Altice USA (ATUS) has introduced its monetary outcomes for the fourth quarter and the complete 12 months of 2023, with a deal with strategic development and operational effectivity. Regardless of a 2.9% lower in whole income and a slight decline in adjusted EBITDA by simply over 1% in This autumn, the corporate achieved its full-year targets, together with stabilizing adjusted EBITDA margins, decreasing capital depth, and producing optimistic free money move. The corporate additionally reported development in its cell and fiber segments and is planning important community investments to boost buyer expertise and drive future development.

Key Takeaways

• Altice USA achieved its full-year targets, together with stabilizing adjusted EBITDA margins and producing optimistic free money move.
• The corporate reported a 2.9% decline in whole income in This autumn 2023, primarily as a result of a lower within the residential subscriber base.
• Adjusted EBITDA declined simply over 1% in This autumn 2023, whereas working bills have been stabilized.
• Altice USA added 46,000 fiber clients and 34,000 cell traces in This autumn.
• The corporate plans to put money into community high quality enhancements and product developments inside a capital expenditure finances of $1.6 billion to $1.7 billion.
• Altice USA is taking part within the Federal Inexpensive Connectivity Program with 125,000 clients receiving subsidies.

Firm Outlook

• Altice USA is targeted on evolving its connectivity portfolio and enhancing its go-to-market technique.
• The corporate goals to return to sustainable long-term development by sustaining monetary self-discipline.
• For 2024, Altice USA plans to ship 3 million fiber properties and expects EBITDA to be barely down year-over-year however anticipates sustaining optimistic free money move.

Bearish Highlights

• The corporate skilled a lack of 27,000 broadband subscribers in This autumn as a result of elevated competitors and a difficult macroeconomic atmosphere.
• Whole income declined by 2.9% in This autumn 2023, with the residential and information/promoting segments seeing decreases.
• Adjusted EBITDA noticed a slight decline of simply over 1% in This autumn 2023.

Bullish Highlights

• Altice USA noticed accelerated development in its cell and fiber segments.
• The corporate reported improved free money move traits and stabilized working bills.
• Altice USA is optimistic about its technique to return to optimistic subscriber traits.

Misses

• The corporate didn’t present particular steerage on ABS debt or disclose IRRs for brand new builds versus fiber upgrades.

Q&A Highlights

• The corporate is optimistic about addressing potential points on their again guide or entrance guide by the primary half of the 12 months.
• Altice USA expressed satisfaction with its cell MVNO partnership and the numerous development in gross sales actions and line attachments.
• The corporate stays disciplined in capital spending to drive free money move and plans to re-evaluate capital depth yearly.

Altice USA’s This autumn and full-year 2023 earnings name highlighted each challenges and strategic initiatives geared toward long-term development. Regardless of a dip in income and subscriber numbers, the corporate’s deal with monetary self-discipline, buyer expertise, and community funding signifies a path ahead in a aggressive market. With plans for community enlargement and product improvement, Altice USA is positioning itself to leverage alternatives within the evolving telecommunications panorama.

InvestingPro Insights

Altice USA (ATUS) has navigated a difficult financial panorama as mirrored in its latest monetary outcomes. To offer extra context to the corporate’s efficiency and future outlook, listed here are some insights primarily based on real-time information and InvestingPro Suggestions:

InvestingPro Knowledge:

• The corporate’s Market Cap stands at 982.22 million USD, reflecting the market’s present valuation of Altice USA.

• With a destructive P/E Ratio of -43.47, traders are anticipating future profitability regardless of the corporate not at the moment incomes income.

• The Gross Revenue Margin for the final twelve months as of Q3 2023 is 67.11%, which is a powerful indicator of the corporate’s means to handle its value of products bought and preserve profitability on its core operations.

InvestingPro Suggestions:

• Altice USA operates with a big debt burden, which is a vital issue for traders to think about when evaluating the corporate’s monetary well being.

• The corporate is rapidly burning by money, indicating potential challenges in liquidity and capital administration.

InvestingPro provides extra ideas for Altice USA, which could be discovered at https://www.investing.com/professional/ATUS. For these trying to dive deeper into the corporate’s financials and forecasts, there are 9 extra InvestingPro Suggestions accessible. Make the most of coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Professional and Professional+ subscription, providing a complete suite of instruments and insights for savvy traders.

These InvestingPro insights present a extra nuanced understanding of Altice USA’s monetary place and strategic challenges, complementing the article’s overview of the corporate’s operational efficiency and future initiatives.

Full transcript – Altice USA Inc (ATUS) This autumn 2023:

Operator: Howdy, and welcome to the Altice USA This autumn and Full Yr 2023 Earnings Outcomes Convention Name and Webcast. [Operator Instructions] A questions-and-answer session will observe the formal presentation. [Operator Instructions] As a reminder, this convention is being recorded. It is now my pleasure to show the decision over to Sarah Freedman, Investor Relations. Please go forward, Sarah.

Sarah Freedman: Howdy, and welcome to the Altice USA This autumn and Full Yr 2023 Earnings Name. We’re joined immediately by Altice USA’s Chairman and CEO, Dennis Mathew; and CFO, Marc Sirota, who collectively will take you thru the presentation after which be accessible for questions. As immediately’s presentation might include forward-looking statements, please fastidiously evaluate the part titled Ahead-Trying Statements on Slide 2. Dennis, please go forward.

