Q2 2019 Earnings Call
Okay.
Good day, everyone and welcome to Cincinnati Bell's second quarter 2019 earnings release today's conference is being recorded at this time I would like to turn the conference over to Josh Duckworth, Vice President of corporate Finance Investor Relations and Treasury. Please go ahead Sir.
Thank you and good morning, I would like to welcome everyone to Cincinnati Bell's second quarter 2019 earnings call. Joining me on the call today is our president and Chief Executive Officer Leap off.
Our Chief Financial Officer, Andy Kaiser, who will recap this quarters highlights and provide detail on our second quarter financial performance.
Following the prepared remarks, Tom Simpson, our Chief operating officer will join Leant, Andy during the question and answer portion of the call.
Remarks made on todays call that are not historical facts are considered forward looking statements and are made pursuant to the safe Harbor provision presented on slide two.
Please see today's press release and the company's recent FCC Bobby's available on our website for a description of the potential risks and uncertainties that may cause actual results or outcomes to differ materially from those indicated or suggested by any such forward looking statements.
The presentation also contains certain non-GAAP financial measures.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available on our website.
With that I'm pleased to introduce Cincinnati, Bell's President and Chief Executive Officer Leigh Fox.
Thank you Josh good morning, everyone. Thank you for joining us today.
Our strong second quarter performance demonstrates the success of our fiber investments and strength of our IP services business.
This quarter's adjusted EBITDA increased 6% sequentially.
Further validating our capital allocation strategy is focused on investments on a long term growth and sustainability for the company.
Our entertainment Communications business.
It's been an early adopter of the fiber is the future strategy, both in Cincinnati and in Hawaii.
We have created a combined fiber network, which spans approximately 17000 fiber route miles deploying a superior fiber to the premise product.
Which produces higher bandwidth faster internet speeds than the cable competition.
The 60% greater Cincinnati and 50% on the island of losses in Hawaii.
It has been one year since we acquired Hawaiian Telcom.
And we have made considerable progress optimizing operations harmonizing marketing and sales.
We are confident the organization is now structured to begin to increase internet marketshare and capitalize on the robust demand brightree services within its business market.
I'm also pleased to report that recently passed legislation reduces regulatory involvement.
Within our business in Hawaii.
This legislation increases our operating flexibility.
Minimizing the need to engage the PC on certain business matters.
And more closely aligns regulatory involvement.
With what we experienced.
Here in Ohio.
I would like to personally thank the members of our Hawaiian team and the Hawaii PC worked together to get these changes past.
I am very proud of our Hawaii team for their efforts and dedication combined with the realization of merger synergies. We're confident adjusted EBITDA growth will approach, 10% this year.
In Cincinnati the focus also remains on increasing internet penetration now at 44% within our fiber to the premise footprint.
We continue to deploy fiber to the premise to newly constructed neighborhood as well as existing structures in which projected returns not just oracle trends as demand for faster Internet speeds continues to accelerate.
As evidenced more than 45% of our consumer internet customers subscribed to 200, Megabits currently compared to three years ago, when it was less than 1%.
In addition, the Cincinnati team continues to identify and implement cost out initiatives to address pressure from ongoing legacy decline.
The impact of our efforts to contain costs and the recent price increases implemented in the second quarter resulted in a 4% sequential adjusted EBITDA growth.
In Cincinnati, and 3% year over year.
Now turning to the IP services and hardware business.
Despite churning out the remainder of certain cloud services from GE and April adjusted EBIT increased an impressive 28% sequentially.
Demand for products and services with our communications practice continues to be robust strategic revenue growing 29% compared to the second quarter of 2018.
Year to date, we have added new contracts with a combined $600000 of monthly recurring revenue for you Cathy.
SD Lan Internet solution.
In addition to the communications practice, we're also encouraged by the new opportunities within our cloud practice.
Excluding the impact of in sourcing initiatives from G. Cloud revenue was up 33% year to date compared to a year ago.
The cloud practice has 50 plus highly skilled software engineers certifications across each of the public cloud providers.
