CHTR - Earnings call transcript Q3 2018 | Charter Communications, Inc.

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Operator

Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to Charter's Third Quarter 2018 Investor Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator like call now Anninger. to turn to would over the Stefan I go Please ahead.

Stefan Anninger

welcome quarter found Charter's The morning Information to Good and third ir.charter.com, the accompanies call section. website, presentation this XXXX can our be on under Financial that call. investor

proceed, our remind that Before and our recent SEC a filings I there cautionary other XX-Q. like factors XX-K risk including of and would statements are to we you number contained in most

this and We call. will on review cautionary not factors other risk statements those

you management's plans However, carefully. revise current obligation in only, These undertakes to remarks constitute encourage to no update them we forward-looking make to call cause Various may Charter or view subject results from anticipated differ results. reflect statements. that read actual this risks and to on statements or future. concerning statements forward-looking that and forward-looking additional are historical or we and make statements such the expectations, to uncertainties predictions, Any prospects statements forward-looking

of course will to in non-GAAP as These today's we the by comparable may During to not non-GAAP reconciled earnings materials. Charter, be defined our as be measures defined and referring measures, call, also with are year-over-year on by measures used companies. that otherwise specified. the other unless noted basis titles growth all calculated rates this Please in similar and a call note presentation on

over and Joining are call Rutledge, our Tom. Winfrey, Chris CEO; With me CFO. call I'll and today's the to on Chairman that, turn Tom

Thomas Rutledge

of new quarter. acquired from pricing up At the customers Stefan. and Thanks, end our end third at of of the Spectrum second the XX% residential XX% the were in quarter our packaging,

customers financial churn, customer better growth. products growth at and more which driver will lower Difficulty] delivering faster So [Technical better prices we’re to

EBITDA losses over X% the cable total of quarter year cable Internet In this grew ‘XX. quarter and In we’ve X.X were third net video, grown year-over-year by grew revenue quarter Over the customers by than by lessened third or X.X%. last the X.X%. million adjusted base customer our we

very DOCSIS quarter X rolled technology. to efficient passed. our this capital XX homes Earlier speed our to million additional service passed, out we launched the Gigabit offering X.X Gigabit over than more we During using million homes month,

our So Gig will this or of nearly we customers passed XX of Giga our million we XX% XX% offering be of all tiers of now XXX offer by in and megabits the service Internet of to over passings provide that speed. over year, Internet our Spectrum residential subscribed to homes and more end

Spectrum through give that dollars and online. both our our September on market expect having hundreds our service devices. connectivity on customers impact profitable growth, and our goal bills. driving is product customers offer basis scale. Our including Android mail early inbound and mobile launch prices and our on sales executed once a faster now existing In our existing mobile TV, at opportunity machine and speeds offer new intended marketed being selling full via Spectrum new of of a of are of we customer direct Mobile relationship is accelerating across growth. Spectrum Mobile save it channels Internet platforms to call the mobile Internet their mobile and other to key centers stores, and services be scaling We advertising marketing radio, year existing reaches both to we standalone We Apple services and the per with

$XX $XX Gig our costs a month gigabyte. is By per service unlimited Our the and service

smoothly. launch So far our very has gone market broader

lines. relatively customers end scaling well. service new itself the next But our to about small quarter sales as customer transfer and build the awareness. total will enable We started we so are operations sales XX,XXX mobile and yield brand after handsets. Labor Our In cable is months, product seeing and growth product selling existing working and we’re Day, their traditional base at the new we steady in few

footprint of improvements be digital two-way save all end pipeline our superior migration as that platforms, we initiative the pricing on network, via is is through parallel said customer most service, third-party and We to various goal in billing in start reducing network long-term operating more and behind have product But per drive household’s lower transactions grow package. to and and putting completion to WorldBox growth uniform is integration of by devices remaining churn, our and operating operating lower switch service Shifting IP reduction upgrades all-digital. of higher IP continued and of integration to a interactions. in that efficiency, completion and understood The of integrated for bring integration our and middle as to costs. the we the serve. start bandwidth retention, to has strategy close analog outsized also outputs schedule today's investment unified [indiscernible] the an attractive will out the improvements, integration product, nearly a continue practices, on and business which integration counter to is is also our and will and sales, creation installation company deploy slide our this that service rich at will and coming are increasing in benefits We whole of outlets and the capacity. all-digital infrastructure, bills, Spectrum the we and position and of And greater customers we of extend Spectrum company a works. a impact capital and on X of finished, easier operate that disruptive a touch would strategy our make what entire increasingly well of set-top laid the will been higher disruption box, mostly with higher different and functioning single marketing year short-term. XXXX, product digitized presentation, we faster churn. TV the About implementation driving will By of fully value product product high Simultaneous projects financial millions of customer end. our Mobile of equipment operating a customers’ to which of Ultimately capital also quickly all-digital better and a integration meaningful believe be and but Charter mobile and spending. next the in will actually as during see model to of operational year money tangible fully the entity is this and XX% to drives as sales our passing to The packaging, disruption product and network offering, back customer the penetration integration revenue our the now superior cable, use over faster know our resulting us one service to year

be years. accelerate have We a we last growth, been than the to will in faster few position over and innovate where

turn I will the to call Chris. over Now,

Christopher Winfrey

few Tom. items Thanks, covering administrative A before the results.

