Batya Levi

Batya Levi inquired about the visibility for the domestic activity range provided for the year, what factors could lead to the lower end of the guidance, and how the recently signed Verizon MLA impacts trends given Verizon's lower CapEx guidance.

Answer

Brendan Cavanagh, President and CEO, explained that while there's good visibility, the range accounts for potential variability in new business signings, with the midpoint being the best estimate. He noted that the current year's estimate is slightly less than last year but flat when excluding DISH. He confirmed increased contributions from Verizon due to the MLA's minimum commitments and existing backlogs, despite their CapEx comments.

Batya Levi inquired about the visibility for the domestic activity range, particularly what could drive the low end, and how the recently signed Verizon MLA impacts trends given Verizon's lower CapEx guidance.

Answer

Brendan Cavanagh, President and CEO, stated that visibility is good, with the midpoint being the best estimate, and the range accounts for early-year activity. He clarified that while overall activity is slightly less than last year, it's flat excluding DISH. He also confirmed increased contributions from Verizon are expected due to the MLA's minimum commitments and growing backlogs, despite their CapEx comments.

Batya Levi with UBS inquired about the impact of the new Verizon Master Lease Agreement (MLA) on SBA's new leasing revenue for the upcoming year, specifically asking if it includes amendments and colocation components and how it would capture incremental revenue from Verizon's acquisition of adjacent spectrum. Additionally, Levi asked for an update on DISH Network's payment status and if they are seeking to exit their contract earlier than renewal dates, referencing a peer's disclosure. She also followed up on whether the Verizon deal structure is linear or similar to the AT&T agreement.

Answer

Brendan Cavanagh, President and CEO of SBA, stated that the Verizon agreement is expected to contribute to long-term growth, building on a strong partnership. He confirmed it includes both colocation and amendment components, with a minimum commitment for colocations over the next 10 years, ensuring a certain amount of growth. Verizon gains access to sites with cost certainty and operational efficiency. Regarding DISH, Cavanagh confirmed they are current on rents and SBA expects them to honor their agreements, though correspondence between the companies is ongoing. He clarified that the Verizon deal structure is much more linear, unlike the AT&T agreement.

Batya Levi of UBS Group AG questioned if the slight slowdown in domestic activity in Q2 was significant and asked if the strong bookings growth was accelerating and becoming more broad-based among carriers.

Answer

President and CEO Brendan Cavanagh clarified that the Q2 slowdown was merely a rounding difference and not indicative of any trend. He confirmed that activity pacing increased in the quarter and was slightly ahead of the prior strong quarter, which should drive higher recognized revenue in the second half of the year and into 2026.

Batya Levi questioned the drivers behind the stronger-than-expected network services business, the slight uptick in non-Sprint domestic churn, and SBA's strategic approach to potential M&A opportunities for tower portfolios in Canada.

Answer

President and CEO Brendan Cavanagh attributed the services growth to a major customer accelerating its network investments. He explained the churn uptick was a matter of timing and within the full-year outlook. Regarding Canada, he stated SBA thoroughly evaluates all M&A opportunities and would pursue a deal if the value and price point are sensible, acknowledging that acquiring carrier portfolios would create a market leader.

Batya Levi inquired about the drivers behind the increased leasing application backlog, asking if it was broad-based or from a specific tenant, and what the shift towards colocations implies for the book-to-bill cycle and 2026 leasing visibility.

Answer

President and CEO Brendan Cavanagh explained that the increase in the leasing backlog is broad-based across carriers, not driven by a single tenant. He noted a significant shift in new business towards new lease colocations over amendments, which extends the book-to-bill cycle. This trend is expected to drive quarter-over-quarter domestic leasing growth throughout 2025, creating a favorable setup for 2026, though it is premature to provide a specific outlook.

Batya Levi asked about the mix of domestic carrier activity between co-locations and amendments, the potential leasing outlook for 2025, and financial details of the Millicom acquisition, including AFFO accretion and lease-up opportunities.