In an effort to establish relationships improve ourselves as a trusted adviser we have successfully completed onetime public cloud embolization.
Totaling $4 million during the first half of 2019.
The team has also been successful in adding approximately $300000 new monthly recurring revenue.
It is important to note that of the onetime implementation and new monthly recurring revenue, 85% were won by traditional onyx locations, highlighting our enhanced geographic scale and ability to compete effectively across our north American platform.
I will now turn the call over to Andy who will summarize our consolidated and segment results for the second quarter.
Thanks, Lee moving onto consolidated performance for the quarter on slide five revenue totaling $384 million generated adjusted EBITDA of $103 million, which is up 6% compared to the prior quarter.
Why and telecom contributed revenue of $88 million and adjusted EBITDA of $25 million, an increase of 4% sequentially.
Our entertainment and Communications quarterly segment results are highlighted on slide six.
Revenue for the quarter totaled $251 million, which was consistent with the prior quarter.
Revenue for the Cincinnati market totaled $172 million with white contributing $79 million.
In both markets fiber to the premise data in enterprise fiber growth continued to be mitigated by video cord cutting and ongoing legacy declines.
Adjusted EBITDA was $93 million up 3% sequentially due to cost containment efforts and price increases in Cincinnati as well as the realization of synergies in Hawaii.
The quarterly metrics update for our consumer SMB fiber suite of products is included on slide seven.
Cincinnati Fioptics Internet subscribers, which includes a combination of fiber to the premise and fiber to the node customers totaled 245000 at the end of the quarter up 4% from a year ago as the declining relevancy of the fiber to the node products was more than offset by the addition of 18000, new fiber to the premise internet customers.
We increased our fiber to the premise internet subscriber base by 3200 during the quarter.
Which is seasonally impacted by local university schedules.
Fioptics Internet ARPU totaled $53, an increase of 4% compared to a year ago with overall churn declining 20 basis points.
We ended the period with 138000 video subscribers in Cincinnati, a decrease of 5% from the prior year, primarily due to customer preference for over the top streaming video services.
Video ARPU increased 7% from the prior year totaling $97 with churn improving more than 40 basis points.
Hawaiian Telcom increased its consumer SMB fiber to the premise internet subscriber base by 1000 during the quarter.
Well video subscribers decreased by 900.
Consumer SMB fiber Internet ARPU was $39 with video ARPU totaling $78.
Turning to our IP services and hardware segment results for the quarter on slide eight.
Revenue was up an impressive $12 million year over year due to solid sales performance across all of our practices.
Adjusted EBITDA increased by $3 million compared to the prior year after excluding the impact from GE his decision to in source certain cloud services.
Revenue from these services totaled $1 million in the second quarter of 2019 compared to revenue of $7 million and adjusted EBITDA of $5 million in the second quarter of 2018.
Now that the migration is complete we have determined that full year adjusted EBITDA will be negatively impacted by $16 million in 2019 as compared to the prior year.
An update on the communications practice is on slide nine.
We continue to be impressed by the increasing demand for our strategic products and the year over year growth within our communications practice.
During the quarter, we added 10200 hosted ucas seats, which now totals approximately 255000.
We also increased our NAV sites by 440 with SD Lan locations, increasing by 740.
As presented on slide 10 capital expenditures in the first six months of the year, well $111 million, including $36 million for Hawaiian Telcom.
During the first half of 2019, we invested $17 million in construction cost to expand our fioptics fiber to the premise footprint in Cincinnati.
Similarly, we invested $4 million in construction costs to expand our consumer SMB fiber to the premise footprint in Hawaii.
Year to date Fioptics in consumer SMB fiber installation costs were $26 million in Cincinnati and $8 million in Hawaii.
We continue to expect the Companys full year capital spend to be $215 million to $235 million.
As outlined on slide 11 free cash flow for the first half of 2019 was $18 million as we remain on target to generate positive free cash flow for the full year.
Our leverage remains consistent at four dot seven times, ending the quarter with net debt of one dot $9 billion.
