Starry Group Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Steric Group Holdings' first quarter 2022 earnings call. As a reminder, this conference is being recorded. I would like to turn the conference over to our host, Ben Barrett, Vice President, Investor Relations. Ben, please go ahead.

Thank you and good morning, everyone, and welcome to our first quarter call. I'm Ben Barrett, Head of Investor Relations for Steric. Joining me on the call today are Chet Knojia, our CEO, Komal Mitra, our CFO, and Alex Mule-Burto, our COO. By now, you should have received a copy of Starry's earnings release and investor supplements for the first quarter 2022 results. If you have not, copies are available on our investor relations website. Before we begin, I would note that some of our comments today may be forward-looking. As such, they're subject to risk. and uncertainties described in Starry's earnings press release and SEC filings, and results may differ materially. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors. Reconciliation of non-GAAP financial measures where appropriate to the corresponding GAAP measures can be found in the company's earnings release and other filings for the SEC.

With that, I'll turn the call over to Jeff. Thank you, Ben. Good morning, everyone, and great to be starting our first-ever earnings call here. I think I've met a lot of folks over my career here, but just for those who don't know me, a quick two-second bio. I'm one of the co-founders and CEO of Starry. I'm an engineer by training, and I've had the diseased career of starting multiple technology companies starting in early 2000. And this entity, Starry, was really started right after my last company, which was Aerea, was shut down. And as the team and I were sort of thinking about what we really wanted to do next, and this is just a fantastic team, and everybody had a desire to continue to work together, we thought building a broadband company made a lot of sense for a variety of different reasons that I'll touch upon as well. The opportunity in broadband is to be able to disrupt the sector with extremely low cost technologies and to be able to achieve scale with relatively less investment compared to the traditional approaches that have been used in the past. And so what motivated us to, I'm sorry, we believe broadband is essential for everyone, just below food and shelter. But the experience is universally bad, it's expensive, and the customer experience is just poor. And I think we can all relate to that from our personal experiences. In founding Starry, we wanted to focus on our customers first and foremost. While our peers look to mine more dollars through price increases, fees, and bundling, we obsess about adding value, speed, and performance to the customer's experience. We knew at the beginning that we needed to be a combination of technologies, in particular in this case fiber, along with last-mile high-capacity wireless in order to have the right disruptive cost structure. But the technology didn't exist, so we did the difficult thing of creating the technology stack ourselves. And that was a process that took us about four years with the first part of the company's life. The result is a totally unique tech stack based on global standards that includes all the radio frequency hardware plus our own software suite that runs our network and provides data. You hear a lot of noise about cloud-based telecom. In telecom, we are cloud native and we run our network effectively from a smartphone. The result of this intense R&D is a new broadband network cost structure, an inversion of the classic model. Instead of deploying billions to build out of fiber, we can cover an entire city with a few million dollars in capex as the price of entry, and then the rest of our capex and cost structure is success-based as customers sign up. This new broadband economic model is what allows us to run a successful business at very low penetration rates in most markets. I firmly believe today we are at a at-water-stir stage of our development process, meaning that the technology and the concept has been proven out, and we obviously continue to need capital to continue to grow the company. That is why we decided to access the markets and become a public company. To that end, we went public on March 19th, raising total net proceeds of about $155 million to de-stack transactions and concurrency of shares. Market conditions obviously are very volatile, but it's a company that has a proven economic model. This is not a concept company, and we've successfully found investors willing to finance our approach. We welcome them to the extended starting family and will strive to prove their thesis right. However, the business ultimately will require more capital. We raised approximately half of what we originally expected to raise in the offering, and we're looking to be raising additional capital in the future days. We have time and multiple pathways to source the future funding on exploring options that combine debt equity and other vehicles with strategic partners as well. As we continue to prove out our ability to scale at a crack of unit economics, we believe we will find the support. I firmly believe that good companies find support in nearly any market condition. Why are we so bullish? Why will Starry succeed? First, the technology is