Charter Communications, Inc.

Hello, and welcome to the Charter Communications Q4 conference call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I would now like to turn the call over to Stephan Anninger.

Thanks, Operator, and welcome, everyone. The presentation that accompanies this call can be found on our website, ir.charter.com. I would like to remind you that there are a number of risk factors and other cautionary statements contained in our SEC filings, which we encourage you to read carefully. Various remarks that we make on today's call concerning expectations, predictions, plans, and prospects constitute forward-looking statements, which 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. On today's call, we have Chris Winfrey, our president and CEO, and Jessica Fisher, our CFO. With that, let's turn the call over to Chris.

Thanks, Stephan. In 2023, we added 155,000 Internet customers, and we added nearly 2.5 million Spectrum mobile lines for growth of nearly 50%. At the end of 2023, we had more than 7.7 million total mobile lines. Only 13% of our Internet customers now have mobile service. and we expect mobile penetration to meaningfully grow over the next several years as the quality and value of our converged connectivity services gains wider recognition. Revenue is up by 1% in 2023, while EBITDA grew by 1.3% and 2.5% when excluding advertising. While we're executing well on our long-term strategic initiatives, Inspector One is working to drive mobile growth. Internet growth in our existing footprint has been challenging, driven by Admittedly, more persistent competition from fixed wireless and similar levels of wireline over build activity. Small changes in gross additions and churn in a low transaction environment have driven outsized impact to net gains, which was clearly the case as we moved through the last quarter. I own that. So let me start with what we believe on the competitive environment and then what we're doing to drive long-term growth by delivering high-quality products and service at a great price. Fixed wireless access. While an inferior product with limited capacity and geographic coverage, which is fluid, is often marketed by the phone companies at a perceived lower price to their existing customers. We continue to believe the impact of fixed wireless is temporary. Our internet product is faster and more reliable. Our pricing is lower when similarly bundled with mobile. Customer bandwidth needs continue to increase. And MNOs will face capacity challenges and will be required to allocate their spectrum and capital to maintain profitable mobile services. While we can't promise when that happens, I believe bandwidth needs increase and quality and value win. On the wireline overbuilt front, we continue to compete well. Overbuilt impact tends to be limited to a few percentage points of internet penetration during the first year of a new overbuilt vintage coming online. It's painful, but it's tied to the pace of overbuilt. We don't see overbuilders reaching their penetration and ROI goals within our footprint now or in the future. They don't have the same ubiquitous convergence capabilities as we do. Their lower-cost passings have likely been built. Some of the planned overbuild was duplicative between operators, meaning less opportunity, and incremental financing costs have increased, putting even more pressure on overbuilder returns. We also expect bead passings will provide better capital allocation and ROI for many of these operators. Our assumption is that our competitors are rational economic players with shareholders and balance sheets which require adequate return on investment. That isn't within our control, so we are focused on the key strategic initiatives that enhance our long-term competitiveness and growth capabilities, and we expect to return to a more normalized Internet growth over time. Just over a year from when we detailed those initiatives, I wanted to remind everyone of their rationale and update you on their status, as laid out in slide four. Our footprint expansion is beating our pacing, penetration, ARPU, and ROI targets. New construction will help drive internet customer growth despite the temporary challenges I mentioned within our existing footprint. 2023 subsidized rural customer growth was already over 100,000. Our penetration also continues to grow at a better than expected pace and will activate more subsidized rural passings this year, both of which Jessica will cover. Bede will provide additional opportunities, although the potential is uncertain given our concerns regarding how states will apply NTIA guidelines. We'll focus Bede investments in states where the rules are conducive to private investment. Outside of rural, we also have accelerated greenfield, market fill-in, and serviceability builds, expanding our existing footprint in both residential and commercial passings. Penetration curves and returns here are similarly strong and predictable, with a lower billed cost. We also remain committed to prioritizing the customer experience via our execution initiative, which is intended to enhance frontline employees' tenure while simultaneously investing in digitization, all to drive better sales yields, higher quality transactions, lower overall service transactions, and higher levels of customer satisfaction. Our targeted investments in employees over the last two years resulted in a significant reduction in employee attrition in 2023. Our investments in the digitization of service is also driving efficiencies. In 2024, we have a number of new automated platforms that are launching to facilitate better service for customers and better digital and AI tools for agents to enhance service quality and the quality of their day-to-day jobs. And finally, our evolution initiative, which includes our network evolution project, our convergence efforts, and our video product development all remain on course. We fully launched symmetrical speed tiers in two markets and currently launching in six more, completing our step one markets. We'll also begin to work in our step two markets with DAA later this year. Excluding the benefit of any savings that result from the project, we continue to expect our network evolution to cost a very low $100 per passing. We expect to complete the project in 2026. So a fast, ubiquitous, low-cost upgrade of our capabilities, which our competitors can't replicate. Our converged product offering also continues to evolve and grow. Spectrum One is performing well and offers the fastest connectivity with differentiated features like mobile speed boost and the Spectrum mobile network. Spectrum One also offers significant savings for customers with market-leading pricing at both promotion and at retail. The Spectrum One customers reaching their first anniversary are performing ahead of our expectations. We'll continue to evolve our converged offering in 2024 with additional features and capabilities. Finally, turning to the evolution of our video product, in October, we launched the Zumo platform across our entire footprint. This industry-leading video platform allows our customers to access their linear and direct-to-consumer video content with unified search and discovery within one easy-to-use interface. Combined with our Spectrum TV app, the most viewed linear MVPD streaming service in the U.S., Zumo is our go-to-market platform for new video sales. We're approaching 1 million deployed Zumo boxes since launch, and we've been getting great customer feedback, and we can keep improving our attach rates. In early January, Disney Plus became available to all Spectrum TV Select customers nationwide at no additional cost. And in the next several months, ESPN Plus and VIX, a Spanish-language DTC product, will both become available to certain TV Select customers at no extra cost. This new hybrid distribution model is good for consumers, and we plan to modernize all of our distribution agreements upon renewal. That means packaging flexibility, value, and not asking customers or charter to pay twice for similar DTC and linear programming. Our new hybrid distribution model, combined with Zumo's content-forward interface, provides a clear path to solve key customer issues of choice, value, and utility with seamless linear DTC and SVOD integration and advanced search and discovery functionality. When we reflect on our key initiatives and what we believe are the short-term market challenges, we're acting as long-term charter shareholders to maximize value. So we have a posture of expectancy and excitement for the opportunity to execute on initiatives that enhance our long-term growth rate and value for charter shareholders. In the short term, we are leaving no stone unturned as it relates to our go-to-market approach. Ultimately, the speed at which we can return to a more normalized broadband growth rate hinges on the assumption that our competitive capital is not limitless for poor ROI projects and, frankly, our execution on our strategic initiatives. So we're keeping our heads down and executing on a clear strategy to ensure we can offer customers the best products and services across our entire footprint, all while saving customers money, not only now, but in the future. With that, I'll turn the call over to Jessica.