Samuel McHugh

Sam McHugh followed up on the 2026 EBITDA guide, asking if the $3.1 billion-$3.3 billion range still implies growth versus 2025 throughout or only at the midpoint. He also inquired if rough calculations suggesting working capital and PCF cash inflows around $1.7 billion are accurate, and if there's any reason for significant working capital fluctuations.

Answer

Chris Stansbury, CFO, clarified that the prior $3.5 billion EBITDA guide included the consumer business, which contributed about $300 million in adjusted EBITDA. He stated that the inflection to growth for 2026 is expected for the full year, not necessarily every quarter, and that an 8-K with pro forma math would be released. He confirmed that working capital would be positive, reflecting PCF inflows and outflows, and that with $2.5 billion in new PCF deals and more demand, the company's cash flow guide for next year has increased.

Samuel McHugh asked if the 2028 vision for 47 million intercity fiber miles relies on securing new PCF deals and whether new fiber routes could expand the potential for the mass market fiber business.

Answer

CEO Kathleen Johnson confirmed that the 47 million-mile projection is based entirely on business that has already been signed and does not include any potential new deals. She also clarified that the company views its intercity fiber network strategy and its mass market fiber-to-the-home build as separate initiatives.

Sam McHugh asked about the step-up in bad debt in Q4 2025 and what AT&T is observing regarding consumer payment patterns. He also inquired about the cost-cutting guidance, specifically if reductions will accelerate with copper decommissioning and other drivers like AI and digital.

Answer

CFO Pascal Desroches clarified that the increase in bad debt is primarily a function of higher equipment sales and service revenues, not a discernible change in consumer payment patterns. He reiterated the expectation of over $4 billion in cost savings over the next three years, driven by legacy decommissioning, digital transformation, and AI. CEO John Stankey added that high investments in software technology are improving productivity, enabling more projects to generate cost benefits and indicating continued opportunities for efficiency gains.

Sam McHugh (BNP Paribas) asked about the recent step-up in bad debt, seeking color on consumer payment patterns. He also inquired about the company's cost reduction guidance, specifically whether the expected $4 billion+ in savings over the next three years will accelerate due to copper decommissioning and other factors like AI and digital transactions.

Answer

CFO Pascal Desroches clarified that the increase in bad debt is primarily a function of higher equipment sales with long-term receivables and higher service revenues, not discernible changes in consumer payment patterns. Regarding cost savings, Desroches confirmed the expectation of over $4 billion in savings over the next three years, driven significantly by legacy decommissioning, but also by productivity gains from digital initiatives and AI across the board. CEO John Stankey added that high investments in software technology are improving productivity, allowing more projects to drop through and contribute to cost benefits, indicating a continuous pipeline of opportunities.

Sam McHugh of BNP Paribas asked about the expected long-term stable market share in areas with long-tenured fiber overbuilders. He also followed up on mobile, questioning how to reconcile weakening ARPU trends with the reported improvements in customer quality.

Answer

CEO & Chairman Dennis Mathew stated that new go-to-market strategies are allowing them to win back share against fiber competitors, improving win-share by 20-40% in some areas. Regarding mobile ARPU, CFO Marc Sirota explained that the company is taking a 'balanced and measured approach' to maximize the overall revenue trajectory, suggesting a strategic trade-off between per-line ARPU and subscriber volume.

Samuel McHugh asked how the company is balancing the risk of cannibalization versus driving new gross additions with its new low-income offer. He also questioned the worsening trends in the West footprint and when an improvement might be expected.

Answer

Executive Dennis Mathew explained that the company is mitigating cannibalization risk through a disciplined and gated rollout of the low-income offer, using AI tools to optimize for customer lifetime value. Regarding the West, he noted that while markets with new fiber entrants are challenging, the company is seeing year-over-year improvements in gross adds and churn in markets with more mature overbuilders, and is deploying new playbooks to improve performance across the entire footprint.

Sam McHugh asked about the wireless business, questioning if the high subscriber acquisition spending would continue in the second half of the year and whether the retail wireless business remains a core focus or if a shift to wholesale is underway.

Answer

Director, President & CEO Hamid Akhavan responded that subscriber acquisition spending is dynamic and dependent on market conditions, not the FCC situation. He affirmed that EchoStar remains committed to its current model, which includes both retail and wholesale components, and is not planning a strategic shift away from its retail operations.

Samuel McHugh from BNP Paribas Asset Management asked for the quantitative impact of government support programs on net adds, the rationale for buying back Hughes secured bonds over potentially cheaper unsecured bonds, and for clarification on whether MVNO contracts preclude white-labeling services.