delivering, providing a comparable or superior product experience to most broadband consumers. I would say the company's technology is comparable to fiber and superior to most other things out there. We have a full stack tech solution for gigabit last-mile broadband today using licensed millimeter wave spectrum and a technology roadmap that allows us to have multiple gigabit solutions in the future. Our innovation in using global standards based on 802.11 based and adapted for license frequencies in the animated wave spectrum enables us to have fiber-like performance at a fraction of the cost. We've proven out the efficacy of our technology at every level of the chain over the past few years. We continue to invest in R&D in several dimensions to drive down costs and improve spectral efficiency. our subscribers are heavy users of broadband last quarter the average user consumed 574 gigabytes of downstream and a very substantial amount of upstream which i think is a long-term trend that's in our favor second we're continuously improving our unit economics this is a key element for success as investors can realize in this sector costs matter in order to succeed as a competitive provider we need to be able to match speeds and capacity except at much lower cost, and which is our purpose. Today, our cost to pass the market is ballpark $10 to $30 million, depending on the size of the market, which is orders of magnitude better than buyers. This is the cost to make the market serviceable. Think of this as price of entry in a particular market. Then, all the remaining network CapEx is success-based. Today, our cost to attach typical customers is in the mid-hundreds of dollars. It has fallen over years, and we continue to improve our unit economics, and we expect we will continue to decline the cost curve as we achieve more scale and operational efficiency. Let's continue to invest in new R&D for the next generation of technologies. For example, our base stations first were about a quarter of a million dollars, then they cost several thousand dollars today. We expect to see similar trends lay out across most of our major equipment categories. In addition, we saw our cost of goods sold per broker asset, which is essentially the equivalent of a tower and managed rooftop, drop by a full 18% in 2021 compared to 2020, and then 36% compared to 2019. Our vertical integration study is unique in the sense that we have an absolute control of our technology as well. This vertical integration helps us drive our unit economics as well as better prepared to resolve any supply chain issues that arise. And we're extremely proud of our team to have managed these difficult times in the past year from a supply chain perspective without missing a beat. Third, we are performing incredibly well on our deployed network. Alex, our chief operating officer after this, will dig into the network and customer performance, but I want to highlight a few trends. We continue to see penetration in the buildings that we deploy and provide service reach 25% in the first year or more, 28% in the second year, and 30 plus percent in the third year of operations, which is all the data we have today. That just shows us the demand is real for our product. But because we're investing in growth along with so many vectors, the multitude and magnitude of our investment is relative to the size of our base can distort the underlying financial picture. The underlying economic model remains extremely healthy and unchanged. The path forward for us continues to grow our serviceable homes while also increasing our penetration within that set. We continue to see a potential for break-even profitability at approximately 4% take rate of the passing. And we have also discussed our adjusted EBITDA margins approaching cable levels at double-digit penetration of any bidding market. This gives us a lot of confidence in the underlying economic model works as intended and reinforces our desire to expand as quickly as possible. Finally, I want to spend a couple minutes talking about the market segmentation and competition. With our licensed spectrum portfolio covering 40 million households, we have focused mostly on the urban and denser parts of the suburban core. I want to highlight this point. There's a lot of attention being paid now to mobile providers offering fixed services and to new fiber deployments. These are both interesting segments for sure, but they're focused on different geographic aspects of the market than starting days. Mobile operators offering fixed wireless are focused on where they have access network capacity, which generally is not in dense parts of this country. New fiber deployments are focused on existing edge outs or DSL areas, which again, by very definition, tend to be away from dense parts of the country. In addition, we have developed a very meaningful competitive moat against potential new entrants. Our network allows us to deliver speed and capacity, while others can offer one or the other, but rarely both. And this is an important point that I want to highlight on. Our spectrum position is nearly impossible for a new entrant to replicate today because the FCC has nearly auctioned off most of the millimeter wave spectrum that was teed up. And there isn't a meaningful secondary market opportunity to acquire it. We've spent four plus years, $200 