Craig Moffett

Craig Moffett from MoffettNathanson asked Brian Roberts about speculation regarding Warner Bros. Discovery assets, their complementarity, and the feasibility of such M&A in the current political climate. He also inquired about the implications of Verizon's leadership transition for Comcast's MVNO relationship.

Answer

Brian Roberts, Chairman and CEO of Comcast, stated they wish Dan Shulman well at Verizon and are confident in their important relationship. Mike Cavanagh, President of Comcast, reiterated that the bar for M&A is very high, emphasizing the strength of their existing businesses and strategies. He noted that post-Versant spin, NBC's media business is well-positioned, and while they will evaluate opportunities, M&A is not necessary for their sound and durable strategies. He also suggested that with the Versant spin, more media M&A options might be viable than publicly perceived, focusing on streaming and studio assets.

Craig Moffitt asked Brian Roberts about the speculation surrounding a potential acquisition of Warner Bros. Discovery assets, their complementarity, and the feasibility of such M&A in the current political environment. He also asked about the implications of the transition at Verizon to Dan Shulman for Comcast's MVNO relationship.

Answer

Brian Roberts (Chairman and CEO, Comcast) wished Dan Shulman well and expressed confidence in the continued successful relationship with Verizon. Mike Cavanagh (President, Comcast) stated that the bar for M&A is very high, but the company would evaluate opportunities, particularly streaming and studio assets complementary to NBCUniversal post-Versant spin. He emphasized that NBCUniversal's current strategy is sound and durable without M&A, and that post-Versant spin, more deals might be viable than public commentary suggests.

Craig Moffett inquired about a potential rise in involuntary disconnects following the end of the ACP program and whether there are performance differences in markets with completed 'Project Genesis' network upgrades.

Answer

David Watson, CEO of Connectivity & Platforms, stated there was only a 'slight uptick' in non-pay disconnects, which was not material, and noted stabilization in voluntary churn. He confirmed that network upgrades are ahead of plan and emphasized that Comcast's ability to compete is strong across its entire footprint, with WiFi being a key differentiator.

Craig Moffett asked about a potential rise in involuntary non-pay disconnects following the end of the ACP program and whether there were noticeable performance differences in markets where network upgrades are complete.

Answer

David Watson, CEO of Connectivity & Platforms, reported seeing only a slight, non-material uptick in non-pay disconnects, balanced by stabilization in voluntary churn. He stated that consistent network investment has Comcast well-positioned to compete across all markets, highlighting the differentiated in-home WiFi experience as a key strength regardless of the stage of DOCSIS 4.0 upgrades.

Craig Moffett inquired about current trends in the Theme Parks business, particularly regarding international travel, and asked about the company's strategy for handset subsidies in its wireless bundles if costs were to rise due to tariffs.

Answer

Michael Cavanagh, President, stated that Theme Park trends in Florida remain stable with strong advanced bookings for Epic Universe, noting that domestic visitors are a significant driver. David Watson, President and CEO of Comcast Cable, explained that as a challenger in wireless, Comcast is focused on providing value and can manage through competitive intensity and cost issues, highlighting the 'bring your own device' option as a key strategy.

Craig Moffett inquired about the key learnings from Comcast's 'Project Genesis' network upgrade markets. He asked what the new marketing and promotional efforts will look like and what differences in the competitive landscape are expected in areas with the new symmetrical, fiber-like speeds.

Answer

CEO of Comcast Cable David Watson reported that Project Genesis is on track, with 50% of the first phase completed. He stated that the company is not waiting for full completion to act and will introduce new simplified packaging in the second quarter. This new offering will bundle top-tier broadband with included mobile service and feature simplified, all-in pricing. Watson noted that it is still too early to share specific data on competitive shifts, as the full marketing launch for the new packages has not yet begun.

Craig Moffett inquired about the strategy for the upcoming Epic Universe theme park, focusing on its capacity, pricing strategy, and any pre-opening costs incurred in Q3. He also asked about the company's plans for the BEAD program and its potential impact on capital intensity and footprint expansion.

Answer

CFO Jason Armstrong clarified that Epic Universe incurred minimal pre-opening costs of about $20 million in Q3, with an additional $150 million expected to be split between Q4 2024 and Q1 2025. President Michael Cavanagh stated that Epic will command premium pricing and will be managed to optimize the entire Universal Orlando resort. Executive Vice President David Watson explained that Comcast plans to participate in the BEAD program under rational conditions and does not anticipate a change to CapEx intensity.

Craig Moffett of MoffettNathanson LLC inquired about the company's strategy for addressing the 2027 debt maturity wall, the timing for refinancing, and how the recent asset-backed securitization (ABS) transaction influences their approach.

Answer

CFO Marc Sirota stated that the company is pleased with the innovative HFC asset-backed loan, which diversifies funding sources at a better cost than their last high-yield issuance. He emphasized that the structure provides additional capacity and flexibility. While not commenting on specific timing for addressing the 2027 maturities, Sirota affirmed they have runway and are well-positioned to explore all options.

