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spk07: Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Consolidated Communications Second Quarter Earnings Conference Call. Please be advised that today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you. And I will now turn the call over to Jennifer Spoudy, Senior Vice President of Investor Relations and Corporate Communications. Jennifer, you may begin your conference.
spk08: Good morning, and thank you for joining the Consolidated Communications second quarter 2022 earnings call. We announced a material event yesterday afternoon with the sale of our wireless investments. therefore we're moving our earnings call up to speak to you all sooner our earnings release financial statements and Presentation are all posted on the investor relations section of our website at consolidated.com Please review the safe harbor provisions on slide two of the presentation today's discussion includes forward-looking statements about expected future events and financial results that involve risks and uncertainties and that may cause actual results to differ materially from those expressed today. A discussion of factors that may affect future results is contained in consolidated filing with the SEC. In addition, during this call, we'll refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation and press release. With me today on the call are Bob Udell, our President and Chief Executive Officer, and Steve Childers, our Chief Financial Officer. Following their prepared remarks, we'll open the call up for questions. I'd now like to turn the call over to Bob Udell.
spk02: Thank you, Jennifer, and good morning, everyone. I'm excited to share second quarter results, which include a few very important milestones associated with our company transformation to a fiber broadband company. In the second quarter, we delivered a record number of consumer fiber ads and turned net positive for broadband connections, offsetting DSL declines. This is an important milestone. Our build machine continues to execute well and produce a record 142,000 additional fiber passings constructed in the recent quarter. In the first six months of the year, we've built fiber to 226,000 locations We are on track to achieve roughly 1 million total fiber locations this year as we upgrade over 400,000 passings by the end of 2022. Each of these operating milestones reflect key inflection points and position us for a return to revenue growth with our fiber build execution. Additionally, we took an important step subsequent to the end of the quarter and announced the sale of our wireless partnership investments for 490 million, the proceeds of which will be invested in our fiber expansion and growth plan. This transaction enables Consolidated to further advance its transition to a fiber-first broadband company and is consistent with our strategic priorities focused on creating long-term value by simplifying our business and fully executing on our fiber expansion plan. Steve will provide some more details on this sale in his remarks. In the recent quarter, we added 9,600 Fiberfidium subscribers, a three-times increase from a year ago and 25% increase from our record first quarter ads. We also achieved total consumer positive broadband ads for the year. Most importantly, this fiber customer gain outpaced DSL losses for the first time in seven years. The vast majority, 80% of our net ads are new fiber subscribers with over 65% of those subscribers choosing our one gig service. For the full year 2022, we are on track to add three times the fiber net ads from 2021. Vidium is now available in 150 communities and we launched 2GB symmetrical speeds at the end of June. While it is still early, we are pleased with the customer interest and reaction of our 2GB promotions. And importantly, Vidium 2GB further solidifies our position as the technology leader in the markets we serve. We continue to see significant growth in data consumption. Our fiber customers consume two to three times more data per month than DSL customers, and upstream bandwidth usage and demand is continuing to increase. An open vault study noted upstream bandwidth has tripled over the past three-year period. Fiber is clearly the superior product and critical to satisfying future market demand. And our fiber product is designed to make broadband easy. This means simple plans, transparent pricing, and a digital customer experience, which makes it easy for customers to do business with us. Our symmetrical speed, premium whole home mesh Wi-Fi, no data caps, and no contract service is game-changing for the markets we serve. We offer convenient installation appointments and have a dedicated premium customer support channel. All of this is to create the best experience possible for our customers. Customer satisfaction closely, and Fidium has been very well received, as measured by our industry-leading net promoter score of over 50. This high score reflects all the elements we have been working so hard on to ensure Fidium delivers the best customer experience possible. Fidium fiber broadband is really a game changer. Turning to cohort penetrations, our cumulative 2021 new fiber build cohorts continues to exceed our penetration target of 14% at the 12-month mark. In addition, our pre-built base cohort penetration has increased 80 basis points to 21% year-over-year. This increase in our pre-built fiber base reflects the positive receptivity we've experienced in our communities. As a reminder, our cohort penetration target for year two is 24% and year three is 33%. Terminal penetration will be closer to the 40% range over a five-year horizon where we have a duopoly parity. I thought it might be useful to give you some additional context on our fiber markets. We'll break it out into three tiers. 