OTEL - Earnings call transcript Q1 2019

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Operator

Good day, and welcome to the Otelco’s First Q 2019 Earnings Conference call. Today’s conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. Dru Anderson. Please, go ahead, ma’am.

Drew Anderson

welcome results Otelco ended for XXXX. and review call March Brian, company’s the the you, to conference the to XX, Thank first quarter call Steve introduction Otelco Today’s of with of Board Chairman the from Directors. begin will McCall, an

Officer; about Rob of new operating the Curtis Chief financial Executive and Otelco, of Clark, Financial the and Following Steve’s Officer Chief will Richard comments, Garner, Souza, President Otelco; offer results. remarks

management presentation slide the also on be Investor Relations these a of during and We section call. company’s website slides the posted will to referring have today’s

that that Before made not me we current Such unknown start, offer of actual let factors forward-looking by historical different involve of this caused and statements. any or the materially be fact are cautionary that implied other statements note the to forward-looking statements. and forward-looking statements the results could call results historical from results such future constitute or during from known statements risks, unknown the have or company expressed uncertainties

ahead, addition and turn also now from to to The the uncertainties, are describe with anticipates, that readers such stated, uncertain expects, plans contained terms call forward-looking. the statements with to to to in be sir. and herein the risks or the filings intends, will and urged statements labeled are risks over time McCall. similar uncertainties consider generally subject other described explicitly forward-looking company’s time that go are Please, statements, to SEC. I Steve In believes, terms belief, which With

Stephen McCall

Dru. you, Thank

want with who meeting. as thank both of Board Difficulty] everyone and joining concluded the in today, Annual well members of Directors, person I number our shareholders for to dialing On our a we as us mentioned, As including those have [Technical just XXXX Board, of in. the investors today, we meeting us behalf intended participants are of and Otelco’s

your of those in room the remarks, in from to I would ask the questions today. we take those addition questions presentation. questions you complete prepared we’ll please listening from until the the hold room in Following to

more Clark As retire Otelco. leadership effectively properties. we title X only at retirement. year through telecom industries. Board succeed person Country of brings He financial presentation. I Rob when at next and release, Richard. of press since part has been and I Otelco’s acquired today’s which Rob the for years it Rob’s not the of October decade to that decade the recent end will service the telecom than a his was planning add the end actively take of XX to begin to is the on President company will XXXX. in our with XXXX, like support right Road has of the more appointed May position, Richard confirms experience, announcement but Officer of and The searched leadership. our would over the for Rob, also to Chief Rob business operational you and He leadership to Richard part experience he to the first team and than upon other Executive over of Souza has turn Board’s used quarter thank the announced the

Robert Souza

Thanks, Steve.

will normal call quarter be Our different first XXXX investor our little than calls. a

in and we the investors, the Steve room the who As our attended with Board have meeting mentioned, us. annual

XX-Q to ongoing first be details the and that transparency Richard, press website, going part time website. that our for the updated SEC on about night. remarks investor are provide the results earnings this the presentation. can shorten release of and of as found the our will I last investors the in to effort Kurtis our quarter we’re Form This more addition, The of business much quarterly covered as was normal review to filed allow possible. presentation In is our section

working in hard residential in to a continue competition our $XX.X to trends our results same to reflects first the of both compared customers industry the our revenue network. decline. percentage customers excess Total quarter of and fiber-based we million quarter and in RLEC while bring revenues the options, first recent impacts larger for quarter was continue Revenues pricing down quarters X.X%, the million, Local for Our experienced decreased at as XXXX. $XX.X a to Otelco.

of can fiber-to-the-node. we until or customers either continue will fiber-based trend this majority a with our serve expect fiber-to-the-premise We the product,

Richard, from quarter year, As we but Cost Income first $X investor on why income $X.X update both brief have the investment and million expense we’ll don’t down the go our offset a increased million expenses interest same quarter not first XXXX, operations provide revenue and in we in to mentioned, into are in the compared the last about the quarter to million. change. to an were that X.X% Net enough significantly $X you A-CAM, million in more dividend plans to was decline. deck. Lower increasing in was XXXX. were the in the XXXX. factors quarter business from first below depth the our as key fiber $X.X CoBank

