Q3 2025 Cable One Inc Earnings Call

Speaker #3: Hello . And thank you for standing by . My name is Tiffany , and I will be your conference operator today . At this time , I would like to welcome everyone to the Cable One's third quarter 2020 earnings call .

Speaker #3: All lines have been placed on mute to prevent any background noise after the speakers remarks , there will be a question and answer session .

Speaker #3: If you would like to ask a question during that time , simply press star . Then the number one on your telephone keypad .

Speaker #3: I would now like to turn the call over to Jordan , vice president of Investor Relations . Jordan , please go ahead .

Speaker #4: Good afternoon and welcome to Cable One, Inc. third quarter 2020 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 , customer , connects and churn rates , new product rollouts , anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms .

Speaker #4: Anticipated benefits from our mobile service pilot program , future cash flows and capital expenditures , future levels of competition , potential uses for our cash flows , our ability and sources of capital to fund the retirement of our 0% convertible notes in 2026 , the estimated MBI put purchase price Mbi's future debt levels .

Speaker #4: Our CEO succession process , the anticipated timing for closing of certain asset sales , and our future financial performance , capital allocation policy , leverage ratios and financing plans .

Speaker #4: You can find factors that could cause Cable One, Inc. 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 and our forthcoming third quarter 2025 quarterly Report on Form 10-q .

Speaker #4: Table one 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 #4: Additionally , today's remarks will include a discussion of certain financial measures that are not presented in conformity with us . Generally accepted accounting principles or GAAP .

Speaker #4: When we refer to free cash flow during today's call , we mean adjusted EBITDA , less capital expenditures as defined in our earnings release .

Speaker #4: 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 Cable One, Inc. .

Speaker #4: Joining me on today's call is our president and CEO , Julia Laulis . And Todd Kushi , our CFO . With that , let me turn the call over to Julie .

Speaker #5: Thank you . Jordan , and good afternoon , everyone . We appreciate you joining us for today's call . Our subscriber results in the third quarter were weaker than expected , reflecting higher churn from the combined impact of macroeconomic factors .

Speaker #5: Competitive pressures , promotional roll offs and billing migration activities . While overall customer losses were disappointing . We saw modest improvements in third quarter connects as compared to the prior year period , a trend that carried into October .

Speaker #5: Rpu performance , along with disciplined execution , allowed us to deliver financial results largely consistent with the second quarter . We anticipate Rpu to remain stable for the remainder of the year .

Speaker #5: We believe our focus on simplified pricing , segmented marketing campaigns and value enhancing product and service offerings is laying the groundwork for improved financial performance over time .

Speaker #5: However , we continue to navigate a challenging macro environment , which is why our focus remains on execution , retaining existing customers , retooling our go to market approaches , and working to position Cable One, Inc. for durable , long term growth .

Speaker #5: I'll first review residential broadband customer trends , residential data customers declined by 21,600 in the third quarter , driven by the factors I noted .

Speaker #5: As I mentioned , momentum and connects has continued with year over year growth for the quarter and sequential gains each quarter of this year .

Speaker #5: And that momentum has carried into October . Positive signs that our initiatives are resonating even in a complex and competitive landscape . One major initiative enabled by our billing platform transformation is the launch of a new go to market pricing structure across our MSO footprint .

Speaker #5: By significantly simplifying our pricing , Sparklight representatives can now more easily match products and price points to individual needs and are doing so faster .

Speaker #5: Thereby improving overall customer experience at the same time , during the third quarter , we experienced increased churn given the economic and competitive pressures in the market , we believe some customers were particularly sensitive to promotional roll offs and to touch points tied to our billing platform transformation , similar to our systematic efforts to drive new connects .

Speaker #5: We are taking an equally aggressive approach to addressing churn . We saw churn improve in October in line with October 2020 . Four results .

Speaker #5: Following this period of significant customer impacting activity , as we continue aligning our products with customer needs , we are advancing our customer segmentation strategy .

Speaker #5: Our lift product , positioned as value by need , resonates with cost conscious customers , providing a sustainable path to reach incremental households and expand penetration .

Speaker #5: We are also seeing strong sell in among our premium tiers , with about half of new customers choosing Gig or faster speeds , including our expanding Multi-gig offerings , up from roughly 40% cell in last year .

Speaker #5: Average monthly usage is now around 775 gigabits per customer , underscoring sustained demand for high capacity service , while peak utilization remains below 20% .

Speaker #5: Through these and other initiatives , we are extending our reach across a diverse range of customer segments . Turning to Rpu , the increase this quarter was primarily driven by realizing a full quarter of the segmented pricing changes implemented during Q2 , as well as a higher than usual level of promotional expirations .

Speaker #5: Looking ahead , we expect some of our retention initiatives will put downward pressure on Rpu , partially offset by the continued adoption of value enhancing products and services , resulting in stable ARPU through the balance of the year .