Dennis Mathew: Thanks, Sarah. I am happy to be right here with all of you to evaluate our This autumn and full 12 months efficiency. Earlier than we begin, I need to specific my gratitude to our devoted groups and their households. In 2023, Optimum started a transformative journey marked by the introduction of a brand new mission and strategic priorities to ship improved buyer and worker experiences. It is solely due to their dedication and help that we have been capable of ship on the commitments we set forth. We did what we mentioned we have been going to do and it took everybody to do it. I remind you that at first of the 12 months, we established our new Optimum mission to be the connectivity supplier of selection in each group that we serve. And we launched the 4 strategic priorities that may place us to return to sustainable buyer, income and money move development. They’re to thrill with the very best buyer expertise, develop with the very best buyer relationships, join with the very best networks and encourage with the very best folks. All through this 12 months, we took steps to put the muse in opposition to these pillars. And whereas we’re within the very early innings of our turnaround, I am extremely proud that we achieved our full-year targets and commenced remodeling each space of the enterprise which has set the stage for 2024. Let’s evaluate a few of the achievements starting on Slide 3. Precedence primary was to remodel the tradition and we did simply that. We introduced in superb expertise to enhance our groups and to steer by operational, monetary and cultural transformation. The profitable integration of a brand new CFO and a brand new telecoms govt management group, together with greater than 100 new leaders throughout our group, has outfitted Optimum with a best-in-class group with many years of world and U.S. broadband, cell and video expertise. We launched a regional working and management mannequin with a localized go-to-market method paving the best way for a hyper native presence within the communities we serve. And we drove worker engagement by listening and appearing, so all of our staff are empowered to symbolize Optimum at its finest. Second, we acted with monetary self-discipline. We modified how our finance group works with our operational groups, embedding a tradition to assist drive the enterprise and make smarter choices. And consequently, we have now seen stabilization in our adjusted EBITDA margins with full-year 2023 EBITDA margin of 39.1%. We drove capital depth down all year long from the latest peak in Q1 of over 25% all the way down to beneath 13% in This autumn of 2023. We dedicated to being optimistic free money move within the full-year and delivered $122 million of free money move by improved topline, EBITDA and CapEx traits within the again half of this 12 months. We have been proactive in our debt maturity administration, clearing out the 2024, 2025 and 2026 maturities giving us one approach to deal with working the enterprise with no maturities till 2027. And we managed our operations and monetary profile with a deal with our core development companies. As evidenced by the latest sale of Cheddar Information, we’ll proceed to strategically consider our operations to maximise our deal with the core enterprise, positioning ourselves for sustained development and success. Subsequent, we launched an improved base administration technique that can allow us to profitably evolve the worth worth equation for our base. Particularly, you noticed just a few weeks in the past, we introduced modifications to our fiber and HFC rack charges for on a regular basis pricing and commenced rightsizing speeds for patrons as a part of our efforts to simplify and normalized pricing and packaging. We additionally launched synthetic intelligence and machine studying capabilities, leveraging buyer lifetime worth fashions to advance our frontline’s means to extra successfully handle our base. Trying forward, we’ll proceed to take a disciplined method to profitability whereas making certain we provide the very best worth for every buyer so we are able to cut back churn and develop ARPU over the long-term. On the client entrance, I am happy that we meaningfully accelerated cell and fiber development. We set a brand new cell technique this 12 months that enabled cell line internet additions of 34,000 traces within the fourth quarter, an acceleration of greater than eight occasions in our tempo of cell development in comparison with This autumn of the prior 12 months. We additionally sustained enhancements in fiber penetration now reaching over 12% on the finish of 2023. The expansion in each cell and fiber are supported by our gross sales optimization efforts, pushed by a brand new successful gross sales tradition, stronger channel efficiency, a transparent retail technique, improved compensation fashions, disciplined efficiency administration and enticing clear provides like Optimum Full. And at last, we made important enhancements within the buyer expertise, advancing CX as our greatest product at Optimum. We prioritize delivering prime tier community high quality and offering distinctive experiences for our clients, exactly after they depend upon us essentially the most, be it for college, work, healthcare or household moments. This 12 months, we additionally launched 8-gig symmetrical speeds on our fiber community to greater than 2.7 million clients, making us the nation’s largest 8-gig supplier. This continues to be a powerful aggressive benefit all over the place we overlap with a fiber competitor within the Northeast. We efficiently carried out new self-service instruments such because the My Optimum app and we superior different self-service choices like chat and a extra buyer pleasant portal. We additionally positioned better emphasis on self-installed and we have seen the variety of self-installations almost double within the full-year 2023 in comparison with the prior 12 months. All the things we have now improved by way of high quality merchandise, high quality community, high quality service and high quality group is translating into higher NPS. Moreover, it is leading to considerably fewer service calls and truck rolls, that are main indicators of improved efficiency, giving us confidence that our technique is working and we’ll return to broadband buyer development over time. In abstract, 2023 was about folks, technique and course of. I am happy that we have now vastly extra capabilities, extra operational rigor, extra instruments and extra execution self-discipline to have the ability to drive a more practical go-to-market technique, ship prime quality experiences, improve our base administration and stabilize our enterprise. With all of this in place, we have now sturdy levers to drag in 2024 as we pave the best way to return to long-term sustainable development. Let’s flip to Slide 4 to evaluate them. First, we’ll proceed to evolve our connectivity portfolio and worth proposition to satisfy altering buyer calls for, whereas driving improved ARPU traits throughout our residential and enterprise division. Broadband and cell stay our anchor merchandise supported by a sexy bundle provide with Optimum Full. As we transfer by 2024, we’ll higher leverage property like fiber as we promote in gig and multi-gig speeds mixed with cell to present clients the very best connectivity expertise for the very best worth. On the video facet, in 2023, we launched Optimum Stream as our principal video product, which blends a streaming expertise with a linear video viewing expertise by the Optimum TV app. We’ll proceed to fastidiously consider how we go to market with our video product to maximise each buyer expertise and profitability and have plans to launch new video package deal choices later this 12 months giving our clients better flexibility and selection. With respect to our enterprise companies section, I beforehand talked about that we have now important potential on the horizon. In This autumn, we noticed B2B income develop 1% year-over-year. We launched Optimum Cell for SMB final month and we’ll proceed to broaden the B2B portfolio over the 12 months, which can give us extra runway to help ARPU enlargement in our B2B section. We’re assured we’ll proceed to see enchancment with extra merchandise and a brand new devoted group led by our President of Enterprise Companies, Mike Parker, who joined the group in December. As we proceed to evolve our operational method, we’re working in parallel to infuse innovation throughout the enterprise. For instance, we’re exploring a number of digital engagement and generative AI instruments to higher interact and work together with our clients. Our goal is to emerge as business leaders devoted to seamlessly embedding innovation into each side of our enterprise. This dedication extends throughout buyer expertise, product improvement, operations and past. Subsequent, as I shared earlier, in 2023, we took preliminary steps to introduce a extra considerate method to pricing and packaging. In 2024, we’ll drive this new technique even additional with a base administration program centered on retaining worthwhile clients, enhancing ARPU traits, strengthening our aggressive place and decreasing churn. Marc, will evaluate this in additional element shortly. Third, we’re centered on fiber penetration development and strategic community enlargement in 2024. We proceed to see optimistic traits in churn discount, ARPU and elevated satisfaction scores amongst our fiber clients. Given the traits and efficiency, we’ll proceed to extend penetration of our fiber community and strengthen the expertise of fiber migrations for our clients. Our present footprint immediately covers a few of the quickest rising cities within the nation. That mixed with our extra proactive method and the way we go to market in new communities units us up nicely to drive development by increasing our footprint by new construct and edge out. This brings us to our fourth lever, which is our segmented hyper native go-to-market method and a brand new model technique. In help of those plans, in This autumn, we employed an skilled Chief Advertising and marketing Officer to raise our go-to-market and model technique. We additionally introduced on a brand new main promoting company of document and plan to reintroduce our model and a brand new platform, new values and developed artistic positioning to boost our model picture available in the market. This new Optimum model and advertising and marketing method mixed with our newly shaped regional Optimum market construction will make sure that we’re resonating with clients and that we’re competing for each bounce ball to drive development. Subsequent, we’ll proceed to simplify buyer interactions and experiences. We made nice progress in 2023 on this entrance and proceed to improve instruments, processes and know-how to simplify how our clients work together with us and the way we talk with them. We stay centered on enhancing our popularity as an organization that is simple to do enterprise with and one that can resolve points proper the primary time each time. And this buyer centric method will contribute to us structurally decreasing working bills. CX stays foundational to all of the work we do throughout the corporate and is embedded in our firm tradition. And final, as we proceed to deal with fiber upgrades, DOCSIS upgrades and whole passings enlargement, we’re dedicated to doing so with monetary self-discipline, aiming to maintain capital depth steady year-over-year in-line with 2023 ranges. Now earlier than I hand it over to Marc, I need to reiterate that the technique we put in place one 12 months in the past is already driving operational enhancements and positioning us for development. We’ll proceed to function with monetary self-discipline, with deliberate capital allocation and steadiness sheet administration. We’re centered on execution and effectivity as we proceed to take the actions crucial to enhance our efficiency and strengthen the enterprise. This features a heightened deal with our core operations and a strategic effort to maximise our whole asset portfolio. I’m extraordinarily pleased with the targets we completed in 2023. And constructing off this basis, I’m absolutely assured that we’re on the suitable path to return to sustainable long-term buyer, income and EBITDA development over time. And in 2024, we’ll take one other step in the suitable route. With that, I will flip it over to Marc to evaluate our This autumn and full-year efficiency intimately.

