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Below is an ongoing record highlighting notes from select CHTR investor presentations and earnings calls (newest content shown first).

Fourth Quarter 2018 Earnings Call, 1/31/2019


The Divergent View One Line Summary: After three years of large-scale integration, CHTR announced that they are finished with customer facing integration activities and now expect improvement in customer relationship growth, EBITDA growth, and free cash flow growth in 2019.  CHTR reported strong 4Q 2018 numbers and guided to $7Bn of cable capex in 2019, which is a material step down from $8.9Bn in 2018.

  • Grew cable revenue by 4.7% in 2018 and cable adjusted EBITDA growth of 6.5%
  • Goal is to accelerate customer relationship and cash flow growth going forward
  • Virtually all customer facing integration initiatives are now behind us
  • Migrated 70% of acquired customers to Spectrum packaging and pricing, All-digital upgrade is finished, finished upgrade to DOCSIS 3.1
  • By end of 2019, expect to complete very last piece of integration, but most of 2019 integration activity is non-customer facing
  • Now positioned to drive long-term sustainable customer relationship growth, EBITDA growth, lower capital intensity, and thus free cash flow growth
  • Spectrum Mobile is ramping up
    • 110k mobile lines in 4Q and growing percentage of cable sales taking mobile service
  • In 2019, we expect to reduce service transactions – reduction in CPE swaps, service calls, truck rolls
  • In 2019, cable capital intensity will fall significantly and will also fall long-term driven by lower CPE spend per home, reliability of plant improves, and network becomes increasingly cloud-based all on higher revenue
  • 4Q residential internet net adds of 289k vs. 263k in year ago period
  • Expect mid-single digit increase in programming costs in 2019
  • Annualizing mobile EBITDA loss in 4Q is a good starting point for 2019 which assumes a material acceleration in mobile line growth
    • Continue to expect mobile to a profitable standalone business
  • In 2018, spent $8.9Bn in cable capex. In 2019, our internal plan calls for $7Bn of total cable capex
  • Don’t expect to be a material cash tax payer until 2021 at the earliest
  • Repurchased 4.3mm CHTR shares ($314 average buyback price)
    • Have repurchased about 19% of CHTR’s equity since 2016
  • Q&A with Sell-side Analysts
  • Capex beyond 2019?
    • Beyond 2019, we think capital intensity will come down as a function of revenue growth and opportunities to be more efficient with capital spending
    • Opex per customer relationship will also come down
  • Video business
    • We embrace where the market place is going and we want to have people use video services on our network. We think there are ways for us to be in the connected video business in a way that provides incremental margins for us and to grow our connectivity business
    • Open to being a supermarket for video services
  • Capex stepdown
    • Actual investment in the network is going up even as overall capital intensity comes down
  • 5G ability to compete with cable broadband?
    • We went to 1 Gig in 2018, which we rolled out across our footprint, which is faster than all the public announcements on 5G
    • Broadband data consumption will continue to growth at a very fast rate. Our network is easy and fast to upgrade to handle this type of data growth
    • It is possible to use 5G for fixed broadband, but it is not efficient from a capital perspective
  • Market share trends
    • Our market share is generally (with very few exceptions) shifting towards us
  • Churn in TWC markets vs. CHTR
    • Across all 3 footprints, churn is coming down (including legacy CHTR)
    • There is at least 10% differential in churn rate of CHTR vs. other entities

 