Answer

CEO Hamid Akhavan explained that former government program customers are now integrated into their general prepaid brands, so they do not break out the impact. He reiterated that the bond buyback was an opportunistic decision based on availability and price, not a deeper strategy. COO John Swieringa and Hamid Akhavan both clarified that any wholesale deal utilizing their roaming partners would require new, custom business negotiations and would not be automatic.

Samuel McHugh asked about the payment structure of the AT&T Network Service Agreement, specifically if payments are at their peak and how quickly they will decline as customers are moved on-net, and if there are any catch-up payment provisions.

Answer

President of Technology and COO John Swieringa confirmed that EchoStar is on track with its minimum commitments to both T-Mobile and AT&T. He positioned the agreements as a competitive asset, not a liability, as they provide subscribers with broader coverage than any single network. He emphasized a focus on a P&L mindset and leveraging these partnerships for profitable acquisition and efficient CapEx management, rather than simply racing to spend.

Sam McHugh of BNP Paribas Exane questioned the company's priority between subscriber growth and ARPU, given the acceleration in customer losses and the underperformance of the FlexConnect product. He also sought clarification on whether the guidance for 'stable ARPU' was on a sequential or year-over-year basis and asked about competition from AT&T's Internet Air.

Answer

CEO & President Julie Laulis responded that Cable One aims to balance both subscribers and ARPU, with strategies varying by market. She clarified that ARPU is expected to remain stable sequentially for the remainder of the year. CFO Todd Koetje added that FlexConnect's launch was deprioritized for the billing system migration but will be relaunched in Q3 with more marketing support. Koetje also confirmed that AT&T is aggressive with its fixed wireless product in non-fiber markets, and FlexConnect is designed to compete directly with it.

Samuel McHugh inquired about the expected long-term fiber overlap percentage in Cable One's footprint and asked if the Q4 underlying residential subscriber loss rate should be considered a reasonable run rate for 2025.

Answer

CFO Todd Koetje stated that while fiber overlap is expected to increase further, driven by incumbent telcos, much of the build is likely complete, and Cable One is comfortable competing in these markets. CEO Julia Laulis asserted that the Q4 loss rate is not the expected run rate for 2025, citing unique Q4 headwinds and new, effective growth tactics. While declining to give specific market share data, Laulis noted that in tenured competitive markets, the company typically returns to growth after a 12-19 month normalization period.

Samuel McHugh questioned whether Cable One can return to subscriber growth while simultaneously maintaining stable or growing ARPU, given consensus expectations. He also requested an update on the company's fiber overlap percentage.

Answer

President and CEO Julia Laulis stated that the company's primary goal is to grow broadband revenue and acknowledged the challenge of growing both subscribers and ARPU at the same time, noting that year-to-date, broadband subscribers have grown absent ACP losses. CFO Todd Koetje confirmed that the fiber overlap in their network remains consistent with the previously reported figure of below 40%.

Sam McHugh of BNP Paribas questioned what T-Mobile needs to do to improve its network perception among switchers and sought clarification on the enterprise sales restrictions within the new cable MVNO deal.

Answer

CEO Mike Sievert confirmed the cable MVNO deal is restricted to businesses with under 1,000 lines. President of Marketing, Strategy & Products Mike Katz explained that improving network perception is a multi-faceted effort involving advertising, customer experience, and widening their network lead. President of T-Mobile Business Group Callie Field and CEO Mike Sievert also highlighted the role of high-profile enterprise and government wins as powerful third-party endorsements.

Sam McHugh of BNP Paribas questioned what T-Mobile needs to do to improve its network perception, as only 20% of switchers view it as the best, and sought clarification on whether the cable MVNO deal restricts sales to large enterprises.

Answer

President & CEO Mike Sievert confirmed the cable MVNO deal is limited to businesses below 1,000 lines. President of Marketing, Strategy & Products Mike Katz explained that the 20% perception among non-customers represents a massive opportunity, which will be addressed through advertising, customer experience, and widening their network lead. President of T-Mobile Business Group Callie Field added that major enterprise and government wins, like the City of New York, serve as powerful third-party endorsements that are changing perception.

Samuel McHugh of BNP Paribas inquired about the potential for a significant step-up in churn in Q2 due to recent price increases and asked whether T-Mobile had restrained marketing spend in Q1 given its strong EBITDA results.