Marc Sirota: Thanks, Dennis. Turning to Slide 6, I might like to start with a evaluate of our monetary efficiency. In This autumn 2023, we reported whole income down 2.9% or down 2%, excluding the Information and Promoting section. This was pushed by a 2.8% year-over-year decline in our residential enterprise, a 1% development in our Enterprise Companies section and a 15.7% decline in our Information and Promoting section. It is price noting, nevertheless, that excluding political advert income, Information and Promoting income grew 8.9% within the fourth quarter. Whole income traits have been primarily pushed by decreases in our residential subscriber base during the last 12 months. However notably, within the second half of 2023, we confirmed important enchancment within the charge of income decline throughout segments. This was pushed by efficiently implementing a disciplined method to charge and quantity, preserving extra ARPU in addition to tactfully using AI instruments, higher base administration methods and maximizing profitability in our retention facilities. We additionally noticed important enchancment in our year-over-year declines in EBITDA with This autumn ‘23 adjusted EBITDA simply down over 1% within the fourth quarter. Compared, we reported an adjusted EBITDA decline of 15.7% in This autumn of 2022 versus 2021, demonstrating a big moderation and the speed of year-over-year adjusted EBITDA decline. In 2023, we stabilized our working bills in comparison with the prior 12 months, which peaked in This autumn of 2022 at $680 million excluding share-based compensation. Compared, our working bills for This autumn of 2023 have been $653 million a 4% decline in OpEx year-over-year. Improved adjusted EBITDA traits yielded higher free money move traits within the again half of 2023. Within the full-year, we generated $122 million of free money move and $322 million within the second half of the 12 months, offsetting the losses from the primary half. Along with improved adjusted EBITDA traits, free money move is supported by a step down in money CapEx. Within the fourth quarter money CapEx declined to $295 million marking a constant quarterly decline in our capital spend all year long. Turning to Slide 7, we noticed steady adjusted EBITDA margins, a step down in capital depth and a corresponding step up in our working free money move margins. Adjusted EBITDA margins in This autumn 2023 have been 39.2% and 39.1% for the complete 12 months. Our purpose in 2024 is to maintain margins comparatively steady in comparison with 2023. Turning to capital depth, you may see that it peaked this 12 months in Q1 at over 25%, and I am happy to report that we almost halved this to 12.8% within the fourth quarter. It is a results of fewer fiber passings constructed and a extra disciplined method to capital spending as a result of considerate governance practices round capital undertaking prioritization. Full-year capital depth was 18.5%, which we consider is the suitable degree to effectively run the enterprise immediately whereas additionally persevering with to speculate and upgrading the community to help future development. Our outlook for the full-year 2024 capital is to average versus 2023 within the vary of $1.6 billion to $1.7 billion. We’re strategically investing capital in the very best development areas for the enterprise drive each near-term enhancements and long-term sustainable development. We’re taking a extra disciplined method to our fiber building by concentrating on markets that yield the very best ROIs recognizing we have now a low transfer atmosphere which limits how rapidly we are able to develop on this entrance. To that finish, we’ll broaden fiber passings to about 3 million properties by year-end and focus extra on driving migrations of shoppers to this unbelievable community. Moreover, we’ll add a complete of 175,000 new passings in comparison with 165 new passings in 2023. And we’ll proceed to put money into community high quality enhancements and best-in-class product developments throughout the enterprise inside our CapEx envelope. Final, on our working free money move margins or EBITDA much less CapEx margins, This autumn ‘23 margins have been 26.4% or 20.6% throughout the full 12 months. Once more, we noticed important step up over the course of ‘23 pushed by steady adjusted EBITDA margins and a notable step down in CapEx. Turning to Slide 8, I might wish to evaluate our latest ARPU traits and base administration technique that Dennis previewed. This autumn 2023 ARPU grew 0.1% year-over-year or $0.15 greater than This autumn ARPU of the prior 12 months. Even with the headwinds of continued losses of video subscribers, we have been capable of offset ARPU declines by driving cell penetration, decreasing churn and implementing AI into our care and retention facilities to maximise profitability with superior buyer lifetime mannequin. Accordingly, as we talked about over the last earnings name, we have now been evolving how we worth and package deal companies in addition to how we strengthen our buyer relationships by offering the very best in worth in worth packages. Our total development is to supply clear clear pricing will driving significant will increase in worthwhile buyer relationships. Just a few weeks in the past, we launched new rational on a regular basis pricing as our new rack charges, leading to provide and construct transparency. For broadband companies, new on a regular basis costs can be decrease than prior rack charges throughout most velocity tiers. It is price stating that traditionally lower than 10% of our clients have been paying full rack charges and particularly on broadband, lower than 5% have been paying full rack charges. We additionally started velocity rightsizing to supply extra worth to our clients, particularly in This autumn we reached greater than 100,000 subscribers within the Northeast with this method. General the [speed] (ph) has acquired nicely by clients with only a few requesting downgrade. Moreover, we noticed each churn reductions and decrease contact charges in clients who have been upgraded in comparison with a measure management group. These outcomes underscore that shifting clients to greater velocity tiers strengthens the worth worth equation, resulting in decrease churn and improved buyer satisfaction, which can in the end translate to stronger buyer lifetime worth for the enterprise. On the core of our present and future base administration technique is the combination of synthetic intelligence and machine studying capabilities to create refined fashions and buyer applications. This can enable us to make smarter, custom-made, information pushed choices and the way we work together with our clients. We now have been testing the deployment of AI capabilities in a few of our retention facilities utilizing information to foretell