Answer

President and CEO Brendan Cavanagh confirmed an increase in domestic carrier activity with a shift towards new co-locations, which benefits long-term growth but has a slightly longer revenue commencement timeline. He stated it was premature to provide a 2025 leasing outlook or specific AFFO accretion for the Millicom deal, but confirmed it will be accretive and noted the sites have a low 1.2x tenancy ratio, indicating significant lease-up potential.

Batya Levi asked about the pacing of domestic activity, specifically if there's a change in amendment versus densification activity given the lower contracted revenue cycle. She also inquired how the 2.5% leasing growth guidance for 2026 compares to 2025, excluding DISH.

Answer

Steven Vondran, President and CEO, explained that carriers are showing steady, broad-based activity with a higher incidence of new colocations and a healthy amendment pipeline, which is expected at this cycle point. Rodney Smith, EVP, CFO, and Treasurer, clarified that the 2026 guidance includes a 2.4% contribution from colocation and amendment revenue (ex-DISH), consistent with 2025 levels (ex-DISH), with slightly higher new business expected in the first half of 2026.

Batya Levi inquired about the pacing of domestic activity from carriers, specifically asking if there's a shift between amendment and densification activity, and how the 2026 leasing growth guidance of 2.5% compares to 2025 when excluding Dish.

Answer

Steven Vondran, President and CEO, American Tower, noted steady, broad-based carrier activity with a higher incidence of new colocations and a healthy amendment pipeline, consistent with the current 5G cycle. Rodney Smith, EVP, CFO, and Treasurer, American Tower, clarified that the 2.4% colocation and amendment contribution for 2026 (ex-Dish) is consistent with the 2.5% contribution seen in 2025 (ex-Dish), indicating stable activity levels.

Batya Levi inquired about the leasing activity cadence in Latin America, asking if the recent lower churn was a matter of timing and seeking clarity on the outlook for escalators in the region.

Answer

CEO Steven Vondran noted pockets of increased activity in markets like Brazil but confirmed that multi-year churn headwinds, particularly from Oi, will keep organic tenant billings growth in the low single digits for the next three years. He stated that the churn profile is consistent with expectations and that the 2025 escalator for the region is anticipated to be around 5%, subject to CPI.

Batya Levi from UBS requested details on the 5G upgrade progress for carriers outside of comprehensive agreements, the expected cadence of new leasing activity throughout 2025, and the company's stance on share buybacks now that leverage is within its target range.

Answer

CEO Steven Vondran provided carrier upgrade tiers without naming them (one over 80%, one at 65%, one under 50%) and noted that the 2025 growth cadence will be impacted by Sprint churn in the first three quarters. CFO Rod Smith elaborated that with leverage set to fall below 5.0x, the company has full financial flexibility. While open to share buybacks, capital allocation decisions will weigh interest rates, macro uncertainty, and attractive organic growth opportunities against M&A and buybacks to maximize long-term shareholder value.

Batya Levi inquired about any changes in the colocation versus amendment mix in the U.S., whether DISH network expansion is included in current holistic agreements, and the reason for a year-over-year decline in domestic gross margins.

Answer

Steven Vondran, President and CEO, noted that while the current business mix is consistent, there is growing interest in new colocations, which are expected to increase during the network densification phase and would be incremental to some MLAs. Rod Smith, EVP, CFO and Treasurer, attributed the reported gross margin decline primarily to a non-cash straight-line revenue impact, clarifying that cash margins actually increased year-over-year.

Batya Levi asked for more color on Live Nation's demand side, specifically regarding recent on-sale activity and sell-through rates compared to the previous year and the summer pipeline. She also inquired about consumers' willingness to pay higher ticket prices, referencing the World Cup.

Answer

Joe Berchtold, President and CFO, reported consistent performance in on-sales and sell-through rates, similar to the previous year, with some high-end tours (e.g., Harry Styles, BTS, Bruno Mars) showing exceptionally high demand. He clarified that Live Nation is not involved in FIFA World Cup ticket sales and could not comment on that specific event. For concerts, Joe Berchtold reiterated that artists are acutely aware of their fans and brand, pricing tickets to ensure affordability for all, while capturing more value from premium seats where brokers might otherwise create arbitrage.