65% have a population of 10,000 or less. Roughly 25% have a population between 10,000 and 50,000. And our largest markets are over 50,000 and make up 10%. As a reminder, ninety percent of our markets have just one cable competitor and no other fiber provider and by introducing fiber we are providing an alternative superior technology that didn't exist previously in these communities that said we're not seeing anything notably different from last quarter as far as the competitive environment there's no new entrance or significant responses where we have upgraded to the fideon fiber product, and we are building the best fiber network and have the best product with the best customer experience. We continue to generate very strong pre-signup activity where we are launching Vidium. We're using a targeted digital and local media strategy to introduce Vidium and provide easy options to pre-signup via our self-service and enhanced website. June was our best month for net ads since we started the build, and July looks to be well exceeding it. Turning to our fiber bill plan, which is outlined on slide five, we are on track to upgrade over 400,000 locations this year. By the end of 2022, we'll have roughly 1 million fiber passings and we'll have 2 million fiber locations when we complete our planned vidium fiber upgrades. Our fiber expansion plan represents significant transformation and growth opportunities for our consumer, commercial, and carrier channels that provides us the opportunity to leverage these assets for multiple revenue streams. Our network architecture and core upgrades enable 10 gig capabilities and will enable 100 gig services to the edge in the future, really future-proofing our product portfolio. We see additional opportunity in 2023 for up to $100 million in broadband partnership and grant funding projects across just a few of our states. We're actively pursuing all opportunities that align with our build plan and help offset rural high-cost passings, allowing a return consistent with our model. As demonstrated by our very successful track record in securing and executing public-private partnerships, we are well-positioned to capitalize on incremental government programs. There continues to be strong demand for faster speeds and fiber services, which we believe is a superior product. Our plan is clear, and we are executing well on it. We have several meaningful fiber deployment advantages, including our incumbent position. We know these markets very well and have a fiber rich carrier class network that we can cost effectively extend. We have existing conduit capacity for varied facilities and pull access where we have aerial fiber. Approximately 80% of our fiber is aerial in Northern New England and in close proximity to our existing fiber backbone facilities. And we have very experienced teams and access to contract workforce which allows us to flex, ensuring we complete our builds on time. Turning to our commercial and carrier channels, we continue our long track record of growing data transport revenue across both channels in the second quarter. Our commercial go-to-market strategy leverages our extensive fiber network and our solutions-based sales approach, allowing us to become a trusted advisor to our customers while providing simple solutions to complex problems. One success I'd like to highlight in the second quarter was with a Champaign, Illinois-based educational network. We designed and delivered a 10-gig switch Ethernet network across 23 locations. This is a great example of solving a customer's bandwidth pain point and delivering a diverse, scalable network solution. Fair revenue benefited from timing related to contract negotiations and a one-time fiber IRU sale booked in the second quarter. As we have previously discussed, The fiber to the tower business is under some rate-re-rate pressure, but as a result of these negotiations, we are seeing an opportunity to bid and win on new towers. New fiber passings within our unique routes provides opportunities for us to leverage the same fiber to grow commercial revenues. We increased our lit buildings 10% in the second quarter and had 90% of our new sales activity on our network, which correlates to higher margins, increased opportunity to upsell, and a greater flexibility to ensure the best customer experience. Now, let me address something on everyone's mind, and that's economic conditions. We are beginning to see some slower decision-making on the part of enterprise customers. However, our sales funnel remains solid. It's just from quote to signing, it's taking a little longer. In addition, fuel and energy costs are increasing, and we're taking steps to mitigate these increases. We are fortunate that we built up our inventory and worked ahead on our fiber builds where possible, allowing us to accelerate some of this year's build while keeping our unit costs down and overall build costs lower than they otherwise might be. I will now turn the call over to Steve, who will provide more insight on our second quarter financial results.