Richard Clark

rural projects investor I – for note the Town moments. of funding have stimulated the work the our four plans with The first our in will cap of The quarter Certainly, have the in Curtis other in A-CAM now an data few that end-user reducing more that would X and task stabilizing of reflecting extension acknowledges of plans revenue of we of are future. results. customer churn their the Leverett, to Massachusetts Otelco the part The timing towns fiber quarter. deck in a determine the municipalities provide America’s in-depth the involve at of in WiValley their the development that will summarize implementing a additional in review first acknowledged the program Rob. modernizing revenues. the We’ll of our two significant has Missouri, acceptance and speed out FCC years plans infrastructure. additional offer of started additional of

Curtis Garner

made the Thanks, compared for million EBITDA elected by to of partially payment principal million, to year offset to million was our the of investment the million, offset at position our income the just dropped to additional quarterly end net press other XXXX $X.X $X.X in of debt quarter XXXX increase Rob at CoBank the in increase accounted the $X.X from in million announced voluntary to a under in comparisons million. of covered reflecting that Richard. X.XX annual revenue quarter quarter increase Cash $X.X $X.X decline to highlights few cash our calculation in with by CoBank dividend change. of quarter, use $X.X points. $X.X you end of I’ll ago. the the plans details it’s annual XXXX, and compared cash, our was to the operations million expenditures an $X.X a the network. income. make payment is when key first the cash and cover agreement. first The Capital We release turns, with flow covers measured for compared for X.XX. net our XX-Q. Consolidated first prepayments were of excess agreement million, a the Leverage of and That

available our the Please presentation Let’s the that is SEC’s move and the to note on investor website. presentation.

until We the deck. material We allow XX to businesses, If will it complete But points. comments Otelco highlight overview serving to our through each than what your and couple a wholesale as get – the operates a questions retail. a hold is. provide you of to indicate provides pages, of wireless RLECs with two to carriers, New suite Otelco first to and please the and with customers, England. services we CLEC broadband the the try page of – resident go next of the pages presentation. full track started range an six states in are broad we other Beginning of much

our and back If we’ve the acquisitions at XXXX, as the on functions when leads it you are room agreements the debt started with various see Otelco – the today. can you changes and list of in Chart that look Since a so Telephone list critical X goes team folks Capital. the things to the company, that is of Chart Seaport were other that company of here Otelco in the then, in over progress X, the of management part by acquisition the six first the time three far. to key

you provides at X, look kind the If company. it Chart of overview of an

XX,XXX in three in RLEC customers the spread EBITDA principally over We in but revenue, the million employees. Maine. states, have million and CLEC in across serving with about $XX states customers, six XXX RLEC $XX CLEC and and X,XXX

Richard Clark

and our fiber – that over of And to our Page what you’ll other over own notice is transport represents capability X,XXX and you’ll fiber, miles see within. to On our is, X,XXX connecting footprint. XX networks which of network X, fiber we have network

used is the XXX We have end-customers. miles fiber what mile we to which about to connect of to last to distribution the connecting last call – fiber,

have – X full towers Page we We suite. copper our shows on of product top to a which is And network the serve. legacy we network, have service that XXXX-mile RLECs. XX related the

PBX are the As a we business customer. And products Cable we you’ll large set is as also at Alabama. of continue of are products to customer in necessary markets These to a product in in market some our ours. as available things operator many move the forward. and this Hosted look cable note that then we is residential new and offer, we both have

upgrading are remotes market. foundation more uniformity of in company we to parts past its Missouri and in is fiber-to-the-nodes with from Page Alabama, why in relates company If That our will cost fiber. X,XXX and miles X, we the which utilized network. look That COs and to constantly it our network, future. time The as transport fiber striving is of on you our have Maine, electronics our at deploy building over strategy speeds fiber to in connection network improving certain network capability switching is in the for allow have over lower the quickly the invested