churn propensity primarily based on particular retention provides. Consequently, we have now seen a rise within the profitability of shoppers who interact inside our retention facilities. This work will proceed and can broaden throughout the care facilities and different areas of the enterprise. Eventually, we’ll proceed to drive promote in and connectivity merchandise with broadband and cell on the forefront. With 7% cell penetration of our broadband base, we have now important alternative to drive extra cell take charge inside our present buyer base and promote into new clients. General, this transformation of our base administration technique will result in long-term advantages to churn, buyer satisfaction and buyer lifetime worth and could have a de minimis affect on our near-term income and residential ARPU trajectory. With a extra disciplined and considerate method to how we implement these modifications, we’re higher positioned to enhance ARPU traits over time. Turning to Slide 9, I might wish to evaluate our steadiness sheet place in latest proactive administration. In January of this 12 months, we issued $2 billion of senior assured notes due January of 2029 at a charge of 11.75% to pay down the excellent time period B mortgage and the incremental time period mortgage B-3, which have been due in 2025 and 2026. Along side this transaction, we introduced that we might pay down the $750 million senior be aware due in June of 2024 with a draw from our revolving credit score facility for which we had beforehand earmarked capability. These two proactive refinancing actions have efficiently cleared out all near-term maturities till 2027 giving us the runway to proceed to function and drive the enterprise towards development. Our weighted common value of debt professional forma for these transactions is 6.5% and our weighted common maturity is 5.1 years. Our fastened charge to whole debt is 86% inclusive of floating to fastened rate of interest swaps and professional forma on the finish of 2023, we have now $1.2 billion of liquidity, offering us the pliability in day by day operations. We’ll proceed to be proactive in managing our debt maturities and consider how our capital construction finest helps our working targets. Subsequent on Slide 10, I might wish to evaluate our subscriber traits, highlighting by the acceleration of our fiber and cell development. In This autumn 2023, we added 46,000 fiber clients by each new internet additions and migrations of present clients. We beforehand mentioned we might put extra deal with migrations and by doing that we achieved penetrations of over 12%, which is a rise of just about 5 share factors from the top of the prior 12 months. Plus with a extra disciplined deal with rising our fiber penetration, we have recognized alternatives to enhance processes and methods associated to fiber migrations, which we consider will enable us to speed up our charge of penetration even additional within the coming months. Concerning cell, we proceed to speed up the tempo of internet provides every quarter including 34,000 traces within the fourth quarter. This development is over eight occasions higher than This autumn of 2022 after we added simply 4,000 traces. We’re happy with the traits we’re seeing in cell. For instance, when clients take cell along with our broadband product, we see a 20% annualized churn discount in comparison with the fastened solely buyer base. This presents a big alternative to additional cut back churn as we broaden cell penetration in our buyer base and drive greater take charges. Subsequent, on our whole broadband subscriber traits, as we talked about final quarter, just like our friends, we noticed heightened competitors across the vacation season in This autumn. That, along with continued difficult macroeconomic atmosphere and a low transfer exercise, impacted our broadband efficiency as reported a lack of 27,000 whole broadband subscribers. Though we noticed some incremental headwinds in This autumn, which can carry over into the start of 2024, we’re assured that we have now the suitable technique in place. With broadband and cell mixed with enhanced base administration applications, the strategic regional and hyper native go-to-market method, community upgrades, devoted buyer care focus and monetary self-discipline, we’re well-positioned to return to optimistic broadband subscriber traits over time. Earlier than we flip to the following slide, I wish to contact on our participation within the Federal Inexpensive Connectivity Program. We stay dedicated to bridging the digital divide by offering reasonably priced and accessible web and cell companies to our clients, and we’re absolutely supportive of continued funding for this system. On the finish of This autumn, we had 125,000 clients receiving a subsidy on their broadband or cell companies by ACP. Given our restricted publicity, we don’t foresee a big affect if the federal funding concludes. Moreover, we can be proactive in our efforts to partaking with these clients and offering compelling retention provides. We additionally see this as potential tailwind and a possibility to draw new clients with plans in place to go after each bounce ball. Turning to Slide 11, I might wish to wrap up with a few of the key efficiency drivers that give us confidence that we are able to have the suitable long-term plan and that underscores our dedication to delivering the very best community experiences and companies to our clients. NPS scores throughout our base persevering with to enhance with tNPS rising 21 factors in This autumn 2023 year-over-year. We additionally proceed to drive elevated utilization of self-service instruments throughout technical help, buyer care and onboarding. The truth is, self-installation has grown 68% year-over-year in This autumn. Moreover, self-service instruments, improved buyer communications and enhanced community high quality experiences led to 1.7 million fewer inbound calls and 300,000 fewer truck rolls in full 12 months 2023 in comparison with the prior 12 months. Whereas a portion of those enhancements are pushed by fewer clients in our base, extra notably the charges per clients proceed to enhance. On our community achievements, we launched 8-gig symmetrical speeds in 100% of our East Fiber footprint within the early a part of 2023 and now clients can take speeds of 1-gig or greater in 96% of our whole footprint. Moreover, as of This autumn, we had upgraded 93% of the West to DOCSIS 3.1 with plans to achieve almost 100% by the top of 2024. In abstract, we’re happy with our achievements in 2023 and our capital investments plans for 2024 are strategically designed for each near-term and long-term returns for the enterprise, making certain we maintain excellence in our community, buyer expertise and enterprise development. With that, we’ll now take questions.