Batya Levi asked for more color on recent on-sale activity and sell-through rates, comparing them to last year and the summer pipeline. She also inquired about consumers' willingness to pay higher ticket prices, referencing the World Cup.

Answer

CFO Joe Berchtold stated that on-sales are showing consistent performance with overall demand and sell-through levels seen last year, with some high-end tours like Harry Styles, BTS, and Bruno Mars demonstrating unprecedented demand. He reiterated that artists are acutely aware of managing fan relationships and pricing tickets affordably, ensuring all fans can attend, while capturing more value for themselves where arbitrage opportunities exist. He declined to comment on FIFA as Live Nation is not involved in selling their tickets.

Batya Levi asked about Spotify's differentiation strategy for artist-first AI products developed with major labels and the urgency of their launch amidst competition and disruption.

Answer

Co-CEO Gustav Söderström distinguished between net new AI music (which finds its audience on Spotify) and derivatives (an untapped opportunity for artists to monetize existing IP). He stated Spotify possesses the necessary technology and capabilities, is ready for partners, and is eager to seize this opportunity, but not stressed about immediate launches.

Batya Levi inquired about Spotify's differentiation strategy for its artist-first AI products, announced in partnership with major labels in October, and the urgency to launch them amidst competitive hype.

Answer

Gustav Söderström, Co-CEO, stated that Spotify differentiates in two key areas: net new music, where Spotify is the platform for cultural moments and charting, and derivatives, which represent an untapped opportunity for artists to monetize existing IP. He affirmed that Spotify possesses the necessary technology and capabilities and is ready to collaborate with partners eager to seize this opportunity, without feeling stressed but with a strong desire to facilitate new revenue streams.

Batya Levi of UBS asked for more color on the competitive dynamics mentioned in the prepared remarks, specifically which competitor actions contributed to Spotify's Q4 outperformance.

Answer

CEO Daniel Ek explained that while Spotify operates in a highly competitive market, the specific instance referenced was a net positive where a regional competitor 'fell away.' He emphasized that this is part of the normal market dynamics and the company's primary focus remains on building the best product to drive engagement and lifetime value.

Batya Levi asked about the underlying performance and long-term growth outlook for Warner Music Group's Music Publishing business, and for insights into artist willingness to opt-in to AI opportunities, contrasting open studio approaches like Suno with walled gardens for attribution and measurement.

Answer

CFO Armin Zerza expressed satisfaction with Music Publishing's performance, noting it doubled top and bottom line over five years and achieved 15% adjusted growth in Q1. He outlined future growth drivers including A&R strategy, investment in developing regions (e.g., Latin America), M&A, and AI partnerships, expecting continued double-digit growth and margin improvement. CEO Robert Kyncl reported surprisingly high artist/songwriter engagement with AI, emphasizing extensive outreach and the company's focus on finding an 'equilibrium point' between open and walled garden approaches to create value and protect artists, drawing lessons from past media industry experiences.

Batya Levi asked about the underlying performance and longer-term growth outlook for Warner Music Group's Music Publishing business, and about artists' willingness to opt-in to AI opportunities, including thoughts on open studio (Suno deal) versus walled garden approaches for attribution and measurement.

Answer

CFO Armin Zerza highlighted Music Publishing's strong performance, doubling the business over five years and achieving double-digit growth in recent quarters, driven by A&R strategy, growth in developing regions, catalog investments, and AI partnerships. CEO Robert Kyncl noted surprisingly high artist and songwriter engagement with AI, emphasizing the need for an 'equilibrium' approach over black-and-white solutions to create value and protect rights.

Batya Levi sought clarification on whether the subscription growth guidance includes new deals and the Tempo acquisition, asked if the current margin is a good run-rate for the year given FX, and questioned how the new Spotify publishing deal compares to previous CRB rates.