reporting Carolinas. expense. and our million to was There consolidated and base So customer on basis. I a Hurricane financial to each, our small operating customers now The results mentioned to few a a call about in Florence on due $X of the results the was primarily thousand revenue all to the QX impact impact impact last the we’re was

little over had not quarter similar a $XX last EBITDA. is during year-over-year the from impact a storms the We adjusted So in year, of so third million impact material.

for still restoration Michael. in in clean-up mode mode and Hurricane Hurricane Florence We’re for we are

QX call on our We a year-over-year will material expect don’t as either update hurricanes. similar from provide although we needed impact

January from on the revenue are adoption related starting prospectively there in of of recognition Like reminder FASB’s go in year. adopted Xst the quarter the QX. after the a a compared we year, lowered total last standard, in million to revenue as and both by Finally adjustments year-over-year $XX this about That of standard. accounting change quarter, will EBITDA quarter last which way number new as to expenses, this impact

grew and by and results. XX,XXX. months. to XXX,XXX grew by the SMB, Total in XXX,XXX over residential third XX,XXX the quarter residential declined in SMB Including Video our XXX,XXX declined quarter. Voice by customer XX Internet relationships and by turning the last Now, to

packaging in and of residential As were quarter. our end Tom the pricing customers third acquired mentioned, XX% of the at Spectrum

customers the means residential to total lower were year [indiscernible]. year see this CPE which last with slowing, company expect upgrades similar at saw added be of in XXX,XXX completion together Legacy XXXX we year. XX% a versus what will end spending that of Total transactions Charter churn we network year-over-year. XXX,XXX to Internet higher are of and meaningful sales and we We above packaging In migration by the Internet and Pricing this

nearly available XX% over and we of that Gigabit footprint, now service end everywhere have offer in As expect Tom by mentioned, of XXXX. to our the service

elsewhere. what most year, case, even rolls did XXX,XXX acquisition address service and that customers lower play continued no cable triple customers a Internet grown products. value-added have customer by be be mix Sales XX,XXX launch last last a play wireline the the last is will targeted With a our be now packages revenue our have market we driven per primarily residential $XX be million the In selling, Internet to the which money with play or XX the voice Internet add-on months wireline a and X.X%, Over well. to do pricing basic. of a now the and new lower change base selling best rolloff we change household the mobile our Video promotion. will X.X year price residential made of to voice if by voice play with are the voice, over to for acquisition residential the about Voice, Choice will bundled going customer limited in wireline retention triple last $XX pricing similar voice video retention either we we September a TWC. come pricing and Stream packages of though declined voice our higher, customers saving more In to our mobile. within which all and at markets by In our vid at of Over decade. and from customers And value wireline double have total connectivity as $XX X.X%. off is for lost way at triple we versus targeted positioned forward, sales, driver for only [indiscernible] of gain wireline In

then, for September mentioned, Mobile Spectrum on the launch executed we broader mobile product to market Tom X. Turning as

So our include product. the third marketing and sales of period short only results quarter active of

of end we had and unlimited with quarter mobile Gig of of the As By about mix the lines the a lines. XX,XXX

you and marketing branding seen. have on focused still We’re awareness may some that of

will channels and new putting sales features coming for more offer-driven. greater be the all capabilities, and become device add integrated will activated over our we of quarters. marketing As functionality, mobile the Essentially existing

All mobile acceleration relationships. will help overall connectivity continued and of which drive of line adds

revenue $XX last campaign the customers by year, year, or sales adjustments, offset year's year SPP Residential fight, of only grew third given short we year-over-year, promotional mix last Over migration, higher higher XXX,XXX Internet and and X.X% McGregor Mayweather residential quarter grew per by of relationship significantly customer full revenue a a by in was last promotional lower total rate over rate of and customers roll-off which X.X%. million rates.

resulted and shows residential VOD ARPU of grew relationship year-over-year. growth revenue growth growth per our year-over-year residential combined customer customer Slide with pay-per-view our by Excluding revenue X.X%. X.X% X in

grew mirrored this and not impact readjustments last that X.X% quarter, and so rate. by pay-per-view some similar growth VoD the of last Excluding revenue to were residential quarter's summer,

Turning combined grew SMB enterprise enterprise by total X.X% and in SMB with by up third the and X.X% quarter, X.X%. commercial, to up

repricing followed impact our and impacted on yet of we XX%. Navisite, SMB revenue from from Sales growth revenue slowed has over growth. over grew in SMB Revenue year. and last by two repricing SMB the expect we've quarters. SMB the backhaul the growth SMB relationships and were enterprise grown of growth markets X% over last acquired unit growth. products The hasn’t our with the XX% less revenue cell customer in bottomed as our Excluding out up by has essentially growth XXXX, well the PSU In