Liquidity continues to be strong at $163 million and we maintain a gross and a well carry forward of approximately $760 million.
We are confident that our strong capital structure and liquidity are appropriate to allow us to execute on our strategic objectives.
As noted on slide 12, our solid results from the first half of 2019 have positioned us to achieve our full year financial guidance, which we communicated previously.
I will now turn the call back to Lee for closing remarks.
Thanks, Andy.
In closing I'm excited about the progress achieved towards growing our two distinct you'd complementary lines of business.
Our disciplined capital allocation approach business strategy has differentiated Cincinnati bells results from its traditional peer group.
Looking ahead to the second half of 2019, we recognize the unprecedented challenges and constraints.
Facing our sector.
That said, we remain confident that our results will continue to prove that our assets on our balance sheet, our strategy and our continued investments will define us as a company that has significantly better positioned to compete.
As Andy mentioned, we're confident in our 2019 guidance and we'll continue executing on our strategy of building or a bus fiber network.
And growing our high margin recurring IP services revenue, while continuing to explore options to create additional shareholder and stakeholder value.
I will now turn the call over to the operator and open it up for acuity.
Thank you.
Ladies and gentlemen, if you would like to ask a question today. Please press star and then one on your Touchtone phone. If you are using a speakerphone set up it may be necessary to pick up your handset or de press the mute function. So the signal can reach our equipment.
Again that is star and then one if he would like to ask a question today.
Well take our first question from Simon Flannery from Morgan Stanley .
Great. Thanks, very much so on the on the balance sheet, there's been some.
Dislocation some of the credit markets do you think you can take advantage of that consider using some of your liquidity to buy back some debt in the open market and then as we think about the capital spending intensity.
How should we think about the the pacing of that over the medium term I think when the Fioptics was originally conceived the thought was that it was more of a a a you know a several year product project and then it would start to to phase down, but what's the right way to think about it today. Thanks.
Thanks, Simon I'll answer the.
The latter question I'll, let Andy address that the debt.
Question, So on the capital side in this short to mid term and until things in the capital markets improve you know I think you should consider us at pace right now look the way I view it.
We're building a business that you know both here and in Hawaii.
That has the ability to achieve.
45% to 50% market share, where we build fiber.
That's a great business and I think in any calm environment people would be pushing us to go fast faster, but it's just not that environment right now and so we're being very cognizant of that and respect love it and and what it means that the cost of that so you look we're using our own cash flow, we're going to we've got to.
Nice pace going.
Got to engineer out of territory.
Here in Cincinnati that should add some incremental homes and with some.
You know good economics, along with that and some improved economics as things are getting more and more expensive here in Cincinnati. So what I, just I would consider the pace sort of steady in the short to midterm and and even answer that that wasn't sure I saw him.
Well I'm, assuming you're talking about are 2024, and 2025 notes given that our term loan is essentially fixed Ah Ah sub 6%. So the 2024 to 2025 to your point represent an opportunity by that the markets and you know as we have maintained.
On on every call and we maintained throughout the year, we're always going to look at the best use.
Of of our capital dollars.
And so when are we continue to look at where they trade and does it make sense to move some of our spend toward debt. We'll continue to look at that but given that we still have significant opportunity to invest in fiber both in Cincinnati as well as in Hawaii.
Oh, we you know we tend to believe in the longer term investment and returns that come with investing in the company in the network rather than buying back debt.
Great. Thanks, a lot.
Thank you.
And we'll take our next question from Sergey until Shevsky with <unk> investors.
Hi, good morning, guys.
I guess just first question.
Okay.
Good question.
Shareholder.
You mentioned that.
Youre looking at exploring additional options.
For the prepaid shareholder value longer term, but I think a kind of a bigger question is I mean, if you look at just dogs. The stock has been down significantly over the past year since acquisition of Hawaiian Telcom and stick would argue whether it's fair or unfair but did you find has been dramatic. So as you look where you are with Hawaii integration and at your current asset portfolio could you share your thoughts on what your things in markets is getting wrong about the company and more importantly, what more importantly, what key steps.
