Liberty Broadband Corp (LBRDA) Q3 2024 Earnings Call Highlights: Strong Financial Growth Amid ...

GuruFocus.com
08 Nov 2024
  • Charter Revenue Growth: 1.6% increase in revenue during the quarter.
  • Charter Adjusted OIBDA Growth: 3.6% growth in adjusted OIBDA.
  • Charter Residential ARPU: 1.8% increase in residential ARPU.
  • Charter Mobile Net Adds: 545,000 mobile net additions, base over 9 million lines.
  • Charter Free Cash Flow: 1.6%, up 48% over the prior year.
  • Charter Net Leverage: 4.22 times, slightly below the revised target.
  • Liberty Broadband Cash and Equivalents: $168 million, including $47 million at GCI.
  • Liberty Broadband Debt: Total principal amount of debt at $3.7 billion.
  • GCI Revenue Increase: $22 million increase over the prior year.
  • GCI Adjusted OIBDA Increase: $11 million increase, partially offset by higher costs.
  • GCI Leverage: 3.1 times, with a cushion relative to the 6.5 times maximum leverage covenant.
  • TripAdvisor Cash and Liquidity: Approximately $1.1 billion of cash and just under $500 million of unborrowed revolver capacity.
  • Warning! GuruFocus has detected 6 Warning Signs with WES.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Liberty Broadband Corp (NASDAQ:LBRDA) reported strong financial growth with Charter experiencing revenue growth of 1.6% and adjusted OIBDA growth of 3.6% during the quarter.
  • Charter's mobile segment performed well, adding 545,000 mobile net adds, bringing the total to over 9 million lines.
  • Free cash flow increased by 48% over the prior year, driven by high free cash flow generation and limited share repurchase activity.
  • GCI's revenue increased by $22 million over the prior year, driven by strong data revenue growth.
  • TripAdvisor's brand saw positive growth with monthly active users up 30% year-over-year, reflecting successful engagement strategies.

Negative Points

  • Charter experienced a net loss of 110,000 broadband subscribers, which would have been growth absent the impact of the Affordable Connectivity Program (ACP).
  • GCI consumer saw a decline of 1,800 revenue-generating wireless subscribers and a loss of 3,800 cable modem subscribers, largely due to the expiration of the ACP program.
  • Liberty Broadband Corp (NASDAQ:LBRDA) has a total principal amount of debt of $3.7 billion, excluding preferred stock.
  • Charter paused its buyback program, resulting in limited proceeds to Liberty Broadband Corp (NASDAQ:LBRDA) from Charter sales during the period.
  • There is ongoing uncertainty regarding the potential all-stock transaction between Liberty Broadband Corp (NASDAQ:LBRDA) and Charter, with no definitive terms agreed upon yet.

Q & A Highlights

Q: Why is Liberty Broadband considering a transaction with Charter now, and what needs to happen for Charter to resume its stock buybacks? A: Gregory Maffei, President and CEO, explained that the timing is right as both companies have agreed on a structure that benefits both parties by tightening the discount and eliminating the dual corporate structure. Charter can resume buybacks once a deal is signed or if discussions cease without a deal.

Q: How does GCI fit into the Charter negotiations, and why is there a mid-2027 timeline for closing? A: Maffei noted that the role of GCI in the negotiations cannot be disclosed until a resolution is public. The mid-2027 timeline accounts for regulatory processes, allows Liberty Broadband to deleverage, and maintains the partnership until the eventual merger.

Q: What are the competitive dynamics in the broadband market, and how is Charter positioned? A: Maffei highlighted Charter's focus on convergence through offerings like Spectrum One, which combines broadband, video, and mobile services. Charter's network upgrades, including high split technology, are expected to enhance competitiveness and consumer appeal.

Q: Could a change in the U.S. administration's antitrust stance impact M&A opportunities for Charter? A: Maffei suggested that while current regulatory conditions allow for some M&A activities, a more relaxed antitrust environment could potentially enable larger combinations and national network expansions, though it's uncertain.

Q: Are there any regulatory concerns specific to Alaska regarding a potential change of control? A: Ronald Duncan, CEO of GCI, stated that Alaska's regulatory process is straightforward, with state-level approvals required, which are less complex than federal FCC approvals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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