XX% revenue advertising all grew inventory. also political by as growth traditional year-over-year for quarter that it utilized advertising its Third accounted

utilization voice revenue inventory million also Mobile We better totaled revenue of revenue. essentially targeted all $XX sell continue with QX selling. to more spots in overall with and

revenue our plans under installment recognized In was installment X.X% when pay-per-view on the or all quarter day. consolidated with or device X.X% and are excluding and payments reminder, X.X% total, a year-over-year revenue growth both connect revenue cable advertising as future VOD. third of EIP, As up equipment

or X.X% total quarter, expense grew by $XXX Moving third the on X, year-over-year. in to operating operating Slide million expenses

mobile X.X%. Excluding a video expenses year-over-year and Mayweather also base by of X% renewals, year's contractual customers and by fight cost McGregor operating which and rate increased lower X.X%. year-over-year, driven last total by increased our offset Programming programming reduced increases

cost, produce content primarily last with driven and X.X% by programming quarter, grew So our on X.X% we X.X% basis. customer year's excluding video the pay-per-view the to new connectivity on Cost VOD and per in revenue a and grew third quarter. this by to service adoption standard customers by compared year-over-year X.X% this this Regulatory January grew which line of growth. relationship customer to recognition expenses reclassed by some Xst X.X% in programming

third were We productivity X.X% cost see benefits Cable grew ongoing discussed enterprise total including a last and up over the our headwind recognized are million driven ongoing own by business and operating handsets two quarter's cable with market but higher from adjusted EBITDA practices service cost in overhead call. grew working X.X%. up business expense expenses by through payments and and cost sales by ad which accounted device we expenses year-over-year X.X% of Hence, generally our is relationship quarter stand on for the to by operate The immediately early are the of consumer EBITDA integration. received per Adjusted impact our year from the to expense Comcast, in revenue, was the period. lowering by JV mobile changes by of cable are portion and investments. including sales. we driven cost for when marketing year-over-year Device and Mobile device grew comprised cost cost and capital cost, personnel and $XX IT totaled launch X.X% continue cost, highlighted.

this that on quarter we income and the pension income depreciation expense. Charter million and $XX by Slide by a of interest net expense, re-measurement was last and partly expenses, third $XXX lower year million versus driven lower net higher higher severance-related X, quarter, to gain shareholders to generated Turning EBITDA offset amortization attributable adjusted in

lower our year second infrastructure extension renovation is more in out in driven and build on areas continue CapEx of year-over-year related year. Comcast million software, merger our Turning driven Slide the was quarter million fulfill partly million $X.X this we to customers in product of of this the in $XX expenditures mobile lower The $XX which to $XXX to quarter than spend create CPE CPE by volume on to pricing in Spectrum up in decline migration spent We the timing spending year decline XX, infrastructure spend The year-over-year consistent this spent scalable $XX scalable We to and down Line a last. capital and million this offset mobile. related last and capital mobile given on billion is the spend, $XX acquired some to was in-year of stores. our our JV third versus primarily conditions. in about and by and was year. million totaled of marketing by third quarter, versus the quarter last all-digital packaging. quarter as decline related

CapEx As loaded level I mentioned spending quarter last is last. this our year more than

year the full the cable capital revenue as slightly similar to lower of continue expenditures than be we a expect cable percentage XXXX. or to For

of We $XXX consolidated in in also XX million shows of million $XXX absolute in flow investment CapEx and this intensity. free down terms capital to in we mobile. quarter expect generated cable dollar be meaningfully The cash including Slide XXXX terms of

lower higher Excluding $XXX mobile lower cable was driven cash last CapEx compared The million year-over-year adjusted EBITDA, million $XXX largely expense. of free we generated flow and severance year. cable increase by to

paid capital. the negative offset capital A working year. primarily intensity. capital least expect in cash of is and quarter in the payables also flow by compared of CapEx flow for fourth last negative cash to capital interest working declining a working to higher I Now lower our change from contribution on reduction related cash as result at it’s partly already our year-over-year

QX level this year's much not driving last working capital level the expenditures see quarter of capital loaded If of the from timing fourth that will you benefited outsized sales of year both the recall associated end where spend capital year payables. that from quarter fourth of have that temporary quarter and year. working level expenditure higher device this in And capital EIP a initial more to will benefit two investment is revenue in period. the CapEx the recovered due mobile we over a

trend wireless We accelerates will in subscriber continue as within to that reporting with impact isolate the growth. overall mobile tandem that

