Altice USA, Inc. (NYSE:ATUS) Q3 2023 Earnings Call Transcript

Altice USA, Inc. (NYSE:ATUS) Q3 2023 Earnings Call Transcript November 1, 2023

Altice USA, Inc. beats earnings expectations. Reported EPS is $0.15, expectations were $0.09.

Operator: Greetings, and welcome to the Altice USA Third Quarter 2023 Results. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Freedman, Investor Relations. Thank you. You may begin.

Sarah Freedman: Hello, and welcome to our Q3 2023 earnings call. We are joined today by Altice USA’s Chairman and CEO, Dennis Mathew; and CFO, Marc Sirota, who together will take you through the presentation and then be available for Q&A. Today’s presentation may contain forward-looking statements, please carefully read the section entitled Forward-Looking Statements on Slide 2. Dennis, please go ahead.

Dennis Mathew: Thank you, Sarah. Kicking off on Slide 3, the close of the third quarter marks 1 year since I joined Altice USA as CEO. It has been a year of transformation for the company as we established and began to deliver against our core pillars of having the best customer experiences, best customer relationships, best network and the best people. I’m incredibly proud of what we’ve accomplished over the last 12 months, and specifically during the third quarter. In Q3, we saw quarter-over-quarter and year-over-year advancements across a variety of operational metrics, which correlates with the continued improved health of our business. For example, we saw improvements in broadband subscriber relationship trends, mobile net additions, fiber customer growth, financial performance, customer satisfaction scores and operational metrics such as reduced call volume and truck rolls to name a few.

Specifically, Q3 marks the second quarter in a row of improved broadband net adds on a year-over-year basis. The progress demonstrates that we are competing better in our markets, and we are particularly pleased that we are seeing our win share improve against many competitors across our footprint as we drive high-quality services, value and experiences with our network and products. On mobile line net additions, we grew Q3 mobile net adds at 5x the pace as we did in the third quarter of last year and had our third straight quarter of mobile line growth acceleration. We continue to sell mobile across our base, emphasize our converged Optimum Complete bundle and enhance the Optimum Mobile experience with better device offers and optimization of our sales channels to more effectively sell mobile.

Turning to fiber, we continue to see growth in fiber customer net additions, reporting our best quarter in fiber customer growth in Q3, and we will continue to see penetration of our fiber network grow over time. We committed to expanding the availability of 8 gig symmetrical speeds in our fiber footprint by year-end. And I’m pleased to say that we achieved that in Q3. We now have more customers than ever experiencing our best-in-class fiber network, delivering multi-gigabit symmetrical broadband speeds of up to 8 gig to all fiber passings in our East footprint. In Q3, we also continued to make progress on our customer experience transformation, making enhancements to our service and support channels with a focus on digital self-service and a first-time right approach, all of which are resulting in improved customer satisfaction.

Our financial performance during the quarter was equally strong, with quarterly sequential residential ARPU growth, reduced decline in both revenue and adjusted EBITDA compared to the first half of the year, a step down in CapEx spend and a return to positive free cash flow in the quarter. These highlights are the result of several factors that we will walk through during today’s presentation. But I want to, first and foremost, recognize our employees, including our strong executive, regional and frontline teams who are driving performance and working day in and day out to deliver exceptional experiences. I just cannot express enough my gratitude for their unwavering commitment to our telecommunications, news and advertising businesses that enable millions of customers to stay connected and informed.

Together, we have strengthened our network and product value proposition, enhanced how we compete in our local markets and improve the experiences we deliver to our customers and employees. While we have more work to do, our results from the quarter affirm our strategy is working, our discipline is paying off, and we are moving fast to transform our business and be the connectivity provider of choice in every community that we serve. Since I joined the company, I’ve been traveling across our footprint, meeting with our frontline employees and getting to know the people and the communities who make up our 21-state footprint. From West Virginia to Texas to Louisiana to New Jersey to North Carolina, New York and more, there is an incredible amount of energy and fight in our local teams.