Answer

CEO Robert Kyncl declined to compare the Spotify deal to CRB rates but expressed satisfaction with the outcome. CFO Bryan Castellani clarified that the Tempo acquisition primarily impacts Music Publishing, not the subscription streaming guidance. He also reiterated that while cost savings initiatives are on track, foreign exchange remains the key variable preventing the company from reaffirming its full-year margin target.

Batya Levi of UBS Group AG followed up on the multiyear growth outlook, asking specifically about the expected cadence for fiscal 2025, including whether growth would be slower in the first half, and about the linearity of the artist release schedule.

Answer

CFO Bryan Castellani indicated that fiscal 2025 subscription growth should be comparable to 2024, though some moderation is expected while lapping recent price increases. CEO Robert Kyncl added that the release pipeline is strong with projects from major artists like Coldplay, Rose, and Linkin Park. He noted that while release timing can shift between quarters, his focus is on maintaining a high volume in the pipeline to ensure consistent output.

Batya Levi asked what caused the deviation from the original high single-digit subscription growth outlook and questioned if the release slate was lighter than initially anticipated.

Answer

CEO Robert Kyncl explained the results were due to a combination of four factors: a tough year-over-year comparison, ad market pressure, a lighter release schedule, and weakness in China. He noted that release schedules can fluctuate for creative reasons. CFO Bryan Castellani added that the prior-year quarter's growth was a high 13.5%, making the comparison difficult.

Batya Levi inquired about sizing BCE's U.S. fibre build plan for 2026, opportunities to accelerate it (e.g., tuck-ins), and the importance of an MVNO for U.S. subscriber growth. She also asked about Third-Party Internet Access (TPIA) activity in Canadian broadband, particularly in the West.

Answer

Mirko Bibic, President and CEO, BCE, stated that M&A opportunities, including tuck-ins, are considered if they drive shareholder value and fit capital market goals, but did not size the build plan. He noted that a converged offering is not currently required for Ziply's penetration gains but options are being explored. Regarding TPIA, Mirko Bibic expressed difficulty in getting appropriate service levels from the fibre operator out West, hindering BCE's ability to offer an additional fibre option and deliver expected customer experience, despite regulatory changes mandating fibre resale.

Batya Levi from UBS inquired about the size of BCE's U.S. fiber build plan for 2026, potential M&A opportunities to accelerate it, and the importance of an MVNO for U.S. subscriber growth. She also asked about TPIA activity in Canadian broadband and whether BCE was observing higher reseller activity in its Eastern region.

Answer

President and CEO Mirko Bibic stated that M&A is considered if it aligns with shareholder value and financial targets, but a converged MVNO offering is not currently essential for Ziply's U.S. penetration, though future options are being explored. Regarding TPIA, he explained that BCE aims to offer a fiber option in Western Canada but faces challenges due to inadequate service levels from the Western fiber operator, hindering execution. He confirmed historically higher reseller activity in the East due to past asymmetrical regulatory rules, emphasizing the need for appropriate service delivery in the West to ensure customer experience.

Batya Levi asked for a rough mix of Bell-branded subs within the post-paid wireless base and if wireless ARPU could return to growth as this mix increases. She also inquired if the new MVNO contributed in the quarter and if it was possible to quantify that contribution.

Answer

CEO Mirko Bibic stated that wholesale network revenue from MVNOs was immaterial and clarified that Bell-brand post-paid net adds were 'multiples' of the consolidated 11,500. CFO Curtis Millen added that wireless ARPU trajectory is positive, with new monthly rates higher than embedded base rates, helping blended ARPU.

Batya Levi noted that BCE is tracking below its revenue guidance and asked about the drivers for a return to growth in the second half of the year. She also requested the revenue and EBITDA contribution from the recently acquired OUTFRONT Media.