Operator: Thanks. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first query is coming from Michael Rollins (NYSE:) from Citi. Your line is now reside.

Michael Rollins: Thanks and good afternoon. Curious when you can unpack a bit extra of what you are seeing by way of broadband quantity and a few of the cited headwinds that carryover early into 2024. After which simply secondly, when you may focus on a bit extra concerning the pricing technique and simply perhaps some extra particulars on the way you’re managing the change in worth relative to the ARPU efficiency? Thanks.

Dennis Mathew: Hey, Michael. I hope you might be nicely. By way of the broadband headwinds, as we had talked about early within the quarter final 12 months, we anticipated to see some headwinds and that is precisely what we noticed. We noticed a few of the competitors early within the quarter actually outspending us in promoting and advertising and marketing, significantly in that October and November timeframe, successfully decreasing our share of voice available in the market. And we additionally noticed some extra aggressive promotions throughout key cell switching home windows and actually extra aggressive provides driving present cell clients to low-end information plans significantly while you take a look at a few of the fastened wi-fi suppliers. We additionally noticed some affect within the West, as we take into consideration the fiber over builders within the again half of the 12 months, extra fiber construct exercise. I feel the final time I commented on this, we have been at about 30% to 35% overbuilt. Now we’re at about 40%, and a few pretty aggressive provides available in the market. That every one being mentioned, I am very enthusiastic about our Optimum market construction and native management that we have put in place. And these groups are simply coming on-line and actually beginning to share some insightful suggestions with us by way of aggressive panorama and actually informing how we are able to compete rather more successfully at a hyper native degree. I feel we’re very well-positioned. Optimum Full continues to carry out very nicely. We have seen a 3x enhance in cell connect since we have launched Optimum Full. We’re actually excited concerning the new Chief Advertising and marketing Officer that we introduced on Board, and she or he’s serving to us with hyper native go-to-market playbooks in order that we are able to compete extra successfully in our new Optimum market areas that we have established. And so, you are going to see extra of these playbooks come on-line and we’re additionally planning to actually do a greater job of telling our story from a model and simply an total advertising and marketing perspective. On the pricing facet, as you noticed, we have made some changes and we have talked about this pricing evolution and the pricing technique is admittedly to handle what our clients are telling us. They’ve informed us they need simplicity, transparency, predictability. They need the suitable worth for what they’re paying. And we consider that the brand new construction will just do that. And I feel Marc talked about, a few of it’s tied to only rightsizing people. Over a 100,000 clients acquired a velocity improve tied to this evolution, and we’re seeing improved churn, fewer calls from these clients and that journey goes to proceed. We’re additionally leveraging AI, in order that we are able to equip our groups in our name facilities, each care and retention, in order that when an present buyer calls, we are able to proper measurement them and put them into the suitable packages and guarantee that they’re getting the suitable worth. And that is truly serving to us cut back ARPU erosion whereas not sacrificing our means to avoid wasting clients. And so, we’re persevering with to drive that technique ahead and we consider that long-term this can assist us truly develop ARPU and actually serving to our mission to stabilize and in the end drive buyer income and money move development.

Michael Rollins: Thanks.

Dennis Mathew: You’re welcome.

Operator: Thanks. Subsequent query is coming from Ben Swinburne from Morgan Stanley. Your line is now reside.