spk10: Steve? Thanks, Bob, and good morning to everyone. Today, I'll begin with an update on the sale of our interest in our Verizon Wireless Limited Partnerships. Yesterday, after market closed, we announced the sale of these investments to Verizon Wireless for gross proceeds of $490 million. As a reminder, Consolidated had interest in five limited partnerships with Verizon, with our ownership ranging from 2.3% to almost 24%. Three of these partnerships were located in Pennsylvania. Two were in our Texas market. We have no employees, operating expense, or capital supporting these assets. which generate approximately $39 to $41 million in annual cash distributions. Related to the tax impacts of the sale, we estimate the federal taxable gain is fully shielded by our NOLs, and we estimate potential incremental state income cash taxes of between $10 and $15 million. The closing timeline on one of the partnerships is promptly following the agreement being signed, and the remaining partnerships are expected to close by year-end 2022. Net proceeds, which we estimate to be approximately $470 million, will be used to investment in our fiber expansion and growth plan. Cash distributions from these investments are paid one quarter in arrears. We received $11.3 million in the second quarter and expect normal distributions in Q3. We currently estimate that our Q4 distributions will be reduced by $3 to $5 million based on the actual time to close each transaction. I'll now provide an overview of our second quarter results, and I'll update our 2022 full-year guidance. Total operating revenue for the second quarter was $298.4 million, and adjusted EBITDA was $107.5 million, representing a 36% adjusted EBITDA margin for the quarter. As previously disclosed, effective January 1st of this year, the annual $48 million in CAF II funding we had received transitioned to $6 million under the Rural Digital Opportunity Fund. The subsidy reduction impacts revenue and EBITDA by approximately $10.5 million on a quarterly basis in 2022. CapEx for the quarter was $179.1 million. I'll update our full year CapEx guidance in just a bit, but first I want to call out a few things. The second quarter is typically a peak construction period, and we took advantage of favorable weather conditions to deliver a record quarter with more than 142,000 upgrades. This would be approximately 40,000 or 40% more than our original Q2 target, and our average cost to pass would account for roughly 24 million of Q2 CapEx. Additionally, we continue to do substantial pre-work on locations that will be completed and released to marketing in the last half of the year, with an added estimated cost of $40 million to our construction and work in process. Our construction and engineering teams are actually working about two quarters ahead This work ahead focus is critical to making inventory available to sales on a rateable basis each month. Also, with consideration of supply chain challenges in the current inflationary economic environment, we continue to build inventory and selectively accelerate the build. Now, I'll review revenue by customer channel. Turning to our consumer channel, total revenue was 118.6 million, down 5.1% compared to a year ago. Normalizing for the impact of the sale of our Ohio assets, revenue declined 3.9% year-over-year. Overall consumer broadband revenue in the second quarter was $67.6 million, up approximately 0.4%. I'll get it right in a second. After normalizing for our Ohio sale, consumer FiberNet ads were up three times from a year ago as our customer acquisition engine ramps. Consumer fiber revenue was 19.2 million, up 4.2 million, or 28% year over year. And we have added almost 26,000 consumer fiber connections in the last 12 months. So in just six quarters of the build plan, and for the first time in years, we have achieved total company consumer net positive broadband ads. Consumer fiber revenue was $64.95 in the second quarter. up sequentially by almost a dollar, driven by speed mix as customers are taking higher speeds and promotional pricing is rolling off after the first year of service. Consumer voice revenue was down 3.5 million or almost 9%, primarily due to continued erosion with access lines and associated services. Video revenue declined 2.4 million or 14.5% year over year. Our transition to over-the-top video services has enabled us to cap linear video deployments. Video programming costs are down $4.8 million, improving margins and free cash flow. Commercial revenue was $104.2 million, down $852,000 for the quarter. Data services revenue was $57.1 million in the second quarter, up 0.4% year-over-year, primarily driven by growth in dedicated internet services. Business systems equipment and custom job installation revenue was up 2.3 million in Q2 compared to last year, building the momentum our sales teams realized throughout 2022. Offsetting this growth is continued voice erosion, which is occurring at a slightly higher rate in Q2. Access line