Answer

CEO Mike Sievert stated that any churn impact from pricing changes on legacy plans is temporary and was anticipated, as the rollout was managed via a test-and-learn approach. He argued the nature of competition is changing, but not the overall intensity. Jon Freier, President of the Consumer Group, added that Q1 competition was device-focused and consistent with prior quarters. CFO Peter Osvaldik confirmed they optimize for value creation each quarter and plan for further investment in Q2 and beyond.

Samuel McHugh from BNP Paribas requested an update on the regulatory progress of the U.S. Cellular acquisition and asked if recent ARPU strength was driven more by customer mix or by price adjustments.

Answer

CFO Peter Osvaldik stated that ARPA growth was driven by core expansion of customer relationships, with rate plan optimization being a minor component. On the deals, Executive Michael Katz provided timelines, expecting Lumos to close early next year and U.S. Cellular mid-next year. General Counsel Mark Nelson added that the U.S. Cellular deal is pro-consumer, leading to lower prices and better coverage, expressing confidence in eventual clearance.

Samuel McHugh asked why Verizon included a tariff caveat in its guidance if management felt relaxed about the issue, and questioned whether broadband market weakness was due to churn or lower gross adds.

Answer

CEO Hans Vestberg clarified he is not 'relaxed' on tariffs but noted that Verizon's CapEx exposure is small and manageable, while significant handset tariffs would need to be passed on to consumers. Consumer Group CEO Sowmyanarayan Sampath described the broadband market as normal and competitive, stating that Verizon's segmentation strategy is driving strong net adds, Fios churn is at a record low, and FWA churn is showing sequential improvement.

Samuel McHugh asked about the phasing of wireless service revenue headwinds and tailwinds throughout 2025. He also questioned if AI-related sales were now material enough to signal a definitive inflection point for Verizon Business EBITDA.

Answer

CFO Tony Skiadas detailed that revenue growth will be supported by price-ups, volume growth, and an improving prepaid profile in the second half, while promo amortization will peak in 2025. Business Group CEO Kyle Malady noted that while AI Connect revenue was small in Q4, the Business segment's EBITDA improvement was driven by a combination of factors, including cost focus and FWA growth, with positive trends expected to continue.

Samuel McHugh of BNP Paribas asked about the expected phasing of wireless service revenue headwinds (promo amortization) and tailwinds (price-ups) throughout 2025. He also inquired about the materiality of AI-related sales and the confidence in reaching an inflection point for Business segment EBITDA.

Answer

CFO Tony Skiadas detailed that the $2 billion in service revenue growth at the midpoint is driven by carry-over pricing actions, improving consumer volume, stable business volumes, and scaling FWA. He noted the prepaid business should become a tailwind in the back half of 2025, while the promo amortization headwind will peak in 2025 and ease toward year-end. CEO Hans Vestberg and Business Group CEO Kyle Malady expressed cautious optimism for the Business segment, noting that while AI Connect revenue was small but impactful in Q4, the positive EBITDA trend is driven by a relentless focus on costs, strong wireless and FWA growth, and new opportunities like their partnership with Brightspeed. Malady highlighted three consecutive quarters of sequential EBITDA growth.

Samuel McHugh asked for details on the new self-install option, including the customer process and its expected impact on the cost to connect new homes.

Answer

CEO Nick Jeffery explained that self-install is available when a new customer moves into a previously fiber-connected home, simply requiring them to plug in a router. He noted this will significantly reduce truck rolls and costs over time. CFO Scott Beasley added that the cost to connect is currently at the high end of the $600-$800 target range, and self-install will help bring this cost toward the low end by eliminating the need for a drop, ONT installation, and a technician visit.

Samuel McHugh asked for color on the penetration rates of the 2023 expansion cohort, which appeared more similar to the 2021 build than the 2022 build. He also requested clarification on the Q1 cash flow impact from pension and post-retirement liabilities versus the full-year guidance.

Answer

CFO Scott Beasley advised against drawing conclusions from a single quarterly cohort, stating that penetration rates are on target overall despite variations in geographic and build type mixes. Regarding the pension, he explained that the Q1 cash flow change included a $52 million cash contribution plus a non-cash pension revaluation due to changes in discount rates and a retirement package, with more details to be provided in the 10-Q filing.

Asked if the 45% long-term penetration target is still appropriate or if there's upside, and sought clarification on the dynamics of the vendor financing balance for 2024.

Answer

The 45% penetration target is considered a minimum, not a ceiling, as many markets are already performing above that level. Regarding vendor financing, cash and accrued capital investment are expected to be very similar in 2024, with no material change in the outstanding balance anticipated.