Answer

CFO Curtis Millen reaffirmed all of BCE's 2024 financial guidance targets. He explained that the year-to-date revenue decline was primarily driven by a strategic decrease in very low-margin product sales, not a weakness in core services. He added that the OUTFRONT Media acquisition closed mid-June, so its financial contribution in Q2 was immaterial.

Batya Levi asked if the potential slowdown in leasing (excluding DISH) is broad-based or specific to a player, the mix between amendment and densification efforts, if the back half of 2026 is weighted towards densification, and how the $65 million lower cost outlook compares to prior expectations.

Answer

Sunit Patel, CFO, clarified that the active growth this year (excluding DISH and adjusting for other billings) is comparable to last year, indicating no significant slowdown. He noted that the amendment versus co-location ratio remains similar to last year. Regarding costs, he stated the $65 million reduction is in line with prior expectations, with continued opportunities for investments in platforms and automation to drive further efficiencies.

Batya Levi from UBS asked for clarification on whether the potential slowdown in leasing (excluding DISH) is broad-based or specific to certain players, and to understand the mix between amendment and densification efforts, particularly if the back half of the year is more weighted towards densification. She also asked how the $65 million lower cost outlook compares to prior expectations, given progress made last year.

Answer

Sunit Patel, CFO, clarified that when adjusted for changes in other billings, the active growth this year is comparable to last year, indicating no significant slowdown. He also noted that the proportion of co-location versus amendment activity remains similar to last year. Regarding costs, Sunit Patel stated that the $65 million reduction is in line with prior expectations for cost-cutting post-transaction announcement. He reiterated that Crown Castle sees continued opportunities for further cost improvements over the next couple of years through investments in platforms, automation, and AI to enhance customer experience and productivity.

Batya Levi from UBS asked about Crown Castle's exposure to UScellular (USM) and the potential financial impact from T-Mobile's plans to acquire more of USM's towers.

Answer

Interim President and CEO Daniel Schlanger stated that Crown Castle has minimal exposure to UScellular as a tenant on its towers. He clarified that the amount is negligible and would not have a material impact on the company's overall financial results.

Batya Levi asked for color on how SG&A is allocated between segments, whether the AFFO growth range could be updated with cost savings, and if the regulatory approval for the asset sale will be a single, holistic process.

Answer

Interim CEO Daniel Schlanger explained that SG&A is allocated based on accounting rules, with directly related costs going to discontinued operations, but acknowledged the remaining shared costs are not representative of the final tower-only structure. He stated that guidance ranges could be updated later in the year as performance becomes clearer. He clarified the sale will close as one transaction, but regulatory reviews are for each buyer's specific asset purchase, not a single holistic review of both.

Batya Levi asked for confirmation of no tax consequences from the sale, quantification of one-time costs in the AFFO bridge, and an explanation for the wide AFFO growth range.

Answer

CFO Dan Schlanger confirmed no significant tax consequences are expected. He noted that $40 million in 2024 advisory costs will not recur. He explained the wide AFFO range on the provided bridge is intentional to provide a directional sense of the post-transaction profile without giving a specific 2026 forecast, and declined to break down the components further.

Batya Levi asked about the geographic concentration of the small cell cancellations, the potential for stranded fiber assets, the outlook for tower churn excluding known impacts, and the current competitive environment.

Answer

CFO Dan Schlanger stated the cancellations were not concentrated in one region and did not leave significant stranded fiber assets. He maintained the long-term tower churn outlook of 1-2%, expecting to be at the low end of that range. CEO Steven Moskowitz added that Crown Castle's urban and suburban asset locations create a strong competitive moat against churn.

Batya Levi asked for more color on bridging to 2026 EBITDA, considering the $300 million EBITDA contribution from fiber sold, higher cost savings, and increased SG&A, and inquired about the pacing of EBITDA and the quantified PCF sale contribution for 2026.

Answer

Chris Stansbury, CFO, stated that an 8-K with pro forma economics would be released to address the EBITDA question. He clarified that modernization spend is largely in special items and that the projected $700 million in M&S savings for 2026 (up from $400 million in 2025) would offset other cost increases. He also highlighted that the company is fully funded, with excess cash over five years, aiming to fund growth, reduce leverage, and then consider stock buybacks.