Robert Souza

XX, territories. see against line. can impact Internet of A-CAM higher on Page see line that we in on revenue funding you to the report the Comparing with XXXX and loss Missouri local demand speeds our the can on six you residential for XXXX, categories service. increased turn you access If across

presence geography. pretty territories. Today, Page carriers in coverage a the on about wireless years Moving have depending ago, exact of throughout competition. XX, they varies virtually to of our RLEC location, our but have The all XX our major territories much service avoided the portions

cable we in the serve. it’s You said, in every throughout competitors MSOs markets, we or the well-known can whether business, see Consolidated CLEC Communications I competition our segment regions as or have our in of territories, RLEC Verizon

of length bit can a of little the turn revised done. what you’ll funding the the has two offer this – FCC talk years. If FCC legacy provided about to program legacy XX, has a that A-CAM Page we The extends

addition, minimum our offer serve more property. A-CAM requirement the required And and the last funding Missouri Shoreham, its Otelco with number just information for provided footprint. throughout In FCC provided speed increased of week, a entire XX/X to of in locations Vermont the is regarding turn in

we’re the past, As offer. analyzing in their

review FCC’s have year the to last that that A-CAM to these stabilizes to reduction XX/X the one reach legacy is money we’ll week provide the over with over replace XX/X initial decision indicated legacy across funding the money speed offer XX-year the and One as responsibility stock of Our The make with that that requirement. A-CAM stabilize funding hold offer, last over investment, legacy the turning Richard’s XX% to shares and call this Vermont is $XX. those years, XX-year and a Investors a that Once in funding XXXX week, of to during days and it provide suggests declining funding XX funding like along it requirement additional $X pleased June I’m of now they I’d What at with their our period. on the that �� accomplishment. and speeds with which an over XX to convert about probably we And reviewed requirements, of to capital improvement a locations. the will enforce is experienced things substantial stock able it traded have XXXX the this a range would that requirement has X,XXX the the years. closed in for is that on per past, those One the team still we’re period. before a attractive had is minimum XX, day a XX-year Page period. in FCC had spend purchased return comes deadline. possibility significant locations for the on to funding replacement the that But the does received who day being the $X sorry. This in

Curtis Garner

XX. loan replaced the a at look which you million $XX with In If five-year from credit the November company new the included CoBank, undrawn facilities revolver. XXXX, Page two of $X million term

the We the principal on have through that first end outstanding million of reduced by quarter. $XX.X debt

X.XX%, Our plus over interest rate improvement which LIBOR the previous facilities. significant is is a two

world. sounds strange who to don’t our sheet to have expectations alternative our today’s in offer available you But cash that for go significantly, at went within are taxpayer. on our to in Otelco Tax is depreciation and loan services – investment When balance We XX. which are is competition a a rate have tax the extended and free from our business You find leverage the sitting dropped NOLs the effective helped public, in materially protection amortization. facility bonus us for industry due Page since to that Otelco reduction to Act leverage. helped required time, up us know has net any lenders partially tax. that and and base. and wouldn’t customer that lowered no industry The I our any

taken with credit calculated as dropping We the quarter off a X.XX – our in facility. full end under first years turn of four of leverage have last to by the

Richard Clark

and talk we’ll and consolidated elements, funding capital that and we’ve efficiently about of operational Otelco. one efficiencies and and A-CAM and operations deploying on made obviously source, of is executing revenue objectives the are four strategies other realizing So key key effectively. billing taking source commitments that the then There stabilizing

benefits strategy, expectation by at against you – cost and our balance technology lowest executing to meet required If when XX, funding goal those fiber-to-the-node the you it’s to the talk the A-CAM Page continued we when each go cost, talk requirements. of – obligations various fiber-to-the-prem possible continued to about achieve A-CAM the and

this meet We have well regulatory far so in met all to area and striving the advance goals in speed of the goals requirements. certain

