LBRDK

• Capital Allocation Policy Update

  • Liberty Capital will initiate a quarterly dividend starting in Q4 2026, with a total annual dividend of $60 million ($15 million per quarter), which is expected to represent approximately half of 2027 full-year free cash flow, and a smaller share in 2028 as capital expenditures decline.
  • Management targets a 3x long-term net leverage ratio for GCI, with incremental cash and borrowing capacity allocated to both strategic investments and shareholder returns (including share repurchases).
  • The capital allocation waterfall prioritizes: 1) funding operating business and committed network investments; 2) paying the baseline dividend, with planned growth over time; 3) maintaining the long-term leverage target; residual free cash flow is allocated between external investments and additional shareholder returns.
  • Share repurchases will be considered when shares trade at a meaningful discount to intrinsic fair value, after meeting all other capital priorities.

• GCI Operational Progress

  • GCI is at the peak of its 5G network investment cycle, having expanded 5G service to over 125 Alaskan communities, reaching approximately 83% of Alaska's population, with over 100 communities upgraded in 2026 to date. This upgrade replaces legacy technology with a more efficient 5G platform that improves network visibility and troubleshooting.
  • Consumer wireless added 2,100 lines in Q2 2026; 42% of GCI broadband customers now take GCI wireless, and 63% of postpaid wireless lines are sold as part of converged service bundles, which management expects will improve long-term customer retention.
  • Consumer broadband had an organic decline of 500 subscribers in the quarter, but this was more than offset by the acquisition of a small fixed broadband provider that added 5,400 net subscribers.
  • GCI takes competition from Starlink seriously, but has adopted a pragmatic approach: GCI competes with Starlink for retail customers, but also integrates Starlink technology into business managed solutions and uses it as an additional network resiliency layer for multiple Alaskan communities.

• Quintillion Acquisition Update

  • The Hart-Scott-Rodino antitrust waiting period has expired, and FCC review remains ongoing; management now expects the transaction to close in late 2026.
  • The acquisition will create a more resilient network with redundant ring architecture and routing diversity, reducing outage exposure and improving reliability for critical Alaskan infrastructure including healthcare, public safety, and government services.
  • Management expects the acquisition to be accretive to free cash flow in the first full year after closing, and will deliver $20 million in total run-rate synergies within 24 months of closing, with half of these synergies achieved in the first 12 months. Including run-rate synergies, Quintillion is expected to contribute $50 million to $55 million of adjusted OIBDA in 2026.

• 2026 capital expenditures for GCI is expected to total $290 million (including $20 million carried over from 2025 due to normal timing shifts), which will represent the peak annual capital spend in the current investment cycle.
  • Capital intensity is expected to decline meaningfully in 2027, with further declines in 2028, returning GCI to its historical capital intensity range and driving stronger free cash flow growth.
  • GCI full-year 2026 adjusted OIBDA is expected to be approximately stable year-over-year, with stronger performance weighted to Q4 2026.
  • Cash generation from GCI is expected to materially expand starting in 2027, driven by lower capital expenditures and the expected contribution from the Quintillion acquisition.

Liberty Capital (consolidated) generated $261 million in total revenue and $96 million in adjusted OIBDA for Q2 2026. GCI, the core operating segment, matched this top-line result, with revenue flat year-over-year and adjusted OIBDA down 11% YoY to $96 million. There are two operating product segments: 1) Consumer: Revenue declined 2% YoY (driven by the 2025 exit of the video business, partially offset by wireless subscriber growth). It contributed approximately 51% of total GCI revenue and had a gross margin of 71.8% (up from the prior year, due to lower video programming costs after exiting the video business). 2) Business: Revenue increased 1% YoY (driven by business data service growth with existing healthcare and education customers). It contributed approximately 49% of total GCI revenue and had a gross margin of 75.5% (down YoY, due to a $9 million increase in distribution costs, $3 million of which came from restored service on the Quintillion network, with the rest from higher costs for upgraded services).

• Forward-looking results are subject to material uncertainty, and actual outcomes may differ from projections due to unidentified risks, as outlined in Liberty Capital's recent SEC filings (10-K and 10-Q).
  • Starlink presents meaningful competitive pressure on GCI's broadband retail business in Alaska.
  • The Quintillion acquisition remains subject to ongoing FCC regulatory review, and closing timing is not guaranteed.
  • GCI's net leverage may fluctuate above or below the 3x long-term target during periods of large investment and transaction activity, creating temporary balance sheet deviation.

Q: David Joyce asked about the financial impact of GCI's current wireless promotions, specifically when promotional pricing would end and new lines would begin generating full revenue, and additional details on the small broadband acquisition GCI completed in the quarter. / A: GCI's primary current promotion offers free wireless service for one year to customers who add or upgrade a wired GCI service. Most new wireless lines added this year will not start generating revenue until 12 months after activation, creating a one-year lag for revenue recognition from these new subscribers. The acquired business is a small fixed wireless provider that serves areas on the fringe of GCI's existing broadband footprint. GCI completed the acquisition to extend its service coverage and gain operational experience with fixed wireless technology.

Q: Joyce followed up asking if Q2 2026 elevated expenses were driven by temporary factors or seasonality, and how much of the increased expense base related to service upgrades versus capital expenditures. / A: One key driver of higher year-over-year expenses was that a 2025 fiber break on the Quintillion network reduced GCI's distribution costs in Q2 2025, so this year's Q2 reflects a return to normal cost levels after service was restored. GCI also incurred one-time contractor costs for special projects in the quarter, plus $3 million in new public company operating costs that were not present in Q2 2025, and these public company costs will continue going forward. Additional expense increases came from higher circuit costs associated with recent customer service upgrades, which are operating expenses rather than capital expenditures.