Speaker #5: As part of our segmentation strategy , have been expanding our value proposition beyond the core broadband service , a key example is Tech Assist .

Speaker #5: Our $10 per month support service that offers customers expert support for a wide range of Wi-Fi connected products , from PCs and smart TVs to tablets , security cameras , thermostats and more .

Speaker #5: Tech assist helps customers keep their technology running smoothly and strengthens our role as the trusted neighbor in their homes . While we initially viewed Tech Assist as a modest contributor in the near term , adoption has exceeded our expectations to date and we are optimistic about the long term opportunity at represents .

Speaker #5: We are building on the success of this initial launch with our recent introduction of two new tech Assist products , one covering home entertainment and connected portable devices , we and another that adds device protection to the tech support assistance included in the original offering .

Speaker #5: Turning to our mobile initiative , I'm especially proud of the speed at which our team has worked to bring this product to market .

Speaker #5: We announced our plans to pilot this product on our August earnings call , began associate testing in October , and plan to launch unlimited plans starting at $25 per line in select markets later this month .

Speaker #5: We believe mobile will help reduce churn , deepen the adoption of our services , and increase customer lifetime value as we launch , we'll continue to learn through targeted pilots and refine how mobile fits within our broader strategy , with plans to share additional details on our go to market strategy once the pilot phase is complete .

Speaker #5: Before closing , I want to briefly address our leadership transition . As we've previously shared , I will be retiring from cable one , but will remain as a Senior Advisor through 2026 to support a seamless transition .

Speaker #5: The board has retained a leading executive search firm and has made significant progress in the comprehensive search process for the next CEO of Cable One .

Speaker #5: The goal is to achieve a smooth transition and facilitate the continued execution of our long term growth strategy . We remain focused on executing our strategy , and I am confident that our talented leadership team and dedicated associates will continue to move the company forward .

Speaker #5: The close were encouraged by the continued progress . Stronger connect trends through the quarter and in October , year over year connect growth another month of sequential churn improvement , we remain focused on executing initiatives that both strengthen connects and reduce churn .

Speaker #5: paired with

Speaker #5: And we are looking forward to the results of our upcoming mobile pilot , which we believe could further enhance the customer experience and support growth over time .

Speaker #5: And now Todd , who will provide a recap of our third quarter financial performance .

Speaker #6: Thanks , Julie . Starting with the top line total revenues for the third quarter of 2025 were $376 million , compared to $393.6 million in the third quarter of 2024 .

Speaker #6: Residential video continued to account for the majority of the year over year decline , down $8.7 million , or 16.2% , due to video subscriber churn .

Speaker #6: Residential data

Speaker #6: revenues decreased $2.8 million , or 1.2% , year over year , driven by a 5.1% decline in subscribers , partially offset by a 3.2% increase in R2 on a sequential quarterly basis , residential data revenues declined by 0.8% .

Speaker #6: Third quarter business data grew 0.4% year over year . This growth was driven primarily by our fiber and carrier segments , offset by some continued subscriber and pricing softness in the SMB segment .

Speaker #6: The fiber and carrier revenues segments benefited from strong sales momentum , higher connection volumes , and our ability to capitalize on new market opportunities compared to the second quarter .

Speaker #6: Business data revenues increased 0.2% sequentially . Operating expenses for the third quarter of 2025 were $96 million , or 25.5% of revenues , compared to $104.6 million , or 26.6% of revenues , in the third quarter of last year .

Speaker #6: With the decrease driven largely by a reduction in programming costs , selling , general and administrative expenses were $100.8 million for the third quarter of 2025 , compared to $88.4 million in the prior year quarter .

Speaker #6: SG&A as a percentage of revenues was 26.8% for Q3 of 2025, compared to 22.5% for Q3 of 2024. The increase was driven largely by non-cash, stock-based compensation.

Speaker #6: Other labor costs and investments in growth enablement platforms , as discussed last quarter , the implementation of these platforms is expected to generate meaningful opex and SGA savings over time as we realize greater automation and operating efficiency .

Speaker #6: Adjusted EBITDA for Q3 of 2025 was $201.9 million , representing 53.7% of revenues , compared to $213.6 million , or 54.3% of revenues , in Q3 of last year .

Speaker #6: And $203.2 million , or 53.3% of revenues , in the second quarter of 2025 . Capital expenditures totaled $71.8 million in the third quarter , a decrease of $5.2 million , or 6.8% , year over year .

Speaker #6: During the quarter , we invested $4 million of CapEx in new market expansion projects and $2.7 million in integration activities . We now expect full year CapEx to come in at the high $200 million range versus our previously articulated 300 million area estimate .

Speaker #6: Adjusted EBITDA , less capital expenditures or free cash flow was $130.1 million in the third quarter of 2025 , equating to a conversion ratio of 64.4% of adjusted EBITDA in the third quarter of 2024 .