You guys are taking to meaningfully enhance your horrible winter going forward, what steps do a thing from organic perspective, when they're getting perspective.
It was the company on a vessel for sustainable long term shareholder value creation.
Yeah, absolutely so.
You look to to look at the last year and to say that a the last year has to do with Hawaii solely.
There's a bit of a stretch and if you look at the entire sector or the you know the sectors has melted down when you have.
What people can pair up to its peers announcing bankruptcy cutting dividends.
Now getting into capital or capital issues.
It's going to affect us as a smaller player in the market that said I think were very different I mean, we've invested in fiber and invest in the future in ways that others haven't.
I, just think people need to see that the Parisian I think there's a lot of perceived risk in the in the sector and until you know you can show.
Steady numbers in an environment like this I think it's it's going to affect you and if you look at our numbers.
You know I I don't know that there are many others that can say the word grow.
Right and the sector you know obviously, we've invested a lot for that but we are you know I think our assets are but better than anyone else in the sector, Hawaii will grow at 10%. This year and you know you know we've been told you know I've gotten the comments that it's well that's just synergies.
And I think with Morgan Stanley that that analysis that had us in the Seventys just on trend line. So you know will be in the high Ninetys, that's not just synergies.
Especially when you're going to see you know I think roughly 10% revenue growth.
So look we know how to run these businesses, we know how to invest in.
But in this environment.
I think people just you know you have to prove it and I think it was your bosses told me one time, it's hard to.
You know proves you know cynical you know things the cynical new Yorkers, while I think its just time right you've got a you've got to show the resolve and I think we are showing the results. So and we'll continue to show results and do what we said we're going to do I mean, our guidance I'm very comfortable or guidance that you know I think the mid 0.4 or five very comfortable with our guidance and on EBITDA and what will talk about next year and next year comes and I don't think we'll have any surprises and we'll just keep doing what we say, we're going to do and that only be responsible with the balance sheet be responsible with the company, but you have to invest for the future. If you don't you end up in the same place that.
Our you know our quote unquote peers are.
Okay.
<unk> <unk>.
I guess a related question somewhat related question.
About capital allocation and they get into consideration your capital investment plans and I was just strategy, but also considering where the stock is trading now and assuming that you've you seem to be as good value. What are your thoughts on opportunistic stock buybacks and at what point do things they could become.
Apple tool.
You know I think the challenge is you know if you look as Andy mentioned down our debt and our equity I think both are actually.
[laughter] could value right now a very good value you know the issue there is shifting capital right and what does it do and this is a short term versus the long term you know I I think personally on the equity side, you know shifting up a decent amount of.
Money over to buy back shares.
You know it's possible it'll have a short term impact, but given the macro.
Macro issues in the sector is that going to sustain itself long term.
And then what does that do to.
Oh, you shifting money away from.
Growing your business and making sure that you had longevity in the business.
You know at the bottom line is the whole industry needed to re platform.
And you know we were one of the.
Not even a handful we were one of very few companies that realize the replatforming and have.
Seriously re platformed and continue to re platform I think the focus needs to be on that I think if if if shy away from that and you need jerk and react to things you're going to cause issues in the mid to long term and and and look like as you mentioned earlier.
The the market doesn't get it right now you know obviously you know we.
That's not you know.
Across the board I think there's a reason why you see private money coming in the sector versus public money more long term oriented money getting excited about what will happen.
Around fiber versus the short term wall Street sees a lot of inherent risk in the sector and I I've given a backdrop I understand but we are not that and as I mentioned earlier, we have to continue to execute.
Oh to show it and we will I think this quarter was an example, we're off to a strong start in the third quarter.
Will you know you can pretty much like I said earlier I'm very confident our numbers. This year and then we'll have a topic of conversation about next year and you know there are.
Any other companies in the sector that are saying the word grow as long as I'm aware of and.
And we're saying in every.
And every one of our subsidiaries. So you know I think it'll just take time, but I think that's the right use of capital right now.
