Earnings call transcript Q4 2022

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Operator

Hello, and welcome to Charter Communications' Fourth Quarter 2022 Investor Call. [Operator Instructions]

I will now turn the call over to Stefan Anninger. Sir, please begin.

Stefan Anninger

Good morning, and welcome to Charter's fourth quarter 2022 investor call. this the be Financial accompanies website, on that under ir.charter.com, Information presentation call found can our The section.

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

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

read you we to them carefully. encourage However,

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

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

our call, we our have Tom On Fischer, today's Executive Chris CEO; and our Jessica Winfrey, Chairman; Rutledge, CFO.

With that, let's turn the Chris. call over to

Christopher Winfrey

Thanks, Stefan.

particular. and XXXX pull in activity backdrop and in we XXXX, previous Charter's pandemic challenging added remain Internet in to the a continued forward market within about industry's well low the We future a execute over environment. despite excited and customers We XXX,XXX

million. full of year very strong see additions line line X.X net in continued with growth, over also to We mobile

lines. had of mobile total of we XXXX, end X.X As million the

a growth. year. fast growth saving creates Charter for So even environment per often broadband and value low growing by we're and That thousands of dollars lines volume mobile hundreds supports customers in

I'm management planned to year, consolidated adjusted full transition For in revenue we close The us and also by X.X% join Chairman going to Tom moving Q&A. the X%. Executive with well, will EBITDA December is our pleased and our today's Tom grew by very

XXXX, to cash In broadband on designed growth coming and initiatives: these drive and is we focused primarily remain growth. execution. in customer three Each initiatives long-term evolution, the flow of expansion years,

convergence. XXXX Starting three the with a our much evolution. than a Already our multi-gigabit And $XXX evolve just We'll offer with over approach maintain fastest deploy mobile we and our increasing launched to for advanced the Spectrum pace we'll One, will combines offerings WiFi much these symmetrical speed which next in cost ubiquitously go-to-market We're marketing competitors, We new products per and and speeds. seamless also years, connectivity. network our faster and at passing. recently Internet, cheaper evolving speed claims. our at

created over better churn lines four-year have while clear benefit churn. the some acquisitions customers our of that a self-selection, and And converged relationship that mobile Internet million may and Charter. With lower nearly it mobile proposition. still as and sell-in quarter mobile mobile yet to saw sales for we Internet driver of fourth Spectrum is be new drive converged a During helped offering continued our for large to nonsubscribers lines. significant potential One be period, value customer X.X for of we drives base, ultimately, of Spectrum largely is Internet the One meaningfully quarter, our educate our untapped strongest churn The

the returns credibility communities We obviously, where to future option to footprint. RDOF expansion extension is builds part value and ahead our of subsidized our the completion Line visibility. second important is creates of growth and and offers future beyond build, for is an commitment, growth it original good for and and build growth. that for faster our we returns, XXXX focus of Our hope and good our construction area complete the of plan

we BEAD in As program. in grants billion same a in in the XXXX XXXX. we've we expect to and successful $XX.X And regulatory participate also a the assuming December, of in state number mentioned local and expect, winning been reasonable other framework,

results at construction Over XXXX, We initial been return. open attractive expectations of initiative have a months our rural mid- passings our is least of XXX,XXX over of rates of high-teen rural time, about contributor new penetration we promising. very and our The growth to six our expect initiative with at to rural to significant in internal be passings XX%. ahead construction customer constructed

we maintenance our operating We're ways, model our continued satisfaction strategy, service and customer a drive customer finally, growth. customer sales of on proactive initiative customer customers address of digitization doing experience, all raise to customer investing see to in the and in our that continue enhance tenure further remain an in before issues the ways employees our for And improve impairment our service core on service training and and to accelerating even that experience, number focused to executing improve including capabilities.

to transactions, with leads sales, lower lower execution Longer time. churn tenure customer service per products more better and higher over

us So to convergence front footprint. our opportunity unique through growth expand of we and a a continued opportunity evolution, have very operational network in large execution and

customers and provide deployed a have successful having the for so packaging transactions high-quality and and the for our long-term service drives putting That with connectivity to products years. churn. strategy together with higher service that product all It's opportunities we We in across pricing more penetration into the household, same replicate, then model of that lower operating front flow. the and and fastest It's fewer that recurring address cash all marrying that to passings difficult us. that's and we've about more

allocation with and a and organic disciplined innovative that cash together to between approach ROI-driven and expansion put flow model capital it We and/or capital an structure you then M&A investment Charter. sustainable and get take buybacks,

deliver a and in for path which local value great customers, shareholder So our of front delivering to we creation, means have us long-term employees communities.

