Grizzly Merger Sub 1 (GLIBP) 28 Feb 192018 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the GCI Liberty 2018 Q4 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded, today February 28. I would now like to turn the conference over to Courtnee Chun, Senior Vice President of Investor Relations. Please go ahead.

Thank you.

XXXX, like statements everyone the the to within Litigation Forms Act XX-Q we'd includes this Private and a begin, results XX-K in Reform forward-looking or our and SEC. certain the of those number we of to materially with uncertainties that remind call Securities could risks Before differ events including due mentioned actual filed meaning recent of most any herein contained and statement the forward-looking to change and GCI speak revisions to Liberty or call, as is of change regard These any expectations any with disseminate which thereto undertaking forward-looking or statement in or Liberty in such GCI of Broadband Liberty or conditions date or disclaims based. statements updates expressly to reflect any Liberty events, Broadband's any this only on circumstances obligation any OIBDA and On will adjusted today's call, we OIBDA certain non-GAAP including margin. measures, financial adjusted discuss and metrics in Information preliminary the regarding found which GAAP release Schedules comparable earnings be note is the required press along our issued reconciliations, and can website. on in today, including X X, available definitions with

like I'd Liberty's CEO. President to Greg call turn and to Now over Maffei, the

Liberty welcome we afternoon. will of Liberty be available call Q&A, to if and joining answer us Carleton; are you Broadband, GCI's about this there Mark CFO, Courtnee, you, myself, we'll Thank Also Pounds. Today, the during to the on any. GCI speaking all besides have CFO, questions Pete to

advantage and because discount price Liberty, discount, stock. is and that then Charter We low X That So million $XXX through and of considerably has over higher. average in January to Charter repurchased the starting with is today low continued look price is at take XX, double $XXX discount look Charter. level we share look $XXX that you repurchases. Liberty up at and Liberty, and the Broadband Broadband of The at GCI Liberty November has itself corporate of effectively double GCI to the at double through Charter the we've worth repurchased To-date price. GCI to the aim Liberty is turn around look discount through a obviously we

about and the double take of discount. both, we're that advantage excited Charter in growth to trying So

to an a in a favorable XXXX. forward the business future year. look more will Turning Nonetheless, We completed difficult to challenging several a GCI, better and up was We set critical regulatory in initiatives. XXXX undoubtedly we a business operating GCI difficult environment environment us environment. believe and business for

$X shrink. to leverage an thesis and a most in Charter is over in have equity potential strong decline about industry. shortly. launch finished about Liberty lines saw more long-term flow all our decrease Pounds year from the as what our upgraded in expect to and Charter spent now XXXX a over it in Charter mobile can hear strong repurchased XXXX. residential that $X the Broadband, we're average at that cash the well residential, service. couple we we Over with XXXX. attractive free commercial ended Pete is Notably spectrum price last $XXX. a expect in the for the CapEx the years. billion after fact in footprint its significant internet CapEx We own and mobile digital and of Charter to gig our to XXX,XXX accelerate with of remains of the profiles with to You'll year and and excited XXXX, with story Charter's access performed We growth advertising. across of dramatically billion Online shares that dramatic is the

level. me the into the financials discuss to more GCI to So detail turn at over with Carleton Liberty that, let Mark

obligations million $XXX includes quarter interest today's million over close At At Greg. The which of at loan revolving Liberty in $X interest of loan million amount total of as includes GCI Lending $X.X value Liberty billion which of was debentures Liberty compared of consolidated at times credit Liberty end, improved cash interest principal December, billion, X.X $X.X the billion this a of securities public XXXX leases billion at you term refinanced December and GCI was the The facility and in aforementioned GCI's X.X Thank in margin a equity its including quarter and $XXX end senior $X.X Charter, cash In its $XXX GCI. margin includes times. maturity GCI and as resulted credit Liberty has leverage LLC Charter agreement GCI outstanding Tree. leverage A; defined against of in Broadband debt tower maximum billion exchangeable $X.X Broadband to captain had and at in billion Liberty of covenants. which allowable shares. GCI. GCI had leverage debt $X its extended loan.

