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Edited Transcript of CBB earnings conference call or presentation 7-Nov-19 2:00pm GMT

Q3 2019 Cincinnati Bell Inc Earnings Call

CINCINNATI Nov 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Cincinnati Bell Inc earnings conference call or presentation Thursday, November 7, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew R. Kaiser

Cincinnati Bell Inc. - CFO

* Joshua T. Duckworth

Cincinnati Bell Inc. - VP of Treasury, Corporate Finance & IR

* Leigh R. Fox

Cincinnati Bell Inc. - President, CEO & Director

* Thomas E. Simpson

Cincinnati Bell Inc. - COO

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Conference Call Participants

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* Batya Levi

UBS Investment Bank, Research Division - Executive Director and Research Analyst

* Benjamin Tureck Brogadir

Odeon Capital Group LLC, Research Division - Research Analyst

* Jay Mayers

CreditSights, Inc. - Analyst of US Telecom, Cable, and Satellite

* Joshua Matthew Frantz

BofA Merrill Lynch, Research Division - Associate

* Sergey Dluzhevskiy

GAMCO Investors, Inc. - Associate Portfolio Manager

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Presentation

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Operator [1]

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Good day, everyone. And welcome to CBB's Third Quarter 2019 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Josh Duckworth. Please go ahead

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Joshua T. Duckworth, Cincinnati Bell Inc. - VP of Treasury, Corporate Finance & IR [2]

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Good morning, and welcome to Cincinnati Bell's Third Quarter 2019 Earnings Call. On the call today are President and Chief Executive Officer, Leigh Fox; and Chief Financial Officer, Andy Kaiser, who will recap this quarter's highlights and provide detail on our third quarter financial performance.

Following the prepared remarks, Tom Simpson, our Chief Operating Officer, will join Leigh and Andy for the question-and-answer session.

Remarks made on today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provision presented on Slide 2. Please see today's press release and the company's recent SEC filings available on our website for a description of the potential risks and uncertainties that may cause actual results or outcomes to differ materially from those indicated or suggested by any such forward-looking statements.

The presentation also contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available on our website.

With that, I am pleased to introduce Cincinnati Bell's President and Chief Executive Officer, Leigh Fox.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [3]

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Thank you, Josh, and good morning, everyone. As today's release indicates, our business delivered another strong quarter of financial performance with strategic revenue growing 8% year-over-year. Third quarter results were in line with Wall Street expectations, and as mentioned on last quarter's call, we are confident that we will deliver on our full year guidance.

Now turning to our IT Services business unit performance. I'm impressed by the team's ability to continue to advance from a nonrecurring harbor reselling model to a trusted cloud services provider, focused on longer-term recurring service contracts. As evidence of our growing expertise in this area, we were recognized as the first service provider to achieve master level certification in all 5 Cisco cloud managed services, demonstrating our broad expertise across enterprise networks, collaboration, data centers and IP next-generation networks.

Our innovative approach has resonated within our communications practice. During the quarter, we added an impressive 15,700 UCaaS profiles, primarily driven by a recent deal with a fast-growing restaurant that has more than 700 locations spread throughout the United States.

In total, we now manage 270,000 profiles for more than 2,000 business partners across North America. Additionally, we signed new service agreements that will add $200,000 in new monthly recurring revenue once fully implemented.

Turning to our cloud practice. Demand continues to be robust. Cloud revenue increased 15% year-over-year after excluding GE's in-sourcing initiatives, which completed during the second quarter of 2019.

As mentioned last quarter, the cloud practice has 50-plus highly skilled software engineers with certifications across each of the public cloud platforms. As clients migrate from Legacy solutions, they look to us as a trusted advisor. Through this process, we're able to demonstrate our expertise and move our relationship with customers beyond transactional interaction to monthly recurring opportunities.

Moving to our Entertainment and Communications business. Our operating results remain strong. After a decade of investment in fiber, our combined fiber networks span over 17,000 fiber route miles throughout Greater Cincinnati and Hawaii. In our wholesale business, we provide services for approximately 90% of the wireless towers in Cincinnati and approximately 80% in the wireless cell sites in Hawaii, and remain a preferred provider of network services to other carriers.