With that, turn call the Jessica. over I'll to

Jessica Fischer

Chris. Thanks,

next you remind will want our changes we be that quarter. making reporting of I couple started, to getting a Before beginning to

our meeting include we and December, revenue investor revenue in as residential mobile in SMB we'll appropriate. in First, noted as service

changes and integrated longer We reflect no and mobile offer converged nature operations will and better the these business of report expenses and mobile of our our structure. our both separately,

Second, line And note and small rural capital fourth finally, extension while want the modest financials disclosures. separate very doesn't impacts impact results hurricane warrant our and provide to some Hurricane contain was the quarter we that of and on disclosure. additional I our overall will customer numbers from Ian,

over results in declined Video Including on turn customers XXX,XXX Let's voice declined in by Wireline last lines. XX we XXX,XXX our SMB, fourth XXX,XXX XXX,XXX fourth we customer Internet quarter. a the and record X. residential and added added Slide quarter the months. and XXX,XXX the added by mobile customers to

X.X For the we full added year, mobile lines. million

fourth in positive Although customer growth our low. continued quarter, remain to levels activity Internet be the

churn fourth the we've XXXX. non-overbuild both amounts to XXXX, During voluntary Total quarter. of levels, saw the which lows additions churn, were areas, reduces opportunity. well the Move in footprint quarters and year-over-year, XXXX by the churn non-plate we quarters. all-time all Internet pre-pandemic and Gross lower for lower quarter, what selling similar fourth also at past seen lower few our in similar overbuild remain and remains and the below return down across churn connects Internet in and than we're

given lower find with going of fixed to coming those wireless, competitive issues But wireless, long scalability, impact, see to way term. a In and conversion product over we the instead additions DSL some us customers terms new us. to the probably reliability we of to to entrant, of expect fixed gross the relate their

share recently. fiber seen I addition, the several of overbuild market higher COVID And slightly a over a of quarters, note also service we've some pace In the to reversal seen return of mobile-only that we've small amount effects. past would

the We in converged product Spectrum packages refinement the early market activity, continues, Despite results. but products to working. we're with our these of remain offering stages is challenges pleased lower very approach and our One of with

X. to financial on Slide results, Moving starting

customers by of our last relationship the of a mix a and rate adjustments, year-over-year. offset mix year-over-year, non-video was revenue flat customers X.X% base. by higher residential rate higher lower-priced promotional Residential video within per packages step-ups customer Over and with grew year,

mind adjustments in discussed moment residential Also although ago. any revenue, change when our next and quarter reflect revenue not I ARPU that we a will reporting the keep that does mobile make

addition, allocating customer GAAP. revenue revenue One-related of a from Spectrum under Internet portion to mobile In we're

Slide by shows, grew year-over-year. residential total X.X% As revenue X

revenue driven capabilities. political revenue, grew by year-over-year, ad lower Core with down X%. commercial. SMB to Turning revenue was excluding by reflecting of X.X%, the revenue. by local offset grew SMB Enterprise quarter advanced grew by up advertising national wholesale advertising X.X% our revenue by year-over-year. And growth and market, PSUs was customer softening growing ad Fourth and driven by by revenue X.X% year-over-year, grew X.X% year-over-year. X%, primarily enterprise by by advertising revenue enterprise revenue, XX%

revenue revenue X.X% with for year-over-year, by million being lower revenue. total, sold fees Mobile quarter device to grew lower totaled X.X% video offset construction and million, that partly rural mostly year-over-year full and by $XXX In XXXX. up higher up fourth revenue was CPE driven of by the processing initiatives X.X% $XXX consolidated year customers. revenue subsidies, Other

due expenses and year-over-year, declined of year-over-year. X.X% offset by and on video $XXX programming Programming a million partly decline to video X.X% EBITDA Slide Moving operating costs or mix higher In year-over-year total QX, adjusted to operating by expenses lighter customers by packages, X. grew a higher in rates.

be approximately expect we flat full customer the programming XXXX, year-over-year. video year at Looking per to cost

primarily partly costs driven video regulatory productivity and year-over-year, costs, and freight service by increased connectivity lower content bad and X.X% sold offset higher improvements. by Regulatory by by X.X%, and customers lower customers. CPE debt, declined by fees to higher Cost labor to higher produced fuel and franchise driven

to debt below year-over-year, from Excluding both while debt bad it And by bad customers level. service pre-COVID higher remained X.X%. years, grew was cost

to continue time in digitization XXXX. year-over-year cost year. as evolution to targeted operations skilled structure, These build more career growth will the year-over-year first investor investment. service drove add pressure costs. in of an of second meeting, service, in customers continued that even paths higher some labor a the job should adjustments result of to and improvements additional we inside expect of tenured our benefits and teams in this customers the workforce, making half noted of higher half network efficiencies adjustments As we're moderate cost our which the in our growth we very to and over pay order to service and But expense December productivity to And

higher mobile expense due the and increased X.X% full in year-over-year primarily other the political by driven higher operating totaled higher in labor X.X% revenue. the for tied to And advertising grew and channels. comprised to related grew of costs quarter sales expenses to X.X%, by expenses our XXXX. and mentioned targeted acquisition included by wages, year-over-year, and revenue, were million levels I customer $XXX costs which and Mobile Marketing device adjustments sales staffing primarily device higher service expense costs. EBITDA and by Adjusted year X.X%