Right.
Another question on I T service as shown in the past you guys have talked about the kind of hinted at Midland.
Dollarsin EBITDA goals AG services business being an important targets and I'm paraphrasing of course, but I think basically your thoughts it may help the market to focus more on the segment to his girls opportunity, which is its ability to be a stronger sustainable business. So my question is do you still use a goal as it relates to coal or medium charm and at the high level. What does a fast was that hundred million in EBITDA and how quickly do you think you can get there.
Yeah. That's a great question I I do still believe that I think that's kinda if as you approach that marker I think people because begin to pay more attention I mean, if you think about it if you know we wouldn't have had that light.
$20 million blip with GE this year.
It'd be a $70 million to $75 million business instead, it will be a $50 million to $55 million business with you know growing at 20% of here. So it's got organic growth we've proven out the expansion model.
It's working.
You know we've got good products and services, we had a great team, they're doing a fantastic job and you know right now its just let them do what they do there they're doing a fantastic job growing that business and I will continue to grow it and I think.
You know once it gets.
Once we get another year or two under our belt I think it will look much much different and there are opportunities that continue.
I'll tell you across the board, whether its CBTI three and see we feel like we have way more tailwind than we have headwind right now which is a lot to say in this industry right. So.
That's what we're going to focus on and I think you can get there organically.
I'm not interested in doing organic inorganic stuff right now just because of the backdrop of the sector in the capital markets and how our sectors that are.
You know viewed.
But we've got to get ourselves out of the sector and a I've said it many times I feel like we're on a very nice house and a bad neighborhood lately. It's felt like we're a very nice house in a war zone, but we're still very nice house and I'm you know, we've got to execute and.
You know more people realize that and that's what we'll do so I'm just going to let them do what they do and I think they'll naturally get there.
Great and my last question is on Fiveg, So you're seeing wireless operators getting closer.
To fiveg, there's various ER fess and launches and I'm just hearing about gigabit speeds also invest environments and almost empty networks for now so mobile sprint merger successfully closes we will have a strong spectrum position until they are using it to compete in the residential broadband space. So could you update us on your thoughts on how fiveg is shaping up versus your expectations or how it seems like the company and to what degree do sees this as an opportunity to gross versus series for Cincinnati Bell.
Yeah, obviously, we pay a lot of attention to what's happening in that industry. We have very good relationships with all the carriers all the carriers. Obviously have you know each carrier has a different.
Strategy and and so we try to stay close to them and what they're doing.
With respect to an impact you know I think time will tell I think the high cycle around.
Broadband displacement has died down for very good reasons I mean, you used the word it just in that sense, Although I think we're hearing a lot of.
All those and buts and you know so it was the hype cycle kind of dies down.
Yeah, I think it'll be a.
A good experience good mobile experience, but you know that the tech as we talk to technologists.
There's one common theme that we hear whether you're in wireline, whether you're in cable whether you're in wireless everything migrates to fiber to the Prem period.
That's where everything's happening and if that is the case, which we believe it is an others due to others. You know that are much smarter than I am.
We are in a very good position, so well look we'll keep our eye on it and we'll we'll obviously you know we see impacts coming we'll let the market know and you know I think we're we've been very responsible about making sure that we are transparent about everything we do and and we will but right now.
We're not seeing an impact we're seeing a lot of.
Good conversations with carriers on the wholesale side and and and both here in Cincinnati and in Hawaii, and we'll keep you apprised when we actually Youre, if we actually do see anything but right now it seems more positive than negative.
Thank you.
Thanks are you.
And ladies and gentlemen, next we will go to battelle levy from you'd be yes.
Great. Thank you in and see a lot of focus on on top line improvement with legacy maybe down to just a quarter of the mix now can we expect on the strategic piece to take that to growth on us.
As you talk about the dislocation in private versus public money, how would you think about some of your assets strategically. Thank you.
[noise], a womb will sort of go into reverse so I'll answer the strict.
Strategic assets a question, then I'll hand, it off to folks.
On the strategic I said look out.