And that’s what we’ve been leaning into. We’ve been harnessing their local energy combined with our new leadership team and our top-performing assets, network and product portfolio. We are acting smarter and with discipline, and the results are proving that out. Turning to Slide 4. I want to spend a moment on reviewing some of the operational improvements that are driving cost out of the business and resulting in greater customer satisfaction. When it comes to customer care, we know several truths. We know that customers bought reliability of their services, and we know that if they have to contact us, the transaction needs to be painless and solved the very first time. To meet what our customers want, we have been implementing a digital-first approach to customer care.

This has not only reduced the number of total customer interactions, but also shifts more of those interactions towards digital channels as opposed to traditional support channels. Our attention to improving customer care is resulting in higher satisfaction scores across a number of NPS metrics, including our transactional NPS, score, which increased by 22 points in Q3 compared to the prior year. We expect these scores to continue to improve as we put more emphasis on quality, service and support. When we look at self-service, we’ve been focused on shifting more installs to self-installs. In Q3, self-installs for qualified new customers increased by 71% year-over-year. Satisfaction scores on our self-installation onboarding continue to increase as we get better at making the setup experience more clear, simple and seamless for our customers and it’s cost effective for both our field operations and our customers.

We’re also expanding our digital and self-service tools available to customers to bring them solutions and troubleshooting help quicker than ever. For example, our text message communication to customers increased by 19% year-over-year as we have become more proactive in updating customers about outages, upcoming bills and technician arrivals. We saw a 51% increase in the use of our chatbot service, which allows customer resolution without having to speak with a customer care representatives, and we saw a 16% increase in engagement with our customer portal which allows customers to directly manage their accounts. By moving more interactions to digital, we’re also taking the weight off of our field and care teams by driving fewer truck rolls and inbound customer calls.

And so to that end, we saw 300,000 fewer truck rolls over the last 12 months and 1.3 million fewer inbound calls in the same time period, which both reflect a lower subscriber base, but more notably lower rates per customer. A key tenet in driving top line growth, maximizing margins and sustainably growing our subscriber base is having a keen focus on doing right by our customers by ensuring that every interaction is simple, easy and done right the first time, and that is exactly what we are focused on. So before I turn it to Marc for a deep dive into our subscriber and financial results, I want to again reinforce the key pillars of our strategy that are on Slide 5, and highlight how we are going to continue to deliver against these in Q4 and beyond.

Now let’s start with inspiring through the best people. As I mentioned on our last earnings call, we brought in new key leaders across the business, each bringing their expertise and leadership from decades of experience in the cable and telecommunications industry. In late August, Nate Edwards formerly from Lumen and before that AT&T joined as EVP of Field Operations, with responsibility for our field service, construction and plant teams. Nate has significant experience leading field and operations organizations through times of transformation, and we could not be more thrilled to have him be on team Optimum to drive our field performance. Now Luciano Ramos joined from Rogers Communications in early 2023 and was recently elevated to the Chief Technology and Information Officer.

Luciano’s focus is on quality and reliability, and he’s already making an incredible impact on the technology experience, both for our customers and our employees. Finally, we recently welcomed our new Chief Marketing Officer for Optimum Jen Garrett, who joined us from Charter last week. Jen is leading our efforts to strengthen and differentiate the Optimum brand across our markets. She will also lead our acquisition, customer base management and retention life cycle program. I’m excited for Jen and her team to amplify and enhance awareness around Optimum’s products and services through all marketing channels and develop strategies and plans to maximize loyalty, growth, retention and profitability across the business. These are just a few examples of the incredible new talent joining our existing teams, and they’re making an immediate impact on our operations and culture.

We also know that what drives sales is people, and we’ve been investing in our sales force and channel performance so that we are optimized to sell our Optimum services in every interaction. The changes we’ve made recently, enhancing our incentive programs, new prequalification for Optimum Mobile, better training, performance management and communications for frontline sales and more have had a positive impact on our ability to increase sales opportunities, and we’ll continue to prioritize this, so there are fewer barriers to onboard new customers to Optimum. These actions have not only helped improve our subscriber numbers, but they are having a direct impact on our employee experience as teams are working more closely than ever to sell, install and support our customers.