Speaker #6: Free cash flow was $136.6 million , and 64% of adjusted EBITDA . Our business generates a significant level of cash flow , and we continue to assess the optimal use of those funds in order to maximize long term shareholder value with our current primary focus on disciplined debt repayment .

Speaker #6: Supplemental to our operating cash flows during the third quarter , we monetized our equity investments in Ziply and Metronet . These divestitures generated $124 million of combined pre-tax proceeds and resulted in the recognition of $67 million of gains on the initial invested amounts .

Speaker #6: Utilizing our operating cash flows and investment proceeds , we paid down nearly $200 million of debt during the third quarter . On top of the approximately $5 million of scheduled term loan amortization payments .

Speaker #6: We voluntarily paid down $173 million of revolver borrowings , and opportunistically retired over $20 million of our senior notes at a favorable discount through September 30th .

Speaker #6: We now retired over $313 million of our outstanding debt in 2025 . Additionally , after the quarter closed , we repaid an additional $25 million of outstanding borrowings under our committed $1.25 billion revolver .

Speaker #6: As of September 30th , we had approximately $167 million of cash and equivalents on hand , and our total debt balance was approximately $3.3 billion , consisting of approximately $1.7 billion in term loans , 920 million in convertible notes , $613 million in unsecured notes , 55 million of revolver borrowings , and 3 million of finance lease liabilities .

Speaker #6: We ended the quarter with approximately 1.2 billion of the $1.25 billion committed liquidity available under our revolving credit facility , our net leverage ratio on our last quarter annualized basis was 3.9 times over 2.7 billion of our $3.3 billion of debt contained fixed or swap fixed based interest rates that are substantially below current market rates .

Speaker #6: Although we expect to be able to retire our convertible notes maturing in March 2026 without needing additional external financing, we continue to monitor the capital markets for attractive opportunities.

Speaker #6: Assuming the MBI put option is exercised , and using an October 1st , 2026 closing date , we now estimate that the MBI purchase price would be approximately 475 to $495 million .

Speaker #6: We continue to estimate that the amount of MBI total net indebtedness at closing will be between $845 million and $895 million. One final note, subsequent to quarter-end.

Speaker #6: We entered into an agreement to sell certain fiber to the tower . Contract rights to a third party for approximately $42 million . Concurrently , our Clearway fiber joint venture agreed to sell a meaningful share of their assets to the same third party .

Speaker #6: These transactions are expected to close by the end of first quarter of 2026 . With that , we're ready to take your questions .

Speaker #3: At this time , if you would like to ask a question , press star . Then the number one on your telephone keypad to withdraw your question , simply press star one again .

Speaker #3: We will pause for just a moment to compile the Q&A roster . Your first question comes from the line of Craig Moffett with Moffett Nathanson .

Speaker #3: Please go ahead .

Speaker #7: Hi . Thank you Todd , thank you for the update on on the balance sheet and the debt you've paid off . Can you just update a little bit more about where you would like to target your leverage and how low you think you might take it , and then a more kind of general strategic question , which is just what might a more dramatic approach to trying to address the the particularly the broadband ARP issue ?

Speaker #7: In my mind . But the broadband net add problem in general , I'm sure you talk internally about sort of what are some potentially more dramatic approaches to to try to right the ship .

Speaker #7: If you , if you will , what might those look like ?

Speaker #6: Hey , Craig , thanks for the question . I'll kick that one off on the balance sheet . Inquiry specific to , you know , leverage as we articulated in our prepared remarks , we've already paid off over $300 million in debt this year , and that will continue to be one of our primary capital allocation priorities .

Speaker #6: The the business generates , you know , a meaningful amount of free cash flow , leverage , free cash flow . We benefited from some of the congressional tax payments or tax legislation recently passed .

Speaker #6: As you've seen this quarter , where that was a really minuscule amount of cash taxes . So we'll get the benefit of that going forward .

Speaker #6: As we've discussed in the past , we do have to continue to focus on deleveraging . We've operated this business in the past between kind of two and a half times in four and a half times .

Speaker #6: But that being said , you know , you have to be conscious of what the cost of capital , environment looks like . When we were willing to take it up to higher levels , it was was for strategic transactions .

Speaker #6: It was in a much lower cost of capital environment . It was in a much less competitive environment , to be honest with you .

Speaker #6: And so we think about all those things when we think about targeting or philosophical approach to balance sheet management , which I would say is much more in the high two , low three times , you know , overall leverage ratio that we're going to continue to focus on driving towards with disciplined debt repayment .

Speaker #5: And I'll hop in on the second one . But you feel free to join as well . I mean , I don't I don't think we'll specifically outline details of what we would be doing to grow our customer base , given the competitive environment and understanding who listens to calls .

Speaker #5: But what I can say is that work has been done in progress is absolutely being made . Now that we can move past some of these very large platform installations and migrations , those are behind us .