For commercial business customers, our recognizable brand as a next-generation network provider has led to success-based build outside of our traditional operating territory. As evidence, we have recently won large commercial fiber builds in adjacent metropolitan areas, which provide additional opportunity to expand our superior consumer fiber services to neighborhoods with the highest return on investment.

Within our existing footprint, fiber-to-the-premise reaches 60% of addresses in Cincinnati and 50% of addresses on the Island of Oahu. Fiber-to-the-premise is a generational asset with a high barrier to entry that consistently delivers high speed with unlimited bandwidth. Simply put, we provide the fastest and highest capacity broadband pipe to the customers' homes.

With that, I will now turn the call over to Andy who will discuss our consolidated and segment results for the quarter.

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Andrew R. Kaiser, Cincinnati Bell Inc. - CFO [4]

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Thanks, Leigh, and good morning, everyone. Slide 5 summarizes the company's third quarter performance. Consolidated revenues totaled $383 million, generating adjusted EBITDA of $102 million.

Turning to our Entertainment and Communications performance for the quarter on Slide 6. Revenue totaled $249 million with Cincinnati contributing $171 million and Hawaii, $78 million. Customers transitioning away from lower margin linear video programming in favor of over the top solutions drove revenue decreases in both markets.

Adjusted EBITDA was $93 million, up 2% year-over-year. Cincinnati generated adjusted EBITDA of $68 million consistent with the prior year. Hawaii contributed adjusted EBITDA of $25 million, up 13% from a year ago, and remains on track to grow between 5% and 10% in 2019.

Moving to Slide 7. At the end of the third quarter, Cincinnati Fioptics internet subscribers, which include the combination of fiber-to-the-premise and Fiber-to-the-Node customers, totaled 247,000, up 4% from a year ago as demand for our fiber-to-the-premise Internet product offset the declines from Fiber-to-the-Node.

During the quarter, we added 3,800 fiber-to-the-premise Internet customers in Cincinnati with penetration now reaching 45%. fiber-to-the-premise Internet ARPU increased 5% from the prior year, totaling $54, while churn decreased 44 basis points to 1.9%.

In the Hawaii market, we've added 7,700 Consumer/SMB fiber-to-the-premise Internet subscribers since the close of the merger with penetration rates reaching 32%, up from 30% a year ago. Internet ARPU increased $6 from the prior year, now totaling $39.

Slide 8 highlights our IT Services and Hardware segment results for the quarter. Revenue totaled $141 million, generating adjusted EBITDA of $12 million, up 4% and 3% from a year ago, respectively, after excluding the impact from GE's decision to in-source certain cloud services.

Turning to Slide 9. As Leigh mentioned earlier, the strength of our UCaaS, NaaS and SD-WAN offerings within the communications practice continues to outperform legacy decline with strategic revenue growing 37% year-over-year. Year-to-date, we've increased NaaS and SD-WAN locations by more than 1,000 each. We've also added 31,000 hosted UCaaS profiles during the year.

Moving to the summary of capital expenditures on Slide 10. We've invested $167 million year-to-date, including $54 million for Hawaiian Telcom. During the first 9 months of 2019, we invested $28 million in construction costs to expand our fiber-to-the-premise footprint in both Cincinnati and Hawaii. Year-to-date, Consumer/SMB Fiber installation costs totaled $37 million in Cincinnati and $11 million in Hawaii.

As presented on Slide 11, free cash flow totaled $34 million for the first 9 months of 2019. We ended the quarter with net debt of $1.9 billion with leverage remaining consistent at 4.7x. Liquidity was $162 million, and we maintain a gross NOL carryforward of approximately $800 million. We remain confident that our strong capital structure and liquidity enable us to execute on our strategic objectives.

As noted on Slide 12, we are on track to deliver against our previously communicated full year revenue and adjusted EBITDA financial guidance. We also continue to expect full year 2019 capital expenditures to be within the range of $215 million to $235 million.