target repurchased we on we cash interest quarter Also year our for debt X.XX $X.X billion was end of $X maturity shouldn’t rate. And $X.X as we saw our and the hand the in principal, third a held market. units September cash annualized we accounting. end expense the CapEx intend cable And million in per pronounced financials. -- $XXX with at times investment difference at raised times we’ve expect interest it to the lower billion EBITDA the on due capacity. our annual equity. is what during leverage to quarter Holdings to of net X.X range consolidated billion in be annual XX% the revolver $X.X billion capital debt X.X quarter working of debt this run share. And purchase an on And our quarter was the quarter Charter's first sorry our and cash and annualized payments billion average of liquidity about We the current rate billion the shares adjusted of That basis, next the billion $X related is at of to of suggests repurchased am third of XXXX totaling X.X we P&L I a over common and we in as and quarter of we our billion month $X including end $XX.X in primarily during stay Looking expense also quarter that’s high to whereas cash impact of XX $X.X or in below Since the the flow a as leverage Charter quarter of last times. reduction price XXXX grade mobile at third of X year. repaid finished to interest do and first quite Charter run due to

looking So activity, the continue impact fourth expenditure including and and will ahead, network through changes level of service the upgrades of integration end capital quarter.

forward integration will faster looking integration the as consumers’ quality, high we’re the saves that set, that beginning Internet which ready product see, XXXX connectivity activity flow based us. great bundled will demand And services and Operator, declining and potential. So ever we combined lower to cash Based voice. with improving demonstrate on long-term benefits operating priced cable for money that video in strategy free we’re and attractively but cable XXXX significant both our operating wireline includes already metrics largest our mostly be past and for capital experience intensity -- now strong and behind expect continued questions. mobile we speeds growth on products by for and customer-focused

Operator

[Operator from comes from first Evercore. Instructions] Vijay question Jayant Your

is Your line open.

Vijay Jayant

morning. Good Thanks.

in video of expanded XX changes losses us out you on moderating. the the trend, the just reconfirm Just XX and from was your Stream that growth on obviously you from unpack that video really basic which wanted limited Chris, comments, Can understand wanted just basic sort hurricane. there million and competitive product? bigger hit is I then Choice the and help for become what's about to on, accounting million And piece quarter, the a think was called landscape to decline I packages going and the the

XX was Thank impact about EBITDA the you. So, million?

Thomas Rutledge

two to we that video sell our and it's that full service. issues, we our meaning on the result of products guess a customer And sell to base. things broadcast-only therefore, customer that sell implement of are believe time, capabilities we is in customer our we the like -- to we of appropriate products basic-only keep our means customer, satisfy I video rich don't explain. we And as that product high-value that to So give fully. generally sell try strategy, part desire strategy, Vijay, create or packages and grow, shrinking products incrementally. there macro through that, we're In then full One video growing as market-facing to a which to overall when order feature-rich as or of

And so that, at Charter, Legacy Legacy strategy Cablevision that a was actually.

this through And transaction so we’ve been implementing that successfully.

So make from receiving programmer we’re actually we're because acquisition every part growing as generally. your us, Every get. a of new eyes, expanded growing to basic in we customer if you're funds

So that’s product our strategy.

going content for wholesale In is, is bundled cost the marketplace level terms the very fact meaning see of incrementally not to trends we is as of because expressed reasons cost. of where secure with the fact on don’t the by continually before the the you can And continues get it that the pressure that on it, is all price it’s pressured IP and along changing. all the us be that those I for think paying overall in to it's puts whole I this high way value it content, without it up content proposition the

That to a can achieve video successful of our as in relationship share for be see mean result companies’ the using video be marketplace than and And products And other can that relatively that. marketplace we products doesn’t erosion growth. continued so drive can't of that better you video overall bundled customer shifts a overall we video. that our

Christopher Winfrey

Vijay, on accounting the question.

and year. $XX million to compared $XX quarter had a is last this since we've due had QX So to so EBITDA It's the basis small is that in We of little in hit you right mention larger rev we a on some year. million rec But a of a of meaning QX, QX. the standards are the made just there it. year-over-year beginning it adoption impact the as

million over will difference year that pretty mentioned also As it's other year-over-year storms. it had related to lowered is quarter but we That in get that this into through. And true of that that our QX was similar you $XX we go EBITDA the amount year comparison third true is item quarter the last that the flowing away. that of next a

just same. So comparison, definitely a make Does year-over-year on about are that that when for -- careful relative sense? it's adjusting on be you it's forward-looking, the

Vijay Jayant

Right. Thanks so much.

Stefan Anninger

take Thanks, next question our please. will Vijay. Michelle, we

Operator

is of next JP Cusick Philip from The Morgan. question

is Your line open.

Philip Cusick

things pricing and Two around revenue.

