Charter Communications, Inc.

Hello, and welcome to Charter Communications' first quarter 2026 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. 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 first quarter, Spectrum Mobile remained the fastest growing mobile provider in our footprint. And we now have over 12 million mobile lines, including an increase of 370,000 Spectrum Mobile lines in the quarter. That's 1.8 million new lines over the last 12 months for growth over 17%. We're pleased with that growth given the continued intensity of mobile subsidies from the three big telcos. In addition, our video customer losses continued to improve year over year. Our 60,000 loss was less than a third of last year's first quarter loss, driven by significant product improvements over the past couple of years. In internet, competition for new customers remains high, and our first quarter internet customer loss totaled 120,000. Revenue was down 1% year over year, primarily driven by lower residential video revenue, while residential connectivity revenue grew 0.9% year over year. First quarter EBITDA, excluding transition expenses for the Cox transaction, declined by 1.8%, primarily due to a prior year benefit. Cable industry internet growth has been pressured for several years now, given new competition, a challenging housing environment, and other factors like mobile substitution. But we remain confident about our ability to win in the marketplace and grow over the longer term. Ultimately, that confidence and our future success is founded on three building blocks. our powerful advanced network, our core operating strategy around products and pricing, and our focus on improving customer satisfaction. Starting with customer satisfaction, our customers remain the central focus when we make decisions for any product or service and how we allocate our resources. We have an integrated and detailed approach that starts at the highest levels of the organization. Our customer focus is not just cultural, it's also core to our incentives. Beyond the obvious, share price incentives, NPS scores, and other service-related metrics now drive a meaningful part of our overall annual incentive structure. Relentless improvement is also a key component of our approach, and that applies to our network capability and reliability, products that we offer, and to our service. We're constantly working to improve each of these, with examples including new product innovations like our invincible Wi-Fi and our anytime upgrade feature for mobile. and the dramatic decline we've seen in service and trouble calls per customer. We've also deployed new AI tools, now used by our service agents, driving higher customer satisfaction and reducing call times with higher job satisfaction for our employees as well. We have a seasoned, very competitive team here at Charter, fully aligned with our shareholders, and that team will only get better with the addition of top-flight talent from the Cox team and Nick Jeffery, who will join in September. Moving to our advanced network, Our high-capacity network is an unrivaled asset. It offers gigabit speeds and low latency everywhere we operate. Those capabilities matter long-term as customer data usage continues to increase, including in the upstream, where we're seeing 20% annual growth driven by things like self-driving cars, a significant and increasing upload. By the end of this year, about 50% of the current spectrum network will be upgraded to symmetrical and multi-gig service, with significant work on the remaining 50% already in flight. By deploying remote OLTs and LoRaWAN transponders, we will have fiber-on-demand capabilities and fully active telemetry in the vast majority of our footprint, giving us cost and service advantages. Our network is both wired and wireless in 100% of our footprint. You can get mobile from us wherever we offer our gigabit speeds and vice versa. And with our expanding hybrid MNO capabilities using CVRS and Wi-Fi in conjunction with the Verizon mobile network, we are driving our seamless connectivity advantage. That is the basis for Spectrum Mobile's fastest overall mobile speeds. In addition, our network is both fiber-based and powered to its edge, which means it can uniquely provide enhanced wireless opportunities that we haven't pursued yet. If you think about our ubiquitous deployment of multi-gig, unique, seamless connectivity capabilities with low latency, edge compute, and the potential for fiber-powered DAS, nobody has the set of assets that we do. You see us demonstrating those capabilities with early deployments of immersive content with Spectrum Front Row, authenticated offload for AWS, and likely extending that to increasingly autonomous vehicles. We're also deploying other B2B products with edge cache and GPU as a service. Our network and data assets really lend themselves to future B2B and B2C applications, which require proximity and low latency under 10 milliseconds, which we now provide. Our industry has always excelled at finding new products and customers for our key assets. Our core operating strategy remains unchanged, offering great products at the best value with continuously improving service. And that service is uniquely delivered by our 100% U.S.