Turning year, the $X.X income to quarter we than interest on $X.X shareholders income X, of generated billion in the billion fourth with fourth compared more of Slide last adjusted in net net Charter to attributable income expense higher higher EBITDA. tax and offsetting to quarter

fourth X. the the billion year Turning in totaled expenditures quarter billion Capital and to $X.X Slide $X.X XXXX. for full

the Our than receipts total year the December for equipment of reflects expected. accelerated inventory in timing CapEx more

fourth Fourth year's spend higher extension last of $X.X rural this customer premise timing $X in quarter construction driven advanced by on spending from capital driven line by evolution, equipment primarily $X.X expenditures, to of spend Capital billion driven in spend $X.X initiative. higher excluding of fourth equipment billion, by last line rose network our above spend. WiFi billion extensions, billion quarter and year's investment increased quarter, quarter

XXXX, the to expenditures, be capital full we extensions, billion. $X.X continue to and excluding between line year expect billion $X.X For

acceleration and expect spending in the network increase line small declines year-over-year excluding by areas. we partly evolution capital of in spend other a So offset extensions, by driven

of initiative end as Following decline and of the our extensions to evolution or should network of to continue the at below percentage XXXX, CapEx, expected revenue, thereafter. of XXXX excluding decline completion line XXXX beginning level the a

billion. XXXX, we line Turning to extension line to expect reach extensions. $X In capital approximately expenditures

XXXX our extension rural and similar funding to XXXX at line we for otherwise for XXXX win We extension capital to look outlook billion XXXX to per $X year. expect approximately and our assume And spending. line commit expectations, expenditure CapEx or XXXX additional

begin XXXX timeframe We money the that time, our spend we build will most from to down. grants. also RDOF ramp four-year to in expect to BEAD begin expect At with timelines appropriated be that

that solidly and We us expand with generating cost unique a to of our expect attractive to program subsidies, opportunity the returns our present network for significant BEAD exceed capital.

to subsidized we subsidized our builds closer RDOF expect For state our incurred construction roughly additional our per local than and cost to our costs. passing net recent per to rural passings, in be that per the we've $X,XXX passing passing

Our continue around expect newly be in to six-month our we these of to in penetrations XX%, areas grow. and penetration areas rural to passings built continues

cost If our high rural you broadband IRRs based excluding mentioned our I per a you multiple incremental which think a margin costs very or see we ago, with is reasonable, incremental the rate, reasonable penetration use terminal a that a passing moment high associated overhead on clearly ARPU, low the can assumption, mobile, current attractive perpetuity growth and builds.

to payments. consolidated cash free $X.X by mostly of our billion tax initiatives Turning $X.X primarily versus construction last fourth billion result higher cash The rural of this generated by XX. was in the year. We of Slide the expenditures, driven decline flow quarter higher capital quarter and

versus For billion generated the full year, cash in flow we $X.X billion of XXXX. free $X.X

free year However, grew cash construction taxes and our by flow full rural X%. excluding cash our initiative,

in $XX.X debt finished principal. quarter We billion with the

rate $X run annualized is billion. interest current Our cash

the of or of our We fourth last target EBITDA adjusted X.XXx. to our at quarter, XX-month Xx the to end below of the range. intend end ratio stay was of X.Xx debt As to high net just leverage

average During of the repurchased we $XXX units X.X per million at $X.X an Charter price Holdings shares totaling common and Charter about billion share. quarter,

XX.X full common Holdings shares Charter million the and we totaling $XX.X billion. units year, For approximately repurchased Charter

and We our that and prioritized and have balance investments capital shareholder and capital to model of investments a generate protect extend those growth, financial sheet ultimately shareholders. proven growth long-term drives We've value. that customer always return and operating allocation

shareholders returned the for form generate to capital to to buybacks. free invest simultaneously continue and cash intend growth We in excess flow of significant and both long-term

Operator, Q&A. we're ready now for

Operator

[Operator New question will with Chaplin first Jonathan Instructions] Street. from Our come

Jonathan Chaplin

of wondering if customers wireless new into you're from give bit is in little context broadband I'm of that more sort the base it versus of separate impact selling a could you we customers lowering much I'm coming some effect in what churn. trying pull-through on existing has really analyze that the the your quarter. strength is on And us acquisition, saw bringing around How this unpack door? kind Spectrum from to One sort way that is the of to having the of

opportunity is the at untapped And is converged us bundle where penetration of then moment? long think term? accounts at you that could sort potentially And this stage. to the driving remind sort wireless that of you really you Can said what the this for in of of get with

Christopher Winfrey

relationships Jonathan, SMB question, it's residential but have so the the And mobile of, exact XX front roughly and in got me, have guess that on million, the what, together base take second don't I of you X million I take to XX.

there. gives that sense So a you

impact the here Internet opportunity driving the Spectrum think On the One, of acquisition adds. net potential remains in terms for of I biggest

the still. largely existing wireless upgrades Our were Internet in net additions by driven quarter

are new customers of is attaching as the well. also the lines, Internet So free the the of paying for get those from XX%, they're that maybe inverse lines, mobile paid upgrading, connects XX% being which paying third of for which or existing lines line second that line means the means came majority with

well, new gross we with new environment, we're are as -- Internet adds. have low in mobile although which means lower connects transaction a Even connected connects

convergence net and So increase picks opportunity more mathematical the line there's up. even both a Internet with to adds adds our as mobile market our

only a there's marketplace, bigger the of our opportunity, footprint, better have provider that the we message that have we we're those gig-powered value benefits is have the and really can But wireless. the to which and product, and across which what the claims into call converged continue product as who

to impact because I the have Spectrum additions, on I on. convergence it's net Internet early real opportunity it's meaningful wireless One over into upgrades. from category, is gains for think still think And of And the and bulk but time a marketplace. going little while are customer it's today take Internet a a to wireless coming the existing our completely educate to new

