Okay, well, we've got a few more people filing in, but we're gonna get started here. Welcome everyone to our lunch, keynote fireside chat. Really pleased to introduce Jessica Fischer, who's the Chief Financial Officer of Charter Communications. Jessica, welcome. Good to be here. Why don't we jump right into it? 2022 was a pretty significant transition year for Charter as the company adapted to a slower broadband industry environment, while also accelerating growth in mobile and cementing your long-term network upgrade plans and your rural investments. Maybe if you could start off by talking a little bit about your focus and priorities for the management team in 2023. Sure. Going into 2023, we're focused on the things that we were talking about at our Investor Day in December, which is evolution, expansion, and then execution. If I start with the first one of those on evolution, it's really sort of two-pronged, but it's all about evolving to have a converged connectivity experience for our customers. The first one of those is by what we're doing with growing our mobile products, largely with Spectrum One, which is the combination of our internet and Wi-Fi, and mobile products together. And we think that they work better for consumers when we put them together. We're working through a lot of improvements that we'll make to make that converged connectivity experience better for consumers. As we educate consumers about it in the market, we think we'll be able to pull through some broadband growth, as well as continue to see the churn benefits that we've seen from having a converged connectivity product. The second piece of evolution is network evolution. We've announced plans to build or to, across our footprint, evolve our network to be able to provide multi-gig speeds in the downstream with gig speeds on the other side in the upstream. We'll do that for the cost of $100 per passing. It's extraordinarily capital efficient. We'll do it in addition to that, being able to gain efficiencies in offsetting operating expenses and capital expenses. Ultimately, we think that that'll lead to better outcomes in the long term in the way that we're able to compete in the market, and will converge well with our mobile products. The second pillar is expansion and what we're doing with our, with our rural construction initiative. We've talked about our plans to build 300,000 rural subsidized passings in 2023, and we continue to be on that trajectory. We think that after that, we'll actually. You know, we started coming in at the end of last year at a pace of about 15,000-20,000 passings per month. Our goal is to end 2023 at a pace more like 30,000 passings per month, and then to continue that into 2024, so to continue the speed at which we expand our footprint to reach new customers. Finally, execution. I think execution has always been sort of part of the lifeblood of Charter and how we approach the business. Here when we talk about execution, what we're talking about is investing in transactions with customers, whether that's investing in our labor force or investing in the digitization of those transactions. Spending the money that it takes to make our transactions high quality, because high quality transactions ultimately lead to us having fewer transactions across the network, which is good both from a financial perspective, and then ultimately we're more efficient in the way that we, that we have our, on our expense side. In that it makes our customers better customers, and increasing the longevity of the customers drives value into the business. Across all three of those, the evolution, the expansion, and the execution, we have a lot of, a lot of drive coming into 2023, and we're looking forward to what's to come there. Okay, great. I think Edward solved the noise problem in the back, so apologies for that. Can you talk about, you know, just how the more challenging economy that we're in now is impacting the business? You know, for example, are you seeing softer demand in enterprise or SMB or, you know, increased mobile substitution, collections, down-tiering, you know, advertising? Just, you know, where are some of the impacts in the macro environment maybe, you know, showing up in the business, if at all? Yeah. The impacts in the advertising business, I'd say, to start there, I think are well known. We're actually a bit insulated in advertising because our markets are more local. That doesn't mean that we don't see some of the impacts of the broader economy and some of the less expensive inventory at the national level because of the difficulties across the advertising business. In enterprise and SMB, so thinking about the commercial markets, I think that it's not a lot different than it's been, but if you go back to kind of coming out of the pandemic, we've seen the sales cycles lengthen in both of those businesses. I wouldn't say that there's a particular impact to the economic moment right now that we're seeing, we do continue to see somewhat slower sales cycles, which results in somewhat slower activity across those businesses. In both of them, I think we have products that are really well positioned. We have excellent pricing in both our SMB and our enterprise products. We have product offerings that are really coming to meet the market. Because of that, I think that we'll end up being well positioned, even in a downturn economy, on the commercial side to grow the business really well. Great. maybe just to shift gears a little bit. At your December investor event, Chris had indicated that he expects broadband net adds to increase in 2023, you know, versus last year. What gives the management team confidence in that outlook? you know, are there any risks that