Ben Swinburne: Thanks. Dennis, thanks for all of the commentary across the base administration and pricing stuff, very useful. I assume, I used to be questioning when you may discuss a bit bit how far alongside you might be in getting your buyer base to a spot the place you do not have a again guide, entrance guide subject anymore and worth will increase yield ARPU development. It looks like you’ve got been working loads on this over the previous 12 months and the ARPU is unquestionably stronger than anticipated in This autumn. So, I am curious when you may give us a bit extra of a way of timing and kind of what’s forward for that undertaking? After which, I assume on the fiber construct for ‘24, I assume I might be curious, one, the place that is centered? Is that every one Optimum East? I feel you mentioned 3 million properties by the top of the 12 months. And did you guys take into account slowing it down extra simply to prioritize the steadiness sheet and promote extra into the prevailing footprint. Simply questioning when you may discuss your thought course of there? Thanks.

Dennis Mathew: Ben, thanks. Hope you are doing nicely. Let me take the fiber query after which I will throw it again over to Marc to broaden a bit extra on the entrance guide, again guide and the pricing. However, our fiber technique, we stay dedicated to fiber. As we talked about, we’ll ship 3 million properties handed, primarily within the East. We’re enthusiastic about having these properties and the efficiency of the shoppers that have been ready so as to add on to that community improved ARPU traits, improved churn, enhance buyer satisfaction. We now have clients which might be simply extremely excited and thrilled with the efficiency of that community. And so, we need to lean in and deal with driving extra clients to that community. And that is going to be the mission for this 12 months. We’re prioritizing migrations particularly. We have been on that journey. We have been capable of, when you look year-over-year by way of fiber additions, we have accelerated by 1.7x and there is extra room to develop. We have been doing an exhaustive audit of the migration course of and as we introduced on as my new CTIO group and area group, they’ve recognized an entire host of alternatives to enhance the method, make it extra environment friendly and assist us speed up our fiber migrations. And so, there are some methods and course of points that we have to resolve over the following couple of months. However I am assured as we enter into late Q2 and the second half, we’re going to have the ability to speed up. After which, we’re enthusiastic about new construct as nicely. And in order we take into consideration simply capital depth and the way we’ll spend capital and the place the very best return is, we’re actually lucky to have 4 of the quickest rising markets in our footprint. And we have needed to do some work by way of streamlining our means to establish, approve and execute new construct and I feel we’ll begin seeing a few of the advantages of that and be capable of go quicker as we enter into this 12 months. And so, that is going to be an enormous precedence for us as nicely. And we’ll look to prioritize migrations and new construct, whereas persevering with to have a balanced method in constructing fiber within the East. Marc?

Marc Sirota: After which Ben, to your query round how far alongside we’re, as you see, we’re happy with the trajectory that we have been capable of placed on the Board right here within the second half of the 12 months round slowing the speed of charge erosion and actually for the primary time in 9 quarters we had a optimistic quarter on ARPU. So, actually happy about that. However I might nonetheless say that we’re very a lot within the very early innings of this transformation round pricing. We’re launching our superior AI capabilities to every of our name middle reps and area gross sales reps and that is going to take a bit little bit of time over the course of this primary half of the 12 months. And so, we nonetheless have work to do and we do suppose that can in the end shut any potential points we have now on again guide or entrance guide. And, we really feel like we are able to compete with the suitable provides with Optimum Full and supply actual worth to amass clients. And, then additionally present the suitable worth for our present clients as nicely. So, nonetheless early days however optimistic on the traits that we see.

Ben Swinburne: Thanks loads.

Operator: Thanks. Subsequent query is coming from Kutgun Maral from Evercore ISI. Your line is now reside.

Kutgun Maral: Good afternoon, and thanks for taking the questions. I admire that you just’re not offering express steerage for EBITDA or free money move for 2024. However, I hoped you can assist us take into consideration a few of the shifting items. First on EBITDA, given the topline traits in your outlook for comparatively steady margins, it seems like 2024 can be one other transition 12 months with EBITDA declines. Is that the suitable method to consider it? Or may we see a few of the optimistic momentum you’ve got proven on the finish of final 12 months perhaps carry into 2024 and manifest in additional flattish to maybe optimistic EBITDA traits? And relatedly on free money move, it is definitely encouraging that you have cleared up all of the maturities till 2027. So, now we’ll see a bit extra of an curiosity burden. Your CapEx steerage implies it will likely be flat to maybe down a bit. I am not likely positive how money taxes shake out. So simply going by all these places and takes, are you able to discuss your confidence in retaining free money move perhaps comparatively regular year-over-year or at the least having it’s optimistic once more? Thanks.

Marc Sirota: Completely, I will take that Kutgun, good to listen to from you. From an EBITDA perspective once more we’re happy on the stabilization that you have seen within the margin over the course of the again half of this 12 months, actually enthusiastic about how we’re being disciplined round working prices after which the speed self-discipline that we simply talked about. In order that does give us optimism round how we’re performing going into 2024. I might count on EBITDA to be barely down year-over-year however we’ll proceed to average our capital spend as we talked about. And so from a free money move perspective we’re nonetheless optimistic that we are going to be optimistic for the full-year of 2024. And regardless of the upper rate of interest prices a few of the money timing on that must be extra, later into 2025 truly. And so, we should always really feel like we’re in a superb place to be optimistic free money move for 2024.

Kutgun Maral: Understood. Thanks.

Marc Sirota: Sure.

Operator: Thanks. Our subsequent query is coming from John Hodulik from UBS. Your line is now reside.

John Hodulik: Sure, nice. Couple of observe ups if I may. To start with, only a commentary on the on a regular basis pricing and the strain on ARPU, are you guys kind of suggesting that we may return to kind of the two% to three% declines the place we have been just some quarters in the past after the average development that we noticed immediately. After which on the cell large ramp in internet provides, I assume when you can boil it down what’s actually driving that ramp and do you count on it to proceed? Thanks.