Jonathan Chaplin

many you you do of One the Chris, have might but broadband wireless? how have a with for got, adds the sense Spectrum offer of not

Christopher Winfrey

and in same a at we're It's for are a going customers the question sale, global Internet attaching tricky time. because the

easier seasonality. think decent always a there's QX think to caveats. with a about think the are few about is Those and is I way typically our in progression quarters it QX year. One So between to

your small of on -- conclusions very impact have a difference have the of because small adds. outsized or net of can adds disconnects is outsized in your gross net that when a caveat amount and us your adds create amount and on you in business, second do, The churn a adds inside small all your outsized difference can a which large variability an that of large

Now as remains. that net but that declines, add and still we growth a hopefully rate mass variability return to higher

for have back we other all mentioned. So Jessica the to that people the so from had volume QX factors still we that Jessica should low that. transaction mentioned, perspective, And a reasons go

between on well. to that saying, and for marketplace, had net issue But on the both fewer is was in Spectrum we -- as benefits QX. same educate little we a more the means that uptick we product. time And fewer in face, which The converged we small lower contributors selling rural the One volume the of QX, keep opportunities think the XX,XXX bigger Spectrum just the bridge in was that as roughly behind One Internet us, transaction we were those adds saw selling at opportunities marketplace and of means as contributing I the

Operator

Our from will with next question Jayant come Evercore Vijay ISI.

Vijay Jayant

for couple A Jessica.

that it you can new Just help shield could there in assuming can clarification? build? have 'XX, other just on higher us you're few of we the X think sort then the that's a from wanted expectation that the of of for it billion and given Is of sort that budgeting And what extension the low? get about BEAD of taxes? years, sort to next means you calling for out limit, Is sort that win you 'XX, potentially of line confirm sort be CapEx

Jessica Fischer

Yes.

but the it the our it's So much it's do higher of and on think exercise, matters But $X expectation, end subsidized builds. that Vijay, kind budgeting I all and we billion, expectations. our win a it's of how

what is it a right to additional now. available and think us ROI think so will we what And that makes on billion our try the I happen of generate for of based and is spend additional what's But passings get to $X to we really from of sort and be where an expectation returns. sense matter will perspective

So that's that. to think probably about the way

tax, of different dependent is We've the a We're now. cash number variables. always cash guidance on On given our tax taxes. a previously liability cash full taxpayer on

If at you the think, said of you don't credit reduce XXX% XXXX, you anymore. plan that now, that what have look we QX XXX% there's back, should in which more CapEx generally because I get liability. But and for deductibility, don't in

X% As to And higher, to that to we but gave can the X% maybe back would a that that at result, guidance. might slightly about I back you think estimate sort look tax. of or cash generally be look we above percentages there, how

Christopher Winfrey

So so The funds. ARPA of state won clearly, we've the and out that process NTIA we've Vijay, disclosed the far BEAD build, come process. what grants rural primarily still on on in is

And make for will. think be for and have they order right it so need sense to rules to us They the to invest, clarified. fully been not in we

allocate will clarified, there of will own distributed. process states then that. But contested, the maps how states funds the they terms then And once of have are their terms how given be grants the in to out the then in are

outlook sense, and how the get timing really states dependent set, state then distribute. our is So in the the to rules of the on here some allocation the that

trying to entirely we're the on along of best extent lot hands, not have view based and our But the we way do have a going best the we'll that best today. to we're to the some to updates do we we information. outlook And in can. provide provide continue our that And so that's to better

Stefan Anninger

next question, Chelsea, take our we'll please.

Operator

Our Moffett SVB from Craig next come question with MoffettNathanson. will

Craig Moffett

I if questions, Two could.

little a down drill margins let's bit. First, on

might us the hard fast customer given to make how growing acquisition of be. sort sense base it's high all and of therefore, wireless costs is of for think the subscriber how I margins

see should think should since the we think -- the go margin we're about overall to wireless you trajectory it trajectory as How how reported therefore, business the particularly and anymore, not for separately forward? we for going about margin

symmetrical one about go of just operating way keep more speeds, your than in you then to And upgrade just speeds your your but not the decision upstream Can physical your downstream all talk to plant higher question. speeds? the to

Jessica Fischer

Spectrum some the willing have we I One on Craig, margins in off, wouldn't to be we margin. So would question, if the first you, tell space offer do didn't

exclude margins basis, some expenses of over time good. run And And that to continue cost, subscriber per take costs, because quite continue customer drive so you does be it to like our they're business acquisition a the customer if in the to getting those on down billing business, and better care. we operating what things

the reason our pushing our business. broader business into that the we're we And actually, reporting into those to broader continue that is integrate

When And sales so a a same when we'll you somebody agents selling a with a lot of both dealing who have call of capable customer that activity and you And be we're call. customer. with have with question, cable things. the have on one mobile in call, as you dealing you're

I But margin overall on customers today. the the make we trajectory, think

well think offers broadband related broadband we that for should We both being that think drive activity. mix that. work using mobile activity, we're them but as mobile I they the to have and And both to in and about

But we the grow. to continue expect to margins

we're numbers there. of think that the in on some the I can gave we see presentation kind trajectory you in December, and

margin that the think when broader continues you think about I expansion product.