Speaker #5: And I think that it might actually be instructive to understand what happened in the third quarter . And what what things have looked like since the third quarter .

Speaker #5: There's no doubt that the third quarter customer loss was disappointing , but thankfully , October seems to be different in some significant ways .

Speaker #5: But first , let's go to the third quarter . In the third quarter , connect showed modest improvement over the last third quarter and actually August , September and October all outperformed last year's connects .

Speaker #5: So that's that's half of the the net ad equation , right . And that is why we made the comment that we feel like our initiatives seem to be resonating to bring more customers in the door .

Speaker #5: However , in the third quarter , disconnects were elevated and we had . A confluence of activities in a compressed time frame from the overall macroeconomic environment compared competitive pressures continuing .

Speaker #5: Of course , higher than ordinary promotional roll off . So they're going to higher rates and a billing migration that touched three quarters , three quarters of all of our customers .

Speaker #5: Our churn did spike with all of that happening at the same time . And regarding the billing migration , I mean , we are super pleased with the increased capabilities and the efficiencies of those platform , and we can even talk about how we've used it already .

Speaker #5: It's agility . Much better than our previous one . We have been able to isolate that . This was also a factor in our increased churn .

Speaker #5: So in a world where there are multiple choices for broadband , a touch in the form of a new name on the bill that they've never seen before , a new bill date , a bill date gets moved , normalized rates has acquisitions come into sparklight all of those things with the billing migration give customers an opportunity to review who their provider is .

Speaker #5: Now the good news is we believe that any heightened churn associated with the billing migration is now behind us , because churn has continued to improve in October , we saw connects at higher levels than last year .

Speaker #5: Same period October , and connects grew sequentially month over month in October as well . So that was the third quarter going into October .

Speaker #5: Again , October connects continue to be higher month over month and year over year . And disconnects in October fell back to pre third quarter levels .

Speaker #5: So that's not enough I mean that's fairly good news . We think . But that's not enough . We're continuing to drive initiatives to bring connect levels higher .

Speaker #5: Lots of work in the segmentation area Multi-gig launches two and six gig web sales . A lot of work being done on our online platform .

Speaker #5: Now that we have a centralized billing platform . That's the same for all the companies . And we're also working on loyalty and retention .

Speaker #5: That side of the business as well . A lot of work going on with high LTV love , if you will , segmentation and targeted save offers , as well as uses of AI in our churn models .

Speaker #5: So hopefully that gives a little more flavor , a little bit of story behind the numbers of the third quarter and what we see going into the fourth quarter .

Speaker #7: That's very helpful and encouraging to hear . Julie , thank you .

Speaker #8: Welcome . .

Speaker #3: Your next question comes from the line of Greg Williams with TD Cohen . Please go ahead .

Speaker #9: Great . Thanks for taking my questions . Just maybe Julie , dovetailing off the last topic , any way to quantify between the competition and the promo rollouts and the billing migration ?

Speaker #9: Friction , you know , is there one more to blame than the other , or is it just sort of a equal perfect storm of events here ?

Speaker #9: You know , because some of them are one time in nature , they'll go away . But things like competition will remain . If not get worse .

Speaker #9: Second question is just on the the broadband strength you gave great color on the fourth quarter with puts and takes as we think ahead in 2026 .

Speaker #9: Obviously not asking for guidance today , but just generally in 26 if you can help us with sort of puts and takes our price hikes on the table , are there more promo roll offs and maybe as an offset , are you attacking more value segments ?

Speaker #9: Any color would help . Thanks .

Speaker #5: Okay , I'll try to tackle that one . There's a lot there Greg . It was when I said a confluence of a lot of activities in a compressed time .

Speaker #5: All of those things affected third quarter churn , which was unusual for us , right ? We have had historic lows in this was definitely a spike .

Speaker #5: Part of it . You know , the billing migration touching , you know , 750,000 people with different things on their bills was part of it .

Speaker #5: But when you go through a billing migration , for those of you who've done it , you you have to put a freeze on your current customers as you move everything over .

Speaker #5: And what that means is that there's a section of customers that don't get their bill and they don't go through their normal cycle for a period of time .

Speaker #5: Those get delayed for about two weeks and some a little . Bit longer . Three weeks . What that means is customers have larger bills .

Speaker #5: By the time they actually have to pay , which does cause a spike in non-pay . So it really was a confluence of a lot of things .

Speaker #5: And we have torn apart the pieces and parts , and no one piece bigger than the other on the competition side , do we get disconnects because of competition ?

Speaker #5: Of course we do . But by and large , our problem related to competition has been primarily related to cell phone internet and not getting connects .

Speaker #5: And that is an area that we've made a lot of inroads on . So all of the things that I mentioned were part of the reason for our increased churn , which we've now seen come back down to Pre-migration levels in terms of 2026 , you know , Cabo has not had a cadence of annual rate adjustments for high speed data customers .