million to develop our technology, which is extremely difficult engineering, time-consuming, and has left us with a great deal of intellectual property and know-how in the market. We've also had the invaluable experience of having built multiple networks in multiple cities. We've worked out the kinks in the system and learned how to most effectively sell the product and serve our consumers. In summary, we've created something really unique. This is, frankly, from my perspective, the only real growth story in the broadband, perhaps even in decades. We've solved really difficult technical challenges, and now we're getting the word out and getting our product in the hands of more and more consumers every day. I will now turn over to Alex, our Chief Operating Officer, to walk you through the operating results of this work. Thanks, Jeff. Hi, everyone. I'm Alex Moulay-Berteau, a co-founder and COO at Starry. I'm responsible for overseeing the business performance and operations here, including network deployment and maintenance, customer delivery and care, as well as sales and marketing. A bit about my background, for those who don't know me. Previously, I worked with Chet and the team at Area, and before that, I spent over a decade in product management and marketing across consumer technology businesses. The underlying thread throughout my career has been to work with high-disruption teams and products. At Starry, that disruption is innovating on how internet access is delivered. expanding high speeds and affordable broadband coverage to millions of americans now let's jump into operating results addressable homes we define this as residential household units within a total market boundary think of this as cam in our live markets we're currently at 9.7 million household units in six live markets flat year over year as many markets were opened you will see this number increase as we roll out new markets. In live markets, we continue to focus on driving serviceable homes by expanding our network. This metric is the household units that we cover and technologically service with our built network. We increase serviceable households by 20% year-over-year to 5.5 million homes. Our customer relationships increase by over 8,000 in the quarter. end at over 71,000 customers, up 72% year-over-year. This is the second quarter in a row that Sari has added more than 8,000 net ads in a single quarter. Sari saw growth in customer relationships in each of our six markets during the quarter with continued strength in the MDE category. Our penetration of serviceable homes was up 39 basis points year-over-year. as the company continues to focus on not only new network expansion, but also deploying and delivering service under existing Starry network coverage. This quarter, we also made great progress with Starry Connect, a digital equity program that now reaches more than 63,000 apartment units of public and private affordable housing. We're proud to say that Starry was named to the Time 100 Most Influential Companies list in recognition of our visual equity work through Star Connect. We also continue to lead our industry in Net Promoter Score. Our lifetime NPS score is 61. This is on par with some of the most beloved household names. So all of these are foundational building blocks that we believe will continue to support our next phase of expansion. and plan to build out new networks in a cost-efficient manner and expect at least one new market to go live in 2022 and more new markets in 2023 and beyond. From the beginning, we looked to align our growth with our equipment costs with strong and consistent focus on unit economics. We originally started by deploying to only large MVUs of 100 department units and above. And we steadily reduced the size of buildings we deployed to as cost deductions in each generation of equipment were realized. In MDUs as of the quarter end, we had approximately 375,000 apartment units connected. As Chet mentioned, we continue to see healthy penetration trends across all MDUs connected in online markets. This healthy penetration dynamic is really driven by a lack of alternative service options, a growing cord cutting segment, and strong customer satisfaction dynamics in the areas that we're serving. We believe this will all support ongoing and robust demand for our service. For single family units, we've rolled out service in select market areas in mostly suburban communities. This is a new market opportunity for us. that has been opened up in existing and new coverage areas. And this is made possible by our declining equipment costs. In other opportunities, the Rural Digital Opportunity Fund, or RDOC as you all know it, and the Affordable Connectivity Program, or ACP, are both government-supported programs we're participating in. we expect to continue to grow our participation in ACP as our overall footprint and the Starting Connect program expands. Over time, we also plan to introduce small and medium business services and more over the coming quarters. In conclusion, our operational focus is on continuing to improve and expand the network, scaling our teams and capabilities to continue to offer We believe we see strong consumer demand. We have the technology and supply to support our customers. And our priority now is to continue to execute. With that, let me now hand things over to Komal.