Christopher Winfrey

the question. question so a -- little not symmetrical. to bit comment choice upgrade was network to I'll the whether your on the And

integrated using for X to a us everybody, That first with footprint. up as reminder be X X.X XX% to going -- high by X, the DOCSIS the give CMTS. XX% will upgrade of Just split is

assessment make and X.X somewhere the we by So so XX% symmetrical. have we we then the think make between one DOCSIS But XX that in a X, of what on -- where X.X one, our case using of if by is of is based X footprint. it is. gigahertz we can capabilities. It's make could the that in by the XX% X base value footprint. the And RPD market just in

can the you and claims reason mix actual capabilities your match and the are. customer choosing you -- demand, we're that and marketing what the you on device product bandwidth Now where based the allocate think

a example, So to for of the product can on you options out speed make there, you we remain have split. depending flexibility us. symmetrical to make, those where set available And

our to view campaign that in now doing It's what more today any marketing opposed And right we're demand claims, much a as upstream product demand. we're the real is lead is those of why marketing we which want doing. to

from a symmetrical of also inside perspective be remote We the in as fiber deploying a that claims here a have from OLT a the -- marketing what we'll node. drop allows

So us or claims entire XXX-gig time, the across XX symmetrical marketing for symmetrical. XX footprint and over that gives

to from already how of not Hard needed, that in the to and least opportunity and what, we it would market be type gives when have enterprise imagine to speed, communities ever us with today. different but that what these at it that do do

So for pivot of can We the long front where a we flexibility. really be it than at we out and a of very term. any cost of this about better to up go product a it can We competitors in faster go all We fast. cheaper reset and price. potential pace lot can and overbuild with do We need a attractive a our at like have a the we at and downstream, we I think can cost. do plan. low can That's what

Thomas Rutledge

is way, business more and actually to is an of and on a mobile of impact a level. low-margin relative is them. that revenues margin level it the are which penetration, and and And I as gross the in has decline just to one Tom. And an at in high-margin dramatically with The impact in it's is improves even -- Craig, video, margin the video but margin. increased operating want the you a business thought impact to declining, associated the with both coming mobile gross high from positive the margins And improving the add this on the has revenues business.

margin the overall improving going forward. in the is So business

Operator

Phil next Our from with JPMorgan. come will question Cusick

Philip Cusick

talk the if competition what wonder And -- talk One, you evolves the Chris mentioned legacy that just broadband in penetration -- your two, if, and you sort growing? was how can over about I I market? footprint about time? Chris, Is incremental can. of fiber

of you a that Jessica, on appreciate bit wondering the are Can detail numbers quantify half us well it. a just cost programming costs, of how first And in I are increase and then ton as the cost second, for some commentary, in of a people you little lot as in gave service 'XX? programming flat

Christopher Winfrey

all we're to let bit I market bit areas Phil, continue overlap, place. So don't taking that a growing some me it are of the despite despite that And grow gig mobile-only we have in but parse broadband market. where back, a all Jessica a little marketplace. low to don't Clearly, little go in way of think the the and rollback we rollback will post-pandemic to the described. a transaction seeing volume

So growing in that space.

growing area, existing and overlap overbuild overbuilt newly and we're Typically in newly gig you a you overbuild and have minted. existing minted have

new that, you extent the have have upfront in just higher where you setback a to the competitor a that have small And because you're a have going. You mix amount marketplace. of impacts

fiber fourth fourth overbuild. quarter, higher space actually the the all additional contribution In look inside based the we in despite that we of our grew grew of passings that analysis in mix despite the at, that we actually overbuild footprint quarter, on

positive. that's So I think

expansion as to the as network the it's benefit it's even well can numbers. -- evolution you think But that's I a through powered and gig better through through the sales of the having any add wireless. as has small. having clearly of time fundamentally of have having And of additional promising tell offering competitors and converged promise our that so a that's marketing And can product future, the net our prior different for and wind claims than network the over additional behind

The biggest market inside biggest to increase the continue initiatives, would improve one mentioned. of if they but get our just and grow. would won't of contributor more and of be QX I that we those any growth or they'll coming back, can that be, position actually steadily the volume to So things than QX, happen ability

a as note comment tangential will somebody ask I'd so and on it, it. and I'll

impact impact not could any our ads think have as particularly pulled And as relates on we've our about, gross not access. to talked We DSL. it fixed would adds, it have some have seen had we that from churn -- demonstrable we on wireless on we've

we voluntary our saw actions pricing were for first higher have on you limited some when term, expected where impact to non-pay. to and around, footprint MDU our move in but It's tendency to higher December, our churn higher overlap non-gig customers, not have it. you taken would But in in actually very a where the tendency time

it it's so just two a to -- there's a but And that. linings blip, was maybe

we that, product related time, the those are to experience a that. flip side without so with And if is And mobile, to or be to the very used saw a coming broadband more for product One convergence. think the of the customers of back given for you is first return amount tend that small of even will. churn them I proper

that. around thought question. the for food just I that's hope anyway, answers that So