Speaker #5: We do do that for video customers due to programmer increases . So we do not have a planned rate adjustment for our HST service for our HST customers at this time .

Speaker #5: But we do continue to explore other avenues to increase revenue for example , we are currently exploring our autopay Plus program and seeing how it aligns with others in the broadband telecom space .

Speaker #5: As an example , I hope that answers your question .

Speaker #9: It does . Thank you .

Speaker #6: Yeah , and Greg , just one thing to jump in on that I think would be helpful for the audience and for you .

Speaker #6: Hopefully is , as Julie was talking about , that Non-pay cycle we have and you know , we're obviously talking quite a bit about about October , because when you go through a migration like that , you know , there's quite a bit of noise and it was the confluence of events .

Speaker #6: But the non is in October , as we've seen from an attrition rate , are approximately half of what we saw in those spikes in August and September .

Speaker #6: And so that is something that I would say is also maybe like you said , an anomaly . That's behind us and not something that would be recurring .

Speaker #6: The competitive intensity it is recurring . We have to be , you know , on our toes , the price and the packaging , the continuous state of rivalry , how we think about every single day going to market is what we've done to build the team that we have now , why we made the critical investments in those platforms , and now really starting to see the agility of executing on those playbooks .

Speaker #6: As we've talked before .

Speaker #3: Your next question comes from the line of Sebastiano Petti with JP Morgan . Please go ahead .

Speaker #10: Hi . Thank you for taking the question . And I guess just kind of following up on the theme questions thus far this evening .

Speaker #10: But relatedly , related to broadband competition . I think you're a larger cable . Peers have kind of called out low end kind of pressure , and I don't know if that is just , you know , F.w.a as AT&T , maybe internet scaled , but can you maybe , perhaps comment from a competitive standpoint , you know , as you kind of think about your , your subscriber base , you know , the churn that you saw on a non-paid basis , but maybe voluntary churn , is there any low end pressure there that that to speak of ?

Speaker #10: And then I think , I think you did talk about the lift products in your prepared remarks , but where are we with the Flex Connect rollout .

Speaker #10: Is that still in the early stages , as you guys improvements in connect volumes in the fourth quarter and beyond , as you look to stabilize things and then lastly , I guess , Todd , I mean , following up on the leverage kind of question or balance sheet , are you still confident in remaining below four times net leverage as you kind of bring MBI in over the next 12 months ?

Speaker #10: think about Thanks .

Speaker #5: Great . I'll go ahead and start low end pressure . I would say yes . As it relates to cell phone , internet , increased marketing .

Speaker #5: There affecting connects . However , again August , September , October all higher connect months . We seem to have found some some go to market strategies that are resonating with our customers .

Speaker #5: And listen the onus is on us to provide services at levels and price points that customers want and lift and flex go directly to that lift accounted for modest but growing share of our gross ads this quarter , and the product is allowing us to reach that value by need .

Speaker #5: Customer segment . And we have been tracking them in the retention of these customers tracks meaningfully better than our overall base . It , of course , requires customers to demonstrate financial need in order to qualify for that service , which naturally limits broad cannibalization and helps preserve the integrity of our core broadband tiers .

Speaker #5: We expect lift to be net accretive , supporting incremental growth and strong retention amongst these , you know , price sensitive segments . This this low end that you refer to , flex is a product that can help the value by choice versus value by need .

Speaker #5: Customer . Someone who can't qualify for lift . But wants something in that same price range , which you could imagine would be the same sort of people who might be interested in cell phone internet , but with much more reliability and unlimited data .

Speaker #5: Higher speeds , etc. , etc. in many cases , flex relaunched late in Q3 and only one channel in our sales center , and it's expanding to multiple channels .

Speaker #5: All channels in the fourth quarter . So we will be able to report out on it on our next call . The good news is our connects are trending nicely even without the benefit of flex .

Speaker #5: In Q3 . So there's there's the silver lining .

Speaker #6: And Sebastiano on the the leverage and the balance sheet question . You know we're going to continue to tackle that numerator . As I already talked about in terms of the debt repayment , whether that be through our organic cash flow or monetization of strategic investments .

Speaker #6: As we were able to benefit from this quarter with Ziply and Metronet . Of course , we're going to focus on driving the improvement in the denominator over time as well in that ratio .

Speaker #6: But inevitably when you do have a customer attrition rate like we had , this quarter , it has financial implications . And as we look at that , we can address , you know , an offset to that with additional cost savings initiatives , which we're leaning into .

Speaker #6: We've talked about in the past , and we'll continue to be very focused on , especially as we get through these platform migrations , where you gain a lot of those efficiencies from the new platforms .

Speaker #6: But I would anticipate that we're still in and around that four times area in conjunction with the MBI transaction . In late 24 .

Speaker #6: Excuse , late 26 .

Speaker #10: Got it . And then anyone maybe quantify the proceeds from the tower . Fiber to the tower sales from your cells and clearway .