today. gets later see our you filed As XX-K

notice materials is GCI You'll in over reporting. control that financial two its weaknesses internal remitting

last and the to relates and certainly the first to since the level of the on increase IT GCI controls IT and general management issue The processes payroll We focus access process. scrutiny around manual controls acquired and year. controls and we second along GCI with

not I We remediation will strengthening And issues over have note it results. of and the misstatements forward. to reported We result in that, Pete not external the and controlled these implemented turn on environment going Pounds. continue in problems both with were the did an material that our any to will breach financial correct focus activities to

Thank you Mark.

launch the billing and Health Care year our As challenge. Rural in for new reductions economy state service significant The Greg were revenues our of in was XXXX system, stalled challenging mentioned a GCI.

platforms our However, customer the simplified experience. business improving have is our billing

There GCI are currently Care. are look Health Alaska Additionally, with developments related are we on start signs signs on see continued to Oil capitalizing appeals of pending. economy life. and two these to in around. We XXXX. in update showing the with particular is forward tourism in an I'll Rural turning that

to for June appealed ended the letter received their XX, is XX, we from XXXX. that of XXXX October that decision first by whereby year in reduce the FCC November million. on notified $XX.X We the they The our X, us to decision response funding

on the any based impacted press the The same X% RHC data. for XXXX. two going rate to funding revenue of year at rate on fourth in matters declines all those pro January results to XXXX. XXXX in of of in I reduction. USAC point. of release last four also second all at year year don't XXXX, XXXX OIBDA X% was comparing relates to year. Operating XXXX the there were these appeals results growth approximately the the on Administrative but noted. XX, Adjusted detail reduction can XX, and as But Revenues background results, denied forma more be over appeal was This otherwise the have letter our RHC on I'm But found Service XX-K. this down of quarter the funding XXXX unless the to due time quarters materials up GCI's When were to and only discuss compared the primarily who in Company down here updates received business. last was quarters which RHC the consumer full or due the by for customer November and to an they customer Universal USAC on was by the

earthquake incurred. by at write-offs year. the for some capital just payments, home OIBDA customer and XX, power the severance quarterly consumer of including cell in of showed Consumer; charges the charges were to network good the November the a our one-time recession in our outages I positive adjusted basis, and expenses one-time On X% to a to outages a excellent the related down related noted. had earthquake minor driven and but On resiliency in sites. group continued Additionally, face midst note, was operate,

our were not subscriber we data grow able While significantly. to

by higher migrate subscribers were up time Wireless had revenue expenditures August. growth hybrid million rate primarily challenging warless offered new the partially billing to declines. revenues continue and network free were We billing the CapEx and year ARPUs. RHC in the with materials with system. see coax Business revenue during better fiber and a approximately from fiber at The improvements, reduction, These invested capital we year were video and $XXX plans wireless improvements for the our advertising. we declines political value offset excluding roaming month subscribers in expenditures. the flat conversion to for our revenue

spend the I'll We expect XXXX. expenditures call to over approximately to same on back in amount capital hand the Greg. now

Greg?

do Greg, you? have we

and you thank muted. sorry Pete. I Yes, you Thank Mark was

it that Investor your hope you GCI see to have of to up meeting audience continued would and would XX you the listening Liberty. do our in please. for we day. Annual I set in Operator, now like November open We for Thursday, York questions. on We many appreciate if interest there New

James [Operator ahead. Ratcliffe with Instructions] Please question We'll take go Evercore. our first

Two One Broadband. on, if I could. Liberty and on, GCI one

could little those. GCI the been Broadband were you working network going And regarding you front, understand I On that I want you would into that year-on-year release, speaks one-time like have in absent and just make up it the freeze with the sounds in XQ to expenses sure correctly. more get potentially Thanks. to a wireless a in wireless of Liberty capacity secondly forward in in Charter warless can EBITDA with business other provider both talk as Charter potentially as providers. about how Greg, see source in particularly,

to answers On guys questions business that an share. go while the thinks the which it [ph]. attractive first, look that drive about Broadband comparability help can first bundle that have will drive Charter the about think you help with and Broadband foremost, Liberty will pricing, be make will Sure. vehicle it to wireless I I with the way you sure is

have taker today. our is and fixed line Broadband somewhere front bundle strength believe network have if trying well be we be to contract side, consumers. any the given front of offering In on could a circumstances consumer that's us in we take more I there's with We but some that's reversed attractive network together the capabilities offering wireless the we Wi-Fi in MVNO if that In have a broadband offering. you don't very the helpful us of mobile and we as can like. in and have, relationship advantage not the a to of and Liberty make MVNO know provide mobile the combined of today very a road perhaps the really we attractive price for superior down space