We are breaking down the silos to work as One Optimum team. Turning to our customer relationship pillar. We are building a world-class data and analytics function within the company. We began rolling out AI-based programs in the third quarter, and we’ll continue to expand on these capabilities to maximize our customer lifetime value, or CLV. Specifically, we’re putting in place a CLV model that provides a full end-to-end understanding of the customer journey, capturing and understanding each customer interaction to ensure we are maximizing the value of the services we deliver, fostering loyalty and creating long-term sustainable and profitable customer relationships. We will continue to advance this work with data-driven decision-making through artificial intelligence and machine learning capabilities, led by our new Chief Data and Analytics Officer, Ben Litvinas.

A large part of CLV driven decision-making is revamping our pricing and packaging strategy. Specifically in 2024, we’ll be introducing new lower rate card pricing, a more transparent approach to promo roll-off and a speed gifting program that will bring faster speeds to customers. We’ll begin by broadly implementing this new pricing strategy with our next-generation fiber rate card. New rate cards on fiber will go into effect in the first half of 2024 and will reduce rates for new and existing customers. This does not have a notable impact on revenue as a very small portion of our fiber customers are close to paying full rate. New rate cards on HFC will also be available in 2024 to new customers and legacy HFC customers will move to new rate cards over time through speed tier adjustments to match existing customer prices, preserving revenue.

In conjunction, we are simplifying our speed tier structure while also finding opportunities to proactively gift speed tier increases to customers to drive greater value. With that, we’ll begin to retire low-end speed tiers in various communities across our network. And lastly, on our CLV and packaging strategy, we are leveraging AI in our retention cues to ensure that our customer relationships are net profitable through tailored offers. Early results from several of our pilots are indicating double-digit percentage level lifts in customer level profitability after a customer interacts with our retention cues. We are encouraged by these results and expect to continue to experiment and roll out these capabilities in 2024. Overall, we expect that our new pricing and packaging strategy will not have negative impact on our go-forward revenue.

Our goal here is to reduce bill-related call volume, churn and ARPU erosion, hold the gap between promo rates and rate card rates and remove offer and other bill-related complexities to provide clear, transparent pricing to our customers. Turning to B2B. As we discussed last quarter, Optimum business represents a significant opportunity for us, and we are focused on product enhancements and expansion of product offerings to further penetrate our markets. We’re already seeing strong growth in the take rate of our bundled solutions, which add services such as professional WiFi and business hosted voice, and we’re focused on continuing to expand our B2B product portfolio notably with voice solutions. For example, we’re enabling voice solutions to some SMB customers who previously could not receive voice to number portability, and we are improving our business-hosted voice products which have already seen growth in the past quarter.

Additionally, we’re improving the B2B customer experience through upgraded WiFi technology and offering greater protection to SMB customers through multilayered Internet security. Turning to Optimum Mobile. We’ll be expanding the service in a variety of ways, including launching mobile for B2B customers. We are proud that for the iPhone 15 launch, we were able to deliver deals and match the competitiveness of many major carriers with the free iPhone 15 offers for trade-ins and on select plans. Looking ahead, we’ll continue to leverage our relationship with T-Mobile and our ability to offer multiproduct savings to continue to drive mobile growth. Moving to our network pillar. Our focus this year and into 2024 is on quality and reliability. We currently deliver fiber at more than 2.7 million passings.

And as I mentioned, during the quarter, we expanded our 8-gig fiber service to be available across our entire fiber footprint in the New York tri-state area, which is the largest availability of residential 8-gig service in the nation. 8 gig provides a huge competitive and marketing advantage for us, and we’ll continue to tout our fast symmetrical speeds to reinforce the strength of our network. Fiber penetration remains a focus. Any new customer in a fiber-ready area gets fiber installed bypassing our HFC product. Customer satisfaction on fiber continues to rise and migrations remain an important part of our retention program. Our DOCSIS 3.1 upgrades continue in the West as we remain committed to providing enhanced speeds and user experiences over the best network.