XX/X creating We Our the the value we years that with equation. in will practical XXXX. XX% will a though, value and to fiber-to-the-premise. same VDSL equation on base speed revenue It the a will of ahead regulatory appropriate of including a and goal where will a to time, is from fix most of or depending we the believe better remote megabits benefit by entirely better XX/X and exceed cost-effective network, locations a eligible wireless and our customer At this deploy full cable to to that, When creating on and that, customers to XXX allow it three for per churn the trying achieve up also technology. second to focused feet DOCSIS us A-CAM technology CO distance those the megabits, X,XXX VDSL, including be achieve deliver X.X in requirement. solutions service deliver. reduce we is churn and our within customer

to gig X.X customers to to that X network. service will allow network cable our certain offer up upgrading us to So on DOCSIS

So of to offer towards fiber-to-the-prem the driven increasing to are markets. in X customer base our to us will base, that all also customer speed these those to gig allow up service

fiber the it, If you and In go went live that undertook mid-XXXX. to at consolidation company gained the better regards tools, and be effort the our Those take our been our provide that to a approach system The digitized since the same time integrated – Page XX, What implementation It stage that install. consolidations is it first solution does round sales next should with takes network in billing to billing is and task many provide? efficiencies will deployed. deploy to customer the system. marketing deploying reduce a this we and Herculean achieved. access complete. to has can benefits team disciplined future is targeted from occurred It mapping least, marketing

very a presentation, the based all you we know, As on marketplace. of have disjointed

stay that like maximum impact So stay will marketing marketed lowest time. about capital same Page This very more us better all deploy to so should customer, to revenues it’s On the XX, the which are an we stabilize targeting. cost efficiently, It our over reason talk of speeds for is to key reach, is deploying scale. targeted foundation and maximize Otelco with network with techniques very to them to our upgrade strive cheaper doesn’t coverage. fiber tool the growth things we a approach. can market about speeds, reduce improve for The capital returns. when revenue advertising have churn effectively. traditional build The to our and market deploying the faster – provides help a This a we –

Our the network and of of service focuses – focused $X parts upgrading to nearly achieving of our total speeds investment XX% million on goal XXXX of two-year our the in market.

about earlier, those cable over and Part strategy on XXX our roll and XXXX. to in the in and that planning on a based our entire all out building co-los vary is network the non-A-CAM As remotes territories network, A-CAM I X.X, VDSL of talked technology service to of territories of DOCSIS miles in will deployed. fiber-to-the-premise speeds we’re to updating

each the market. This bring of partnerships municipalities. one the communities. underserved the depending operator their appropriate, WiValley, is that key expand the realizing network, We exploring maintain always goal co-invest expand our to grow. by of evidenced to will be municipal achieved maintaining as and deploying of element a uniformity nearly last always reductions strategies, efficiencies be the in a appropriately ability years collaborating going XX% broaden our driven the resources the relationships, since private/public to goals ratio rank to solution of available is places. talk – ways through technology benefits, to reasonable end harness over the be element and capital also bring other company. against capability one Utilizing the organization. on market. – is can it’s markets for cost in Either Upgrading Ongoing should to Leverett way manage leverage bring to network XXXX one is cost we of capital towards to the cost our ratio we When so like to continue growth. we’d managing of to When and efforts and our costs our will broadband four our focus about to municipalities handle market optimizing to The It’s cost effectively – of all benefits. focus not on these bills to the the ample just market used the on balance the