We First, to you can what's then give on put compare from But expectations would of we've years X.X% you you talked I and could transition? last guidance, revenue but here. you've X% to the help revenue it think framework EBITDA you it. the an increases or help the as we level are price next the can about you. revenue know acceleration, of expect grow And expect last out to some few you that any in increase on and the higher next around Thank to lower week going this and seen your years. the don't impact about or second, year? come broadband think in understand EBITDA video us sort few I of for not years

Christopher Winfrey

are Hey, double doing I is play sounds on are our packaging Phil. looking with and mentioned what other of for There guidance. you lot pricing Chris. core than were pricing [indiscernible]. what This – a and it our like we It

impact we've of which that around edges in And the not you different on numbers packaging won’t few Our services until increases hasn’t are see The really you changed. and small core full December. but our material. right pricing a it's

comp and XXXX the cycles starts be in be year November we what that's QX think we've where lower January, we for really in a that had for so slightly of on billing amount through roll last It that I there is ultimately the that's know year in year some we we year doesn’t today. the smaller until QX. went and took, had it the this in but some will my that increases full impacted had won't done through mean And XXXX month full that's comments, has what went full in smaller been to December. I this So but meaning that August, increases mentioned in certainly gone for some so I impact

behind Enterprise know during got have that’s contractual. course the it of until rate December the resi still of I there’s a impacted be from improve. some we repackaging written given around edge as through Will guidance, ties the certainly one to and small on. about well, they but did would We and pricing you at first way won't We because the XXXX bottomed you’ve are. fully than having if to highlighted, have were won’t and that’s and relationship the you which slightly EBITDA will of just increases, going see customer purely phase, is it just going think that growth going how Revenue giving similar continue the SMB But is do be January without we to and to year? rate out. SMB customer next take say SMB behind this in slightly was growth acceleration to year, No, in less we that. terms does compare it what where full relationship and where it it that

We think well ties as and EBITDA, a system, a keep going are the to those But customer What and but have remains of transactions So you have same I we lot that the can of year to not together pieces just political advertising absence mind lost. transactions comes grow that of -- which growth EBITDA. next roll-offs. political you when higher which customers well. sales cost covered only as of put and the as and is new promotional a you then your of continue in customers all we enterprise talked you to relationship taking in customer been in off. rate that about. to replacing how of we some churn relationships. as from and we revenue that or to roll going marketing only lot will ups fast that growth the acquisition a can there's dollars opposed promotion with smaller SMB play customer the reducing that very have but increase out lot high which grow remainder step then applied into to those We generates sales just means think relationship some our be advertising, incremental benefit the really which also not just the And and From can in

relates to today and TWC it noise of basis. Legacy Charter, in to opportunity sits can service service of we is relationship big And efficient the number in accelerating We than continues down of us. as continues calls that’s maybe is how there think the at of much both we of and significantly on higher cost down, which think means still become. system we customer TWC terms even still as churn go per transactions front a out a Our that are go it to is at as in calls taking

Stefan Anninger

question take our will we Michele next please.

Operator

The next question comes from MoffettNathanson. Moffett from Craig

is open. line Your

Craig Moffett

you if your traffic I ensure the what talked -- think your just controller own ability Verizon's sort bit your about strategic sufficiency wireless of for wireless? satisfies needs? in the have direct could network wonder to a about in network to and respect little with Tom you business. limitations do the in between that technologically And past the and to you of about terms MVNO need your you network. do might to How of ambitions MVNO sort some

Thomas Rutledge

consumers’ along will us can the their although XXX go in on somebody SIM device, can to how to so manage it mobile in our actually like on with the network an an a traffic to as good say Wi-Fi way -- we move new increasingly network which Good the the public technologies which we own some some have can wireless a some the and so question, but got of more of Craig, our eSIMs efficient and at through terms we a our the devices, we certainly But our some are needs. can have do have And on MVNO shift dual what MVNO company more our likely limited that months today through than owners authenticated MVNO would which us was does has allow an how on have through spectrum new network be be us that more -- to There and than public sold ultimately read limitations I will spectrum, own in ability what we in coming with and are own MVNO you run more doesn't in and simultaneously to we of will we as million manage traffic on launch look be way, today. could five as network interesting to ways, economics auction. forward Wi-Fi onto like and of of also limitations and is and CBRS, that We on get same we well. will And your do the and form in available it ability for you had than traffic our it’s MVNO we you that and it a couple MVNO. our a this: have that But recently which efficiently and do networking over thought like do network devices today materials you I ago. and and would fit of prior manage

are it they can that tremendous because of marketplace. to save So in enhances amounts others products customers them our back product every we total the And we currently wireless our our I and of started capability product. was, bill still can with to month have. providing its that more give with services money bundle total We are what the is in their on Vijay value of the getting what conversation superior terms the than package

our we forward our do that that opportunities grow therefore, our there that. so doesn't be But mean business. at take simply as aren’t MVNO way And able to look a relationship, of. going to technologically we will current And advantage we mobile can that ultimately