I will now turn the call back to Leigh for closing remarks.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [5]

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Thanks, Andy. I am proud of the company's operating performance year-to-date and the progress achieved towards building 2 distinct and growing businesses.

This company continues to build superior assets and deliver strong financial results while competing against larger companies. We have also built a company and culture that gives back both socially and environmentally. Year-to-date, we have financially supported numerous local charities and our employees have volunteered over 10,000 service hours. On the environmental side, one vendor program helped us reduce 350,000 pounds of electronics, equating to enough energy savings to power more than 1,300 homes per year.

As we entered the final quarter of 2019 and look ahead to next year, we remain confident that our strategic initiatives have differentiated us from our peer group and positioned us for EBITDA growth in 2020. We remain focused on applying a disciplined approach to capital allocation to drive profitable growth and we continue to evaluate alternatives to maximize stakeholder value.

I will now turn the call over to the operator to open for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question from David Barden with Bank of America.

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Joshua Matthew Frantz, BofA Merrill Lynch, Research Division - Associate [2]

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It's Josh in for Dave. Two if I could. How do you view the change in demographic trends in Cincinnati and Hawaii, kind of impacting the pace of cord cutting and fiber adoption versus the national average? And then secondly, in Hawaii, it looks like DSL sub-losses are still offsetting the fiber gains. When do you think that will flip positively?

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [3]

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Josh, I would say, on the first question on the trend, I'll answer that, and then I'll let Andy answer the second question. I think we see the NaaS, what's happened nationally, here in Cincinnati and in Hawaii. We definitely see a demographic-based shift, as you mentioned, to cord cutting. We are watching things like the launch of Disney+. What that has -- the impact that has on over the top adoption. I think with more and more availability on the tech side, look at what's happening with Apple TV, I do think there is a growing trend, and it's going to continue and cutting linear television and -- we view that as a positive for us. When you have a very dense fiber network and you have -- your sole focus is building fiber-to-the-premise and offering the best and highest bandwidth pipe to the home.

I think that only gives us an advantage over time. I will say that I talk to a lot of people around supply and demand, and I think we have built more supply than there is demand, and I think once that shift happens from the standpoint of usage on consumer side, I think we're in a better spot. And so as I mentioned in the script, we feel like we built a generational asset where demand will only increase for bandwidth. Look at all the studies and we think we're in a great spot as that demand inflection really meets supply, and we become one of the key suppliers, if not the only supplier as an example for truly symmetric bandwidth.

So, why don't you answer the second question?

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Andrew R. Kaiser, Cincinnati Bell Inc. - CFO [4]

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Sure. As we've discussed on multiple calls in the past, really in Hawaii, the big opportunity is driving fiber-to-the-prem penetration, and we continue to do that. So when you look -- we're currently sitting at 32%, but we clearly have a lot of opportunity to drive that upwards towards where we sit in Cincinnati, which is 45%. So it will be a combination of driving further penetration from the 32% throughout the remainder of 2019 and 2020 as well as new doors that we will open in 2020 as well. So when you take those 2 in combination against kind of the fairly steady clip of Fiber-to-the-Node decline as well as DSL decline, we should turn positive all in 2020.

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Operator [5]

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And for our next question, we'll take Sergey Dluzhevskiy with GAMCO Investors.

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Sergey Dluzhevskiy, GAMCO Investors, Inc. - Associate Portfolio Manager [6]

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First question is kind of on the portfolio. So if you look at your portfolio beyond the IT Services business and beyond obviously, the core Entertainment and Communications business. Do you see assets that -- where you might not get credit for or are not getting credit for that you could possibly monetize down the road, whether they are noncore or not central to your strategy, whether it's real estate or anything else? Anything that could be used to surface value over short to medium term?

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [7]

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Yes. Sergey, this is Leigh. Yes, absolutely. I mean you mentioned one big one for us. Real estate. We have a few projects going on right now, really strong real estate consolidation, especially in Hawaii. As you can imagine, whenever you consolidate a network -- real estate in Hawaii, first and foremost, is expensive. But also as you consolidate electronics, the cost of electricity and the savings available to you is substantial. So we have quite a few projects going on in Hawaii around network consolidation, CO consolidation and what to do with real estate, we are a real estate owner in Hawaii. So I'm not sure that's necessarily where we want to be long-term. There's probably a mix, we'll always have some, but I think there is an opportunity there so we are absolutely delving into that.