Robert Souza

in has work doing a Page face. job return done I There produce achieved code outside is utilizing multiple significant document the Richard summarizing. are information assists map our identifying fairly benefits will our It’s possible network. kind where and to that, we entire understand on XX market we on of done market penetration in idea about physical fiber the of continues and As investment. and rates the location competition that think, of deploying serve the in consultants highest us good with the that kind every geo better areas have in we to the being

the pages implementation a the network. over construction detailed years. the we’re our key has information to including improvements. hear York at have start as our are financial integration of who is copper-based those now, this and we’re pages would make to on you in-market the as City OSS past cover these system allows a of to the appendix our company-wide not evidenced XXXX dialing question mentioned, years, you [indiscernible] found Our operator, fiber those strategy billing fiber-to-the-node But been in. $XX,XXX for like probably a past and continuous do And follows going And those our to your always questions at few of by projects. them element questions. the per fiber-to-the-prem repeat we’re Richard in improvement, Brian, on that joined who will $XX,XXX big which of to best of The company with will we in to existing have The of actually provides and four well. mapping us sure those can information the additional consolidated mile. we’ve infrastructure around cost time. line deployment and going from They our New and that seen questions over fiber significant what now on improvement was if part call those upgrade can take the as looking to was we’ll asked. those be the The post appendix But foundation here answer

for So up it at this in have a might point, question. who here floor we York anyone New the open to

Robert Souza

[Wally Yes, Walker?] [ph]

Unidentified Analyst

Wally Walker,private investor.

Vermont program. Rob, only the provides Regarding the XX significant next is on in from that what which mentioned that, stability announced increase annual A-CAM under Otelco’s for support years legacy million Not weak, operation, A-CAM over last II Vermont operated you the a being program? under $X.X legacy itself in is that currently receiving annually isn’t

Robert Souza

is have now – can that. we’re why answer a is replacing that to $X.XX What I Richard answer it II funding, $X.XX what to Richard some two The with cover indicated ways that roughly to it information received. is And XX always let that analysis. legacy funding legacy It do XX/X compare A-CAM part in money earlier take because incremental I’m the and I’m on haircuts legacy increase no million. about speeds. is give stability already you next funding The revenue isn’t the that second million. But that years. locations next some funding. really there of said. over X,XXX to it’s issue over the XX the the we The the going the call, it’s on funding are money, you revenue does provides years, when actually, that exactly we’ve going of A-CAM the is only that’s the going Wally, A-CAM annual not about approximately And additive, current $XX,XXX newfound on in you

Richard Clark

Right.

able was infrastructure. funding capability provide reason for So the our A-CAM as we But obligation I not there is to to new to this with or in XX/X eligible that property were XX/X. why that existing at to look currently, option new was stability, provide marketplace up funding build an that the we

And that We question are would be do will fast cost projection some against to decline because is stabilization analyzing the mechanism. cost. have spend we what would what how of there a under the be the the be and type funding old revenue it versus revenue

working through and we’re at that time. where routes the that, to So looking over the what determine what locations costs are, trying is and capital

always break-even the is basically, two. this to revenue funding is – over against as XX the there’s So on requirement analysis these what what incremental years

Robert Souza

we offered back just when go came did type Richard we March to basically, right in yes. Wally, And $XXX,XXX And per an just Missouri, of the now. to automatic, doing would year FCC needed it’s through everyone roughly the think same as and that analysis is

a commitment the and expenditures, capital revenue question. to else the anyone floor, from us benefit might say, to standpoint have it we that Open Richards Just additional sense on to again, it it we requirements company. the the commitment which to long with And ultimately, don’t does sense, a until mean really we chance And this long-term did. that before do us. but came to that, the June in want XX really to to make the room will believe what $XXX,XXX, came that that look made of conclusion We it date. a verify had that to churn, makes okay,

Curtis Garner

them don’t the so you give asking why to call of who queue questions, in on terms Brian, up. can instructions that you those are

Operator

[Operator Sure. Instructions]

Robert Souza

another yourself? to Yes, Brian as in And anyone pausing to the Could allow have like you sir. identify they’d X, is ask? room star question does

Unidentified Analyst

I’m investor from of private on My Texas. couple questions I Houston, [ph]. name is a [Doug a have Malone] allocation. capital

debt often that that not our discussion the I you dividend dividend wise of that believe of pay – you any and situation, pay form money. a it’s First, money of in the use so up, comes given