-based employees, 24 by 7, with a customer commitment supported by money-back guarantees. That core operating strategy has served us well. It fueled our organic and inorganic growth through legacy charter in 2013, which was 5 million customer relationships, to charter today with nearly 32 million customers. And now pro forma for the Cox transaction with over 70 million passings. We take the responsibility that we have to our local communities personally, and it's reflected in our operating strategy. With those three building blocks in place, I want to turn to what we're doing day to day right now to win in an increasingly converged market. Our competitors are all talking convergence, but we uniquely provide it now and in the future. Slide five of today's presentation clearly shows that we offer more for less than our competitors. Our results don't yet reflect that reality given the legacy reputation of cable. So we remain focused on clearly messaging and delivering our superior value, utility, and service to both new and existing customers. And we're doing that in different ways. We launched our $1,000 savings guarantee in February, which demonstrates the value we deliver in a very clear way. If you sign up for Spectrum Internet and switch to our more mobile lines from Verizon, AT&T, or T-Mobile, we guarantee $1,000 of savings in your first year, or we'll cover the difference. We also recently launched a new digital buy flow for our online channel. It better demonstrates our bundle value in savings versus competitors, and the new buy flow is achieving better yield. We're also actively migrating our existing basic customers to our newer pricing and packaging, giving them more product, including internet speed increases and mobile, for the same price or slightly more than they're paying, so they get more value, creating higher satisfaction and reducing their propensity to churn. Roughly 45% of our residential customers are now in the pricing and packaging launch in late 2024. With respect to providing superior utility, over 50% of our expanded basic video customers have activated at least one of our included streaming apps, with those activating taking nearly four streaming apps on average. Customer churn for expanded basic customers who activate is one-third lower, and it is meaningfully lower across all customer tenure. Keep in mind that nearly all video customers are also broadband customers, so that's a big help. We also launched our new Invincible Wi-Fi router in February, which effectively guarantees connectivity. When a home or business loses power, Invincible Wi-Fi's battery unit keeps the router running. It also comes with a backup 5G cellular connection, keeping customers online without interruption if a network disruption occurs. The upgrade and attach rate was much higher than expected, and we've had to prioritize our supply to a smaller audience until we get the right level of supply. It's a little frustrating short-term, but Invincible Wi-Fi is a great way to add utility to our service, which improves quality, lowers churn, and earns more revenue. It's a great example of an innovation that provides better utility to our customers. In mobile, we have the most value-rich plans in our footprint. A market-leading anytime upgrade program the most valuable repair and insurance plans, and the best international service plans around. And in service, I'll simply highlight what we've talked about previously, our continuous service improvements through telemetry improvements with our network upgrades, the use of AI in the network and frontline employee tools, same-day service and installation guarantees, often we're at your doorstep in an hour, and a commitment to a U.S.-based service agent. We are America's connectivity company. Before I turn things over to Jessica, I just wanted to provide a brief update on where we are with the COTS transaction. We've now received all the necessary federal and state approvals that we need to close, except from California. And we're working with the California Public Utilities Commission towards the summer close. Within a couple months of closing, we will launch the Spectrum brand and our pricing and packaging within the legacy Cox footprint. Our focus, as always, will be on product penetration and customer ARPU, not single product ARPU. And of course, growing free cash flow for passives. Cox's low mobile and video penetration rates are major opportunities, and that's what's going to assist us in migrating the customer base to our pricing and packaging in an efficient manner. That's something we've done successfully several times before, including with Time Warner Cable, Bright House, and Bresnan, and at Charter in both 2013 and the last 18 months, really. In addition to benefiting from better mobile and video products, the Cox communities will benefit from lower promotional and retail pricing, sales channel expansion, including field sales and stores, and our very complimentary B2B capabilities, which will help accelerate growth of both Cox and Spectrum business. As part of the acquisition, we're picking up talent, which we expected, and unexpected capabilities in B2B and network AI. And we're stepping into a very high quality network asset. The Cox network has been very well maintained with robust investment through the years. Cox's mid-split process is nearly complete, And it gives us plenty of competitive runway to implement high split and DOCSIS 4.0 after we finish those projects within the current spectrum footprint. We can then make that move at lower cost and at faster speed. That's what was included in our original plan, although we don't have to rush it. So we're looking forward to the completion of our multi-year investment programs, the near-tier matches to win in our current footprint, and the pending Cox closing and driving growth in that footprint. That, now I'll pass it over to Jessica.