We ended Q3 with 91% of our West footprint upgraded to DOCSIS 3.1. And more broadly, we can deliver 1 gigabit speeds to more than 95% of our footprint. Our video strategy has evolved with our Optimum Stream product, which is available over fiber and is expanding to more markets over our HFC network. Video is an important part of our product portfolio and around half of our customers take video. In addition to the expansion of Optimum Stream, we’re actively exploring solutions to adapt to consumers’ changing viewing habits, including more flexible packages tailored to our consumers’ interest with convenience and value of a bundle. More on that in the quarters ahead. And finally, I’ll close with our customer experience pillar. I touched on this earlier, but I want to reinforce that our focus remains on digital, self-serve and first time right as we head into Q4 and beyond.

In summary, we continue to deliver across every area of the business that I laid out when I joined as CEO 1 year ago. And I couldn’t be prouder of the team’s progress and their ability to drive these investments and operational advancements with a focus on financial discipline as we transform our business to enable future growth. Now I’ll turn it over to Marc.

Marc Sirota: Thank you, Dennis. Turning to Slide 7. I’d like to begin with our broadband subscriber trends. Last quarter, we began to close the gap on our subscriber net losses year-over-year. I’m pleased to share, in Q3, we continue to see fewer net losses reporting broadband customer net losses of 31,000 compared to losses of 43,000 in Q3 of last year. This 13,000 improvement is driven by better trends across our footprint. Breaking down the Q3 broadband trends, we continue to be impacted by a slow housing market and a low move environment. And we have ongoing pressure from competitive fiber operators and fixed wireless. Despite these headwinds, we are receiving improved underlying trends in competing through better fiber network upgrades and more strategic go-to-market activities.

For example, although we see muted gross add activity due to the low move environment, as Dennis mentioned earlier, of the pool of potential gross adds, we saw improved rates of win share at Optimum gaining 4 percentage points of win share quarter-over-quarter according to Opensignal data. This is mainly due to our stronger competitive approach against fixed wireless, DSL and legacy fiber operators in our footprint. Consumers who have the choice of fixed wireless in our footprint are now choosing Optimum more often as we can offer speeds up to 32 times faster than fixed wireless competitors. We attribute this shift to a few things: stronger sales performance across all channels and having strengthened our competitive marketing and advertising to highlight our network, speed, experience and product superiority, ensuring customers know that the quality and value of Optimum is top tier.

It’s just one of the factors driving our improved broadband subscriber performance, but is also meaningful because it demonstrates that we are competing on the quality of our service and not just price. As we continue to focus on delivering quality and value, we are optimistic that we can increase win share even further. Churn is also improving. In addition to lower move churn, nonpay churn is better year-over-year by almost 10% as we continue to improve customer collection practices and have become more proactive in communications around customer billing. We still have more work to do, but our goal is to continue to close the gap on a year-on-year basis, subscriber losses until we get back to positive customer growth trends. As a reminder, in Q4 of last year, we had a subscriber net add benefit from the Big Apple Connect program.

We launched in partnership with the New York City’s Mayor’s office. On a reported basis, we lost 9,000 broadband subscribers in Q4 of 2022. Although on an underlying basis, we would have reported net losses of 17,000 broadband subscribers if not for a 9,000 subscriber benefit from this program. Moving to Slide 8. We are seeing acceleration in Optimum Mobile growth. In Q3, we added 24,000 line net additions compared to 5,000 net adds in Q3 of last year. Note that in Q1 and Q2 of 2022, we added 8,000 and 28,000 mobile lines, respectively, which were receiving free 1-gigabit mobile data plans for a 12-month period. The majority of those customers rolled off of that promotion last quarter, and we had about 6,000 in Q3 2023 that rolled off the promotion.

We continue to see around 60% of those customers previously on free data plans convert to a paying plan. We’ve remained disciplined around preserving mobile ARPU as we move away from free promotions. We previously reported the adjusted mobile line additions to exclude churn from free lines and to adjust line additions to the quarter in which they became a paying subscriber. Therefore, in Q3, the adjusted mobile line additions would have been 6,000 higher than at 30,000 net adds. After Q3, we will not have any more subscribers on this legacy free data plan. Since the launch of Optimum Complete in May, our mobile growth has accelerated, and we are on a strong trajectory. Our momentum in mobile is supported by better sales training and incentives to help our employees promote and sell Optimum Mobile and through the expansion of distribution channels as we are now selling mobile through care, retention and door-to-door sales in addition to traditional sales channels.