erosion combined with lower slick and long-distance usage charges drove the decline. Consumer data and transport revenue was $36.3 million, up 2.3 million or 6.8%. Our carrier revenue included $3.1 million in a one-time fiber IRU sale. Carrier revenue also benefited by the delayed impact of recognizing new pricing on fiber-to-the-tower contract renewals. that had been expected to be a revenue reduction in the range of 10 to 12 million for 2022. It is now estimated to be in the range of 7 to 9 million, primarily in the last six months of this year. Our carrier team is actively trying to minimize the impact in 2022, as well as for the run rate going into 2023. As Bob mentioned, as a result of the ongoing negotiations, we have the opportunity to add new towers and other business opportunities with the major carriers. Network access revenues totaled $24.8 million, down $6.3 million year over year. Over 60% of the decline was driven by lower universal service fund revenue, with the balance primarily coming from special access. As a reminder, the FUSI charge is a pass-through, so it is EBITDA neutral. Operating expenses were $211.4 million, an improvement of $2.9 million, or 1.4% from a year ago. The primary drivers were $4.8 million decline in video programming expense, a $3 million decline in the universal service fees, which was offset by $2.1 million in fuel and utilities and travel expenses, combined with one-time expense related to carrier IR use sale. Net interest expense was $30.2 million, a decrease of $15.3 compared to a year ago, primarily as a result of non-cash interest of $10.9 million. on the Searchlight Note, which has now converted to perpetual preferred stocks in late December. The remaining reduction in interest expense was primarily the result of the maturity of an interest swap agreement in July 2021. Given the current rate environment, we want to remind you that approximately 77% of our debt is fixed. We have a $500 million interest rate hedge against our $1 million term loan. or $1 billion term loan, and when combined with our $1.1 billion senior notes with fixed coupons, our overall cost of debt is 5.86%. Additionally, you can see our capital structure on slide 9 or slide 8, along with the pro forma view of our liquidity, giving effect to the net proceeds of the sale of our limited partnership wireless interest. Our net debt leverage was 4.4%. six times at June 30th and on a pro forma basis, our liquidity improves from $293 million to over $850 million. Additionally, we have no debt maturities until 2027. The additional capital infusion puts us in a very strong position to support our fiber expansion plan. As a reminder, we announced an agreement to sell our Kansas City assets in March, which we estimate to generate net proceeds approximately $90 million and is expected to close by year end, following routine regulatory approvals. It is currently under review with the FCC Team Telecom. Additionally, we continue to review all markets in our portfolio for investment or monetization. We believe we have the ability to raise additional capital through potential asset divestitures. Our criteria in this review includes evaluating the fiber build opportunities, market-level competition, and potential valuations. Today, we are updating our 2022 guidance. Our outlook is outlined on slide 9. First, adjusted EBITDA for the year is now expected to be in the range of $400 to $410 million. Our updated outlook for adjusted EBITDA reflects primarily the following three factors. First, our Q4 cash distributions will be impacted due to the sale of Verizon Wireless Investments. We currently estimate that wireless cash distributions could be $3 to $5 million less in the fourth quarter based on the time to close each transaction. We are seeing inflationary pressures on primarily utility and fuel costs and expect our operating expenses to increase between $4 and $5 million in the last half of the year. We are taking all steps necessary to minimize the impact of these increased costs. Third, additionally, we are experiencing slightly higher erosion of our voice access revenues. We expect this to impact earnings by approximately $3 to $5 million. Capital expenditures are now expected to be in the range of $565 to $585 million. The higher CapEx level primarily reflects additional investment in pre-construction work and securing inventory for fiber upgrades. to be released in 2023, and also for some inflationary cost pressures. There is no change to our plan to upgrade over 400,000 locations this year, and we are on track to achieve this target. Cash interest expense is now expected to be in the range of 125 to 129 million, and cash income taxes are now expected to be in the range of 12 to 17 million. The adjustment considers potential 10 to 15 million state income taxes associated with the wireless investment sale. And we still do not expect to be a full cash taxpayer until 2026. With that, I'll now turn it back over to Bob. Thanks, Steve.