Speaker #6: So $42 million is the agreement ? No proceeds yet . We just entered into the agreement on a direct basis . And that is effectively some contracts that we still owned that were in the Clearway fiber market .

Speaker #6: The agreement that Clearway fiber , our joint venture , entered into with the same third party , is for all of the network assets in that specific region .

Speaker #6: And that is an undisclosed amount . But effectively , our direct proceeds will , you ultimately be in that $42 million area ?

Speaker #11: Thank you both .

Speaker #3: Your next question comes from the line of Steven Cahall with Wells Fargo . Please go ahead .

Speaker #12: Thanks . Maybe first , just wanted to ask about move activity in this context of a lot of competition for subscribers . I think historically when we have activity picked up , it was a tailwind .

Speaker #12: I know it's been muted the last few years , but if we do see lower rates and more activity , given all the products that are out there , do you see that as a as a headwind or a tailwind to your connect activity ?

Speaker #12: And then , relatedly , as we kind of get to churn from here , do you think it's similar to where it was in the first half of the year , or is it still a little bit of a headwind ?

Speaker #12: And then last one , Todd just wondering if G&A slows in Q4 , if it remains at levels where it was in in Q3 ?

Speaker #12: Thank you .

Speaker #5: So, move activity is still low. And so this is a game of jump balls. It is again incumbent upon us to win.

Speaker #5: Any opportunity to to have folks look at Sparklight . It's interesting . One of our go to market strategies is to have a very particular claim for each market place .

Speaker #5: That is verified by a third party . So it's not just us talking about ourselves . So it might be a claim on speed .

Speaker #5: For example , from Eucla , or maybe open source , but one of the claims that several of our markets use is , you know , customers who come to Sparklight stay with Sparklight , and that is based on a Kagan , the media research group of .

Speaker #5: S&P Global Market Intelligence , who declared Sparklight number one in customer loyalty among major US broadband providers in their Q1 2025 media census survey .

Speaker #5: And that was due to our lower churn . So it's whenever there is a chance for connect in town , it's incumbent upon us to get that win .

Speaker #5: And I think again , with connects trending up , we're we're finding some things that work . I think your second question was about churn in the fourth quarter .

Speaker #5: Am I right ?

Speaker #12: That's right . Yep .

Speaker #5: Okay . Yeah . It's it's as Todd said , October was half of what ? August and September were in terms of non-paid , right .

Speaker #5: And overall churn is back to pre-migration levels. So we would consider us back to normal.

Speaker #6: Yeah , I would say , Steven , that , you know , we definitely feel like there's still an opportunity for us to improve , you know , on that .

Speaker #6: To your question around , like , you know , pre you know , even some of the migration levels and we recall we started this migration in , you know , Q4 of 24 and it was a phased approach .

Speaker #6: So it's been a it's been a , you know , an important and critical , you know , process that the team did well on and navigating .

Speaker #6: But it's also been putting us in a little bit of a hamstrung situation relative to not only the connect side of the equation , but a lot of the new retention initiatives that we have .

Speaker #6: So we're going to really focus on that . You know , execution of retaining customers , driving into that loyalty factor that that Julie , just alluded to , retooling .

Speaker #6: You know , a lot of the go to market strategies to even capture more of those moves . I don't think we or maybe even the industry did great on those in the past , but we all know that there are additional alternatives and there's different tactics to drive that awareness from a branding perspective .

Speaker #6: And from a connect perspective . And then just really reignite , you know , the the growth mindset in terms of how we bring that , you know , element of , you know , winning strategies to bear , you know , each and every day with our associates and in our communities , now , you asked about SG&A .

Speaker #6: I think as well , it is heightened this quarter . I talked about it in the prepared remarks , a little bit of the non-cash stock comp that I talked about last quarter that will still be in Q4 of 20 of 25 here , but when you're going through these migrations , you have incremental labor expense , both internal labor as well as contract labor .

Speaker #6: And then , of course , we talked about last quarter , we will start to see the benefits . Some of these cost savings coming into the financials .

Speaker #6: And opex and SG&A at the tail end of this year . But really , more on the run rate basis for 2026 . So I would anticipate that , you see , you know , that come back in line .

Speaker #5: It related to retention as well . I mean , we talked about some of the things that we were we're somewhat pleased at how things are proceeding since since the billing migration , but that we would be leaning into even more to drive even more connects and really working on the retention side as well .

Speaker #5: Even as churn comes down . So working on retention overall , but also a lot of tests going on , you know , we talked about promo roll offs and , you know , when someone goes from a promotional rate to a full price or higher rate , that's certainly can elevate churn in the short run .

Speaker #5: But we have done deep analyses on these cohorts and , and how they roll off in their first month . And subsequent months .

Speaker #5: And it proves that the overall retention of these customers , as we track them versus the control the business as usual customers is a good ROI .