It's a little less prevalent in Cincinnati as the cost of real estate, cost of electricity is -- you just don't get as much bang for your buck, but we're constantly looking at assets. Beyond real estate, I'm not, I mean our other -- probably the -- our other most liquid asset is the IT Services business, as we mentioned in the past. They're intentionally building 2 companies up, and so we've always got optionality around that. But beyond those, EMC, IT Services, those are our main 2 companies. We're constantly looking at assets, but the real estate will be probably the biggest one. Hopefully, that's helpful.

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Sergey Dluzhevskiy, GAMCO Investors, Inc. - Associate Portfolio Manager [8]

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Right. And I guess a bigger question also related to what you just mentioned. So the stock has been obviously under pressure and the valuation into public market continues to be depressed. So as you look at your business in addition to operational execution, what options or alternatives do you see that you believe could be effective in unlocking value and eliminating those disconnects between the intrinsic value of your largely fiber centric business and valuations that so far persists in the public market.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [9]

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Yes, I mean that's a great question. I think one of the things we suffer from is just a kind of a sector overhang is, I'll be kind and just say that, and a lot of it, at least in the last several months, to me, focuses around the credit markets. We're obviously okay from a balance sheet standpoint, and we -- our debt maturities, we have plenty of time. But I didn't -- very honest about the fact that this doesn't turn. We do have options, and we see a path over the next several years getting our leverage down into the 3s. And I think that's a good place to be when you are going to refinance your long-term debt. That would be our goal. And I think in doing that in this environment, we would unlock a lot of value as the perception of high leverage in this industry, given what's going on in the sector, I think has had a lot of -- has resulted in a lot of the downward pressure.

And so we feel like we've got a solution for it or solutions, we still manage our cash very closely. We have, as you're well aware, we've been very intentional about investing in fiber, and investing our own cash. I think what you see from all the teams is that we've been able to hold leverage very consistently over the last several quarters. So we're very focused on it, and we do see a path. When we execute that is really just -- look, we're watching the markets, and we're going to take full advantage of our options when the time is right. Right now we don't have to do anything. We have plenty of cash to do exactly what we're doing. We're executing. The -- I'm a believer of stocks. Stocks are volatile. They go up, they go down, they go back up again, right? And so as long as we keep executing that's the one thing we can control and this team continues to that. So I see a good path forward, but right now, we're focused on execution.

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Sergey Dluzhevskiy, GAMCO Investors, Inc. - Associate Portfolio Manager [10]

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So you mentioned leverage. Ideally, where would you like to be given your asset portfolio? What is the optimal leverage for the company of your size and the nature of your assets?

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [11]

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I think in the 3s is fine. I mean, look, to be candid, in the 4s was fine until certain issues arose in our sector. Look, we're a very capital-intensive industry. And I've read a lot recently on what the narrative is in the sector and what needs to happen. And what needs to happen is investment. You need to invest in fiber because the companies like ours need to invest in next-generation networks. We've done that, and we continue to do that. Others need to do that. Our leverage is high because we reinvested in fiber as an example. We've got great assets because -- but due to that fact, we have high leverage. Now again, I'm sort of watching the trends, and I'm going to -- that's going to really dictate over time what we need to do from the standpoint of leverage. But I think if you're in the 3s, you're in a really great place. I think in the -- as you've seen from us, in the 4s is absolutely manageable under our debt structure and capital structure. I think 3s will be fantastic, but it's just dictates the kind of -- it's dictated by the tone of the markets and right now the tone isn't good, and we're watching it very closely.

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Sergey Dluzhevskiy, GAMCO Investors, Inc. - Associate Portfolio Manager [12]

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And my last question is about Hawaii. So I mean you're making progress in terms of integrating those assets and basically driving operational performance. So as you look into 2020, what are your top 2 or top 3 operational priorities for Hawaii? What would you be putting particular emphasis on in 2020?