spk02: We're executing well on our consumer fiber expansion plan, having achieved record fiber subscribers and net positive total broadband connections this quarter. Quite frankly, the first time in over seven years. We've continued our long track record of growing commercial and carrier data transport revenue. We're enhancing the customer experience across all channels as shown by our industry-leading NPS scores. And we're disciplined and focused on ensuring we have a capital structure to support our growth plan. We significantly improved our liquidity and added flexibility with over 600 million aggregate divestitures of non-core assets announced in the past year. As we look to the future, we are focused on growth and creating long-term value for our shareholders. Operator, we will now take questions at this time.
spk07: Thank you. I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. And we will pause for just a moment to compile the Q&A roster. And we will take our first question from Greg Williams with Cowan. Your line is open.
spk01: Great. Thanks for taking my questions. Just one on the Fibre build. You mentioned and you reiterated the $400,000 build for the year. I'm just curious, does this Verizon sale maybe help accelerate that? Other carriers have noted when they've gotten more capital, they've accelerated their build. I'm just wondering if that's the case here. And you mentioned your second quarter build was better than expected. Second question is just on further divestitures. It sounds like you're still looking. I figured you maybe would have taken a breather after Kansas City, Ohio, and now Verizon. So you are still exploring other asset sales. And what does that environment look like given rising rates? Thanks.
spk02: Yeah, thanks, Greg. I'll take the build question first and then get to the focus on divestitures. You know, we're looking – always at the flexibility as we execute on our fiber expansion plan, which is absolutely key to our growth. Right now, our plan is to build the 400 for this year. We continue to solidify our view of where we go first to accomplish the full 1.6 million build out. And so what I think this does is certainly ensures that build-out plan and will remain opportunistic as we pursue public-private partnership or the infrastructure funds being made available from a federal government perspective and allocated by the NTIA. That's a key focus on ours, so we're going to remain flexible, and for now we're committed to the $1.6 million, looking opportunistically at ways to grow it. Divestitures, you know, it's all about focus. This is a total transformation of our business. And so as we've said, you know, and we're doing exactly what we said we were going to do, we're going to continue to evaluate our portfolio and opportunistically sell or divest of assets that allow us to, you know, advance a deeper penetration of our fiber build and to expand our fiber footprint. So that's our focus, and the 70% coverage I think will exceed as we continue to focus our capital structure and our execution on the fiber transition.
spk05: Great. Thanks.
spk07: And we will take our next question from Michael Rollins with Citi. Your line is open.
spk03: Hi, Mike. Oh, thanks. This is Anthony on for Mike. Thanks for your questions. Just a follow-up. As you consider future asset monetizations and impacts to EBITDA, do you have a leverage-neutral target in mind on a pro forma basis? And then also on the macro, you talked about elongated decision-making for enterprises. On the consumer side, are you seeing any impacts on collections activity with inflationary pressures on consumer wallets? I do.
spk05: Take the first part.
spk10: Yeah. Hey, Anthony. This is Steve. Good morning. Thanks for the question. Yeah, with respect to the leverage neutral target, as we look at the investors, as I mentioned in my prepared remarks, I mean, we're really evaluating. Number one, we're in 22 states today. We've identified seven to eight that are key fiber investment markets today. We have good properties across the footprint. All of them are producing cash, none are a distraction. to management, and we're just looking, taking the opportunity, like, where are we going to build next, and if we're not going to build, what's, you know, is there a monetization opportunity to fund, you know, maybe an accelerated build. So when we look at those, we evaluate based on, you know, number one, are we going to build, what's the competitive dynamic, what's the cash flow characteristic of that individual sub, competitive environment, et cetera, et cetera. But when we come, most importantly, if we're considering It really is about valuation and about the impact to leverage. I mean, obviously, this Verizon transaction really helps us out from a cash and leverage perspective. I would say our long-term targets are still every dollar that we're raising from Verizon, these incremental targets. asset sales every dollar is going to be invested back into the fiber business but over time as we really execute on the fiber build plan we would ultimately expect to be even as a growth company be kind of in the three range over time so as a reminder it is star one if you would like to ask a question
spk07: And we will take our next question from Anna Goschko with Bank of America. Your line is open.
