Charter Communications, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Charter Communications fourth quarter 2020 earnings call. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone keypad. If you require operator assistance, please press star zero. I'd now like to turn the call over to your speaker today, Stefan Aniger. Please go ahead.

Good morning, and welcome to Charter's fourth quarter 2020 investor call. The presentation that accompanies this call can be found on our website, ir.charter.com, under the financial information section. Before we proceed, I would like to remind you that there are a number of risk factors and other cautionary statements contained in our SEC filings, including our most recent 10-K filed this morning. We will not review those risk factors and other cautionary statements on this call. However, we encourage you to read them carefully. Various remarks that we make on this call concerning expectations, predictions, plans, and prospects constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. Any forward-looking statements reflect management's current view only, and Charter undertakes no obligation to revise or update such statements or to make additional forward-looking statements in the future. During the course of today's call, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials. These non-GAAP measures, as defined by charter, may not be comparable to measures with similar titles used by other companies. Please also note that all growth rates noted on this call and in the presentation are calculated on a year-over-year basis unless otherwise specified. On today's call, we have Tom Rutledge, Chairman and CEO, and Chris Winfrey, our CFO. With that, let's turn the call over to Tom.

Thank you, Stephan. 2020 was an unusual year, but it demonstrated and enhanced the strength of our business, and we performed better than expected in a number of areas. The past year has also highlighted the importance of the services we provide, and our robust network handled an immediate conversion to a remote-based economy, enabling work from home, remote education, and telehealth services. Over the last 10 months, our broadband infrastructure was tested, and it performed very well. That's because at Charter, we've spent over $35 billion on our network and infrastructure since the close of our transactions in 2016, and it showed up in our 2020 performance. For the full year 2020, we added 1.9 million new customer relationships for growth of 6.5%, and we added 2.2 million new Internet customers for growth of 8.3%. We also performed well financially. We grew our adjusted EBITDA by 10% and our free cash flow by 53%. Our residential business performed particularly well with strength in Internet where we added 800,000 more customers than we did the prior year. We remain very optimistic about our opportunity to grow our Internet business given the quality and value of our product. Despite the outsized growth and some pull forward of demand into 2020, which will drive continued benefits to our revenue and EBITDA going forward. Our expectation and plan for 2021 is to revert to the trend we were on pre-COVID and meet or exceed the customer relationship and internet net ads that we achieved in 2019. And we believe our long-term broadband penetration and market position has actually been enhanced. COVID-19 hurt our small business and enterprise businesses But trends in those parts of our businesses are improving, and we're on our way back to our previous growth rates or better. Our core ad business also suffered, but it's now bouncing back, and core advertising is 95% of what we would have expected from a revenue perspective. We anticipate our advertising business will make a full recovery, with the timing of that recovery dependent on the full recovery of the economy. 2020 also resulted in the acceleration of efficiency in our core operations Our self-installation program expanded dramatically from about 50% of sales before the pandemic to a new steady state of over 80% of sales during the fourth quarter of 2020, driving cost savings and improving customer satisfaction. We saw a significant increase in the use of our online and digital sales and self-service platforms, which drives cost savings and higher customer satisfaction. As we reflect on our 2020 operating performance, we also demonstrated our commitment to our customers, the communities we serve, and our employees. We launched a number of community programs, including a remote education offer and the Keep America Connected pledge. In addition, we significantly expanded our spectrum news coverage areas and opened up our spectrum news websites to ensure people have access to high-quality local news and information. We rapidly connected and upgraded fiber services to healthcare providers and donated significant airtime to run public service announcements to our full footprint of 16 million video customers. For our employees, we offered additional paid sick time for COVID-related illnesses and a flex time program to address other COVID issues. We also increased our wage for all hourly field operations and customer call center employees. Our efforts have been recognized by our employees, the local communities and customers we serve, and related stakeholders, which brings long-term benefits. Looking forward, we remain committed to offering a $20 minimum wage and our strategy of employing an insourced U.S.-based workforce that offers a long-term career path for our employees. And our call centers and all of our employees are now 100% U.S.-based. Our plans to expand our footprint in rural areas will increase broadband access and help connect well over a million homes, which have gone unserved until now. And that doesn't even include our regular build-out to lower-density areas, which accelerated in 2020. We continue to offer our Spectrum Internet Assist program to millions of lower-income households at affordable prices. And as we look forward to the rest of 2021, we remain focused on driving customer growth by offering high-quality services and products under an operating strategy which works well in various market conditions. Over the coming months, we plan to add multiple streaming video applications to our deployed world boxes and all incremental video connections, making it easier for our video customers to access today's most popular streaming content through one device. Our Internet product also continues to improve. During the fourth quarter, we expanded the delivery of our minimum speed offerings of 200 megabits from about 60% of our footprint to close to 75% of our footprint. In the near term, we have a large opportunity to improve data throughput and latency on our network by using our DOCSIS 3.1 technology, which still offers us a long runway to improve our product set. We'll also continue to invest in DOCSIS 4.0 with key vendors and the rest of the industry for even greater capacity and functionality down the road. We're also improving the quality of our Wi-Fi routers and Wi-Fi reception in the home. We recently launched our new Wi-Fi 6 router in our first market, and we will have Wi-Fi 6 routers available in nearly all markets by mid-2021. And we now offer companion Wi-Fi pods to improve Wi-Fi reception in the home. Our advanced in-home Wi-Fi service, which is a managed Wi-Fi service that provides customers the ability to optimize their networks while providing greater control of their connected devices, has now been launched across more than 65% of our footprint for new connects, and we will continue to expand that footprint this year. Our mobile service now offers free access to nationwide 5G service. We recently spent $465 million to purchase 210 CBRS priority access licenses. We intend to use those licenses along with significant unlicensed CBRS spectrum on a targeted 5G small cell site strategy with our HFC network providing power and backhaul. Those small cells combined with improving Wi-Fi capabilities enable better throughput while driving significantly better economics for charter. This year, we'll focus on scaling our systems to actively manage traffic on handsets using our MVNO, Wi-Fi, CBRS spectrum. We'll also build some targeted 5G small-cell sites, which will help us learn how to pace our purely return-on-investment-based CBRS deployment. In closing, as we look back on 2020, we're very pleased with our performance as it demonstrates that our operating strategy works well for charter communities, employees, and shareholders, even in challenging economic and operating environments. And despite the one-time impacts to our P&L, which Chris will cover, we ended the year well ahead of where we expected from a customer growth perspective, providing a higher level of subscription-based revenue and underlying EBITDA than what we would have expected. Now I'll turn the call over to Chris.