little bit about the RPO Trends? Yeah. I mean, we're going to take, Uh, sama balanced approach to driving Mobile rpu, on a per line basis. Again, trying we have a lot of Runway left with only 7% of our base penetrated. There's still opportunity there, you'll see us pulse in and out different strategies around that. So we'll we'll take a balanced and measured approach as we're drawing. It ultimately Drive maximize Revenue, trajectory while improving uh margins in that space as well.

Our next question comes from Stephen cahal with Wells Fargo. Please proceed.

Yeah, thank you, good morning. Um, so first, uh, just looking at the Eva dog growth guide for the back half of the year. It sounds like you've got really good line of sight on costs. Um, revenues have been a bit more pressured. You've talked about some of the drivers of that and some green shoots. Um, so I'm just wondering what kind of subscriber or arpu results, you need to see in the back half of the year to get you comfortable, with the guide. And, and what kind of line of sight on that? Um, and maybe I missed it because I joined the call late, but did you reaffirm the revenue guy that you gave last quarter for the year? Thank you.

Yeah, Stephen I'll take that just uh overall. Yes we we uh are reconfirming our Outlook from what we provided in the first quarter, and that's both on Revenue uh direct costs and Opex costs.

So we feel like we do have good line of sight on more of. This is heading. Um, certainly we're going to see most of that Improvement, uh, really step up in the fourth quarter, so just as you guys are building your models, uh, again but we re re reiterate um, those components and and really the drivers of of improvement is really going to be the impact of the subscriber performance year-over-year. Uh, the improved Revenue Trends. We talked about stability in our poo, the incremental, uh, selling of mobile and our value added services. In addition to acceleration, we anticipate from our light path and our news and advertising businesses.

Uh, certainly from an Opex perspective. Uh, we feel like uh the workforce transformation and transformation efforts will really start to kick in.

Uh in the back half of the year, a lot of the third-party costs. We've incurred tied to that in launching AI. Those are really front half loaded, so we'll see the benefits of those and then we just continue to operate the network much more efficiently. Until we do anticipate lower service calls and and lower truck rolls with these new AI tools fully established. Um, so again, a lot of the benefit we'll be seeing

Seen in the fourth quarter again, from a, from an R2 perspective. As we think about Broadband, we are lapping the, the, the rack rate reset. We did in early 2024, as we think about full year guidance around Broadband our Foods, we do think they'll be, uh, improvements year-over-year, uh, slightly. And so uh, we feel like we have the right balance approach to continue to drive improved Revenue Trends as well as moderating our cost profile.

Hope to bring your weighted cost of debt down through those um activities or should we expect some upward pressure on cash interest over time? Thank you.

no, we're excited about uh,

The, the loan that we just did. And and as you mentioned the Improvement, we saw versus what we previously did in our high yield issuance.

Uh, again we have a significant flexibility. Our objective again, is still, We Believe 4 and a half to 5 times. Is the right sustainable. Leverage, uh, levels to operate this business over time. We feel like there's a path to deliver on that. Um, certainly more to come at the, at the appropriate time.

Thank you.

Yeah, thank you at this time. I would like to turn the call back to management for closing comments.

Thank you all for joining. Please reach out to investor relations or media relations with any further questions.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.