You may have seen in September, we teamed up with Baseball Hall of Fame Legend Derek Jeter to launch a new marketing campaign around the company’s greatest offer of all time, which has been getting great traction in our markets and has been one of our best-performing campaigns at Optimum. We see churn benefits when customers take fixed plus mobile, reducing annualized churns by over 20% compared to fixed only customer base. This represents a significant opportunity to further reduce churn as we expand mobile penetration in our customer base and drive higher take rates of our mobile product. Last month, with the launch of the new iPhone 15, we offered a valued customers an iPhone 15 on us and up to $800 off on other iPhone 15 models with trade-in.

This compelling offer stacked up against the other MSOs and led to additional mobile growth through our sales channels. We were pleased with our preorder in the first 4 weeks of sales growth year-over-year or above the market average of iPhone sales, driven by our very competitive mobile promotions. We are not only driving mobile growth but driving mobile growth of high-quality mobile customers, which support better mobile ARPU and stickiness. At the end of September, 33% of our mobile base subscribed to unlimited mobile plans up from 20% last year. In Q3, the majority of customers on legacy free mobile plans rolled off the promotion which yielded a 13% year-over-year increase in mobile service ARPU. We remain disciplined around our mobile pricing strategy going forward with a focus on maintaining profitability and sustaining higher mobile ARPU.

In addition, we are working to deliver a B2B mobile product in Q4, which will be launched as Optimum Complete SMB offering next year. As Dennis shared, we have a lot of opportunity to continue to drive mobile growth through more predominantly offering mobile through our sales channels, drive penetration of mobile into our fixed Internet customer base by leveraging Optimum Complete and targeting high-quality mobile subscribers. Next, on Slide 9, we will review our best-in-class Optimum network and how we’re continuing to drive network improvements. We added 45,000 new fiber customers in the quarter, through a combination of gross additions and voluntary migrations of existing customers. We ended Q3 with 295,000 fiber customers. At the end of Q3, we had 2.7 million fiber passings adding 61,000 passings in the quarter as expected.

We continue to see performance and satisfaction benefits out of our fiber cohort. We are seeing over a 10 percentage point differential of better survivability after the first 12 months on fiber versus HFC, which indicates a significant churn reduction opportunity as more of our customers use fiber. Monthly broadband revenues per customer for a new fiber customer remains consistently higher than for new HFC customers. And broadband product MBS continues trending higher on fiber versus HFC, which reflects our improved customer trends in fiber markets. We mentioned last quarter that we are temporarily slowing our fiber construction as we evaluated certain vendor relationships as part of our internal investigation. We are redesigning many of our processes and procedures relating to vendor onboarding performance and monitor.

I’m also pleased by the team’s ability to very quickly onboard new partners and scale some existing partners to resume our fiber strategy. To that end, we expect to reach approximately 600,000 fiber passings for the full year. At this point, our internal investigation is substantially complete. And the investigation and its results are not expected to have a material financial impact on our business. We will, of course, evaluate any additional information that becomes available to us and we will assess whether and what remedies we may pursue. Turning to Slide 10, I’d like to review our revenue trends. In Q3, total revenue declined 3.2% year-over-year, driven mainly by declines in our residential and news and advertising businesses. But notably, all revenue segments have shown improved year-over-year comps versus the first half of this year.

Residential revenue was down 3.4% year-over-year, mainly driven by the impact of cumulative video and broadband subscriber losses we’ve seen over the last year. We grew business services revenue year-over-year for the first time in 6 quarters, reporting 0.1% growth. This is driven by Lightpath growth of 2.3% and improvements in our SMB and other segments, which declined 0.7%. This quarter, our B2B team is focused on improving retention and base management with new customer success team, new team, dedicated to simplifying customer onboarding and an increased number of sales engineers to guide customers through the technical aspects of presales process, and we’re beginning to see results in this progress. Within other, news and advertising revenue declined 10.8% year-over-year in Q3 despite macro slowdown in advertising spend, normalizing for political cycles, news and advertising grew 4.9%, excluding political revenue in Q3.