Thank you, Alex, and good morning, everyone. Let me introduce myself to those of you I haven't met. I'm Komal Misra, the CFO of Starry. I'm an engineer by training and have worked as a software engineer at AT&T Bell Labs early in my career before transitioning to a 15-year career in asset management, where I was a tech investor and portfolio manager at Alliance Bernstein. Prior to taking on this role at Starry, I also spent time at Cognizant and ITsoft in finance and cross-design roles. And I'm very excited to be here, a company that is disrupting the status quo in broadband services. Now let me share the details of our financials with you and also provide guidance for fiscal year 2022. Let me start by saying how pleased I am that we were able to produce these results. They clearly show that Starry's value proposition to consumers is working, helping us to drive our penetration of home services to new levels, and I'm convinced we are on the right path to take share and grow the business. Now on to the financials. Revenue of $7.4 million increased 63% year-over-year due to the increase in net customer relationships and was partially offset by a decline in our pool. R2 of $36.4 was down 7.9% year-over-year and reflects our significant customer growth coupled with our revenue recognition methodology where we don't recognize revenue for the promotional period that we offer to our customers. Our R2 after the promotional period expires returns to our draft rate. We don't offer teaser rates and we think this is the right thing to do for consumers and our customers. Given the early stage of our business and the high growth in net new customer relationships over our existing base of customers, we expect our realized ARPU to continue to show the impact of these promotional periods. In markets where the number of our new customers is smaller than the existing base of customers in that market, we see a substantially higher ARPU today. We expect ARPU to flatten out and increase as we see growth in the midst of our high-type service offerings like S&B and also other higher-speed plans. Cost of revenues were 18.2 million, up 45% year-over-year, due to higher depreciation related to our network expansion, as well as an increase in headcount and network service costs as we expanded our network this quarter. we continue to see positive signs of leverage in this expense as our business scales. LG&A expenses increased by 77% year-over-year due to higher headcount, deal-related expenses, and our marketing expenses. Excluding deal-related costs of approximately $3.3 million in first quarter of this year, LG&A expenses actually increased by 53%. This year-over-year growth was also higher due to an increase in public company-related expenses that we incurred in first quarter of this year for the first time. R&D expenses increased by 38% year-over-year due to increased headcount costs to support the product development of our network. We anticipate that R&D expenses will grow at a reduced rate in future quarters as we are well-staffed for the current product roadmap that STARI has in place. Net loss was 53.6 million compared to a net loss of 41 million in the first quarter of 21. Our net margin improved by more than 150 percentage points on a year-over-year basis. The adjusted EBITDA loss increased to $27.8 million as we invested in our network system and the staff to support growth in current and also future quarters. The adjusted EBITDA margin improved by over 100 percentage points on a year-over-year basis. Our capex was $16.8 million, up 67% year-over-year as we invested in our network and customer expansion. Most of this capex was related to driving growth of our network in both the existing markets and also initiating network build-out in one new market that is expected to be launched later this year. Now let me give you color on guidance. We are executing a capital allocation strategy based on the results of the defect process and the capital rates from it. Our focus is on maximizing customer growth while also lowering unit economics and our guidance reflects both these goals. We continue to pursue higher penetration in our existing network while also expanding the network in both our existing market and the new market that I mentioned previously. We will launch one additional market later this year and we'll give you additional color on that market as we come closer to realizing subscribers within that market. We expect our customer relationships to be greater than 100,000 by the end of fiscal year 2022, reflecting a growth of at least 58% year-over-year. On revenue, we expect fiscal year 2022 revenue to be at least 50 million, which represents growth of at least 125% year-on-year, This guidance assumes we will receive more than $15 million in federal regulatory revenue through the FCC's Rural Digital Opportunity Fund this year. Our adjusted EBITDA will be a loss of $125 million, which represents an improvement of 200 percentage points on the year-over-year basis, and we will continue to deliver on operating leverage in the future as we grow our customer relationships. and scale our business. In conclusion, as you can see, we reported very strong results this quarter, highlighted by industry-leading revenue growth, rapid customer growth, driving record penetration of homes serviceable, and strong operating leverage as we continue to build scale in our business. We are confident that we can maintain our current business momentum, and we look forward to sharing the results of our continued success with you every quarter. With that, Chet, Alex, and I are ready to take your questions.