we should be aware of? Yes. The risk to meeting that goal is the same as what the risk sort of has been that we've talked about, which is that market activity does continue to be slow, which isn't really different from what it's been before. I think we did see in January a slight sort of downtick in our rate of net additions versus what we had seen in Q4. That's recovered somewhat in February. But I think that we have strong opportunities going forward into the rest of the year. You have a rural build, which ultimately will contribute to subscriber additions as those rural passings come online. You have the success of the Spectrum One product, and our continued convergence in the market. As we educate consumers around that, I think we'll grow broadband. As we sort of bring more of the base into the Spectrum One product, we'll get additional benefits in churn. You have what I think we're hopeful about, which is that the market will continue to sort of steadily tick towards some more normal activity level. Okay. A core part of your long-term strategy is growing homes passed, you know, both through traditional line extension activity, along with the partially government subsidized rural footprint expansion. Can you talk a little bit about, you know, how much incremental homes passed you might expect from the rural builds, you know, as compared to the approximately 2% annual growth that you've had over the last five years? Maybe talk a little bit about what the profile is like, for returns for the different flavors of line extension activity. Yeah. If you break it into two buckets, if we talk first about rural subsidized build, then after that about our sort of business as usual cadence. The rural subsidized build side, we said 300,000 passings in 2023. That 300,000 passings compares to about 120,000 rural subsidized passings that we built in 2022. The 120,000 is a component of the 200,000 total rural passings that we reported for last year. But that's really the piece to think about as incremental. The 300,000 this year versus 120,000 last year gives you an additional incremental passing versus last year of about 180,000 on that front. On the BAU build side, I would tell you that we continue to aggressively pursue passings all across our footprint. We're more on that side, I guess, at risk of what happens across the market, and so you need to have home building happening and economic impacts can happen that sort of have an effect on exactly how many BAU passings that you can get. We certainly are out there trying to find all of the natural extensions of our footprint, and to continue to build those passings the way that we built them in the past. On the rural front, from a returns perspective, you know, we've talked about mid to high teens IRRs on those passings. What we're seeing in terms of how the passings come in, I think that we continue to believe that we are on track to meet those return targets that we had for the rural builds. How does that compare to a regular business as usual line extension returns? You know, We've always pursued the BAU line extension returns, because the returns on those passings are incredibly strong. Yeah. A comparison maybe isn't as helpful as I think that they are all very accretive to the business, and so I think it's good for us to pursue both of them. Okay. What kind of penetration levels are you seeing after building out in the underserved areas so far? How does that compare to more traditional business as usual line extensions where you might actually have a broadband competitor in the market? Can you talk about how the other KPIs in the previously underserved areas, you know, compare to the overall company average, you know, things like churn and ARPU? Penetrations in the new rural areas are extremely fast. at the six-month mark, we continue to see penetrations around 40%, and they continue to grow after you hit that six-month mark. we're really happy about the penetrations that we're getting in those markets. The ARPUs are also quite good. While internet is what kind of drives penetration in those markets, we continue to see good attach rates around video, and landline voice and mobile products to the point that our ARPUs on those passings are actually over $100. Very, very strong ARPUs coming into those markets, which I think just show the kind of demand that you have across those unserved markets to bring the product in. as I said, like, all of that contributes to our continued confidence that we can build those passings, and make really strong returns on those passings, on a go-forward basis. Good. Also at the December investor event, management presented the company's network upgrade plan, which is gonna bring the network up to 10 gigs down and one up with the ability to go a step further to deploy fiber to the home at a later time if need be. Can you just talk about the full range of benefits that you expect to realize from the upgrade plan? Yeah. We'll roll out across 85% of our footprint the ability to go to at least five gigs down and one gig up. We'll do that by the end of 2025 with a cost of about $100 per passing. As I said before, that cost then is offset from a cash flow perspective in the longer term by efficiencies that you get in operating expense and in capital expenditures. In addition to having that sort of speed upgrade in the HFC plant, you have the ability to, on a very targeted basis, deploy success-based fiber to the home out of the existing nodes. By doing that, you also have a product that you can market to a high-end sort of user, sort of like what we've done with enterprise, a targeted product to deal with those in the very limited scenarios in which we think a customer might have a need