UBS Conference, 12/3/2018


Tom Rutledge, Chief Executive Officer

  • Priorities for 2019?
    • We went through a long, arduous integration to build a single platform everywhere we operate. We are mostly wrapping it up this quarter.  We can see the fruits of those project translating into 2019.  We are expecting a lot less of a capital-intensive business
    • Vast majority of new transaction on a new interface. We have in-sourced labor.  Cost to serve will continue to go down
    • There are headwinds with video cost, but there are also tailwinds as it is easier to provide high quality service at a lower cost
  • How do you foresee sub trends going forward?
    • Think the sub trends will be better going forward
    • Fundamental issue is that we have a better product that is priced properly
    • Opportunity to run the business efficiently is better
  • Competitive dynamics? AT&T?
    • Not a lot of changes. We took our data speeds up to a minimum of 100 mb/s in 60% of footprint so relative competitive posture has improved
    • Satellite has been less competitive
    • We also launched mobility into product mix, so we have a better competitive package and a better value package
  • Importance of video?
    • There are a lot of issues in the ecosystem that are causing disruption such as bundled packaging. Trend lines in video will continue but don’t see a dramatic change
    • Opportunity for us to have video product to be integrated with data, voice, mobile to package it economically
    • There has been a decade of pressure on video margins but don’t see margins going to zero
  • Streaming providers?
    • We have an opportunity to create a stickier relationship than the streaming providers out there now. Streaming providers have a lot of marketing cost
  • New user interface? Guide and integration with Netflix?
    • Rather than have user interface integrated with hardware, we can project that UI without us being hardware centric. Cloud-based UI is a better customer experience giving us ability to change the UI and guide real-time
    • We can sell video tiers out of the UI very efficiently (push a button on the remote to purchase additional video tiers for example)
    • New guide is rolling out incrementally. Plan is to roll out the guide in DOCSIS and 80% of boxes are DOCSIS.  We will be able to ‘backwardly’ put the UI onto existing boxes
  • Broadband dynamics?
    • We took up speeds so we could have a better product and to differentiate vs. competition. It is working
    • Not very capital intensive to upgrade network
    • We have 51mm passings we can go 1 gig in and we can go to 10 gig relatively inexpensively, and we think we will
  • Focus on 5G – is that a risk to the cable broadband business?
    • Any overbuild is a risk in the sense that if someone spends enough money, they can replicate the network we have
    • I don’t think replicating a dense fiber network with a small cell 5G network is much different than FiOS from a cost perspective
  • Recent price increase and reception from customers?
    • We have been relatively moderate in our pricing. Strategy has been to drive market share.  We grew our data business 5.3% in last twelve months just based on customer relationships
    • If we continue to grow relationships in this manner with some moderate price growth, we can achieve nice revenue growth and even better EBITDA growth
  • Pricing and packaging
    • On residential side, 2/3 of base on new pricing and packaging. The repricing of the business masks some of the positive effect of growth in the business
    • Comfortable and happy with way that the SMB and enterprise product is growing. It is a bit behind the curve relative to residential on translating the base to new pricing and packaging
  • Margins
    • Believe cost to serve will continue to decline over several years
    • Don’t think the video business will fall apart
  • Wireless launch
    • When you buy mobile from CHTR, a customer saves $400/per year and CHTR still generates additional EBITDA
  • M&A
    • Properly managed, properly priced, and properly capitalized – the cable business is a great business, which is why we’ve been buying back our stock
  • Leverage
    • Comfortable with less than 4.5x leverage with 4.25x being a target