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [13]

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Tom, you want to...

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Thomas E. Simpson, Cincinnati Bell Inc. - COO [14]

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Yes. Sergey, this is Tom. The top 2 priorities in Hawaii is really where we're starting real estate consolidation as we consolidate some central offices and really business and consumer sales focus. We're still pushing in fiber penetration in the consumer market, and we're starting the MyWay TV launch, which is the skinnier bundle that we launched this quarter. It's really continuing to push up penetration on the sales front and push the IT integrated services and business voice and all of that full stack inside of the business sales.

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Operator [15]

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And our next question comes from Batya Levi with UBS.

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Batya Levi, UBS Investment Bank, Research Division - Executive Director and Research Analyst [16]

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Couple of questions. Given the optimal leverage in the 3s, how should we think about the incremental fiber build opportunity in the market? But also you were contemplating maybe doing some overbuilds, some projects going forward. What does this suggest in terms of CapEx plan? Have we seen the peak? And are we going to start to see that coming down? And another question on the operations. Can you provide a little bit more color on the KPIs you're seeing in October? And maybe the competitive environment. Is there any change in connect or churn, given the price increases that charter implemented?

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [17]

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Thanks, Batya. On the build side, I think the way to think about -- we definitely saw the peak a few years ago. We won't be building that aggressively. I would say that the way to think about our CapEx right now is sort of steady state. I would say that what you saw in '19 is what I would consider a very steady state. Now -- then you look at where you're investing, I would say that you're going to see less investment, though we're not going to end our investment in our -- in Cincinnati, as an example, but we are seeing a lot of opportunities as we edge out and overbuild.

We've won some deals in territories right outside of Cincinnati. On the business side, that has allowed us to build fiber up to those markets and also allowed us to take advantage of that fiber in building consumer neighborhoods. And when you do it in that order, you win the business first, build the fiber line, then you spur off of that fiber. What we found is we saved on the consumer doors. We've saved about 15% on the build roughly when we go to engineer those doors. So to me, that's a great strategy, right? We also look at those as incremental doors. We're not cannibalizing part of our own business. These are truly incremental wins for us and that's exciting for us also.

So we are gaining traction on the territory. We're seeing other business type solutions. At least, we're being sought after, I guess, is the best way. Our reputation is good in the area we're being sought after. So look, I think it's got a very positive impact on our capital spend going forward, but I would say the majority of that would be in that overbuild category, unless in Cincinnati, you'll see us kind of trending out of territory. The same would be in Hawaii. In Hawaii, look, we're going to be slowly build. We're going to use government subsidy to build but it's going to be a very slow steady build.

So you won't see any kind of aggressive build out of us moving forward. It really does come down to managing cash flow and managing our leverage ratio. And in this environment we see this -- that as being the most important element and that's what we're doing. So study execution with steady build.

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Batya Levi, UBS Investment Bank, Research Division - Executive Director and Research Analyst [18]

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All right.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [19]

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You want to answer the metrics question, Andy?

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Andrew R. Kaiser, Cincinnati Bell Inc. - CFO [20]

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Yes. Batya, I apologize. Batya, on the competitive nature of the -- we're not seeing any changes in the KPIs, given Spectrum's most recent announcement on pricing. We've been very, very focused since last year on reducing churn. As I think you probably remember us talking about ARPU management, and we stated you shouldn't be focused as much on ARPU because what we are going after is retention. We believe that keeping customers is much more important to us than going after what I call these vanity metrics on the consumer side.

I could ask Jason Praeter and Tom, who run Cincinnati, I could ask John Komeiji in Hawaii, hey, get me subs and they could get subs overnight. It's just not the subs that we really want, or our investors really want us to have because they churn out, they cost you cash, you don't make any money from them. So what we're really focused on is really diving into what are the subs we want and want to keep, and I think that's what you're seeing in our churn numbers and the improvement in our churn numbers. We've seen no movement yet from Charter's announcement, not saying that we won't, but there's been very little time since the announcement on the pricing.

