Charter Communications, Inc.

Hello, and welcome to Charter Communications' second quarter 2025 investor conference call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will 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 will now 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, and 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, 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. As a reminder, 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 Chris Winfrey, our President and CEO, and Jessica Fisher, our CFO. With that, let's turn the call over to Chris.

Thanks, Stefan. During the second quarter, we remained the fastest growing mobile provider in the United States. We added 500,000 Spectrum mobile lines in the quarter and 2.1 million lines over the last 12 months for growth of nearly 25%, all because we offer seamless connectivity with the fastest speeds at the best price. In the second quarter, internet customer losses of 117,000 improved from 149,000 last year. Our video customer losses improved fivefold year over year to 80,000, driven by better connects and lower churn. Revenue was up slightly year over year, while second quarter EBITDA grew by 0.5%, and we expect to grow EBITDA for the full year. The operating environment remains competitive. In Q2, we drove higher levels of sales year over year and lower voluntary churn, partly offset by higher levels of non-pay internet churn absent ACP. We have not seen a material change in the competitive landscape and we remain confident that we'll return to internet customer growth over time through our operating strategy of delivering the best networks and products at the best value for customers combined with unmatched service. The new pricing and packaging we launched last September continues to produce good results, including a higher number of total products sold at Connect, a gig attach rate that's nearly doubled, more mobile lines for Customer Connect, and a video sell-in rate that's improved substantially, with lower churn across both our traditional expanded basic packages and our skinny bundles. Our video product continues to improve. In June, we announced the inclusion of Hulu with our traditional packages. Hulu should become available for those customers prior to the launch of ESPN Unlimited. And together with Fox One, our inclusion offer will then be essentially complete. As slide six shows, we will offer over $100 in monthly value inside of our seamless entertainment packages at no additional cost to customers. Our streaming app activation process for customers has improved and we'll be ramping our marketing of seamless entertainment together with our programming partners. This month, we began launching the sale of a la carte programmer streaming applications to customers without traditional video packages, including broadband onlys. In the coming months, we'll also launch our video marketplace. It's a place where customers can discover, activate, migrate, upgrade, and downgrade their streaming inclusion apps. It will also be a starting place for video-centric sales leads and a place to learn about and buy Spectrum TV video packages like TV Select and Stream and a la carte programmer streaming applications. So why have we worked so hard to improve an ecosystem that's been in structural decline for years? The reason is because we recreated the video product into something of much higher quality with unique video packaging, flexibility, and value, together with Zumo, which solves a growing content discovery problem. Our video product can be yet another competitive advantage for our internet and mobile sales, and it drives churn lower. It's the convergence of our connectivity services and video through seamless entertainment. I do want to highlight that our programming deals over the past two years, including recent extensions and co-marketing efforts, reflect our programming partners' belief in our customer video proposition. And those relationships are probably in the best place I've seen. Turning to internet, specifically, we offer gig-capable seamless connectivity, wireline and wireless, across 100% of our footprint. We're not standing still. Our wireline network evolution is effectively a very low-cost spectrum acquisition across 58 million passings, adding up to 1 gigahertz of additional spectrum when we move to 1.8 gigahertz. We're deploying symmetrical and multi-gig speeds everywhere we operate. In July, we completed the addition of two by one gigabit per second service to all of our step one markets, approximately 15% of our footprint. Step two, including DOCSIS 3.1 distributed access architecture is now underway to the next 50% of our footprint. We'll deliver five by one gigabit per second service there, as well as fiber on demand capabilities. Step three, adding DOCSIS 4.0 to the equation will expand capacity even more, allowing us to offer 10 by one gigabit per second service. We're also in full deployment mode of our hybrid mobile network operator or HMNO network, deploying CBRS small cells across an additional 23 markets. In mobile, our rapid growth continues. And for the last five quarters, the majority of our line net ads have come from unlimited plus lines with higher value in ARPU at a fraction of competitive prices with faster speeds and better connectivity. We've also been selling more mobile lines per connect with our new packaging and upselling additional lines to existing mobile households. Convergence reduces churn and higher mobile lines per customer benefits churn further. On convergence and higher line counts, earlier this week, we announced a long-term MVNO relationship with T-Mobile, which enhances our Spectrum business package of connectivity services and can accelerate Spectrum