Jessica Fischer

trajectory you're which flat. sort the with sort year more that the like growth two questions, quarter-over-quarter like in growth of seen X.X%. growth to it to other of bit line to until look And serve, So we've in on was largely decrease to would look in then is year-over-year to I expect more for your QX the QX -- really a across cost that. before,

with really sets For reason cost, mix that customers per programming packages year-over-year remain programming whether come our where flat that, expectation, more per packages those taking sort that do priced has and channel that's of are they they sub customer to skinnier premiums and packages out or or to into have be continue larger sub is whether some less. of the cost the

mix not a longer programmers that it's issue, raising certainly an So no rates. issue are

Philip Cusick

talk about We them. used to

Christopher Winfrey

Go ahead.

Philip Cusick

you that anymore? to room about an terms put packages? was small some you Sorry. peak kind on package No, of and ask, talk some going the that can issue how -- video I do used wherever point? just Is in people have to mix of of out at want might Or sort you we

Christopher Winfrey

to Tom we Maybe we I have for have the packages to and create and and into create ability still what that between go consumers. this we'll myself. But talking ham about egg value headroom, want

typically, the they to do can. more give and they programming the that want. best always customers has try philosophy to And what want Our been price we

-- so And capacity also on based of wallet. their their

than drive packages And in And have you are lower results the actually video that's the programmers. us that's to people other allows those the our lot sometimes losses, what video consumer more we in can pay, it but a ability the than in result these product, to a which benefit -- of can the so to and conflict. And they some based having still is of see of that and losses marketplace. what it's wants on sell

to need and and themselves. the future, themselves we the also So that where say, worked. It I for already doing to programmers what given But space -- video OTC we in continue direct-to-consumer are has effectively with I think work. what -- it think the and they're model unbundling see doing look as will given we're to

we we for their in of if problem around solve space package the for I the that to that. grow but that benefit difficult some had video the flexibility actually heads further exists think and But of programmers, them today, do it's we than get could

Thomas Rutledge

It is.

what place what the got contracts. it. limitations as everything we've and high-priced but guess We fat can still industry or package in So I'm not egg, we you've bad be. those we moving renew structurally I'm with video you ham is have from limitations really But to do a perspective, a me I a contractually, the want on been in sure

from of are lot content a pricing selling. It model. lot separated it and companies whose there less a different a package it's a of out is different But consumers. create value requires that for And can obviously, lot

it's to within in continues video consumers. those still not so said, to terms expensive say the product that And most situation solved we've the And is limitations been structured that the what But way in Chris for can. product do of we a an way it's a is structured. I trying marketplace have which to would best make

Christopher Winfrey

a with could help. think the That's design. I Xumo lot that. could help Xumo

that the probably through discovery, well a with other the the as live in best footprint including as video the remote, both place with with very combined the that Spectrum consumed up paying and all tailored can unified a their voice our to single they're platform consumers well Comcast be with content cetera, voice and have platform, single already app search, as budget what appetite in we in packages take remote SVOD, DTC, have. different they et and the all allows product you to If of that that pair TV live video as them

I pretty powerful. think that's

in that I And we're agreements, continue can about think the sell extent our programming that more. requirements change to to able Tom talked the we to

Operator

come will from RBC Markets. question Kutgun Maral next with Capital Our

Kutgun Maral

I wanted can. the on programming to discussion, had housekeeping a if then I I up mobile, cost just follow item and quick on

just to So in on guide issue. overall. costs, lighter remarkable it these know or many a shaving mix year-over-year I to I you're be the characterized is if see ways. quite taking packages programming flat an you Jessica, seeing subs for cord acceleration wanted it in as

a or shift read relatedly, overall? Or the and carriage recent whether networks of purely else terms out shouldn't renegotiations, consumer in of harder Charter vocal with and of anything we just mix maybe Is And issue? a years taking pricing many it, very again, programmers it's it's you've maybe there in about even certain now. terms line call been programmers tensions with to for into

much help phone try a of lines to are all just wireless, housekeeping trends, And mobile chance understand question better size the on how you versus industry-wide quickly, your million X.X postpaid we as tablets? any could phone

Christopher Winfrey

churn and service. acquisition having broadband is drive million, driving vast with connectivity in to the me of overall I we an higher selling profitability, it available. you customer but and combined And the wants Internet mobile but mobile X.X Maybe ARPU front the selling devices, the our to vast, the split don't as have and so in have make both it course, majority, and and that But of here Internet a as well programming that service service. business, that we view jump... you start we're we're on get with extent additional through that the

Jessica Fischer

not the flat base that And clarify, the on guidance, we programming previously. significantly year-over-year. smaller. have is it's what from cost per Yes. The sub To mix is is that different that seen shift

And so mix as the the but base -- the -- mix different. not of from it's base, isn't shift substantially incoming that customers does differ the