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Thomas E. Simpson, Cincinnati Bell Inc. - COO [21]

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And Batya, I would add to that. I would anticipate that we would continue to see, as a result of everything Leigh just said, continued improvement. As we shift more and more away, you see it in our numbers from Fiber-to-the-Node and DSL as those continue to come out of the base. We are then left with fiber-to-the-prem subs, that -- and we've said this over and over, it's a superior product that we see more and more demand for bandwidth. Folks are making their way to the fiber product because they need it. And to Leigh's point, the way we're managing that to ensure that they we're not pricing them in a manner that we see them leave. We're seeing stronger churn metrics year-over-year and I would anticipate we'll continue to see that as that trend continues.

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Operator [22]

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And we'll take a question from Jay Mayers with CreditSights.

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Jay Mayers, CreditSights, Inc. - Analyst of US Telecom, Cable, and Satellite [23]

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I wanted to maybe dig into that churn aspect a little bit more. So obviously, you highlighted an improvement on year-on-year basis. We saw a little bit of a step up both in Cincinnati and Hawaii. I remember you kind of noted last quarter that there was a price event in Cincinnati during 2Q and then 1 in Hawaii this quarter. Maybe just any additional color there on the churn impacts you're seeing?

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [24]

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So obviously, any time that we push through a price increase, we anticipate that we're going to see some impact on churn. But the way that we've been managing this year, we mentioned it moments ago, we are looking very closely on a sub-level basis. And taking a look at that -- the contribution margins coming through, and are very closely managing the kind of promo expire moment, which is a big moment that can drive churn. So while will we'll continue to push through price increases, how we manage the base on a go-forward basis will be consistent with we've done in 2019. And that is taking a look at the overall contribution margin and ensuring that when price increases happen, we do so in a logical way and don't push the subscriber out.

So again, that goes back to how we're managing the base, very intentionally, not chasing video subscribers and ensuring that the customers that we do have, stay with us long-term.

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Operator [25]

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And we'll take a question from Ben Brogadir with Odeon Capital.

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Benjamin Tureck Brogadir, Odeon Capital Group LLC, Research Division - Research Analyst [26]

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Just a question regarding the deleveraging initiative. I know you said, you want to get down into the 3s. But my question is based on your CapEx being kind of steady state at this number, you referenced $215 million to $235 million. You guys are generating a little over $400 million EBITDA for the year. And kind of given the interest payments and pension, and OPEB payments. I'm just wondering if you kind of do the simple math around EBITDA last year and kind of cash flow items? Just wondering how you plan on kind of deleveraging to the 3s? Is it just pure EBITDA growth, is there kind of non-core M&A and debt pay down associated with that? I mean, could you kind of do a simple math around EBITDA and your cash flow items. It doesn't really paint much of a deleveraging free cash flow picture.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [27]

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Yes. So great question. You said it, it's a combination of growth in EBITDA, M&A and proceeds of M&A that go towards paying down debt ultimately. We've been pretty honest about everything we do. We have 2 companies. Ultimately, if need be, we sell assets and we get down to the 3s. We're watching it very closely, the credit markets, but it's just a combination of those 2 things, get you down in the 3s.

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Benjamin Tureck Brogadir, Odeon Capital Group LLC, Research Division - Research Analyst [28]

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Understood. Maybe I could slip in one more real quick as well. Given Presidio's sale that was completed late summer or early fall, they go to like a 9x valuation multiple on the buyout. Obviously, you guys highlight them as a comparable to CBTS. Wondering kind of based of that multiple evaluation, if there's been any strategic discussions around what to kind of do with CBTS to kind of take advantage of that comp.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [29]

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Yes. There's been strategic discussions.

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Operator [30]

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And there are no further questions at this time. I would like to turn the conference back over to Leigh Fox for any closing remarks.

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Leigh R. Fox, Cincinnati Bell Inc. - President, CEO & Director [31]

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Just want to thank everyone for joining the call today. We appreciate your interest in Cincinnati Bell, and we look forward to speaking next quarter. Have a great day.

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Operator [32]

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And ladies and gentlemen, that does conclude today's conference. I appreciate your participation today. You may now disconnect.