mobile growth over time. We look forward to working with T-Mobile. From a financial perspective, mobile EBITDA and less mobile CapEx is positive. And for the last couple of quarters, that figure has been positive, even including the impact of customer device financing. Outside of our multi-line phone balance buyout, we don't see a need to subsidize acquisition given our market-leading speed and value. So the mobile business is now becoming a real tailwind to our free cash flow growth, and it'll continue to increase. Turning to customer service, we have a unique opportunity to create a competitive advantage here. The significant investments to improve our customer service were largely made over the past few years, those being technology, including digitization, AI, network intelligence, and direct investments in our US-based employees. Our technology investments have been primarily directed at applications that directly benefit customers in various self-help channels, and machine learning and AI-based frontline service tools to make servicing customers easier and more efficient for our employees. We're currently focused on using machine learning and AI to take full advantage of all of our network and in-home telemetry to identify and address service issues before they ever occur. Our investments in employees themselves are focused primarily on driving employee tenure, which drives better craftsmanship and customer service. It starts with good paying U.S. jobs and benefits. And then we expanded that with career paths, including self-progression, training and education, and enhanced retirement benefits. We recently extended that notion of better service from better craftsmanship and commitment to a unique frontline ownership program geared towards tenure, with the company matched based on tenure and a three-year investment holding period. In the first election window of our employee stock purchase plan, nearly 15,000 largely frontline employees opted to directly invest and become owners of our company. Our employees understand the investments we're making, and they believe. They own not just their career and retirement here, they increasingly act like owners of the business. And that's good for our customers, the communities we serve, and our shareholders. Ultimately, our investments in employees and technology are all resulting in significant and sustainably improved service. Cable billing and repair calls were down 14% year over year in the second quarter, with a near 10% decrease in truck rolls, despite significant weather impacts. And we're seeing tangible improvements in how customers perceive our service, products, and pricing. We also have a public customer commitment backed by service credits, including if we can't be at your home or business the same day. But internally, we're moving that standard to two-hour windows. Why? Because we can. We're now doing it a large percentage of the time. We believe it'll take our competitors years of investment to catch up. Taking a step back, we still recognize the competitive environment we're in. Our operating and capital allocation strategy means we've been making the investments to put us in a position of confidence today. Network evolution to ensure the fastest wireline speeds. Convergence to make the same speed and reliability available seamlessly. Extending our network to rural footprint, which often becomes suburban density in the future. and transforming video to provide value and utility in a complex ecosystem, driving connectivity sales and retention, and then pairing those network and product investments with market-leading pricing and packaging to save customers money, all with a commitment-backed, best-in-class US-based service from employees who are tenured, committed, and act like owners because they are, all of which has yet to fully take hold. So how do you know as an investor whether it works? Because everything we're doing is what you as a customer want. And as a customer demand for bandwidth, reliability, and low latency service seamlessly connected continues to increase, I believe we're in the best competitive position. And I think that's true with or without a step change from AI, VR, edge computer, other transformational shifts, which have always occurred when we have ubiquitously expanded the capabilities of our network for advanced products. A logical expansion of our strategy was our announcement in May to acquire Cox Communications. This combination offers significant benefits for customers, employees, local communities, and shareholders. The transaction will marry Spectrum's operating strategy with the B2B capabilities and community investment heritage of Cox, together with our shared philosophy of long-term investment in our network and employees. It will bring Spectrum products and prices to the Cox footprint where we don't operate today. increasing competition in those markets to the benefit of consumers and increasing onshore labor to the benefit of employees. This transaction is good for America. It's also a great outcome for both our current shareholders and for the Cox family. The transaction is priced at an attractive valuation, and it's accretive to top-line growth, margin, and to levered free cash flow per share, even when absorbing the impact of a modest delevering of the combined business, and without factoring in the benefits of a lower cost of capital and the value of Cox as a sophisticated long-term shareholder. As we spend more time thinking through the integration, assuming regulatory approval, we continue to see areas of additional opportunity. And in the meantime, the employees of both companies are focused on business as usual and delivering value for our respective shareholders. Now I'll pass it over to Jessica.