Christopher Winfrey

In to video. availability really free the with the of proponent the problems content been some many been talked about margin terms a related that anywhere, that. mentioned exists almost around in that for piracy. inside of of in And of cases, issue programmers, because long position has we've Tom cases, We've Tom

indifferent across harder I cheaper guess increasing at it's say carriage more at about a the higher It's or it's certain of know fair price I even line. don't rates for to So content market available when about just free. all

And so a just a we're that's at. harder that's reality not where of line,

biggest cost increases put our The of to two what And I the those significant content customers. are is issues channels pass inside of forced important be into on are but describing, development other of biggest content, the which to we're a sports the cost the consumer. continued just to and and to drivers two was which category over-the-air as retrans,

Operator

Mitchelson Credit Our next Suisse. with Doug from question will come

Douglas Mitchelson

EBITDA at it would be in and net broadband XXXX, I that XXXX think that XXXX the adds better than Analyst was suggested growth. Day, would have

side, I you the XXXX? broadband that could just XXXX add wondering, of And think, on kind confidence better what I'm be gives Chris, so than net

thoughts a cadence but that that? to impact any can right? that you're I on I what I for guys guess, expectation guidance, is helpful. EBITDA on -- EBITDA, in the would then offer maybe in if be jump The you willing of are growth know are swing do remember XXXX? but Jessica, fan And all, And factors And any

just it at all just sorry, follow-up. -- ask I'll -- a Chris, curious I'm then once. as And

like said in when the churn, you've I the time. a -- action, pricing was you it -- it had mentioned wasn't you've for what time churn? maybe in pricing You So you But just actions that had saw a was was blip the what when first sure the first past, right? blip you've

Christopher Winfrey

net broadband one that's control. is market XXXX out broadband me year, that's goal and net higher what's The because will. to volume, that transaction of only it's terms in place have the Yes. I this there one and think the you we said adds adds, angst taking gives biggest The variable I our is can't

these initiatives of -- lot going have we favour, a of that talked a with I've in our But the things about. starting lot

-- during us in increasing as with early base small One constructed and only Spectrum clearly, Internet So bigger driving passings of product success grow that the a course I the think takes to behind is early hold. year, but the rural of of going

better. that are wage actions made our selling repeats, in and faster targeted do having better but think better time. drive a not means And cost increase force Jessica who job too the investments peanut to the by yields, we a I ROI, tenure, they that weeds, that not avoid and much to get reduces transactions, butter longer not addressing sales And They to result only having that customer which which churn tend into there the increases. in They were were we've in having were big targeted. personnel, over issues talked an customer but employees longer-tenured in infrastructure the service that some pretty labor about, reduces took

as of market of a And in investments of both as very if time, everybody seen we've made. end passage that's investors order of I've where was at time, And in seen that our lowest service I last for in those we've going that's get the that year, -- attrition to a very, back function market tenured ever, the think rates because the labor but well the benefits, to QX functions. the long sales and the

I lower increase But as market all And which I'll that's started, ultimately, biggest driver adds and goal is investments But gross as else net where for biggest into is churn. the volume. uncertainty well to is our both those adds the collectively back to to go this year. equal, tie us

Jessica Fischer

On the growth XXXX. as guidance, we give certainly, do in side, you but don't EBITDA expect said, EBITDA we

of it drive I few things. think I a out

customer to growth. have have We continued

side. rate we've talked the on think about I

that customers. to rate -- small we we those some good to taken then recently. We And actions have we expect have continue be rates to continue believe across

revenue So growth. driving

I April. increases would rate last in year's we remind you lapped that

that's challenged. -- So as made investments Chris tenure. most probably is to quarter and we've But timing, space in which in the your comment second around then the said, these

of process to both We that the digitization initiative, the tenure out of better efficiencies continued out have. gain of the expect we

We operational continue costs relative drives of the improve in to efficiency, of which business. sort out our

confident pretty in we're generating think year-over-year. that growth I so EBITDA And

Christopher Winfrey

with we changed. I'll You there on price We're at mentioned in products maybe we've what grow that the trying there, start and but was confusion best best packaging can to focused some our faster. so and market pricing -- action competitive the provide hasn't We philosophy done.

the mind, happened year, And we what's But space, and last through the you for we've of middle you rate seen. pretty pass given to in to if given was the dramatic, video did we that if it see continue on the a programming look in the back pass-through of economy people's increases year. increases can the you're where middle

big saw downgrade You video in a and voice.

did as that than QX, service inside customers. combine done some from And for our We've competitors you until change of experience, that we Internet competitiveness. our pass-through to for bill maintain and to additional wait not could a Internet-only small well lower a increase wanted on have to as we twice the

taking of place -- of just bundled at video this customers is customers place Internet Internet with the bundled the year. taking at So beginning beginning

where very has through. our and actions we related The uptick there has given churns what maintaining seeing that call market volume, the a we're rest pass It's am pretty not I the been and is in low muted. the price reaction to doing of still competitiveness. big been

Operator

Our next Morgan Ben Swinburne with from will Stanley. question come

Benjamin Swinburne

Jessica, all the detail that for the rural pieces. sort of build. beginning on the on non-RDOF at questions few A thanks

of $X,XXX talked you about think passing net. I

when the receive to as So revenue those we the we on into Should CapEx, think sort you spending? think do the about I of and can a subsidies guess things. as you'll those about treatment visibility of gross? give versus benefits And we of have you accounting timing trying X,XXX also couple layer so guys that

way XXX,XXX say, you'll in our in us is of think you'll to to, into course sell you're build I passings what there but rural think then know to year? make the over you the 'XX, about any can us how If many if And willing we those help we 'XX. of don't assumptions. going own you're build tell to think no, guessing, I'm

I assume are turning this and at better to getting on at this getting point, you guys stuff market.

what the So lag you've be would and far helpful. on any learned help so from timeline

Jessica Fischer

Yes.