spk06: Hi, thanks very much. So a few questions. So first, on the 9,600 FiberNet ads in the quarter, I know you mentioned that 80% of those are new to the company. Could you provide more color on where those are coming from? And then two, I think we've heard quite a bit from some of the other players in your space about the impact of, I guess, a gridlock within the housing market, limiting moves and therefore limiting the ability to capture new subs. We'd like an update on what you think the housing market is like in your markets and That's a headwind to subscriber ads.
spk05: Yeah, thanks, Anna. Let me start with the housing market first and then get back to your first question.
spk02: With regards to what we see in our markets, as I described the size of the markets, they're primarily suburban and rural markets. And it seems to have been post-COVID and during COVID an attractive environment for people to migrate to. And so while the move activity has subsided some, and new move-ins certainly help you catch customers making a change, we've really got a compelling product that we're bringing to communities that haven't had you know, a one gig symmetrical, even a one gig, but in many cases a symmetrical when you consider the size of these markets and the level of competition based on the facilities infrastructure of our competitor. And remember, you know, it's 90% a duopoly environment, and some of our environments don't have any cable overlap at all, and very few have a third provider. And so I think we're in an excellent position to remain somewhat insulated from, I wouldn't call it a gridlock, but the slowdown that we've seen in housing sales and moves. And as that relates to recession, we joke privately amongst the peer group for years that we've seen recessions actually on a comparable basis treat our industry pretty well. So that's probably enough on the housing. With regards to the 9600 Fibernet ads, the new subs are coming from just consistent with what I just mentioned. This is an attractive product. And it's changing the way people work and live in these small communities and raising the economic prospects of them. And so it's really something that I think sells itself and Our focus on digital advertising and digital acquisition, I think, is helping us get to people and expand the service to those markets. And so that's why we see 80% new subs.
spk06: Okay. So I think the kind of main question is, is where you do compete with cable, do you feel that you're attracting or winning any shares from cable, or is it really sort of greenfield outside of that?
spk02: No, I think it's us winning customers from whoever the competitor is in our market, largely different cable TV service providers.
spk06: Okay, great. And then I apologize if I missed this, but I know in the past you have cited an average cost for fiber passing, which I think has really been kind of an industry low, so in the past, $550 to $600. Also, the average cost to connect at $700. Wondering how that's potentially changing, one, with regard to any inflationary impacts, two, as you move further along in your bill plan, are there just sort of longer passings and kind of more difficult passings that are more costly to achieve.
spk10: Hey, this is Steve. I will start, and I'm sure Bob will want to jump in here. But I think you're absolutely right. The way we have talked about cost to pass in the past is like, you know, basically 550 to 600 on an aggregate basis, averaging across our entire footprint. As Bob mentioned in the FTT thesis early, we have a significant cost advantage in northern New England based on the amount of aerial fiber that we have. So I think we've been averaging probably the upper end of the 600 as we've done more work in our legacy markets and are doing more buried or underground type construction in those markets. And I think with the inflationary question, is, you know, we did increase our guidance modestly for what we think inflation will be for the last half of the year. So I would say, you know, there could be a potential, you know, let's just say 5% to 8% increase in average cost to pass here for the duration. But I think over time, you know, the future cost of build is really going to be dependent upon the market, how we fine-tune the build plan, the markets we're going, the balance between aerial in underground, the length of the drops, et cetera, et cetera. So I think we still have really unique assets that we, you know, I think will still be well under the peer group averages for the cost to pass. But, you know, over time it could go up based on where we're building at. So, Bob, do you want to add anything to that?