Batya Levi asked for an update on the ~$200 million in incremental costs for 2025, whether they would extend into 2026, and for more detail on the drivers and structure of the new PCF (Public Cloud Fabric) sales.

Answer

President & CEO Kate Johnson stated the new $500M in PCF deals are mostly lower-risk 'over pull' work for data centers and hyperscalers. EVP & CFO Chris Stansbury identified ~$200M in second-half EBITDA headwinds from disconnects, cloud migration, and PCF OpEx, which is why the company is guiding to the high end of the range despite strong H1 performance.

Batya Levi from UBS asked for clarification on the difference between 'cloud economics' and traditional telco models, including potential margin differences. She also questioned if these strategies could apply to the mass market segment and inquired about incremental fiber build costs amid the strategic review.

Answer

President and CEO Kate Johnson explained that 'cloud economics' breaks the linear revenue-to-cost link by enabling multiple digital services on a single 'fabric port,' thus increasing revenue at a lower marginal cost. She noted it was too early to quantify the margin impact. EVP and CFO Chris Stansbury added that more details would be shared at a September Investor Day and confirmed that new fiber builds are progressing with economics similar to the first round.

Batya Levi asked for clarification on the network utilization chart, questioning the drivers behind the enterprise segment's utilization assumptions through 2028. She also inquired about the cadence of incremental costs and whether free cash flow guidance assumes new deferred revenue.

Answer

CEO Kathleen Johnson explained the chart reflects total fiber miles, and the significant hyperscaler utilization comes from leasing previously empty conduit, which expands overall capacity without taking from enterprise. CFO Christopher Stansbury added that no new PCF deals are assumed in guidance. He detailed that a $200M EBITDA headwind relates to PCF team ramp-up, a CapEx-to-OpEx shift to cloud, and TDM disconnects, while a separate $300M in special items are one-time transformation costs.

Batya Levi of UBS asked about the customer mix of the incremental PCF sales, questioning if they were primarily big tech or included enterprise demand. She also sought to confirm if the new sales were on existing routes and what the prepaid revenue mix would be.

Answer

President and CEO Kate Johnson stated the customer mix includes both repeat and new business, predominantly from companies building AI models like the major cloud and social platforms. EVP and CFO Chris Stansbury added that the total $8.5 billion in secured deals share a similar structure, including the ratio of CapEx to sales and upfront versus recurring revenue. He noted that future deals on new routes will have different economics.

Batya Levi asked about the outlook for wireless ARPU in 2026, considering the backdrop of lower volume growth and increased competition. She also questioned whether roaming revenue continues to be a headwind or if Rogers Communications is starting to lap previous impacts.

Answer

President and CEO Tony Staffieri explained that while ARPU-in trends are positive but slowing due to promotions, base management and value propositions beyond price are helping reduce churn. He noted that 2025 roaming weighed on ARPU, but new roaming offers introduced in H2 2025 aim to increase adoption and volume, with the March break period serving as a barometer. He anticipates a slow climb for ARPU growth.

Batya Levi asked about the wireless ARPU outlook for 2026, considering lower volume growth and increased competition. She also questioned if roaming continues to be a headwind or if its impact is starting to normalize.

Answer

President and CEO Tony Staffieri stated that ARPU N remains positive but is slowing due to promotional activity. Rogers focuses on base management and value propositions to reduce churn. He noted roaming was a headwind in 2025, but new roaming offers aim to increase adoption and stop revenue decline, with a slow climb expected for ARPU growth.

Batya Levi of UBS Group inquired about the current wireless competitive environment, including recent price increases and the outlook for the back-to-school season. She also asked about changes in subscriber loading trends as the company laps the impact of lower immigration.

