Liberty Broadband Corporation

Greetings. Welcome to the GCI Liberty 2025 Q3 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press star 1 on your telephone keypad. As a reminder, this conference will be recorded today, November 5th. I will now turn the call over to Shane Kleinstein, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the prospectus forming part of GSA Liberty's registration statement, the most recent forms 10Q, followed by GSA Liberty and Liberty Broadband with the SEC. These forward-looking statements speak only as of the date of this call, and GCI Liberty and Liberty Broadband expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in GCI Liberty or Liberty Broadband's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures for GCI Liberty, including adjusted OIBDA, adjusted OIBDA margin, and free cash flow. Information regarding the required definitions, along with the comparable gap metrics and reconciliations, including Schedule 1, can be found in the earnings press release issued today, which is available on GCI Liberty's website. Speaking on the call today, we have Ron Duncan, CEO of GCI Liberty, Brian Wendling, GCI Liberty's Chief Accounting and Principal Financial Officer. And during Q&A, we will answer questions related to Liberty Broadband. Members of both GCI Liberty and Liberty Broadband Management and GCI Management will be available to answer questions. With that, I'll turn the call over to Ron.

Good morning. GCI had a solid quarter building on an already strong year, and the business is performing largely in line with expectations. We are proud to say we are tracking towards a record adjusted EBITDA in 2025, a huge milestone for the company. Our consumer business continued to add wireless lines. Our business unit continues to deliver the benefits of last year's strong sales cycle. and we have streamlined to become a pure-play connectivity provider following the exit of our video business this quarter. As mentioned last quarter, our rural operations this year have been adversely impacted by an outage from a fiber break in the Arctic Ocean in January on a third-party network in which GCI uses capacity. In early September, our partner was able to repair the broken fiber. We moved quickly to restore our consumer wireless and internet customers as well as business customers that had lost service. All customers are operational as of the end of the third quarter. Unfortunately, in early October, Typhoon Halong hit southwest Alaska with devastating consequences. Two villages, Kipnuk and Quigillingock, were destroyed, with dozens of other villages very hard hit. While we do not expect any material impact on our business in the near term, We are still in the early days of assessing the longer-term plans for a rebuilding effort in the broader area, including the potential loss of locations served for clinics and schools. We grew consumer wireless subscribers 2% year over year and in the quarter with 207,500 subscribers. During the quarter, we added 500 consumer wireless lines. On the data side, we saw a 3% decline year over year ending the quarter with 153,100 cable modem subscribers. During the quarter, we lost 1,400 data subscribers. The decline of data subscribers over the past year is largely due to competition, including wireless substitution, as well as the aforementioned break on the third-party network in which GCI uses capacity. During the third quarter, we exited the video business. This will not have a significant impact on revenue or cost of sales, but will allow us to avoid future capital expenditures in a business with no margin and to focus on the core connectivity products that our consumers want most. As I mentioned last quarter, the adjusted EBITDA growth rates we reported in the first half of the year benefited from a series of non-recurring tailwinds with an expected deceleration in the back half of the year. We fully lapped the upsell cycle in schools, which began in the third quarter of 2024. We also incurred additional SG&A spend in the third quarter as compared to the prior year due to increased personnel expense, including higher health care costs and expenses related to accrued employee incentive payments. We are proud of the progress both financially and operationally this year. We remain focused on improving our infrastructure to deliver high-quality service to our customers, furthering our rural expansion to bridge the digital divide, and increasing the efficiency of our business. I'll go into a bit more detail in several areas. Starting with our network infrastructure, we are offering two and a half gigabit broadband connectivity everywhere that has fiber middle mile, which covers an overwhelming majority of our customers. Material progress is being made in improving the broadband network in Anchorage as we are in the process of upgrading the core, reducing node sizes, and upgrading to 1.8 gigahertz. Our initial deployment is yielding positive results, and we plan to significantly scale the deployment of our hybrid fiber coax network next year. All the work that we are doing is DOCSIS 4.0 or 4.0 capable, enabling speeds that are multiple times of that which we have today. We will be rolling this out to other markets starting in 2026, allowing us to get to 5 gigabits and ultimately beyond. We believe these changes will not only lead to higher speeds, but also a network with fewer maintenance requirements. The strength of this offering positions us well against competitors today and into the future. On wireless, our unlimited test drive promotion can continue to support subscriber growth in the third quarter. As a reminder, this promotion offers our broadband customers an attractive discounted price to gain access to unlimited broadband and add a wireless line free of charge. We expect to roll out other new pricing and promotional offers next year to best maximize quality and value for our customers. Through continued investment in our network, we believe we will be able to offer 5G wireless service to all of Alaska over the coming years. We continue to bridge the digital divide in Alaska with our rural expansion. On the Alaska plan, we expect to complete the first phase and meet our build-out requirements in 2026 and increase wireless speeds in the communities we're serving. Additionally, the FCC's new Alaska Connect Fund will extend the Alaska plan and increase the amount of funding support, which will aid in the deployment of 5G wireless throughout Alaska. Turning the bead, GCI was provisionally awarded, subject to NTIA approval, three subgrants totaling over $140 million. These subgrants will support the build out of infrastructure to and within communities in the Yukon Cusp, the Quim Delta, and the expansion of GCI's Anchorage Local Access Network to four new neighborhoods. Any funding that GCI is ultimately awarded will offset our capital costs as we expand in unserved locations. Other items. From a macro perspective, looking at the Alaska economy, in mid-October, the administration announced plans to open the Arctic National Wildlife Refuge to drilling. This increase in oil and gas activity, along with the potential deployment of a gas pipeline, could grow the Alaska economy and provide an opportunity for increased demand for our services. And finally, as we announced today, we intend to launch shortly a rights offering to raise approximately $300 million in proceeds. In the offering, all holders of our common stock would receive transferable rights to acquire shares of GLIBK at a discount to the market. Our chairman, John Malone, has stated his intention to fully support the offering by exercising his rights in full and oversubscribing for any remaining shares available. We intend to use the proceeds for general corporate purposes, including potential future M&A. We believe this is an attractive source of liquidity and will provide value to our shareholder base. We refer you to the related registration statement being filed later today for more details. In summary, We continue to deliver high-quality service to the state of Alaska with both the breadth and caliber of our network. We believe the quality of our infrastructure and durability of our financial results will drive value for our customers, partners, and shareholders. With that, I'll turn it to Brian to discuss the financials in more detail.