spk02: Yeah, I think, you know, if you look, you know, You know, opportunistically, we're building ahead, and that's working to our advantage as we see headwinds from an inflationary perspective. I can't tell you that that was, you know, totally planned. You know, it started with the opportunistic or started with getting in front of the supply chain, but it's resulting in our ability on a unit cost basis to keep, you know, these costs of homes passed or new addresses low comparatively. with those inflation headwinds. So I think we're in a good spot.
spk06: Okay, thanks. And then if I just speak in, are there any updated targets that you have on when you believe you can stabilize either revenue or EBITDA, you know, on a, let's say, sequential basis and, you know, which expect to come first?
spk10: Well, this is, so I guess the way I would look at it, if you talk about, if you look at the moving parts on, our strategic growth revenues being fiber, consumer, broadband. That is starting to outpace, or it is outpacing, the drag on DSL erosion. We're really focused on driving strategic revenues and data and transport for commercial and carrier, but we are working through the carrier reset, tower repricing that I mentioned. So I think you'll start seeing sequential growth revenue growth probably in early 2023. Again, we need to continue to work hard on mitigating the voice erosions, but really continue to invest as we are in the fiber to the prim and supporting the commercial and carrier opportunities where we can.
spk06: Okay, well, that's great. Thanks very much.
spk04: As a reminder, if you would like to ask a question, it is star one.
spk07: Pardon me. And we will take our next question from Joe Choi with FPA. Your line is open.
spk09: Hey, congrats on the consumer broadband net add. Question for you on the wireless partnership sales and This question is coming from you from the debt side of the world. So the proceeds will be used, will be invested into the fiber expansion. Can you confirm whether or not that reinvestment, that investment will be occurring within the collateral package that's supporting the credit facility and the secured notes?
spk10: Yeah, I mean, all the assets supporting the FiberBuild program are unrestricted subs where the operating assets are at. So, yes, every dollar of the capital raised from Verizon will go through to the benefit, eventually go through the benefit for the restricted group and with the underlying collateral package for that. But just to be clear, just to make sure we're not talking past each other, I would refer you to the July 1st AK that we put out where we identified creating an unrestricted sub to transfer the wireless partnership assets there, but all the cash is going to come back to, over time, come back to the restricted group for the benefit of the operating properties.
spk09: Right, right. I did read that release. So you created an unrestricted sub. You pulled you put the wireless partnership assets in there, you know, effectively out of the collateral package, then you sold it. Correct. And then that cash, that cash, you're going to use that cash to invest into the fiber network. And that, and that reinvestment, I guess my, just, just to be clear, the question was that money, that cash that's being invested in the fiber network that's occurring within the like existing subsidiaries that are guaranteeing and and securing your the the debt facilities is that that is that they might understand or not correctly okay that's okay so it was removed from the collateral and it's effectively going back in yeah probably not at one time but yeah right okay okay And was there, so the unrestricted subsidiary designation, was there, because from what I understand, there was an ability to do this vis-a-vis the asset sales provision. Is there a specific rationale behind going with the unrestricted subsidiary designation instead?
spk02: This is Bob Udell. It was primarily to have maximum flexibility to get the best outcome for raising the capital. And so we thought the time was right, and we didn't know what vehicle we might use, and so the board considered many options, and it was just a step to maximize our flexibility.
spk09: Gotcha. Okay. All right. Well, thank you for taking the questions, and again, congrats on the milestone there. Thank you. Thank you, Joe.
spk04: As a reminder, it is Star 1 if you would like to ask a question.
spk07: And there are no further questions at this time. I would like to turn the call back over to Mr. Bob Udell for any additional or closing remarks.
spk02: Thank you. And thank you all for joining us today. We think this is a special time to be in this industry and a very powerful opportunity to be implementing this fiber transformation plan at Consolidated. We appreciate your support and your interest and look forward to updating you on our next call. Have a great day.
spk07: Ladies and gentlemen, this concludes today's conference call. We thank you for your participation and you may now disconnect.
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