Liberty Broadband Corporation Q4 FY2024 earnings call

• On November 12, Liberty Broadband entered into a definitive agreement to be acquired by Charter, providing certainty for shareholders and enhancing liquidity. - The transaction terms: Liberty Broadband Series A, B, and C common stock holders will receive 0.236 shares of Charter common stock per share. Shareholder approval was received on February 26, and the transaction is expected to close on June 30, 2027. - GCI will be spun off to Liberty Broadband shareholders in late Q2 or early Q3 2024, with Charter bearing the corporate level tax liability exceeding $420 million. - GCI's 2024 results: Record revenue, solid adjusted OIBDA and free cash flow, and $150 million in dividends distributed to Liberty Broadband. - GCI's 2025 CapEx expectation: Approximately $250 million for middle and last mile connectivity and network expansion in rural Alaska, related to fulfilling build-out requirements of the Alaska plan.

In 2024, GCI achieved record revenue exceeding $1 billion. Fourth quarter revenue increased 5% and full year revenue grew 4%, driven by strength in data revenue. Adjusted OIBDA decreased 4% in the fourth quarter and was $362 million for the full year, with revenue growth offset by higher SG&A expenses. In 2024, GCI spent $193 million on capital expenditures, slightly below the prior expectation of $200 million due to delays in rural fiber projects. GCI's net capital expenditures for 2025 are expected to be approximately $250 million, primarily for middle and last mile connectivity and network expansion in rural Alaska.

• The spin-off of GCI is expected to be completed in late Q2 or early Q3 2024. - GCI's net capital expenditures for 2025 are expected to be approximately $250 million, primarily for middle and last mile connectivity and network expansion in rural Alaska. - The acquisition by Charter is expected to close on June 30, 2027, unless otherwise agreed to.

• Competition from Starlink in rural areas due to service disruptions from fiber network outages. - Potential changes in government subsidies, including possible adjustments to BEAD rules and impact on Starlink's participation. - Economic slowdown risks, though Alaska has historically been countercyclical to recessions due to its energy economy.

Q: Could you help think about the competitive backdrop today and how it's evolving, particularly with increased focus on Starlink and other satellite operators, and update on subsidies and how it fits into expectations for the next few years at GCI?

A: Ronald Duncan discussed that in Alaska, the wireless market has GCI competing primarily with AT&T, Verizon hasn't moved to 5G due to lack of C-band spectrum. On wireline, GCI has a predominant market share in the bulk of the market driven by Universal Service Fund support. Starlink is a competitor in rural areas due to fiber disruptions, but once fiber networks are built out, disruptions should decrease. Government subsidies are huge, with state having April date for BEAD applications, waiting to see adjustments with new administration.

Q: What about the possibility of substantial revisions in subsidies on the health care side and fiber side, and if GCI can withstand an economic slowdown?

A: Ronald Duncan stated Alaska is typically countercyclical to recessions due to energy economy. With Trump's focus on domestic energy production, there's potential upside. Regarding subsidies, there's a pending case before the Supreme Court on Universal Service Fund structure, but probability of material changes is low. Health care subsidies are material, but health care facilities are more likely to stay on fiber network due to bandwidth needs.