Dennis Mathew: Thanks, John. I will take the cell piece after which Marc, welcome to chime in on the pricing and ARPU components. However cell, we’re very happy with the transformation and the acceleration. This has actually been inspecting and optimizing each space of the enterprise. We have reworked our retail facilities into gross sales facilities and we have actually prioritized, as we have mentioned, to be the connectivity supplier of selection, which incorporates broadband and cell. And so, we have up to date our compensation plans. We have up to date our gross sales targets. We have reworked efficiency administration and participation, Optimum Full and together with that as a proposal and a package deal has been very well acquired each by our frontline groups in addition to our clients. And so, as I take into consideration this 12 months, I take into consideration persevering with to drive acceleration and development in that area. I feel we have seen others, a few of our friends set the usual by way of internet additions per quarter and buyer penetration of their base. And I feel these are all achievable long-term and that is the journey that we’re on. And so, the 8x acceleration, we’ll proceed to drive that throughout the enterprise. And, I feel we’re at 7% cell penetration of our base immediately. I feel there’s extra alternative. I am significantly excited as Marc, I consider talked about 20% annualized churn discount with cell. And so, there’s plenty of causes to proceed to drive cell and can proceed to drive acceleration all year long. Marc?

Marc Sirota: After which John, on the ARPU declines, now we really feel like we’re in a superb place as you noticed with the traits. Definitely there’s going to be continued strain from video losses on ARPU, however regardless of that and our extra disciplined method in leveraging AI instruments, We do really feel like we have now a path to stabilize ARPU and develop it over time. In case you take a look at 2023 for the full-year, we have been down simply 1.5% year-over-year comparatively flat particularly popping out of the again half. We count on to enhance on this in 2024. So, we really feel like we have now the suitable instruments in entrance of our brokers to drive the suitable outcomes. And, be ok with that.

John Hodulik: Thanks, guys.

Operator: Thanks. Subsequent query immediately is coming from Jessica Reif Ehrlich from Financial institution of America. Your line is now reside.

Jessica Reif Ehrlich: Two questions, if it is okay. One, I simply love your views on the sports activities JV that was introduced with Disney, Warner Brothers, Discovery (NASDAQ:), and Fox. Simply how that you just suppose that impacts your online business, video and broadband and the way it may affect renewal dialog? After which individually, you confirmed good development in promoting, ex-political and information, may you discuss the place that is coming from and type of your outlook within the, I assume, couple of quarters forward?

Dennis Mathew: Jessica, I hope you are nicely. I will take the sports activities JV query and Marc, if you wish to discuss a bit bit about information and promoting. I feel I’ve mentioned this earlier than, however sadly I will reiterate that I actually do suppose that the mannequin is damaged and it is actually difficult when you consider the truth that viewership is that all-time lows on linear conventional video and but charges are at all-time highs. And so, I feel we as distributors actually do have to work with our companions to place the client again within the middle and guarantee that they’re getting the suitable worth. And so, as we have now these conversations and negotiations, that is precisely what we’re making an attempt to do. We’re making an attempt to actually push exhausting and guarantee that we have got, we’re combating for our clients by way of charge. Traditionally for legacy course of has been to incorporate channels with extraordinarily low viewership bundled in with channels with excessive viewership, it is simply not the suitable method and rigid packages. And so, we’re combating for extra flexibility as nicely, in order that our shoppers can in the end have the forms of bundles and packages that they are on the lookout for. After which as these direct to client options proceed to turn into accessible, having these conversations, ensuring that they are accessible to our clients and that they are often leveraged as a part of the portfolio of options that we’re making accessible. And so, these are the conversations that we’re having. It actually does come again to placing the client on the middle and ensuring that we have now the suitable pricing, the suitable packaging, the suitable channel lineups, the suitable direct-to-consumer choices. However, in the end for all these options, you want broadband. So, it does strengthen the worth of broadband and we wish to have the ability to present the very best high quality broadband high quality and worth and one of many prime functions leveraged on broadband is video. And so, we wish to have the ability to make the suitable video options accessible and that is what’s driving the shoppers as they’ve some need to watch conventional linear video, others need streaming. We want to have the ability to convey that to our shoppers on the proper worth and on the proper worth and people are the conversations we’re having. Marc?

Marc Sirota: After which on promoting, definitely 2023 was a difficult 12 months for all of us within the advert area, however actually happy on how the section operated this 12 months and managed by that. We have been capable of offset a few of these declines by simply increasing truly our buyer base and nonetheless having extra clients. After which actually some considerate investments in our superior promoting company enterprise is admittedly have been the accelerant to drive the expansion that you’ve seen over the previous few quarters. So, as we look forward to 2024, we really feel optimistic about the place we’re trending it is definitely going into the brand new political 12 months, it must be a reasonably good tailwind for our information and promoting section.

Operator: Thanks. Subsequent query is coming from Craig Moffett from MoffettNathanson. Your line is now reside.

Craig Moffett: Hello, thanks. I’ll see if I can squeeze into as nicely. First, I do know you guys, particularly Tony, you’ve got spent quite a lot of time speaking about ARPU I’m wondering if I can simply dig in a single final time perhaps on simply broadband ARPU particularly, though it is rising year-over-year, it took a few 1.6% sequential decline, granted that bundling, allocations and that kind of factor can fuzz that up a bit bit. However I’m wondering when you may simply discuss whether or not that’s, indicative of something that is occurring with respect to the bottom administration program that you just described? After which second, when you may simply discuss a bit bit about your cell economics. We do not know a lot about your MVNO and the bigger MVNO within the business is shrouded by quite a lot of secrecy. I’m wondering when you may simply share some at the least directional steerage on the type of margins you count on to have the ability to make in that enterprise at the least on the gross margin degree?

Dennis Mathew: Craig, hope you are nicely. Let me let Marc bounce in on the broadband ARPU query and I will discuss a bit bit about cell.

Marc Sirota: Sure. Hello, Craig. From a fourth quarter perspective, that is normally a low level for the 12 months so far as buyer roll-off and promotional roll-off, elevated promotional exercise occurs sometimes within the fourth quarter, so that is normally a seasonally low quarter for us on this area. I am happy to see that we have been capable of average the fourth quarter seasonality that we have seen historically fairly meaningfully and so though down, I would it not’s not indicative of the worth modifications that we introduced right here initially of the 12 months. So, really feel good we have now the suitable instruments in place to handle by that.