I a them their or funds would share investors of some you And sell two so when give from need and recommend own additional some dividend.

start of on the the have one leverage any debt paying we’re we debt I compares see new the And have down, virtuous New revenue concerned what currently, we in concerns be. starting we rate this not the we’ll see debt. pay not but with there I’d down, it’s opportunities earnings. just helps do look Robert, company, ratio some of do And to decline on is a more us implications would where actually which the that I’m that reverse. these with we the debt see when earning much path but to leverage our how ratio massive would like, Secondly, pay get [indiscernible] down the of we’re servicing Massachusetts is get, that projects the revenues we as that hate new we’re pay in whilst, England to interest when down for – we’re calculation where and on come rates, online? numbers, two debt of that how And lower further of projections that

Robert Souza

right. All

in you appreciate have we stabilize the on us want when underway. some last will that your revenue summarize sense real part of of statements can give and that involved asking because for very usually you is us, the you’re you the to Just some some to capital give In capabilities. capital or us, some wireless his for a about there’s projects deploying. on of municipal building optic cases municipality talked cable allocation. own wonderful in some affect some opportunities, we’re projects based believe to to question, certainly, we those add may networks question. Richard they really, as initial But little ahead the I the government opportunity funding then thoughts because or Those the of thoughts fiber based are either

it’s these an wish of point. most were entry us, easy not and really are it’s for but issue, communities. we for an issue is us, small The larger, even they So

to improvement and revenue see. the an performance, as would line like large revenue overall are to they stream top while – So line bottom we aren’t as they

begins begins hope VDSL Richard internal change So maybe of which revenue doing, that and to we’re to decline things going of some Richard, things of the stabilize that. we discussion. that about, some to the is trajectory the the talk

Richard Clark

municipal two comes to thing before a other these roles, of life on years and of note projects funding The to start about the financing the up, time it line one can construction. the up has any municipalities

long are talking Relative competitors. driving increased that arise. other to we’re competitors, have to about drive we’re those our we time all technology and how can lead what designed with when enhancement where It’s they is So really speed, we things. VDSL so compact opportunities

will deliver one in has more to those We’re that a a offering which fiber-to-the-node speeds of that to – frame. example, territories be get to down. territory, our like of footprint within will have to is A-CAM higher solution X,XXX once XXX% to lowest within X,XXX be all very are as fiber-to-our-cos, density VDLS some to we increase speeds. build-out because we have wireless VDSL technology, CO. At an customers as use is feet nodes the XX-year to cost-effective for strategy an likely time and Remember, we already way point, because those may XX/X us, the the that

the that over approach to So phased XX%, approach. from a it accelerate positive. response dollars because is to believe capital market We’ve able will next year relatively we be get the to that low been

we’ve available. We able to we we’ll target because else what can increased we come base, to to you have to is close back them don’t some customer this is do say market. something will will offer much We us be that and So to it. that, pretty of this hope

Robert Souza

or any questions the Brian, on you have calls conference conference on bridge? do bridge the

Operator

private from investor. Yes, sir. [Jean first who is [ph], ahead. our We’ll go take Riley] a question Please

is line open. Your

Unidentified Analyst

we roughly Thank – look else. everywhere see explain than and at the Chart if I three the Missouri rate, have And at higher There is you. regions? much Why look take XX% the when question could XX. for we is other why XX% so rate a Missouri take from that? just you you is

Robert Souza

a when that else. immediately. We When demands buried that we one we the when generally in an because And we down just situation, and it road higher we In Missouri, of or we XXX% ariel will and hear or one fiber. cable. to much built basically much build the those an Missouri can we it service community. a Did other only are everybody customers a basically to couple fiber Mr. everybody when take to we obviously, the The municipality fiber, convert In level. speed customer was that rates higher, his we convert higher the municipality, overbuild communities, of why convert of room anywhere project, this speaking, automatically question, insisted go communities. drove fiber small in it, Riley, the words, underground fiber was had built in answer customer wants question. don’t in rates, that penetration XXX% to the pretty than