We've got very good assets, you know period, and we've done a great job. This team is.
I think invested in the right ways, we've invested responsibly.
We respect if you think about a we've been investing like this for over 10 years.
You know Weve I think done the right things and so I think the results show that I think they will continue to show that and I think it'll continue to show that we have superior assets and we've we've developed not just to me not just one good company, but to really good companies and and they both are very complementary to one another.
And.
And so you know I think there's a true there's an attraction there.
Wall Street is not seeing it right now in the public markets aren't seeing it but as you know you're aware I'm aware.
Yes markets aren't always efficient in the short term right and we realize that and and so you just have to be patient and not do anything.
And a knee jerk fashion and just keep doing what you feel is right for the company in mid and long term and and as long as you're seeing the results that we're seeing obviously and we are and so we'll continue to execute.
But I think we have great assets, but you and I think we'll continue to focus on developing great assets. Tom you want to answer the structural Hawaii question, Yes.
From a voice standpoint, when you look at the team integration and focus on the service delivery and sales ultimately analyzing the undersold inventory that we have in wahoo and the other islands I believe we can absolutely get up to historical levels in both ARPU and penetration.
Two teams doing it in a mince job continuing to prove every month and you see that that even year over year in pharma. The premium we have we have gross so I'm very confident that being sustainable.
Yes, I mean, the team, but the team has been really focused on getting the operations.
Line really working with the equine team to make sure that.
We educate each other and we.
We start to.
You know nixed the teams together, making sure that everyone's talking making sure that operationally, we're set for success and even with that environment, they've they've increased penetration by 2% in the year and the fiber to prime so it's beginning.
It doesn't happen overnight.
Because you do want to make sure that you are doing the right responsible things for the operations and the consumer and all your customers.
But it's begun and we're pretty confident.
Andy you want to answer the legacy sure Hey budget.
Okay. So as you know the investment that we've made over over now call. It roughly the past 10 years.
In in fiber and what you're referring to a strategic has been key to us offsetting ongoing legacy decline.
As as Lee mentioned, when we look into the future, we see growth modest growth, but growth across all of our all of our business units and that's coming from from the investment in in Fioptics in fiber.
We still have a bit of legacy obviously.
To deal with in Cincinnati, it's probably 35%.
Of our revenue is still legacy related in Hawaii, a bit more more 50% to 60%.
And so we'll continue to see the legacy offset against our strategic growth, but we will continue to offset a large portion of that legacy growth into the future and that's again, where we're able to see modest growth.
In 2020 and beyond.
Okay, and the only thing I'd add to that project is.
You know when you grow the way that we've grown and you expand your assets we've expanded.
Good things tend to happen good things that you know you don't expect or predict.
You think about where we've come from and where we are today.
We're a completely different company, we have a reach across North America.
We have.
Good networks in two locations, we are investing in those networks, we're doing the right things for our customers. We are doing the right things for the businesses and that creates a virtuous cycle and we're starting to see the benefit of that and that expansion in ways that we're going to talk about right now, but as I mentioned earlier I'll just.
Phrase it as we see a lot more tailwinds than we see headwinds in the business right now so good things are happening and we're very comfortable.
Yes, that's very helpful. Thank you.
And we'll take our last question from David Barden from Bank of America.
Hey, guys. Thanks for squeezing me in I appreciate it.
So obviously the highlight in the quarter was the sequential EBITDA growth and I think you guys.
Frame that is a function of those price hikes and cost reductions so can we.
Talk a little bit about that and kind of how that looks in the second half.
From a price hike standpoint can you talk about kind of what and when the price hikes phased in could we see that rolling into the third quarter to create a little bit of the incremental tailwind.
Second.
Has there been any kind of churn fallout from that price hike.
Platform that would impact metrics in the second half.
And then I guess, the third piece would be.
The kind of cost controls that were implemented.
Were they related to GE in their older or is there some more kind of structural program in place that will continue through the second half. Thank you.
Thanks, David.
I'll, let Andy get into more of the specifics on timing of projects, but I would say that.
