Frontier Communications Parent, Inc.

Good morning. Thank you for attending today's Frontier Communications fourth quarter 2023 earnings call. My name is Cole and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I'd now like to pass the conference over to our host, Spencer Kern. Please go ahead.

Good morning and welcome to Frontier Communications' fourth quarter 2023 earnings call. This is Spencer Kern, Frontier's head of investor relations. Joining me on the call today are Nick Jeffery, our president and CEO, and Scott Beasley, our CFO. Today's presentation can be followed within the webcast available in the events and presentation section of our investor relations website. Before we start, please see our safe harbor disclaimer on slide two. This is a reminder that this conference call may include forward-looking statements that involve risks and uncertainties that may cause actual results to differ materially from those expressed today. During the call, we may also refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation, press release, and trending schedule. With that, I'll turn the call over to Nick.

Thanks, Spencer. Good morning, everybody. I'm here with Scott today in our new Dallas headquarters, and we're looking forward to sharing our Q4 results with you and providing 2024 guidance. But before we do that, I'd like to take a moment to ground us on where we are today, nearly three years into this great American turnaround story. From the beginning, we said 2023 would be the year that we would return to sustainable growth. And I'm pleased to share with you that we did exactly that. For the first time in more than a decade, we achieved full year EBITDA growth. And this accomplishment is the result of our team's relentless execution of our strategy. It's the culmination of the strong operational results we've achieved quarter after quarter. And it's the most compelling evidence yet that our Fiber First strategy is working. Today, we are the largest pure play fiber provider in the country. We've scaled our fiber build ending the year with 6.5 million fiber passings. Easy math puts us at 65% of the way towards our goal of building to 10 million fiber locations. And we've connected a record 2 million customers to our high-speed fiber broadband network. And that's noteworthy because our fiber broadband customers now represent two-thirds of our total customer base. And this is a remarkable evolution in just three years. As fiber continues to become a greater share of our business, we will become an even stronger company. So how do we build this leadership position? Well, if we turn to slide five, we can see that the answer is in the consistent execution of our strategy. Build fiber, sell fiber, improve customer service for all customers, and increase our operational efficiency. So let's take a closer look at each of these components. It all starts with our fiber build. Last year, we increased our fiber footprint by 25%, and we've doubled it since we began our build back in 2020. We continue to stand out from the pack as the only scaled fiber builder to add more fiber passings year after year. The second pillar is selling fiber. Fiber is a superior product, and as data usage continues to grow exponentially, this only becomes more true. There's a need for speed that only fiber can deliver, and that's showing up in our customer growth. Today, we have 50% more broadband customers than we had three years ago, and I'm proud to share that last year we gained market share against every competitor in every market we serve, and we did so whilst also growing ARPU. Scott will talk more about our fourth quarter performance shortly, but to give you a preview, We grew broadband customers by 19% year over year, with ARPU up 5%. Next, let's talk about the improvements we've made to our customer service. Last year, we saved our customers a collective 50 years of time on the phone by eliminating 2 million service calls from a total of nearly 9 million the year before. Even more impressively, we did so whilst growing our broadband customer base by nearly 20% over the same period. This was the result of us putting the customer firmly back at the center of our universe. We have removed thousands of customer irritations and invested in digital self-service tools like our app and our AI chatbot. We made it easier for customers to interact with us digitally, and in many cases, eliminated the need for customers to contact us at all. The outcome? churn is down to near record levels, and NPS has skyrocketed. And we are now the industry leader in fiber broadband customer satisfaction as measured by independent NPS research. And finally, we've become more efficient. We've simplified the way we work, introduced new technology to improve how we operate, and right-sized our real estate footprint. This focus on operational efficiency has achieved over $500 million in cost savings since 2021, and that's double our initial target. If we take a step back and look at our performance over the past three years, we've clearly delivered an operational turnaround. And if we turn to slide six, you can see how these results are now driving sustainable financial growth. I love this chart. It clearly shows how building and selling fiber is delivering EBITDA growth. You can see here that our strong execution drove fiber EBITDA growth of 14% in 2023, which lifted total company EBITDA growth into positive territory for the first time in a decade. This is a critical inflection point that we've been working towards over the past three years and an important milestone in our progress towards unlocking the next phase of our growth. Underpinning these results is our fiber broadband revenue, which grew 20% in 2023. That's up from 13% in 2022 and 12% in 2021. We've created a model for driving sustainable growth. It's a virtuous circle. We put fiber in the ground. We connect more customers to our superior fiber product. We offer higher gig speeds and value-added services, delivering higher ARPU, which all leads to revenue growth. We invest that revenue back into our company for the benefit of our customers and our business. It's repeatable and scalable, and there's value created at every turn of this flywheel. With the strong results we delivered in 2023, I'm confident that we will accelerate our growth in 2024 and beyond. Which brings me to the priorities for this year, which you can see on slide seven. I'm going to share an overview of our plan, and then Scott will provide more detailed 2024 guidance later in the call. Firstly, we'll execute our strategy with determination and rigor, just like we did last year and the year before that. Specifically, we plan to build 1.3 million fiber locations again this year. We plan to add more fiber broadband customers in 2024 than we did in 2023, whilst also accelerating ARPU growth at or above 3% to 4%. And we plan to improve our customer service and streamline operations to deliver benefits to our customers and to our bottom line. Secondly, we plan to accelerate fiber revenue growth, which will drive overall company revenue growth in 2024. We expect this top line growth to come from an acceleration in consumer revenue, with business and wholesale remaining relatively stable. And importantly, we plan to accelerate EBITDA growth into the mid single digits this year. So let me wrap up by saying a huge thank you to the builders of Gigabit America. Everyone at Frontier played a role in making 2023 a success, and I'm confident that 2024 is going to be our best year yet. Before I turn it over to Scott, I want to remind everybody that we're planning to host an investor update later this year. The event will be held in the second quarter, and we plan to provide additional detail on our longer term financial goals and a path for driving additional shareholder value. So, please stay tuned for more information. Scott, over to you.