So I'm the going to start at the bottom of Ben. list,

and would those they're We incremental XXXX, is which at XX% RDOF usual subsidized build. in penetration What passings we've given you rural around get build we how do on of expect pace to much those are the with business XXX,XXX the I mostly to normal as six months. of passings, information

we after way. grow that to six time continue that We hit at them XX% but months, in you can

year at year month we're XX,XXX to the starting would per -- the and get going a XXX,XXX faster end of the to pace passings pace Our XX,XXX to number. to and that of that end into I expect the total coming we're pace at range, within

to so to than amount. would The I in that passing, subsidized clear, what our was that closer $X,XXX I builds RDOF be we've just the $X,XXX we more recent be think been per to the said

prescriptive $X,XXX totally a we’re But number. net that So around is exactly.

capital for Our are where as subsidies expectation and way the accounted is subsidized offset on those state not be on a and -- BEAD revenue. programs structured where build the in likely the to as that expenses are count a

net we're costs, numbers. harder. think, are build it lot a at with I So going Gross

understand in sort of these experience a had seeing and we happening economics are what's driving also and bidding quite about what want we in passings some of bit terms we -- in what about need now so the marketplace. And to

win about a lot pretty could those range. what you costs are a what impacts they build gross But be wide and in

have side. So that I number on don't a

Christopher Winfrey

it, at Just Ben. in terms of how we look

with If I footprint you go in market back overlap. used a to the December, we an threw presentation up unnamed that

footprint, other be and and I how you gray, grants now the blue. look take a BEAD our gold that between, So were colors our evolves doing. state Between and existing RDOF way think, and the strategy at could grants we’ll

of of result and the we approach together. can gross these we how terms of a cost make how market build the as And we lower in our so the strategy put

pace. the that cost can mobile building. at cost to these a and of And we better at we're that us a lower to existing constituents have, can have been to participant, products, better we builder today. broadband of bidders the they're not Internet that the competitors and that states trustworthy or product, the so in our footprint economic for successful build lower therefore we pace competitive existing We great a and a builder a fast faster than I and because have And moving price get rural think their the reliable, largest only more net gross makes we're footprint because at not these going a converged with a something it. at aren't bring We've to and have can most communities. and that's mobile, going We're but

Benjamin Swinburne

from That's comment. ask very helpful. just Can I your clarification a

I up. you also think back forms all you churn, at I record of QX, non-pay. coming including But talked think about nonpaid guys mentioned in was debt churn lows bad

comment any sort Just the the on consumer, low-end consumer. of

your churn talked to thoughts? Was of sound about normalizing. hear non-pay it wanted competitors we're your but didn't like seeing -- I have that, Some

Christopher Winfrey

back back and near to Bad basis. where been an low. let building the I'll has was still year-over-year on has it debt think it I well, but comment. dramatically Jessica still -- much pre-pandemic, was, churn It's it's It's nowhere lower than is a up. it impact slowly

to like we may we But reflects not be saying. to our up of non-pay between talk the bad bridge in peers I seen and some And economy. we the debt. well January, dramatic, as a just starting as what but overall It's that that step In don't see, are to. we're and think intra-quarter, don't typically competitors have both

you upfront sense, is impact look negative. some and of that at In the that

like don't it. You

normalize the in other delay starting transaction volumes, bad when when selling terms of the you that news arises. the the to is in On hand, and it's market from of opportunity indicators a one have comes the

double-edged So sword. it's a

Jessica Fischer

Yes.

big proponent of before, we're remind I other would a The and you program. participant ACP we've about a that in big piece talked

recognize customers endeavored them. make that program to to are sure our Internet them non-pay. they're to solution and for affordable that more be think that, to is of they making that I prone available part for the We've

It has impacts. customers before. One much churn two that as don't those is as

that the related into customers be those ends sort is of then though, bad that our a debt computation. flushing up ACP that of carrying impact, through some to might on in program. other convert We balance those The customers

not into bad to basis, So value it's while non-pay a a debt an where higher connecting we've numerical is the necessarily on being customer. ACP churn converted customer

Stefan Anninger

our Thanks, Ben. Operator, that concludes call.

Christopher Winfrey

everyone. you, Thank

Jessica Fischer

Thank you.

Operator

today's call, Thank conference and appreciate This you, gentlemen. conclude and ladies your participation. does we

disconnect may time. any at You

Charter Communications (CHTR) 27 Jan 232022 Q4 Earnings call transcript