GCI Liberty, Inc. Q2 FY2025 earnings call

• Spin-off from Liberty Broadband was completed in July. - Network infrastructure: Offering 2.5 gigabit broadband in areas with fiber middle mile, upgrading Anchorage's core network to be DOCSIS 4.0 capable, with plans to roll out 5G and beyond. - Wireless: Postpaid business showing growth with the unlimited test drive promotion driving sequential growth in postpaid lines by 3,400 in Q2, and plan to roll out new pricing offers. - Rural expansion: Expect to complete Alaska plan phase one in 2026, with FCC Alaska Connect Fund aiding 5G deployment; GCI submitted applications for BEAD program but funding not factored into CapEx budgeting. - Exit: On track to fully exit video business by end of 2025. - Cost efficiency: Reorganized tech organization, hired CTO, and continuing efforts to streamline the business.

Consumer revenue declined 2% to $119 million, with the majority of the decline driven by data revenue and the exiting video segment, slightly offset by growth in consumer wireless. Consumer wireless revenue increased 6% to $51 million, benefiting from wireless subscriber growth and an increase in federal wireless subsidies. Business revenue grew 14% to $142 million, mostly due to data revenue from a strong upgrade cycle starting in Q3 2024, though wireless revenue declined $2 million or 17% largely from roaming revenue decline. Total revenue for the quarter was $261 million, representing 6% growth. Adjusted OIBDA was $108 million, an increase of 26%. The trailing 12-month OIBDA was a record $405 million.

• Expect slowdown in adjusted OIBDA growth in the back half of 2025 due to fully lapping the upsell cycle in schools starting in Q3 2024. - Full year net CapEx expected around $250 million. - Currently expect GCI Liberty spin-off to result in a basis step-up of approximately $1 billion, with combined federal and state tax rate just under 30%.

• Factors like wireless substitution, Starlink competition, and changes in the BEAD program funding as the state may not award full allocated funding. - The drop in oil prices and challenges with the Alaska economy could impact business.

Q: About your acquisition strategy, would you go out of Alaska? Would you go out of your industry? What are your criteria for acquisitions?

A: Yes, there aren't a lot of attractive acquisitions of scale in Alaska, so any acquisition strategy would largely be directed out of state and not necessarily within the current business. GCI as a public company is relatively new, so we don't have a developed list of acquisition targets or priorities yet and need more time to develop that strategy.