Speaker #5: Obviously , that's because of increasing rpu . Well , we are working on tests for retention for our promo rollouts because those promo , that promo activity will continue at those elevated levels through the end of the year .

Speaker #5: And so we're doing tests against those segments to see what we can do to help keep more , longer . So working retention on all sides of the business .

Speaker #12: Thank you .

Speaker #3: Your next question comes from the line of Brandon Knispel with KeyBanc Capital Markets . Please go ahead .

Speaker #13: Great . Thanks for taking the questions . Two quick . I think on the competitive environment , one , could you just update us on where you think you are from a fiber overlap standpoint within your footprint , and then two , you talked about fixed wireless sort of being the main competitive factor .

Speaker #13: AT&T has talked about rolling out AT&T air more broadly , really starting this month . How are you thinking about the competitive impact of that product starting to roll out more broadly going forward ?

Speaker #13: Thank you .

Speaker #6: Yeah . Hey Brandon it's Todd , the fiber overlap that we talked about last quarter being in kind of that low to mid 50s is pretty consistent .

Speaker #6: This quarter as you you know do recall . And we've talked about before one of the most ambitious , you know kind of movements in that was AT&T upgrade from DSL to fiber .

Speaker #6: And we did see that slow a little bit undoubtedly because they're putting more emphasis in some of the markets that are smaller , more rural , where we do have a considerable amount of overlap with of where them on the AT&T air product .

Speaker #6: So kind of answering both of your questions with one is fiber overlap pretty consistent . You'll see it in select areas , but from a , you know , the primary drivers of it being LEC upgrades that hasn't accelerated in any way .

Speaker #6: And then the FWA , we've got meaningful overlap in our markets from what we see from ground truth , as well as third party research with T-mo , we have basically nearly all of our markets that have it from one of the three providers and AT&T was , I would call it the laggard in launching that .

Speaker #6: But has here in the last really 3 to 4 quarters been the most aggressive of rolling it out in areas where they are still copper only .

Speaker #6: And we would anticipate that that will continue .

Speaker #5: Yeah , I mean , I think that's where flex finally getting out has has a good chance . So it'll be interesting to see how it performs .

Speaker #5: And don't forget we're launching mobile in November . So which is amazing given that we just signed the deal in August . But at any rate , we're going to be able to market to our customers just like they market to theirs .

Speaker #5: So it's going to be a more level playing field .

Speaker #13: Got it . Thanks for taking the questions .

Speaker #6: Thanks , Brandon .

Speaker #3: Your next question comes from the line of Sam McHugh with BNP Paraba . Please go ahead .

Speaker #14: Hey good afternoon guys . I'm two questions I guess one is a follow up on gross out on churn . You're talking about gross as being up .

Speaker #14: I think I heard you say churn was down year over year in October , but maybe you could clarify . So I guess , you know , with that in mind , could we see broadband losses actually stabilize in the fourth quarter ?

Speaker #14: Like how confident are we in that momentum continuing ? And the second one on the sale proceeds ? I'd kind of multi-part . Sorry , Todd .

Speaker #14: The 123 million year book . That's a pre-tax number . The question one . And then on the fiber proceeds same question is that pre-tax and is that only your direct sales like could there be some pass through from clear wave as well then I guess lastly , like how much do you think you have left to to divest now ?

Speaker #14: Are we looking at similar amounts still left ? Thanks .

Speaker #5: I'll start with the churn question . October . Yes . Down year over year . That is correct . You mentioned something about Gross connect , Sam , but I'm sorry I did not catch it .

Speaker #5: I did ask . Yeah . Go ahead .

Speaker #14: No , just saying that you're talking about . They were up in October again and through I think August , September 2nd . So if we flow that through for the rest of the quarter , if gross adds are up and churn is down and that would suggest a pretty decent improvement in Q4 .

Speaker #5: You said it , not me .

Speaker #6: Yeah , I would maybe one anecdotal thing , Sam , just to add is , you know , the month of October , it's month , right ?

Speaker #6: But both from a connects improvement year over year and a disconnects improvement year over year. That's the first month that's happened in 17 months.

Speaker #6: So it's it's definitely a good indicator in our mind . But definitely something that we have to continue to , you know execute upon .

Speaker #6: And I think then moving into your other question on the sale proceeds , yes , those are pre-tax . But as I'd previously articulated , we've got some pretty good tax or , you know , kind of tax insulation .

Speaker #6: There relative to some of the other previous losses that we had take on strategic investments . And so a very meaningful amount of flows through in terms of what we paid off in debt for this quarter .

Speaker #6: And then, with the announced agreement with the fiber to the tower contracts, again, that's not a sale of fiber. That's just a contract.

Speaker #6: The actual infrastructure was owned by Clearway Fiber. That will also have a pretty high tax-efficient flow-through as it relates to proceeds to be allocated under our capital allocation philosophy.