beyond what the HFC plant can offer. Ultimately, what we think it does, why go do it, right? We think that, first off, it sort of secures the speed claims that you have all across your market. I would remind you that we upgrade sort of not only those passings that have a fiber competitor today, or not only those passings that are in a particularly competitive area. When we upgrade, we upgrade our whole footprint. You, you get the benefit of having those higher speed claims and marketing claims across all of your footprint. That then combined with what we have in being able to market a converged product to consumers, I think really sort of future-proofs the network in terms of being able to be really competitive all across our footprint, and continue to succeed, and with competing in a market that has a variety of competitors across the footprint. You talked about how if a customer needs capabilities beyond the HFC plant, you can deploy fiber and you have the flexibility to do it. I guess can that be done in a really localized way and on customer-by-customer basis? Just trying to understand how success-based, you know, that potential future capital spend could be. Yeah. I would first say, to be clear, we don't have any plan to deploy fiber broadly to sort of overbuild the cable plant across the network. We don't think it's necessary with network evolution as we've planned it. You have inside of a node, it's called a Remote PHY, the capability to run single sort of fiber drops out if you need to have a success-based product. It can be very localized in the way that we deploy it, which gives us a lot of flexibility in what we would do on a go-forward basis to the extent that we wanted to have some fiber to the home deployment. Mobile was the second largest revenue driver for Charter last year and the largest volume driver in the business. Growth really accelerated after the Spectrum One bundle was introduced in October. What's the runway you see for the growth in the mobile business over the long term, and can you discuss your optimism surrounding your converged offering? Is there anything tactically that you need to do in order to achieve your long-term goals in mobile, you know, for example, device subsidies or unlimited plans that don't have any usage thresholds? We have a tremendous runway for growth in mobile. If you think about it, about 5% of our passings today take our mobile product. Our share of growth adds in the market is much larger than that. Our ability to continue to grow our mobile product at a very rapid pace, I think it's clearly there. The customer acceptance and I guess our Spectrum One product has been very successful in bringing lots of new mobile customers into that mix. From a growth trajectories perspective, I think that there's a long way for us to continue to go. Yeah. Now that the company's about five years into it, can you talk about, you know, maybe the full range of benefits that are accruing to Charter from mobile, and maybe the future opportunities that you haven't tapped into yet? The benefits of mobile, one, is that I think it creates cash flow for the business, right? Today, on all of the customers that we're adding to the business, we are creating, we're generating margin from those customers. It's swamped by customer acquisition costs because of how fast we're growing. I think that's the right thing for the long term, right? We'd like to add as many customers to the network as possible because our ability to continue to create margin off of those customers in the long term will be strong. In the short term, that means that you do have to incur the customer acquisition costs to acquire them. I think the benefit that we will get from convergence, in the long term is substantial. It's not only the benefit of the margin that you get off of the mobile product, it's the benefit of coupling it with the internet product, seeing the bundling benefits from that, which is ultimately reduced churn. I think me and some of our competitors have talked about that. As well as sort of bringing people into the business because they want access to that combined product, where we can actually make the mobile service better, in the long term by offering connectivity to our fixed broadband network, things like Mobile Speed Boost that we've talked about, and just access to the Spectrum Mobile network overall. Do you, do you think that you might need to get into device subsidies? 'Cause obviously, it can significantly impact the economics, so I'm just. It, certainly it can. What I would say is that right now we are growing our mobile business exceptionally quickly, and we're doing it without device subsidies. Where we are, I think that we're really confident in our ability to continue to grow without having to resort to some of the tactics that some of our competitors have. I guess, you know, have you seen any real benefit on the broadband side yet? I mean, or is that something that you think is an opportunity down the road? I do think that there's opportunity down the road as we continue to educate consumers for the broadband pull-through piece. Yeah. It's more difficult to sort of sort out exactly what happens with that side. Yeah. On the churn side, admittedly, there's this selection bias that you have to kind of work through to say, okay, one customer, did a customer choose mobile because they're already a better customer? Sure. When we cut the data in a wide variety of ways, we see that there's benefit of from a churn perspective across customers in a wide variety of circumstances, such that while it's difficult to quantify exactly how much it is, it's quite clear to us that that churn benefit is already something that we're seeing in our