The better way to think about it.
You know.
We're actually doing less from a pricing hike standpoint than we have done historically.
So I'll start there right.
So what you are seeing isn't just price hikes.
And on the cost side, it was not related to specifically to GE or any other thing you know we are constantly we have a sort of a constant program of managing costs.
As you can imagine in the in the industry and the business. We're in it's just.
What you do and it's something that you do every day every month and every quarter.
And so you should see a benefit going forward and as I would expect and I think you've seen it from us in the past very consistently so I don't think the price hikes or.
You know the the price increase drove some sort of.
You know incremental boost for a quarter as I mentioned I mean core first half to second half I'm very confident in our and our guidance. So you just do the math and you're going to you know.
C arrays in the second half.
So I just think we're doing a lot of good things and we have been doing a lot of good things I would say the thing that.
To look at expectations some of the things that Wall Street gets wrong is some of the quarterly seasonality that we naturally see as a business.
When we talk to folks folks tend to just kind of take a number in straight line it and that's not how things come into the business. So as things ebb and flow from a first quarter second quarter to third quarter.
Typically our best quarters, the fourth quarter of every year and.
Typically depending on hardware.
First quarter is lower can be lowered depending on how hardware shifts around the end of the year to begin the year. If it doesn't doesn't second quarter is traditionally I think fairly low because it moves at universities and so you have to build these trends in so I think you know the way I think about the business. We continue to do all the right things you see quarterly seasonality, but we're trending.
Kind of slightly up into the right. Andy you want to go into specifics around sure sure. So David I'll first I'll talk about I think your question around sequential EBITDA growth Lee Lee I think mentioned most of the things that I would have highlighted but we continually.
Take costs out of the business Weve had vs fees. The past several years, we'll continue to have them. So to Lee's point, it's not a it's not a onetime.
Quarterly or even annual event. It continues obviously throughout the year and into subsequent years. So we've got a.
Individuals that that signed up for VSP. This year that have been staged in are coming out throughout the year, we'll continue to do that in 2020 and beyond.
Where we see appropriate and as we continue to migrate from from legacy to to fiber as as it relates to the price increase Cincinnati was timing was roughly it would have hit most folks.
In the April .
Kind of build cycle.
And in Hawaii, that's being kind of phased in as we speak and really thing we're doing there's just more closely aligning with the spectrum in the Hawaiian market.
I think historically has been significantly under despite this the superior asset. So so again. These these aren't things that are one time that we would anticipate.
Headwinds down downstream, we feel that the current quarter and on a go forward basis. These represent.
Tailwinds.
And just as a follow up real quickly any churn kind of ramifications from from April launch of the.
Great sites.
No and I think Lee touched on this but.
Look we closely manage our our base obviously, it's a critical asset and this year, we have really taken.
A look at what we need to do to manage as effectively as we can to ensure that we don't lose subscribers that we've invested a lot to bring on board. So we we analyzed from a customer lifetime value perspective, as as we approach certain milestones in the subscriber life and it's it's really paying dividends. So we have not seen any type of of a spike in churn.
As a result of the price increase.
Yes, David I think you are you the numbers.
If you look at churn on the on the fiber side year over year, you'll see improvements in churn I think across the board I think.
And I want to say relatively flat even in the legacy side.
So were.
Andy mentioned and I think we've mentioned this in the past we are cash flow focused and so part of cash flow is turned a big part of that if you can keep a customer keep them happy and not have to roll a truck to a new customer and not have to spend that capex.
That that flows to cash flow creates a virtuous cycle that you can take that cash and invest in the networks. So.
That's what we're focused on and it seems to be working really well.
Great. Thanks appreciate it.
Thank you. Thank you.
And there are no further questions at this time I would like to turn the conference back over to Chief Executive Officer, Leigh Fox for any closing remarks.
Thanks again, everyone for joining us today, we look forward to speaking everyone next quarter and we appreciate your continued support since I don't thanks a lot.
Once again that concludes today's conference. We appreciate your participation you may now disconnect.