Dennis Mathew: Sure. We’re very proud of our cell MVNO and our associate in accessing the most important 5G community. Our cell margins, we’re additionally joyful that we’re gross margin optimistic. We do not escape extra element, however we’re actually proud of the efficiency. We proceed to see acceleration as I discussed significant acceleration in our gross sales actions additionally by way of attaching traces. We have been capable of develop that to now 1.5 traces and there is extra upside as we simply begin proceed to get our legs beneath us. We now have immediately about 50-50 by way of BYOD and machine connect. And so, there’s alternative there to proceed to proper measurement that and proceed to lean in as we once more, get our sea legs beneath us. And so, we’re within the early inning. We’re actually simply beginning to promote equipment and insurance coverage, however we’re excited significantly concerning the churn profit as I discussed and we’re enthusiastic about persevering with to drive cell as there may be long-term margin enlargement alternative.

Marc Sirota: And the one factor I might add is simply on the ARPU facet from cell perspective, we’re seeing development in that as nicely. One, coming off the truth that we’re now not promoting free companies however then additionally with Optimum Full we’re actually beginning to see significant development within the ARPUs popping out of that bundle package deal up $5 truly sequentially from the third quarter. So, all indicators are getting in the suitable route.

Craig Moffett: Thanks.

Operator: Thanks. Subsequent query is coming from Vikash Harlalka from New Road Analysis. Your line is now reside.

Vikash Harlalka: Hello. Thanks a lot for taking the query. Now, that you have raised $2 billion in debt, how will we take into consideration any potential ABS debt? Is that fully off the desk or I see engaged on that. And when you do, what can be the potential utilization of these funds? And second one, if I may, may you give us a way of what the IRRs are for the brand new builds versus fiber upgrades? And the way you kind of resolve whether or not we go for added new construct versus fiber upgrades throughout the 12 months? Thanks.

Marc Sirota: Hello, Vikash. I can take each of those. Because it pertains to the $2 billion refinancing actually happy that we have been proactive and we cleared the deck for the following three years for us to function particularly given the uncertainty across the rate of interest markets and the place they’re heading into this 12 months. Because it pertains to ABS, we definitely have realized extra concerning the course of concerned in an ABS transaction and simply this as you could know simply takes time and so I nonetheless suppose it’s extremely a lot a risk. However, now that we have cleared out the near-term maturities, we have now a bit bit extra flexibility in getting the timing and the sizing executed correctly. So nonetheless on the market, however it simply takes time to do this. After which because it pertains to IRRs, we simply haven’t traditionally disclosed these externally, however particularly as you consider the fiber builds, we’re undoubtedly seeing improved outcomes popping out of that from churn discount to ARPU raise all of that are higher than our unique base case state of affairs, however once more we’ll simply stay disciplined across the degree of capital depth to drive in the end free money move and make investments the following greenback within the spot that is going to present us the very best yield.

Dennis Mathew: That is proper. The one factor I will add is that, as we have executed with each a part of the group, we’re revamping and evolving our means to establish, ship, execute, ship and drive penetration of latest builds. And so, as I discussed, we have now 4 of the quickest rising markets in our footprint. And so, these are good issues to have by way of driving making funding choices.

Operator: Thanks. Our remaining query immediately is coming from Bryan Kraft from Deutsche Financial institution. Your line is now reside.

Bryan Kraft: Hello, good afternoon. I need to ask you, I assume, the $16 billion to $17 billion CapEx steerage mixed with the capital depth steerage implies a reasonably wide selection.

Marc Sirota: Simply to right, the $1.6 billion to $1.7 billion. We’re not —

Bryan Kraft: Excuse me, sorry. I simply forgot the decimal level.

Marc Sirota: It is a level of readability.

Bryan Kraft: We do not need a record state of affairs. So, that capital depth implies a reasonably wide selection of 2024 income, when you mix that with the 18.5% capital depth steerage, so I feel that means about $8.65 billion to $9.19 billion. I simply needed to ask, I assume, first, how a lot Cheddar income was in 2023, which might clarify some or all of that income decline? After which whether or not you count on 2024 income to actually be in that wider, in case your expectations are actually that extensive of a variety or if it is extra slim than that? Thanks.

Marc Sirota: Sure. We can’t get into, that is Marc, we cannot get into specifics across the Cheddar income and all of that, however simply say that it was de minimis and never materials to the monetary outcomes of the corporate. As we take into consideration the capital depth, once more, we have said that we’ll stay disciplined round how we drive capital depth. We really feel optimistic that we’re making the suitable strategic strikes and have the suitable playbook in place to drive income, we cannot give particular steerage right here immediately on the income outlook, however we really feel like we have now the suitable playbook in place to drive our income trajectory and we’ll type of simply depart it at that immediately.

Bryan Kraft: Marc, may I simply ask one fast follow-up on the 18.5% capital depth? Is {that a} multi-year remark, at this level? Ought to we take into consideration that as being long-term steerage or is that extra of a ‘24?

Marc Sirota: Bryan, that is an amazing query. As we mentioned and I will reiterate immediately, we’ll re-evaluate capital depth yearly. And, actually be disciplined round how the enterprise is performing to actually dictate how a lot we’ll spend. And once more on the 18.5% we’re saying we’ll average barely from that to drive these outcomes.

Bryan Kraft: Okay. Thanks.

Operator: Thanks. We have reached the top of our question-and-answer session. I might like to show the ground again over to administration for any additional closing feedback.

Sarah Freedman: Thanks all for becoming a member of. Please attain out to Media Relations or Investor Relations with any extra questions.

Dennis Mathew: Thanks. Have a superb day.

Operator: Thanks. That does conclude immediately’s teleconference and webcast. Chances are you’ll disconnect your traces presently and have an exquisite day. We thanks on your participation immediately.

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