customers who take both products. Okay. you talked in your last call about some disclosure changes that you're gonna make, particularly around mobile. can you maybe talk about that a bit so that, you know, everyone understands what's coming? Everyone's prepared, yes. On the P&L side, mobile is going to come into our P&L reporting. Residential mobile will be reported inside of residential revenue. SMB mobile will be reported inside of SMB revenue. Mobile expenses, instead of being segregated into a separate line, will be incorporated in the relevant expense category sort of across the board. In addition to those changes that we're going to make around mobile, we're doing a little bit of extra reporting around detail and line extensions and rural. Sure. I would expect those to be coming as well. I would just remind people that, you know, the mobile reporting change is really because that's the way that we're operating the business today. If you think about the sales side, we're bundling our mobile product with internet and the Spectrum One product. The actual sales transaction is a single transaction where a customer calls in to get the sale. We're working through also the convergence of the customer service side of the business. We are really operating this as a single connectivity business and not as two separate product lines, which is why it will make sense for us to report it all together inside of the P&L. This isn't just you and Comcast conspiring to make us all rebuild our models? It is not, no. How do you envision the economics of mobile evolving over the next several years from a margin perspective? I mean, it sounds like it's, you know, profitable on an incremental basis now, but, you know, can you maybe talk about how the overall economics evolve? Yeah. In December, we gave some information around what our margin looks like excluding subscriber acquisition costs, and it grew over that period of time, which was really the message that I was trying to show there, which is that there continue to be what I would say are sort of semi-fixed costs across the business that we're continuing to reap the benefits of scale as we grow into those. I expect that margin to continue to expand as we scale against those semi-fixed costs. I think we'll get some additional margin expansion there from from what we do around offloading traffic from an MVNO perspective. Also sort of as we improve our customer service function across that, right, and improve our expense profile overall. I think that the margin in our mobile products sort of continues to grow on a go-forward basis, which is part of the reason that I think then it becomes part of the cash flow story, right, and how you generate additional cash flow from our customer base who are connected to our network, which is always sort of our goal in the business to expand that cash flow base that you can generate from a customer pool. Right. Maybe just to follow up there, can you talk a little bit about what the trends have been like, in CPGA for mobile and also churn, you know, what direction they've been headed? I know you don't disclose back or churn, but maybe just directionally. you know, I think that what I would say is across all of the components of cost in mobile, our cost per customer is improving. Sure. Whether that is, whether it's customer acquisition cost or sort of cost to serve, we see sort of improvements across the board, and I really attribute that to the benefits that we're seeing as we continue to scale the business. Yeah. Okay. Shifting to business services, can you talk about what you're seeing in SMB in terms of the competitive environment, how the economy's impacting the business, and how much opportunity Charter has to continue to take market share there, just given how much success you've already seen in SMB? Yeah. SMB continues to grow. The environment, I think, has some of the same issues that we've seen in the resi environment in that activity levels are not as high as maybe we would like them to be. I said, you know, that customer buying cycle is a little longer than we'd like it to be. That has been the case really, like, since we came out of the pandemic. It doesn't appear to be driven by a new economic factor. We think that we continue to be really the well-positioned. You know, we have a strong product in the market. It's priced well. I think SMB benefits from network evolution as you get there, and the ability to offer higher speeds in some of those areas. I think that we continue to be well-positioned and under-penetrated, which means that in the long term, we should continue to take share in that market. Okay. On the enterprise side, I mean, that's been growing at a really healthy rate when you take out the drag from wholesale. What are the key factors that we should be considering as we think about the growth potential for enterprise going forward? Maybe if you could talk a little bit about the key products and the market segments that are driving the growth in that business. In enterprise, you're right. It is performing extraordinarily well when you sort of pull away the impact from wholesale. The businesses that are performing well there are really the combination of the fiber internet access business and then managed services that we've been adding over time, things like Voice over IP and that kind of piece. In addition to that, I think we've also been looking at additional markets that we can serve where, and expanding to have salesforce to address those additional markets. Mm-hmm. Grow our customer base there. The last piece I would say is, you know, we talked about this a little in December, and I don't know if people picked it up a lot, but inside of our footprint, we