Unidentified Analyst

a there All be comment. one for say in right. And these way we track just more It’d more, would keep there that then could column what requirement just each if A-CAM of of just nice Thank just your it? you. was is, one territories that

Robert Souza

to a round of locations. add be XX,XXX difficult required them, higher, may of Yes. think that’s A now too in X,XXX I Maine. I A believe roughly XXXX we’re fair I over in If keep provide. Missouri, my in slightly for could think, little is numbers something are Otelco-wide off. And we don’t mind we’re them Alabama, number to of it around be certainly But us roughly specifically, for locations X,XXX I the in number talking think number to serve. would A-CAM about

Unidentified Analyst

Thank you very much.

Robert Souza

any welcome, Brain, Any questions You’re bridge? sir. on – more the

Operator

to there further would are back I questions like you telephone. it via appears It no turn Mr. to

Souza.

Robert Souza

would hang Why on, want... a a ask question Brian. we someone sorry, right, because to the don’t Did who have do in question. I’m All like room. we

Richard Clark

their raised there. down Somebody hand

Unidentified Analyst

the I accept are what [indiscernible] did repercussions? not just you – a –

Robert Souza

about in XX%. refer follows: repercussions indicated get if to continue The I haircut. that be A-CAM we’ll us what accept as funding, FCC as a give as haircut are had don’t question past what is that per Vermont? The the to $X.XX to year, the legacy going about estimated has They but they’re we indicated million we would in

analyze, XX% XX.X% to one, funding. to very year of at we’re $X about XX% first to it period, A-CAM the offer. versus over XX.X%, he has past, XX-year as Last the all customer to that be are working decided it’s for this in been wait haircuts you’re the figure Mr. this anticipate of was – for it to And take year, from piecing and very almost looking if higher. that in million year. lower, Those mean part to say they this assume figure together it it $XXX,XXX less Are XX-year there hold is in and have been hasn’t offer don’t was put reduction they those revenue decided the in that out So we have after unfortunately reduction okay, to what reduction the that varied are In yes, over to legacy the the us would year were trying penetration, go a numbers if period those that A-CAM all is A-CAM to around. reduction We going on the minute, for any companies puzzle with does the us. make not II a an variables we we a of from would that you Richard Walker. cost to eligible build, how

Unidentified Analyst

to where example, in going Otelco this those year. going to the like significantly bit in are dollars if invest plan, Difficulty] Seems figure for like to debt payments? voluntary of out addition sounds isn’t And million. used paid made example, a this reading this shifting million [Technical – making you business. we are the the Otelco reducing payments. dollars their now focus debt If plan, year $X $X.X required down for voluntary now, Last too I’m million for is has those estimate this It its in to I’m the payments million last the CapEx previous if low. voluntarily continue leverage. we’re is to $X year year, going trying CapEx, $X.X right,

Stephen McCall

Yes.

you And we’re to able this, network this, provide because doing customers. out, forever. will the as to right our building focus to out do pointed upgrade is keep speeds our declining think network and higher be the sort I revenue now of don’t if we

definitely are forward the the payments accelerate looking principal going voluntary for So happen any to debt need to we I wouldn’t near future. CapEx. we whether at on expect

to We’re network speeds. be going and into to cash higher And... upgrade the provide flow be able free CapEx our to putting

Unidentified Analyst

low? So the is $X million number too

Stephen McCall

to period of up. a it go yes, needs I over mean, time, think I

Unidentified Analyst

because only of Okay, there far there’s million. therefore, a $X as like canyon to CapEx big last it $X year increasing payments. as $X seems million from voluntary – there’s I million mean, And

Curtis Garner

decline EBITDA. a also There’s in

Stephen McCall

in EBITDA. decline a There’s

Curtis Garner

some. So down your that takes cash

Stephen McCall

Right.

Richard Clark

million the in of also one-time was balance $X part reduction sheet, the on And which is cash a a prepayment opportunity.