Third Quarter 2018 Earnings Call, 10/26/2018


  • At end of 3Q, 67% of acquired residential customers are on new Spectrum packaging and pricing, up from 62% at end of last quarter, which will ultimately lead to lower churn
  • Video losses lower than 3Q17
  • Rolled out 1 Gig speed offering to 7mm homes passed using DOCSIS 3 technology
  • Will offer Gig service to almost all passings by year-end
  • Faster speeds are having intended impact of driving internet subscriber growth
  • Launched mobile in early September and expect mobile to be profitable on a standalone basis when it reaches scale
  • Spectrum Mobile is being marketed by TV, direct mail, stores, etc. Offer mobile at prices that will allow customers to save $100s of dollars per year – $45/month subscription cost
  • 21k mobile customers at quarter end but seeing steady growth
  • In next few months, will allow customers to transfer existing handsets
  • Cable – all digital initiative is on track for 100% completion by year-end
  • Integration is coming to a close and will start to see tangible benefits through lower churn, higher sales, operating efficiencies, and lower capex
  • New FASB revenue recognition rules resulted in $15mm lower EBITDA relative to 3Q17
  • In 2019, expect less impact from re-pricing of SMB business of acquired markets
  • Expect 2019 cable capex to be down meaningfully in dollar terms and in terms of capex intensity
  • 4Q will see the initial working capital investment for mobile device sales
  • Q&A with Sell-side Analysts
  • SMB will continue to improve into 2019, but still some repricing going on into next year. Enterprise going through a similar process, but behind SMB
  • In residential, think we will continue to grow customer relationships into 2019 combined with some rate increases
  • In 2019, will not have political advertising
  • For EBITDA, there is a lot of benefit for taking transactions out of the system. Number of calls and services calls is still higher at legacy TWC than CHTR and that is an opportunity to reduce
  • Today, we have a limited MVNO with Verizon. It doesn’t do everything we want it to do, but it is more than what we had before and can still offer it to customers so that they save money
  • When we acquired TWC, the TWC markets still had analog TV, which takes up capacity for high speed Internet and is a worse picture quality. In order to do this, we had to be very disruptive to the customer base by going in and putting in set-top boxes at these customer premises.  We’ve had to go to millions of customers homes which has impacted 2017 and 2018
  • Satellite TV – think you’ll see continued erosion of this business particularly since video content can be accessed easily over the top and through password sharing, so the high cost of $100 satellite subscriptions is becoming less compelling
  • Believe mobile will be breakeven at around 2mm subscribers without considering the benefits to mobile

Deutsche Bank Leveraged Finance Conference, 10/2/2018


Christopher Winfrey, Chief Financial Officer

  • Time Warner Cable integration will largely be complete at end of this year
  • Goal was to rip off the band aids and operate as a single company, which is where we’ll be more or less at the beginning of 2019
  • Will be at 1 Gig/second availability at all 50mm passings by YE
  • Results have not been linear
  • Time Warner Cable strategy historically had low priced offers which rolled into a higher price offer, resulting in a customer base that was conditioned to call in every six months to negotiate down a high rate
  • Integration contemplated rolling through a simpler pricing and packaging structure to TWC markets
  • Minimum speed offering is 100mb/s in entire footprint
  • In half of our market, we are competing against traditional DSL
  • Q3 2017 had $50mm of PPV revenue from Mayweather fight, which won’t repeat in 3Q of this year, so a bit of a tougher comp
  • 80% of customer traffic over mobile networks are already traveling over our networks, so mobile strategy is about addressing the other 20%. Expect mobile to be profitable / NPV positive without considering the benefits to the cable side of the business
  • Wireless spectrum – we find mid-band spectrum to be attractive. This FCC is doing a great job to make spectrum available and we believe we will make use of both licensed and unlicensed spectrum.  This will be a lease vs. build analysis
  • We like video. Less than 5% of sales are standalone video…we don’t sell video; we sell connectivity and video is an application on that.  Don’t think there is any margin in selling video off-net (ie, Virtual MVPD)
  • SMB served by a coax product, but it looks like residential – so we moved this over to our residential operations so it can be provisioned with a standard product
  • Scale for scale’s sake isn’t a great reason to do M&A. We acquired TWC not just for scale but to bring CHTR’s business model to TWC and realize operating synergies.  We like cable but most of what’s out there is family-owned or controlled businesses, so that timeline is not in our hands
  • Target leverage range is 4-4.5x and we are at the high end of that today. Expect for the short-term to remain at high end of that range
  • Capex for cable is going to go down meaningfully into 2019, but we are using some of those savings to develop next leg of growth which is to get into mobile space
  • Cash flow priorities – 1) ROI positive opportunities within the business, 2) M&A if more attractive than buybacks, 3) buybacks, and 4) dividends
  • Mobile – the cost in the P&L is setting up the platform, retail stores, handset devices. There is a also a significant working capital cycle since we buy the devices and the customers pay us back over time
  • Believe mobile customers will save money by moving to CHTR wireless – $45 unlimited line and $15 per gig for lower consumption customers