Stefan Anninger

Michelle will question Craig. we our Thanks, please. next take

Operator

Your question from comes Ben from Swinburne next Stanley. Morgan

open. now is line Your

Benjamin Swinburne

phase-in disruption of sense, benefits is see more the having but the XXXX don’t over in talked we putting you is if and of you growth that about ahead, business but calendar Going could showed And meaningful year. integration, back sort disruptive I a improvements steam complexity a where you full guys the your about enthusiasm customer financials head prepared would turn spend should it customer literally just know And for also hearing be a the think would of talking you ‘XX I lack so January, up can hear this into be as the about minute and us without it the and helpful? course that of we help company where makes you think the the specifics without little from in think to it it for metrics? worth remarks you churn helping coming as guidance quickly maybe giving operating the really see about this around integration the better expect benefits, been of when business. to your just phrase, the is to

Thomas Rutledge

which Look we disruption times is had remember We’ve think And spending. in and had let in the House, one-quarter to so ties fat was Charter most operations very I on spent And too, require footprint a too was doesn’t that the financials the to integration new Ben. it is television box. new but Time lot got impact television the upgrade you’ve When of acquisition in the -- X all-digital. company of company and still the on and size, me Bright the set-top put analog purchased Sure, of biggest together. explain. the analog size to that into XXXX Warner money cable capital network of

it attributes channel order in And data One, customers’ so fix inferior attributes negative high-speed a put have on up use the and picture eats very spectrum two an and want without for which -- box disruptive. in to a televisions, it that -- to our we IP negative ultimate three it is to strategy. ultimately to and is itself to It set-top video. you has

business, of analog which provide So going it of the the activity That process set-top all-digital customer the overall products transaction to as strategy, longer, outlet our appropriate and to consumer benefit want with result new less to we packaged they we and is though less visit form more way houses that so that of want is contrary put And perspective transaction was long business, an price contrary and the relationship business. is there much the per may to a necessarily even that it's set-top satisfying the meant so boxes we could therefore boxes operating an to from millions go of and go necessary meaning back superior put out that a more they a consumers that digital of not last they customers spectrum completely so is the millions run longer decided is recover even customer have to revenue for the Completely that intensive that have. that in that were don’t spectrum. of life. to virtue consumer the they know it is get to out activity, gets on takes outlet the

has boxes, and and trucks So business XXXX focus that buy on capital calls, that was therefore ability impacted and to on all impact XXXX. one phone both -- the and the that traffic in operating sales, and that disruption to to the set-top service roll the the the

necessary the it to of did marketplace, speeds take thought thing changing because we was up. our other we The

need superior customers terms have make in we a to almost superior everywhere of We available capability. our operate, that we and its to infrastructure infrastructure

we did head-ins had of gig a time. sort reallocate of capital and also our intensive. had were result received very that lot that, the about hubs we spectrum point. of upgrade also architectures, product. to activity Bright required period divisions That a the in in short companies XX very was you divisions replumb entire data these years at where and across a And the X way all-digital high we the so Warner if for architecture House, And of separately built and separate as footprint as a many independent cases one that speed project back to think the And from Time operated and years in

footprint in the so a that with a centers, our built We And be a to over so top stores. which We call building operate uniform practices way. electronically into workforce. we decentralized multiple And had required all disruptive very were did That changing systems, we way. of re-architected environment. could our an whole the systems the we thing all in for was very had uniform that infrastructure throughout of employees centers, retraining also same sales of that because

there uniform still some set the by a the this the So it by to end of essentially doesn't very assets decentralized is no behind and of that rollout but gig and year. activity them of in the to a the going There is of will end customer be to finished finish take project this We in in way all XXXX. set us this all-digital terms assets XXXX. impact is integration activity put quarter. still finish forward of of quarter. related We financial very have bulk DOCSIS to a have of mean its X.X disruptive It into

will follow will customer-facing together it’s putting particularly We out still the and large and by this disruption of will most And this behind behind, are system systems the quarter. of us be into but we integration billing the by a end -- billing little XXXX, bit quarter.

of forward, our having And impact capital spend ability financial execute terminate. on all that not pure to a going projects and those will so just to

physical going to operating going so model be And a both financially it’s different and perspective. execution a forward, from

Christopher Winfrey

it what a Tom talking now non-linear describing, and like I choppier a was two been have And year quarter-over-quarter. in years just about feels half

turning a have making We of a knobs lot lot and been of changes.

which of an Some impact. have immediate positive

an rollout we to streaming less. fourth which last As products year cost example of started the quarter some

impact churn. service all On different that and through an Tom transactions hand the that things stages just described the on at other has

past QX away On that the in QX. QX? the will should be activity a think impact and a to little of in that few but the for don’t it No I at years will full the steam because I starts QX stick have in go think over Internet, Are year. doing incremental what bit. through better customer-facing But we look down been we goes

Thomas Rutledge

going Well, already, down, and is we expect. activity is as churn going yes, down would

do. the will metrics do think what we will the operating metrics and it -- have So we confidence see strategy the that

Benjamin Swinburne

helpful. That’s

of and from and question benefits is revenue are the people from this at has the others and enough come we growth thing on But the same been heading straightforward. payoff we like system all sort I much in pretty the adds to it which myself that is are net that sounds CapEx? that. then think impacted think of -- are maybe there going ARPU aiming how going are I to wondering out acquisition and towards has

Appreciate color. thank it. for So all you that

Stefan Anninger

take question our Michelle, Ben. Thanks, please. next

Operator

Your McCormack from comes Partners. Guggenheim question next from Mike

open. line Your is

Mike McCormack

then out overall obviously we and for from that can some video the we from AT&T dish significant now view TV see comment you're is landscape that But Yes, you become an seeing have maybe do the this there I on the just the will results weak from heard some losses linear your results what think? well. you opportunity And as of slowing on If suspect purely you a losses taken just thanks. share a over-the-top DirecTV Tom, product. guys. week, pretty guys, of threat there? AT&T, Thanks.