Craig Moffett requested a broader perspective on the competitiveness of Optimum's pricing and whether management feels the process of rightsizing its broadband pricing and bundles is now complete.

Answer

Executive Dennis Mathew explained that the company has moved from a 'one size fits all' model to a sophisticated, AI-driven, hyper-local pricing strategy that allows it to compete effectively while preserving ARPU. Executive Marc Sirota added that gross add ARPU increased nearly 2% year-over-year, supported by value-added services and a customer mix shift, with 60% of new subscribers now choosing 1 gig or higher speeds.

Craig Moffett questioned the strategic shift from a primarily fiber overbuild strategy to one incorporating more mid-split and DOCSIS upgrades, asking what was learned from fiber performance and if this change implied a performance trade-off.

Answer

CEO Dennis Mathew responded that the company has unlocked new potential in its HFC network, which was previously underutilized. While praising the superior performance metrics of their 3 million fiber homes (better churn, ARPU, satisfaction), he emphasized that HFC is a robust asset that can be upgraded to multi-gig speeds in a highly cost-efficient manner. He described the current approach as a multi-year strategy that leverages both HFC and fiber assets effectively, using fiber for new passings where the ROI is strong.

Craig Moffett inquired about broadband subscriber trends, the competitive impact from fixed wireless, and whether recent broadband ARPU growth is sustainable.

Answer

Executive Dennis Mathew acknowledged industry-wide softness in gross adds and ongoing competition from fixed wireless and fiber overbuilders. However, he noted that Optimum's win/loss rates are improving due to hyper-local strategies. Mathew expressed confidence in stabilizing and growing ARPU through a combination of right-sizing speeds, bundling mobile, implementing more sophisticated promo roll-off management, and launching new value-added services.

Craig Moffett questioned the financing for the D2D satellite business, asking about potential financing partners and which assets could be used as collateral. He also asked if selling AWS-4 spectrum would be considered as a way to raise capital, referencing a recent media report.

Answer

Director, President & CEO Hamid Akhavan acknowledged the need to finance the project but could not provide a detailed financial picture at this time, promising more clarity in the future. He dismissed the media report about spectrum sales, stating it did not originate from the company and that all strategic options remain on the table while they collaborate with the FCC.

Craig Moffett inquired about the new T-Mobile MVNO agreement, its strategic focus on the business segment, the resulting impact on the existing Verizon relationship, and whether the deal contemplates the pending Cox acquisition.

Answer

President & CEO Chris Winfrey explained that the T-Mobile deal is strategic for entering the business mobile market more aggressively and provides valuable optionality. He affirmed the residential relationship with Verizon remains strong and that the T-Mobile agreement was signed post-Cox announcement, implying future possibilities were considered.

Craig Moffett asked about the impact of converged services on broadband churn, requested an update on the mobile attach rate, and inquired about the potential effect of tariffs on capital spending.

Answer

CEO Chris Winfrey confirmed that converged households exhibit substantially lower internet churn, a benefit driven by both value and technology convergence. CFO Jessica Fischer stated the mobile attach rate is just under 20% of internet customers. Both executives affirmed that tariffs are not expected to have a meaningful impact on the company's capital expenditure guidance.

Craig Moffett requested tangible evidence of the wireless bundle's positive impact on the core broadband business, such as reduced churn. He also asked for Chris Winfrey's perspective on inorganic growth opportunities, particularly the frequently discussed possibility of a combination with Comcast.

Answer

President and CEO Chris Winfrey acknowledged that while lower churn is observed in converged customers, some of it is self-selection. He explained the strategy has evolved from using broadband to sell a free mobile line (Spectrum One) to now using the strong Spectrum Mobile brand to enhance internet acquisition and pricing. Regarding M&A, Winfrey stated Charter's value creation strategy is not dependent on it but is focused on organic growth and operational excellence. He noted that any large-scale M&A would need to be good for customers and jobs and that the decision to combine rests with the family-controlled entities in the cable industry.

Craig Moffett asked what portion of Charter's plant is now fiber-to-the-home (FTTH) and if lower participation in the BEAD program might lead to more small-scale rural M&A.

Answer

President and CEO Christopher Winfrey noted that while new builds are now ~90% FTTH, they see 'absolutely no difference' in competitive performance or service quality compared to HFC. CFO Jessica Fischer addressed M&A, stating that the company always evaluates small-scale opportunities at the right price but does not see a direct trade-off between pursuing BEAD funding and M&A, as they will pursue both where returns are attractive.

Craig Moffett from MoffettNathanson LLC inquired about the new T-Satellite service, its expected contribution to ARPU growth, and how learnings from its beta might alter rural network deployment strategies.

