GCI Liberty, Inc. Q2 FY2025 earnings call

• Completed spin-off from Liberty Broadband in July. - GCI continues to lead in statewide service, with significant upsells in rural health and education segments. - Network infrastructure: Offering 2.5 gigabit broadband, upgrading in Anchorage to DOCSIS 4.0 or capable, planning to roll out to other markets for higher speeds. - Wireless: Early signs of postpaid business growth, launched unlimited test drive promotion in April with sequential growth in postpaid lines, plan to roll out new pricing/packaging offers. - Rural expansion: Expect to complete first phase of Alaska plan in 2026, FCC's Alaska Connect Fund to aid 5G deployment, GCI submitted applications for Alaska BEAD program. - Efficiency: Reorganized tech organization, hired CTO, continuing efforts to streamline business and increase efficiency.

GCI Liberty's total revenue in the second quarter was $261 million, a 6% growth. Consumer revenue declined 2% to $119 million, with consumer wireless revenue increasing 6% to $51 million. Business revenue grew 14% to $142 million. Consumer gross margin was 70.6%, relatively flat compared to the same period last year. Business gross margin increased to 81.7%. Adjusted OIBDA was $108 million, an increase of 26%. Trailing 12-month free cash flow was $153 million. Consumer wireless subscribers ended the quarter at 207,000, with 4,700 added during the quarter. Data subscribers ended at 154,500, a 3% decline year-over-year.

• Expect slowdown in adjusted OIBDA growth in the back half of 2025, partially due to fully lapping upsell cycle in schools starting Q3 2024. - Full year net CapEx expected to be around $250 million. - Trailing 12-month free cash flow through end of Q2 was $153 million, outlook favorable for rest of 2025 as USAC approval received for significant services. - Spin-off expected to result in basis step-up of approximately $1 billion, combined federal and state tax rate just under 30%.

• Previously, USF challenge at Supreme Court was an overhang, but has been favorably resolved. Other potential risks not explicitly detailed but implied by general business and market uncertainties.

Q: Asked about acquisition strategy, whether would go out of Alaska or industry, and criteria for acquisitions.

A: Ron said there aren't a lot of attractive acquisitions of scale in Alaska, so any acquisition strategy would largely be out of state and not necessarily within current business. GCI as a public company is new, hasn't had first full quarterly Board meeting yet, so don't have developed list of acquisition targets or priorities yet, but has cash flow to deploy and tax assets to accelerate