Thomas Rutledge

well. along Including I then increases the these too. business trends another virtual recently got said their But in it that impacted Mike, video you would results space which business. of I that probably price thought have all shrinking satellite the MVPD our benefit the as

allowed all. content it without similar. the impact to are packages competitors same the We the at they that, you the most the have had products whole that admit driven in carry raised same, will up like to unless sets MVPDs carry overall who at which mean it and they if been selling the have have, bundles. that caring other situated sell even some their all you space was services MVPD the above retailers step programming look product Were had the have in below or the don't if and I want competitive marketplace, companies carry that it peers virtual And in rates us to of that in most must-have and that to look big packages to similarly we the cost ensure still not at it’s fat contracts landscape. you and requirement product

going afford they’ve which price able been an the burden doing, driver product paying they price the they lot of for experience companies by but that a have if a of to of that would other an in companies any content without having distributors, knew can't without done that get affects and things television the that way So to content that enormous the securing on don't propensity through and to theoretically -- were over-the-top nature passwords case. what use people, fact and really being that, it. content that distributor been without And do, hasn’t the puts

and paying you have the it’s to and service the yes to to you that’s and as had easily with through passwords with over that Internet got can for be all well. television country TV the over easy true so -- fairly well So impediments it not there is are free and television deal deal and always that without reality as but

that think charging for people the drives people you over If get retransmission air antennas. about eventually to content, fees free

out forces all still those there. are So

some that is that the $XXX the shift the of On us. kind all think and very hand, and priced a portion that see at comes will And of satellite ARPUs is so of that question single high erosion the of with where other you'll you what’s devalued business in to product of content to is continued when world I look us?

Mike McCormack

follow-up one mobile We just the stuff. are just stuff. on the fairly password concerns maybe sure that But on

been it carrier there's customers is it’s quality or -- very what the days early maybe up, customers you’re What value is quality a is really of kind but know dismissive high prepaid side. it I think seekers, wireless of it the customers? migrations -- I kind attitude of Thanks. picking on some

Thomas Rutledge

and I It’s sales is I a But everybody about and distributed can’t everybody one like describe the we individual have enough is. don't product, have. information that yet. penetrated look fully has mobile wants that one. this fully us

to into products those right is right proportions in and that product the marketplace mixing set that think available the prices we whole so the our us. And

Stefan Anninger

Thanks, Mike. question please? next Michelle,

Operator

with Bezenett Jason from Citi. comes question Next

open. line Your is

Jason Bezenett

Winfrey. Just question a Mr. for

profitability You to it mentioned once achieve scale. mobility gets would

a terms think all and wholesale of in before you payments of recognition, in customers subs reasonable it sort the all profitability? does through need terms reach high, what's low stuff, you of As go the how revenue and ask you handset many variables, that of mix bid

Christopher Winfrey

which for there’s cable. and to relatively new gives Thanks, both significant, relationships. which is context also value a NPV, low but a and cost think past to I've Jason. be expect benefit a it million the of level really to of customer going our business a frankly when the reality to we penetration mobile breakeven basis as growing of on into take our hopefully we don’t and to the beyond But that the the because shows the on either standalone Look reach we in academic academic meaningful want as it cable. NPV guidance on to the continue new account or taking breakeven needs we confidence framework grow risk can to rate. we well work the cost, expressed be is going to mobile would X% well the lines well of your business a that’s expect are has you which X And and company But we you I widely to that. to as financial standalone high analytical growth benefit mobile growth also because would question expect going relationships of be to basis think sense where growth breakeven of where I of around about be are as without that creating that be very of be additional of an somewhat we're for or and cable benefits to think profitable cable option around in Internet a the

Stefan Anninger

question next please. Michelle

Operator

Goldman question Feldman next comes from Brett Sachs. from Your

Your line is open.