Operator, we're ready for Q&A.

Ladies and gentlemen, if you would like to ask a question, please do not hesitate to press star followed by the number one on your telephone keypad now. In case you change your mind, please press star followed by the number two. For those who have joined online, please press the flag icon on your web browser. Also, when preparing to ask a question, please make sure your phone is unmuted locally. Our first question comes from Brett Feldman from Goldman Sachs. Brett, your line is open.

Great. A couple questions, if you don't mind. First, did you actually get any revenue revenues during the quarter? I think there had been some delays in distributions out of R&R and that's a follow-up, so I'll start with that one.

Hi, Brett. This is Jeff. No, our subsidy has not started to be expected to sit very soon thereafter. We were obviously waiting for our transaction to close so that we could be prepared for that next step. So we were timing it just post-transaction.

Okay. One of the things I was looking at was, you know, going back to the presentations you've given during the D-SPAC process and you've given some forecasts, And I think you'd initially expected about $26 million of subsidy revenue this year. It seems like you've written that down by about $11 million based on a delay in the program. And I think that would probably explain the large majority of the variance between your current revenue outlook and what you would put in that deck. Is that a fair assessment?

That's correct. Yeah, the organic revenue ballpark is going to be the same. what we had originally shared. And if you recall, the original view was the transaction was supposed to close in the fourth quarter, like October, November timeframe, and new market conditions that ended up being in the Q1. So that's effectively, we pushed the subsidy part out to essentially keep the pace of that.

OK. The next question is also kind of thinking about how your current outlook compares to what you anticipated previously. It does look like you're expecting a greater loss than maybe your prior estimates on a reasonably similar customer revenue forecast. And even if we adjust for RDOF, it looks like it's still going to be a much greater loss. I was hoping you could give us some insight as to maybe where you've pulled forward some spending in the business.

So I can give you some color on that, Brett. I think what you are referring to is some of the numbers that we had put out when we were solely focused on launching some partner markets for the rest of this year. I think what the new guidance reflects is that we will launch a market as a story market And of course, we are continuing to see partnerships for the market, but for now, the guidance assumes that the entire expenses related with that and also the growth in our current existing network will be borne by START. So some of the expenses related to that is what you see in the data number.

Okay. And then just one more, if you don't mind, and I know, Chet, you sort of talked a bit about the competitive backdrop, but I'm curious for what insight you've gained in terms of how consumers are starting to think about fixed wireless, meaning you now have T-Mobile and Verizon advertising the services much more significantly. Are you finding that that is making it harder because it's more competitive, or are you actually finding that consumers are starting to see fixed wireless as less as an oddity and more of a core service in some ways that might actually be helping to go to market?

Yeah, we actually find it to be easier, but it's probably not the best way to describe it largely because I think there is more of an educational component In the consumer's mind, there are alternatives emerging. And as I mentioned, geographically, we don't see an overlap with that. We haven't over the last year. And we don't expect to, given the technological differences. We're obviously, as you can imagine, we don't zero rate. We don't do any of those things. And our customers are consuming 500, 700 gigabytes a month and substantial uplinks. So that's pretty difficult to replicate with a mobility-based solution, which is why we think that you know our position geographically where they're focused is uh it's actually you know interesting in the sense that you know you know stores and people have always talked about hey why don't you do rural why don't you do this that whatever you know my view was always look i want to be where the customers are and secondly on the rural side you know there's going to be a lot of competition within government subsidies you know potential of you know the 5g based solutions uh utilities you know electrical ops And on the urban side, you know, we're pretty unique that, you know, we're kind of the only name of the game from an overbuilding perspective that's attempting to gain any meaningful scale. So we don't see overlap on the competitive side, but I think generally speaking, be aware enough in the consumer's mind that there are alternatives emerging is very helpful and positive.

All right, Alex, thanks for the call.

Thanks, Brent. Next question, please, operator.

Our next question comes from Michael Rollins from Citi. Michael, your line is open.

Thanks, and good morning. A couple questions, if I could. First, can you talk more about the pivot to targeting single-family housing units and how you're looking at it in terms of ramping the growth there the acquisition costs for those customer opportunities. And then secondly, you know, as you're thinking about just the opportunities from an addressable market perspective, what's the pros and cons of accelerating the geographic footprint expansion, you know, relative to the current outlook that you have? Thanks.

