Optimum Communications, Inc. Q4 FY2024 earnings call

Transformation Efforts - Phase 1: An experienced team drove operational and financial discipline, streamlining processes and using real-time data insights to improve efficiency and reduce costs. - Network Acceleration: Prioritized customer-first solutions, accelerated network upgrades, and developed a strategic network roadmap including fiber expansion and multi-gig rollout. - 2024 Milestones: Best Q4 fiber net additions, best mobile line net additions in 5 years, low churn in East, launched new income-constrained program in West, evolved product portfolio with new services (e.g., Total Care, video offerings) and enhanced customer experience (reduced truck rolls/service calls). - Network Investment: Grew total passings by over 2% in 2024, ended with 9.8 million total passings and 538,000 fiber customers, and Residential ARPU trends stabilized despite macro pressures.

Total revenue in 2024 was $9 billion, a 3.1% year-over-year decline. Mobile service revenue grew 52%, News and Advertising grew 8.6%, Business Services grew 0.3%, and other segments (driven by mobile equipment) grew 22.5%, while Residential revenue declined 4.6%. Lightpath had a strong 2024, with revenue accelerating to $414 million, up 5.5% year-over-year. In Q4, fiber net additions were 57,000 (a 22% Y/Y increase), mobile line net additions were 40,000 (best in 5 years, 70% Y/Y growth). At year-end, there were 4.3 million broadband subscribers and 460,000 mobile lines. Broadband subscriber net losses in Q4 reflected hurricane impacts and go-to-market pilots, but fiber and mobile showed growth.

2025 Priorities - Revenue Opportunity: Improve broadband subscriber trends, increase value-added services, grow mobile penetration, expand B2B portfolio; expect up to $100 million incremental revenue via new pricing and value-added services. - Efficiency: Leverage AI/digital solutions to drive costs out, moderate other operating expenses by 4%-6% by end of 2026 via enterprise benchmarking. - Network Strengthening: Grow total passings (majority fiber build), increase multi-gig availability via fiber and HFC upgrades. - Capital Structure: Target $1.3 billion capital spend, maintain strong liquidity for operational and growth objectives.

Competitive Pressures - West footprint faces challenges from incremental fiber overbuilders and fixed wireless, greater proportion of income-constrained households. - News and Advertising revenue impacted by non-election year in 2025. - Macro and competitive pressures affecting broadband ARPU.

Q: Talk about broadband performance in different regions and underpenetration opportunity in West.

A: East has ~70% overbuild, West ~45%. West faces fiber overbuilds and fixed wireless competition. Market tests in West show sales improvements, using surgical go-to-market strategies.

Q: Pressure on EBITDA in Q4 and future trends.

A: Onetime investments in Q4, but EBITDA expected to stabilize in 2025 with improved base management, pricing, and network strategies.

Q: Balance sheet and Lightpath monetization.

A: Exploring balance sheet options, Lightpath focused on growth, no immediate plans to monetize Lightpath.

Q: CapEx trends, hyperscaler business, Lightpath cash.

A: CapEx expected to trend down, hyperscaler contracts self-funded, Lightpath cash staying for investment.

Q: Fiber vs HFC, video churn from MSG network drop.

A: Leverage both fiber and HFC for network upgrades. Video strategies focus on customer-centric packages, no Q1 guidance but seeing video attach growth.

Q: West vs East competitive trends, video margin contribution.

A: West under pressure from overbuilders, East uses hyper-local strategies. Video margin improving with lower programming cost inflation and better packaging.