Speaker #6: Right now , what's left is very speculative . I would say that , you know , we've talked about what the past has been and a disciplined focus on monetizing these strategic that investments and using those proceeds to pay down debt , starting even , you know , in 2023 , we , you know , we do expect to continue to see , you know , interest and likely ongoing consolidation just from a broader sector perspective .

Speaker #6: But beyond that , from a policy perspective , we don't speculate on M&A .

Speaker #3: Your next question comes from the line of Frank Luton with Raymond James . Please go ahead .

Speaker #15: Hey guys . Good evening . This is Rob on for Frank . So you kind of talked . Hey guys . So you kind of touched on this a bit earlier .

Speaker #15: But what are some of the products you're having particular success with? You know, are there any offerings you're seeing an especially strong take rate for?

Speaker #15: And then, you know, switching gears slightly, how would you assess the trajectory of your video declines right now relative to your internal expectations?

Speaker #15: And you know, what can we sort of expect for the pace of those declines going forward?

Speaker #5: When I think about what we see resonating , I think it is not one thing . It is a lot of things put together to tell you the truth .

Speaker #5: We talked about our go to market strategy that Tony and team have been working on , and using third party and AI data to deeply segment customers and and bring to them the things that they most want and need seems to be those sorts of messages in an environment where we are seeing as trusted neighbors to our customers in terms of how we deliver service again , seems to be resonating .

Speaker #5: What else can I tell you about what's working ? Well , you know , wallet share our prices for HST . You know , our ARP , who's driven by people , you know , our high LTV base .

Speaker #5: And then , you know , we sell in Multi-gig whether that's two even up to six gig symmetrical in some cases , but also we've had just tremendous success with products that customers get to choose for themselves .

Speaker #5: In other words, they see a need and they pick and choose whether they want it or not. So secure. Plus, part of securing their Wi-Fi environment in their home is very important to a lot of customers.

Speaker #5: Our Tech Assist program . Service really is doing so well . That's $10 a month that we're launching a $15 a month and a $25 a month service that is similar to those that covers certain different devices and services , but very much similar to that original tech assist .

Speaker #5: So we've been successful in wallet share . And it's not just wallet share for us . It's helping customers with a need that they have .

Speaker #5: They get very frustrated with , you know , having a doorbell , connect to Wi-Fi or thermostats , for example , or in the newer products will be handling things like home electronics like TVs and laptops and headphones and gaming systems , things like that .

Speaker #5: So things that actually help make their life easier , that gives a bit of flavor .

Speaker #6: Yeah . Rob , I'll just jump in there as well . You heard Julie talk about Euro , but you know , our adoptions continue to see really good increase increasing momentum .

Speaker #6: There . We actually had our strongest quarterly sell in to date with that product . And we also look at that as you know , what are multi-device options for that .

Speaker #6: Really all of it about solving problems in home given we have such a high reliability standard to the home , we were also now in an opportunity in a position to benefit from the opportunity of really having a much better insight inside the home .

Speaker #6: With that partnership . And then , you know , the multi-gig selling that . Julie was alluding to , that was also meaningfully higher than any other category .

Speaker #6: As it relates to growth for this quarter . So , you know , you see those driving good support for the stability of our rpu .

Speaker #6: And I say stability . As I've said numerous times , even though you saw it move up a little bit this quarter , but I would anchor investors and our analysts to some of the previous comments that we made in Q2 around , you , stability being , you know , plus or minus a dollar because it's going to move from time to time and quarter to quarter , you know , but about a dollar plus or minus off of that , you know , 81 ish dollar Q2 reported Rpu .

Speaker #6: And then on the video side , sorry , you asked that . Yeah . You know , we're continuing our strategy around converting the video customers to IP .

Speaker #6: Those that want to remain a video customer of ours , obviously , the number of video customers that we have left is quite small , and getting smaller .

Speaker #6: And has been , you know , a philosophical approach from over ten years ago that that wasn't really going to be , you know , what was driving the power of the bundle as much as that was the data product .

Speaker #6: And so , you know , Julie even mentioned to it , that's a product we're going to focus on keeping profitable through passing along price increases .

Speaker #6: That isn't the greatest experience for customers . So that attrition rate has continued to be pretty consistent . Wouldn't expect that to be much different .

Speaker #6: And we're going to be very focused on getting that IP conversion complete , which then allows us to reallocate that spectrum to the data , upload to the data , upload capacity , and capabilities .

Speaker #3: We have reached our allotted time for the question and answer portion of today's call . I will now turn the call back over to Julia Laulis for closing remarks .

Speaker #5: Thank you . Tiffany . Before wrapping up , I want to thank our associates for navigating a tremendous amount of change in driving meaningful progress over the past year as our major platform initiatives become fully embedded into our daily operations , we're leveraging these tools to serve our customers with greater efficiency and effectiveness than ever .

Speaker #5: Thanks again for your time and interest in cable . One .