have a lot of lit buildings today. We also see that there are opportunities for us to connect buildings that would be accretive to our overall network, but that are sort of inside of our footprint. We are going out there and connecting additional buildings to continue that growth of the enterprise business. I think our trajectory going forward in terms of what that retail side of enterprise continues to do, is really strong. They're executing well against sort of all of their plans from market expansion, product expansion, and I think they'll continue to grow well. A growing TAM, deeper penetration, more products. Okay. Excellent. Maybe if you could talk about capital allocation priorities and, you know, just plans for utilizing excess free cash flow and leverage capacity going forward. Yeah. Our plan around capital allocation priorities really haven't changed. We do the thing that we've always done, which is first we take cash and try to invest it in things that'll be accretive to the business, whether that's in organic investment in the form of something like our rural construction initiative or whether it's going out and doing accretive M&A. Once we've sort of made those investments with the cash flow capacity that we have, we look at what's left over, looking at our leverage target, which continues to be 4- 4.5 x. If we have additional capital capacity, we return that to our shareholder base in the form of buybacks. I think, you know, maybe just to follow up there, I think, you know, a lot of people ask the question about the higher interest rate environment. Sure. Is 4-4.5 x, you know, still appropriate? I mean, how do you kinda, you know, what's your response to that? You know. Yeah. I do think that the 4x-4.5x continues to be appropriate in spite of the environment. There are a few factors there. One, obviously, is we have already a balance sheet that includes a lot of long-term fixed rate debt. The impact that higher rates have on our sort of incremental interest expense it hasn't been that high. One is our continued belief in the growth of the business. When you look at sort of the return that you get from a levered free cash flow model, if you believe that the business is going to continue to grow at a certain rate, it's the right thing to keep some of that extra leverage on the balance sheet. The last one really is, what's the value of your equity in the market, and does the market value of the equity reflects the value that you believe is intrinsic in the business. When I sort of put all of those things together and look at where we're sitting today, I think the right thing for us to do is to continue to maintain our leverage at that 4 - 4.5 x window where we've been. Our confidence in the continued growth of the business is high. It appears that the market doesn't have that same confidence. There's a situation where we can take advantage of some of that dislocation. We think it's the right place for us to be. Okay. In 2023, Charter's levered free cash flow will step down because of higher CapEx and higher cash taxes. Does that mean we should expect free cash flow growth to resume after this year? Short term, timing matters a lot, right? How does the rural construction initiative capital exactly end up getting deployed? How much capital ends up getting deployed against the network evolution and in which year? I think the more important story is what's happening long term around free cash flow. If you break that up into components, you know, EBITDA continues to grow. We have a number of ways that we're working on that EBITDA growth, whether that's around evolution and deploying mobile and deploying our speed upgrades to drive our competitiveness in the market to generate growth, or whether it's our continued drive around execution and expense efficiency, EBITDA continues to grow. The second piece is what happens around CapEx. I talked about you have the rural construction initiative, you have the network evolution initiative, where we're sort of going out and affirmatively spending capital to improve our growth in the long term. If I pull those back and I just think about sort of what's the, what's the maintenance CapEx that it takes to continue the network, that baseline CapEx continues to come down. I think we talked about that we expect after we make it through network evolution for our capital expenditures, excluding line extensions, to be lower as a portion of revenue than they were going into it. Than they have been over the last couple of years. That capital intensity, you have growing EBITDA, you have capital intensity and your baseline that's coming down. You have what I talked about just a minute ago in interest expense, which is that our balance sheet, because we have so much long-dated fixed rate debt, is largely insulated against the impacts of the rising rate environment, which means that you don't get cash flow drag that's commensurate with what's happening in the rising rate environment. When you put those things together, the long-term potential to continue to grow the cash flow of the business is very high. That's really what gives us the ability to make the decisions that we've made, to take some of that capital that we have now and invest it in future growth to generate continued growth in the long term on that already growing cash flow base. I think we feel really fortunate that we're able to sort of take advantage of the moment and subsidize rural, and to do that while we're also sort of future-proofing our network, to create really the long-term growth that we expect and think that we can have in the business. Great. Okay. It's a great place to wrap up. Thanks, Jessica. Okay. Thank you. Thanks, everyone, for joining us.