So, not a pivot. I think it's a continuation of our cost-curve-based sort of, you know, how we sort of think about it, right? And today, our sense is there's about 50-ish million households in multifamily or varying different sizes in the licensed areas that we have. So, in all candor, if the company did nothing else and just focused on that, you know, we have a pretty bright future ahead of us. But being who we are, obviously beginning to expand to single family is important because a couple of years from now, it's going to be an important element where we're going to be investing more heavily along those lines. So I think it's much more of an early stage. And the data is early, so I don't want to set any expectations on that. But I think we have guided towards about 2% take rate on an annual basis. And we feel really good about that performance and that number on the single family side. So it's more think about it as setting our foundation for the next five years, if you will, and making sure all the technical solutions that are necessary, processes, training people, labor, componentry, all of that stuff so we can get our foundation done. I think you will see us continue to have sort of this balance of making sure that we continue to execute at the pace we are on the apartment side. And I think our current run rate is somewhere in the 10,000 to 12,000 apartment activations on a company basis ballpark, which if you take a step back, that's the equivalent of 30,000 to 40,000 new drops which is, you know, pretty heavy clip, if you will, right? Even in current providers today that are obviously, you know, a hundred times bigger than sorry, in terms of balance sheet and things like that. So you will see us balance the part where we are going to continue to basically add as much, you know, customer relations as we can within the current footprint and strategically, pick off next cities that are going to be, you know, providing the growth for the next, you know, calendar year, the calendar year after that. So it's going to be really sort of that staging that we're going to be doing throughout this process.

Thanks.

And can you give an update on... The reality is the cheapest customer we're ever going to get is a customer that is already in an existing building. The next cheapest customer we're going to get is in a residents that is currently under coverage and the third cheapest customers that may complete the new city but obviously you know we'll continue to drive uh take great in our current cities uh and uh add new cities as we can layer them in to continue to uh you know get to our ultimate objectives and can you just give us an update on the funding outlook for the business in terms of um where the cash balance is the

the EBITDA burn for the year and how you think about funding the business as you're looking out on the multi-year business plan.

Yeah, so we're working with advisors, Mike, to help us sort through that and don't have a specific update on that particular topic, but I would expect us to resolve those things in the short and medium term. And again, we're in a combination of that equity and other vehicles that we're exploring. So we would hopefully make some meaningful progress in the short order here, but top of mind for us. Thank you.

Operator, next question, please.

Our next question comes from Greg Williams from Cowan. Greg, your line is open.

Great. Thanks for taking my questions. First one's on the subscriber guidance. You noted greater than 100,000 customers in your S4. You called for about 115. So maybe I'm mincing the numbers a little too much, but is the language changing here a little bit more conservative or are you just leaving room for more? for, again, being conservative on that guide. Second question is on ARPU. You noted that you guided that ARPU would flatten. Can you just help us with the mechanics there and the nature of your promos? You said you're not offering teasers. Can you just tell us what the take rates are on your plans and how the mechanics of the ARPU flattening will occur? Thanks.

Yeah. So the ARPU, I mean, this is sort of a, you know, It's very, you know, artifact if you will, in some ways, right? Because the way we realize our food is being calculated is basically taking all the revenue coming in and dividing by the number of customers. And what happens in our case is we don't do teaser rates, as Como mentioned. It's just, you know, as a brand, we've kind of, you know, stayed fixed, focused on it's one price, flat price. And in order to, so the standard promotion that we typically offer to consumers is, 30 days free or six weeks free or, you know, two weeks free, depending on kind of what the particular situation happens to be. But basically, it's a free period. If you think about, you know, if we're adding, you know, 8,000, 9,000 in a quarter and, you know, 4,000 of those may have not paid you for the first month because it's a free promotion, that brings, on a relative basis, you know, pulls the number down. But as you think about the... number of new customer relationships as a ratio of the base decreasing just because your base is increasing, the total pull down tends to be less than that.

And just adding to that, our ARPU or the RAC rate is typically the $50, $65, $80. We also have an ACP plan where the ARPU is $30. So the minute the promotional period expires, that is indeed the ARPU that we recognize from the new customers. So a large part of what you're seeing on the ARPU is just a mix of new to existing, which where the new is a larger piece of the total existing base. And, you know, like I mentioned, we have a couple of markets where we are seeing better RQ because the base is large enough where the net use is not as much of a drag on the total RQ for that market.

And on your prior question, yes, we're, you know, trying to be conservative here and leaving some room. And obviously, you know, we raised less capital, but as we solve in the short to midterm additional capital, we wanted to leave ourselves some room on the next customer relationship part.

Got it. Thank you.

Next question, please, Aparik.

Our last question comes from Walter Pesick from LightShed Partners. Walter, your line is open.