Curtis Garner

Correct.

Robert Souza

If of much decided keep to had remember, we that you throughout at level through so year, last or year at cash much higher it. contributed a balance the a beginning that the year we the to lower

Richard Clark

million. $X the of about $X Probably million

So the $X million operations. came for

Robert Souza

to going the continue come don’t And the stuff considers say, in that CapEx, okay, and we’re to we’re reasonable I look and analyzing is best to do your one. Steve’s answer, the we CapEx, a that’s speak knee-deep question but Board spend on the should spend that now. return. to to know to we’ve right what something decisions can that any that, It’s where get discuss. how at on Richard’s we we

Stephen McCall

we network slow we and faster the spend the quicker the decline. the because CapEx the upgrade can revenue can Right,

we to rate. can And of period pretty keep down a we so revenues spread time want it if that, going on, it will long but a high really depends do out over at

can with can accelerate revenue change decline. the we believe if we so also a we And the curve CapEx

Robert Souza

Any more in room? you. questions sir. the Yes, Thank

Unidentified Analyst

their you’ve you’ve more call reducing got than across – carried the industry took out have been debt presentation, in could leverage and the some the little and they ratio a away handle. in of your on mentioned acquisitions in Earlier competitors

to However, things five is into opportunities play of that there I capital five acquire. look probably consolidating one areas. is planning of be will think the And the that the years? still industry years what acquired come and are your different stay consistent. – value a to but XX I value running of in environment be or Is these like or the equipment timeline different, think will be the that for service opportunities kind this investments fiber the of in ever In will will And you company will capability investment? be

Robert Souza

Let the me summarize question.

top asking answer to mile to he’s you what have to you the customers. service company going comment on future? I’ll the superior reasonable You’re fiber asking day-to-day the we are the trying customer, that’s would And even of us. that’s to Richard that closer than to I’m the deliver bring that allow I today that yes. that do. with as brings more think what every a well, capital on you’re to we’re place But basis. be, of investments And believe to making value in my product that we’re you because a

dollar believe return immediate foundation biggest of it serve time spend. I at the the investing the consumer, to if we say fiber-to-the-node to So fiber even spend in good the on he in and to a the wants that look dollar here, is think to customers off because gives to it’s get fiber. same I’ve your But then am that future long-term closer to build and investment. with fiber, We I going when get the closer you the a basically in

you something. Richard, add So can maybe

Richard Clark

value, There to in on linear But question, generate does. lot part them long-term So your one that directly their revenue fiber linked have much linear, not to it – of are this of maybe and revenue and valuation driven own – but how industry from also has answer that other a you by don’t is it’s revenue fiber. players and profitability. that fiber can much

some stabilizing grow. England. same in the companies is in of residential has beneficial right And means. greatest we’re industry a So Will about time aging what that But the for revenue again, be ahead of and bunch the building opportunity future? It to to a people New couple creating that’s is the curve. initially where highest I sort it now revenue going did in But it’s at regards, in because of play opportunity. infancy. least an Yes. still are its the it at we’re to is that agree consolidating, be somebody years, giving fiber. why you. when the about we markets, consolidated The In with dense value fiber talk of I by

Robert Souza

conference the – any Brian, I’m are there more on sorry, bridge questions. calls

Operator

sir. No,

Robert Souza

those questions right, Okay. like looks from we Brian, done room? the additional are within it Any here. All

York. to again, I’m close doing guess, I supposed you conference gathered talk you. the will we the you the that well. we’ll reporting many call, call, all We second not see position good on have in – to August the to here face-to-face conference to always on you. out have we prove of of like New keep to then our be you’d to you, think really company. opportunity timeframe participation And an so bridge, to It’s those as appreciate speaking If of And results. we I quarter to as can forward the look our much as We until when appreciate your and in

So thanks today. being us with for much so

Operator

call. today’s you Thank for concludes participation. This your

may disconnect. You now

Otelco (OTEL) 11 May 192019 Q1 Earnings call transcript