Answer

CEO Mike Sievert stated that while it's too early to quantify the direct impact, anticipation of T-Satellite has likely driven adoption of higher-end plans. He clarified the service complements, rather than changes, their terrestrial build-out strategy. He and President of Technology Ulf Ewaldsson noted they are accelerating greenfield site builds, guided by an AI model that is currently prioritizing rural areas, independent of the satellite offering.

Craig Moffett of MoffettNathanson LLC asked about the contribution of the newly launched T-Satellite service to ARPU growth and how it might alter T-Mobile's strategy for serving rural markets and deploying network assets.

Answer

President & CEO Mike Sievert stated that while it's day one of the launch, anticipation for T-Satellite likely drove adoption of higher-end plans, and he expects monetization through both plan upgrades and a la carte sales. He clarified that T-Satellite complements, but does not change, their aggressive terrestrial build-out in rural areas. President of Technology Ulf Ewaldsson added that their AI-driven model is already directing their 4,000 planned greenfield sites for the year primarily to rural locations, a strategy that transforms their rural competitiveness when combined with US Cellular assets and T-Satellite.

Craig Moffett of MoffettNathanson asked about the potential impact of tariffs on handsets, questioning whether prices would rise, upgrade rates would fall, or if carriers would absorb the costs through promotions.

Answer

CEO Mike Sievert responded that while the situation is dynamic, any significant tariff would likely be passed on to the customer, which could in turn dampen upgrade rates. However, he emphasized that T-Mobile does not currently foresee a material impact on its business or guidance from this issue. CFO Peter Osvaldik confirmed that current expectations are already factored into their financial guidance.

Craig Moffett asked about T-Mobile's perspective on network convergence, citing AT&T's high wireless attach rates in its fiber footprint. He questioned whether this dynamic influences T-Mobile's view on the necessary scale of its own converged fiber footprint.

Answer

CEO G. Sievert responded that while convergence is an option for over 80% of Americans, most do not choose it, indicating it's not a primary purchase driver. He noted that T-Mobile also experiences lower churn in areas where competitors have fiber, suggesting selection bias rather than a causal bundle effect. He concluded that customers prioritize the best service in each category independently and that bundles can be constructed in many ways beyond wireline and wireless.

Craig Moffett from MoffettNathanson asked for T-Mobile's perspective on persistently low handset upgrade rates and how the company is positioned to benefit from a potential AI-driven upgrade cycle in the future.

Answer

Executive Michael Katz attributed low upgrade rates to customers being satisfied with their current 5G devices, which last longer. He stated T-Mobile is well-positioned for any future cycle, as high switching environments favor them. Executive Ulf Ewaldsson and CEO G. Sievert added that newer devices increasingly leverage T-Mobile's unique network capabilities like 4-way carrier aggregation, extending their network lead and creating a performance tailwind.

Craig Moffett of MoffettNathanson LLC asked how Verizon would prioritize potential spectrum purchases, from government auctions or private markets, against other capital allocation uses like share buybacks.

Answer

Chairman and CEO Hans Vestberg responded that Verizon feels good about its current spectrum position but supports efforts to bring more spectrum to the U.S. market over time. He explained that any potential spectrum acquisition is evaluated through a 'build vs. buy' analysis to determine if it offers a better return than densifying the existing network. The decision is based on which path is more capital efficient.

Craig Moffett inquired about the evolving MVNO relationship with cable operators and whether Verizon views them more as customers or as convergent competitors.

Answer

CEO Hans Vestberg described the relationship with MVNO partners as a good, business-to-business relationship. He emphasized that the MVNO business is accretive and aligns with Verizon's core strategy to build the network once and monetize it through as many profitable connections as possible, including wholesale partners.

Craig Moffett asked for more insight into the observed moderation of new fiber overbuilding from third parties, questioning whether it was due to market saturation, ROI challenges for competitors, or Cable One's own strategic response.

Answer

CEO Julia Laulis attributed the trend to multiple factors, including the difficulty of operating a network in rural America and Cable One's own aggressive competitive response in select markets during the first half of the year, which sent a strong message to potential entrants. CFO Todd Koetje added that rising capital and labor costs are making returns more challenging for overbuilders. He noted that while total fiber overlap is in the high 40s, recent increases are primarily from incumbent telcos, a dynamic Cable One is accustomed to.

Craig Moffett asked if Cable One is being competitively disadvantaged by not offering a converged wireless bundle, especially given the hiring of an executive with deep wireless experience. He also followed up on whether attractive wholesale rates for wireless are available to the company.

Answer

President and CEO Julia Laulis responded that the company continuously evaluates a mobile offering, similar to how it cautiously studied VOD and home security in the past, and must be able to articulate the value proposition for all stakeholders before launching. She noted they are open to all forms of bundling. CFO Todd Koetje added that while access to wholesale wireless is available, the costs are not yet 'extremely compelling,' though that could change over time.