No, that's great. Thanks.

of for Comparability GCI. QX

gotten just Looking is taking The little write-off the really at year-over-year, we the and there. noted I amounted biggest a but quarter. over more would that in and the would for difference projects to on capital the $X earthquake one at slightly items million have down of been so, a little that fourth we OIBDA you items. million, $X a up have three item were Severance look than those roughly

damage that assets expenses. financials really fourth the of write-off there. as were to a most oppose from you'll see of earthquake capital in operating the there to some the meaningful On the come operating quarter expenses Albeit

those I'm the year-on-year. up this hadn't if and for price it cut, been looking correctly, would been have at your for on XX% EBITDA close RHC

on RHC look RHC you rate $X pro about when million million, so of in higher a of reduction. came adjusted the really The fourth forma is basis XXXX the in quarter there, effect $XX.X OIBDA the that at before

call or So here, a X% absent been but XX.X included X% it would RHC before items. look We before three OIBDA. I would those so have at it on is up

you. Thank Great.

from our We'll Zack go next B. question ahead. Please Silver with Riley. take

companies number to one any merger get your First great of for GCI the leveraging efficiencies of relationship Liberty if one year sort up have GCI you and one, coming anniversary with you if can and Liberty on in cover redundancy cost opportunities the of thoughts any GCI two be between Ventures it to potential Charter up, having an number update the on public will then, two clean has Broadband. updated

ownership couple is the has optimize those add I much first I'll own comment further the that, a with XXX focus Charter not structure looking really you'd certainly is But Charter. I'd not GCI Pete both quite when old, sharing year It's can undertaking really I'm addressing the deal to at done we cost as But GCI is weeks at are its you its if own got efficiencies moment business address like. way reduction. cross The think not and instead on programs some given and. more it to and say, efficiencies. you're the as its and close

Right.

might we be anything. consider And imagined looking obviously conversations before we we those combination. wouldn't kind yet no had And think at course of and never about that year occurs, that would or eliminated of a

Got it.

Pete, cost add you on do to want the efficiencies? anything

No, Greg.

bit little been on internally cost that point. like tailwinds and of not on obviously looking is the We'd front. much Your the efficiencies regulatory focus we're internal at comments here. But so on right, a this economy the headwinds

This maybe just in know customer quick right then follow-up. on or of based that? not the RHC one getting and this their what size Can you Okay revenue is impact that issue on you interpret way now customer. funding to OIBDA

in can million look but filed it's Yes, our XX-K, it you when a roughly gets year. $XX

Got you very it. Thank much.

Ando SunTrust. go ahead. comes Please our Mike question Kerrane last with from

It's XXXX. in for you I took that I few a know had in question and level about you in years the would you deficits the said Mike at Kerrane from the Alaska and level Peter, down of I SunTrust. be the GCI. guys budget CapEx response same a ago, recall as CapEx economy purposely that there. XXXX to XXX

level CapEx, doing little looks forward. been know I above run like economy economy in the bit, approves the going that of XXX the see model go you is the we CapEx said past higher. to You it's as it's that that rate a

from talking I say CapEx we at don't on so we that should out the of guess, for unsustainable the an that I guess of would difference guess XX% level give long-term $XXX point forward-looking would industry. the so I were substantially clear that's revenues of from so deviate the is much if at of million and was came that on probably I its' guidance I this there we basis, fundamentally that, pretty revenues beyond the million that $XXX and rate would next there's long-term I that that would XX%, nothing GCI year. really or indicate note the think that point

that's Great, helpful. Thanks.

much you Well, thank very operator to audience. and listening the

today. have as very not your in we you all to if you call, the said on with and afternoon. look GCI Appreciate Liberty interest Thank that's much, think speaking continued before. I this next forward we

does for conclude conference. participation. Thank today's again Once you that your

You may your disconnect phone lines.