Thanks. Just in terms of, I guess, let's start with pricing. You know, there's been some chatter in the mobile wireless world about increasing pricing, but in kind of the home broadband world, they've got competition coming from fiber and wireless broadband, you guys, among other things. How do you see kind of what has been historically an ability maybe to increase price in the industry and maybe your specific ability to increase price over time within this industry? Just kind of 10,000-foot thoughts on that, please, Chet.

Sure. Hey, Walt, so I'll start off with an apology. I know how much you love prepared remarks. This was our first go-down, so we were a little long, but we will try to be on your short list of shorter prepared remarks. My view, Walt, in this is I think, you know, we are pricing, I'm committed to not raising prices on a as consumption continues to grow up. So my view is, and I think that's what you see in other providers' results as well, where, you know, started being, despite being a much smaller company from a size perspective, on a net-add basis, and the total number of drops we're doing is incredibly high on a relative basis, largely because we think we're going to drive prices to be flat to down on a perfect basis on an ongoing basis. We do think, ultimately, there is opportunity so the customer and get more revenue on it for a customer basis based on product features performance speed and other things that you might be able to add in security and who knows what else but ultimately i think the raise the rate mindset needs to go away because i don't think uh customers are going to be responsive to pay five percent rate increases on an annualized basis that's just not going to be the case and yes maybe there's opportunities for people to with acceptable amounts of bundling or whatever else, but I think any reasonably sophisticated customer is going to see through that and, you know, be the start of that.

Got it. And I've looked at the comment, I appreciate having revenue that's closely aligned with cash. We don't always see that, but I think you know, when I look across the industry, promotions typically are amortized over the life of the customer as a kind of revenue. I mean, I know that's what's happening in the wireless industry with handset, but I do appreciate, I mean, so you're obviously showing lower revenue than a like company would report. This will obviously kind of play itself out over time, but, you know, my preference is stick with what you got just because it's associated with cash. Just one other question on the penetration rates. I think in year three, you mentioned getting to 30%. So again, with the changing dynamics of the industry, I know earlier you mentioned that you're not seeing a mobile wireless customer. But look, if there's a small cell next to a building, it's feasible that someone could potentially sign up for Verizon or T-Mobile. What are the puts and takes that year three or year four, year five penetration can't hit 30%? And conversely, what limits you from taking 30% in these buildings up to 40 or 50% like we've seen with some fiber overbuilds.

So Walt, those penetration numbers obviously take into account, you know, where competitive areas, all of those kinds of things. So I'll start with the Where could this go as a first question? And today, there's a natural ceiling on StarE's customer take rate within a building, mainly because we don't offer a video product that's for a certain percentage of the population, they're still used to kind of the old quicker model, right? So we've strategically decided that's not for us. It's an impact on margin that I don't believe in, and it's not a product that I think long-term is going to be sustaining itself. So obviously, in buildings where we see a lot of new-move traffic, we tend to exceed that take rate. And this is average across all of our markets. So obviously, in areas where we are just against coax in a single area, the numbers will be higher. But this is blended across even in Boston, for example. Obviously, there is an overcover in a sound or RCNF level. So this takes all of that into account. On the mobile 5G side, I think the question is, yes, you will certainly be able to, if there's a power close by, you might have the opportunity to attach to that. I think the thematic question in our mind tends to be, is that really economically rational for anybody? Because if you think about, we are seeing, and I think over the last year, our utilization went up almost 170 to 200 gigabytes and non-deal rated, so any customer that's sucking off of mobile network, you know, that's basically, you're basically saying, I'm going to drive you a perfect price, 30% lower on an annual basis, and continue while the customer's consuming 40, 50 times more bandwidth than a mobile customer. So I think ultimately it's become an un-economical issue at mid-band frequencies, anytime you have a lot of density or a lot of collection of people. CSW would be our case, where even in dense parts, you would certainly have people have the ability to do that. But my view is, look, we are ultimately competing with upgraded coax or fiber. And you need the ability to deliver a terabyte plus without flinching in front of the consumer over the course of a month. And probably 200 to 300 gigabytes a month uplink as well, just part of that.

Okay, with that, operator, if there are no more questions, we'd like to turn in the call. I just wanted to say we will be at a couple conferences in the next few weeks. We'll be at Moffitt, Credit Suisse, Callen, and UBS. So hope to see you then.

Thank you, everyone. Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for being with us today. Have a lovely day ahead. You may disconnect your lines now.