Answer

President & CEO Tony Staffieri noted that the wireless market net add growth has slowed to around 2.5% but the company is performing well on subscriber share. He explained that recent pricing changes aim to simplify the value proposition and reduce promotional activity, supported by features like satellite service. Staffieri also highlighted that improved churn has been a significant factor in net additions.

Batya Levi inquired about Rogers' confidence in its annual outlook given the macroeconomic environment and potential tariffs, and also asked about trends in the Cable segment, including revenue performance and monetization opportunities from the Xfinity platform.

Answer

President and CEO Anthony Staffieri stated the annual outlook already accounts for the economic slowdown and expects growth. He attributed the Q1 Cable revenue dip to the timing of price adjustments and video/satellite losses, but anticipates that growth from Internet and Xfinity products will lead to a breakeven or growth scenario in the latter half of the year. CFO Glenn Brandt added that he expects Cable revenue to return to zero or positive growth in the coming quarters.

Batya Levi inquired about the wireless competitive environment after the holiday season, the potential for continued churn improvement, and the key drivers for 2025 CapEx, including whether DOCSIS 4.0 spending would peak.

Answer

President and CEO Tony Staffieri described the post-holiday market as returning to normal seasonality with fewer promotions and stated that churn improvements, driven by better customer service, are expected to continue. On CapEx, he noted the focus remains on network reliability and mid-split upgrades. CFO Glenn Brandt added that while the DOCSIS 4.0 rollout is a multi-year project, the spending will be most prominent in 2025.

Batya Levi asked for details on the $7 billion structured equity financing, including potential share issuance and operational impacts, and inquired about the wireless competitive environment and the sustainability of stable ARPU into the holiday season.

Answer

Chief Financial Officer Glenn Brandt clarified the financing is a minority equity sale in a subsidiary holding wireless backhaul infrastructure, not a sale-and-leaseback, and involves no RCI share dilution. President and CEO Tony Staffieri addressed the competitive outlook, highlighting a disciplined promotional strategy, a focus on the premium Rogers 5G brand, and the successful use of the Chatr brand for new-to-Canada customers, which he expects to continue into Q4.

Batya Levi from UBS Group asked for more details on the strategic review process leading to the acquisition, the deal's implied valuation, the network's fiber-to-the-home mix, any breakup fees, and whether 2025 CapEx plans would proceed as planned.

Answer

CEO Teresa Elder stated that a special committee of independent directors conducted a thorough and diligent process before unanimously recommending the offer, with full details to be disclosed in the upcoming proxy filing. She confirmed that the current year's CapEx plan remains unchanged and noted that while all 91,100 greenfield passings are fiber-to-the-home, a total network percentage was not provided.

Batya Levi inquired about underlying broadband trends for Q4, excluding storm and ACP impacts, the competitive environment from converged bundles, and the CapEx outlook, including the pace of new builds for the remainder of the year and into the next.

Answer

CEO Teresa Elder stated that the ACP subscriber roll-off is complete, while hurricane impacts are estimated at a 6,000-7,000 subscriber loss in Q4. She highlighted positive trends in the legacy business due to speed upgrades and simplified pricing, and strong penetration growth in expansion markets. CFO John Rego added that Q4 Greenfield CapEx will be an additional $10 million, bringing the 2024 total to around $70 million, and suggested the 2024 expansion spending pace is a good proxy for the next couple of years, but declined to provide a specific Q4 home build forecast.

Batya Levi inquired about the drivers behind the strong broadband additions, the outlook for the second half considering the ACP impact and seasonality, and the reasons for the deceleration in ARPU growth.

Answer

CFO Scott Beasley noted that while the Affordable Connectivity Program (ACP) wind-down will be a headwind in Q3 and Q4, he expects Q3 net adds to be up significantly year-over-year due to strong sales momentum and seasonality. Regarding ARPU, he explained that Q3 would be sequentially flat due to ACP transition plans before picking back up in Q4 to meet the 3-4% annual target. CEO Nick Jeffery added that long-term ARPU growth is supported by core pricing, speed upgrades, and value-added services.