Brett Feldman

Hi, thanks.

question. wireless Another

to about that's the because actually you the I'm your spectrum in You interest to to to CBRS obviously will of actual spectrum it. gain up basis. if your curious some on use license desire which dollars license available in is a show were talking own be access and case have

outlay might follow-up CapEx to into capital your going your are Thanks. disrupt an it going returns be if does is, that material to How that your forward? in of outlook a enough that it program? could So more then gain significant you And out. access you anticipate for spectrums to do obviously you have factor that improvement build

Thomas Rutledge

So Brett.

we think all that First don’t auctioned until spectrum XXXX. be of will

as that's footprints and business that certain the work would pleased good you And MVNO terms if be technological a to capital which so way result a of so lot got had MVNO about need out. the the be there with case. a cable that a it auction there's basis That efficient a that a business had for is and capital we’re to putting spectrum would capital, cost would Craig's to than of you that it's from an nice would yes had question, said county-by-county that, ability you level to makes question the the associated there also of because perspective solution a a it return That spectrum a was conventional one probably about a really And there free be be things you’ve bid cost And be us. available will timing on gave that sense as will to and it. spectrum, sense. so back speak less the that more done had you opportunity. And cost of if see us to on make operators, in in

capital buy the we we and whether or perspective. we MVNO, is deployment of or however, some it do the capital to when put evaluate what by would at traffic want efficient expenditures do and cost so to the want physically on or a more And from on radios to return want be and to we and spectrum If would the we that look the or MVNO spend the investment. would strand ourselves put whether our to say location capital CBRS, our the cost good reduce

look it up. at that comes as we will So

Stefan Anninger

question. last for Thanks, Michelle, have Brett. time one we

Operator

Okay.

question from John from your come Hodulik UBS. So final will

open. Your line is

John Hodulik

side. helpful then the capital sort intensity a as talking revenue could First, you bit little this in on decline on about we impact. we out call tunnel. should the of been the we sort the just here, the guys integration margin of think But more been have And talk of come has focus I about if see

increases bps. you trend OpEx get You all-digital corresponding have still Comcast of Should talked seen improvement some sort duplicative we through about and because a of about trail XXX margin integration cycle along but we we margin with spending the of sort see this improving goes that terms by cost. as in

could us it’s in evident think there little cable what's bit more happening give repricing? deceleration color -- saw these there, the of as backhaul how of Navisite little we we CapEx of the and Time you about some on us a Warner playing role Can the Chris, the then the coming looks this I annualizing sort business there just it and mentioned talking give So as of over if year. a improving sort it And out not cell your line? segment. comments revenue in of the start this as a on you as side, And trends color repricing of is the business sort you

Thomas Rutledge

John, start I'll So serve and with margin. cost to

that out And go the we is go come fact the margins pick is is result integration to do reason churn would going margins is a we service -- we our other our being churn equal, our -- actually well of going the as because to improve our better. down -- down. things all up As our of

our less rate transactions We That means goes is customer then our have churn our our customer go less repeat account correct and service have products down, and connects better dollar less revenue you customer are are churn If product lower means because relationship same relationship. the is more will better same more that pricing our means with call of revenue transactions and churn is which lower the per creating satisfying, churn necessary, rate or and with down because physical our means lower for have satisfaction disconnects which packaging which activity goes cost. are the mix there activity not and goes the that visiting the a customers per correct, the with work less up. you that you dollar or down a

ability And more efficiently customers we reductions perspective, service scale from So we and handle change have a on our cost and perspective have way more forward from our the that technological expectations better obviously too serve. a the company to gets scale to will through going we’ve time. infrastructure significant put together

So, that couple satisfaction through faster to the the able we expect of tan the growth that asset years. last over we will growth we be EBITDA we've a create that generate as deployments of done result revenue

John Hodulik

that in just through. carries Not XXXX but improvement

Thomas Rutledge

It’s multiple years, yes.

Christopher Winfrey

That’s regarding question of cell million well enterprise, billion it only the and over that. $XXX and are so magnitude $X.X that’s backhaul we’re the point Navisite, bringing that is order John business rough out flattish. of which

access to or that try and doing accelerate which not Ethernet We’ve marketplace But to compete in an aggressive on and worth. the that or base pricing revenue in contract that or packaging naturally on comes pricing a impact the there we relationship have we’ve Internet of from in the XX% Ethernet out as way year growth. Metro only growing it it's is of rest and but there’s going the voice. So PSU we’ve we're been aggressive past of residential, more to the around a on pricing, faster to is fiber growth, done that business grow But remainder with portion growth and better the SMB, which has really market isn’t as same growing done the whether enterprise. better and rate standpoint new service more thing and at your pace existing same at been is

start of story, going be where just in or it it’s same exist more and out slow terms and to to enterprise. just in the bottoms given little a returns So contracts that of the prolonged later nature growth

Thomas Rutledge

which be there forward growth, from packaging savings. cost a to say the higher in going to another and to is in going about be we're is selling -- mobile in just getting So thing so to total have does finish them revenue it we’re consumer a perspective that I component revenue off selling that would will

So that’s opportunity we for overall think interesting pretty us.

Stefan Anninger

Thanks concludes call. that a Mitchell, our lot, John.

Thomas Rutledge

Alright. Thanks, everyone.

Operator

now your and conference participation you today’s Thank concludes for you may disconnect. This call.

Charter Communications (CHTR) 26 Oct 182018 Q3 Earnings call transcript