These improving revenue trends support strong margins as shown on Slide 11. Third quarter adjusted EBITDA margin of 39.5% was stable compared to last quarter. We said that Q2 would be the peak of EBITDA margins as OpEx would trend slightly higher in the back half of the year compared to the first half, but have come broadly in line with Q2 margins as we remain disciplined around moderating OpEx and balancing rate and volume to support improved revenue trends. In Q3, we reported OpEx excluding share-based compensation decline of approximately 1% year-over-year. The first year-over-year decline in 10 quarters proving our focus on operating improvements is driving towards structurally reducing our cost to operate the business. Operating free cash flow margins increased 5 percentage points sequentially to 24.3% as we saw capital intensity in Q3 stepped down significantly, supporting better free cash flow, which I’ll come back to in a moment.

Turning to Slide 12 on capital. Q3 spend of $353 million represented a capital intensity of just over 15.2%. Excluding FTTH and new build CapEx, capital intensity would have been 8.8%. Capital spend is down 28% year-over-year in Q3 and a step down of $120 million or 25% sequentially versus Q2. As we said, CapEx will step down in the back half of the year, driven by CapEx timing and fewer fiber passings constructed. Year-to-date, capital spend is $1.4 billion, and we continue to expect to come in on the lower end of our initial guidance of $1.7 billion to $1.8 billion as we take down the run rate of CapEx in the back half of this year, driven by timing of spend and fewer fiber passings while continuing to invest in other growth CapEx opportunities.

In Q3, we added 61,000 fiber passings in the quarter. We continue to edge out our footprint, adding 30,000 new build passings. And we have upgraded 61,000 passings to DOCSIS 3.1, bringing the Optimum West footprint to over 90% upgraded to DOCSIS 3.1. In summary, we remain focused on making strategic capital investments and growth opportunities with discipline around highest ROIs and a focus to bring down capital intensity. And last, Slide 13 is a bridge of our free cash flow. Free cash flow for the quarter was $121 million, attributable principally to higher operating free cash flow or EBITDA less CapEx and working capital benefits. We saw strong free cash flow this quarter despite slightly higher cash interest expense due to timing of semiannual bond payments and floating rate exposure, although recall that taking into account interest rate hedges in place, about 80% of our debt schedule is fixed free.

We continue to expect positive free cash flow for Q4 and to be positive for the full year. In summary, in Q3, we continue to deliver on many of our commitments, and we are seeing results through improving trends in subscriber revenue, EBITDA and free cash flow, which will allow us to continue progressing towards sustainable future growth and return to our target leverage levels. And with that, thank you all for your time. We’ll now take questions.

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Q&A Session

Operator: [Operator Instructions]. Our first question comes from Phil Cusick with JPMorgan.

Philip Cusick: Dennis, let’s dig into the new rate card that you discussed. How should we think about that impacting subscriber trends? And sort of promoting around that should we think about lower gross adds with a little less promotion upfront? Some companies do things like never-changing ARPU, things like that and impacting churn later? Or do you anticipate sort of a less of an impact? And then second, you talked about stabilizing broadband subscribers. Do you think that’s feasible in 2024 or maybe beyond that?

Dennis Mathew: Thanks, Phil. The new rate card is all about simplicity, transparency, predictability. And so as we move forward, we really want to be able to reduce the complexity for our customers. This will reduce the delta between gross add offers that are in the marketplace versus rate card. But we believe we have the right offers in market today. And so we have a great value. We’ve got the right offers and with Optimum Complete and the converged offer, we really do think we have a great value. We’ll start to roll this out in Q — in first half of next year with fiber. And then for our HFC customer base it’s really all about getting them the right speeds at the right price. And so we will be moving forward with the speed gifting and making sure that all of our customers have the right speeds based on their rate cards and that’s going to be a process that we’ll undertake over the next few — over ’24 aggressively to really make sure that we’ve got everybody rightsized.

And in terms of our broadband subscriber growth and sustainability, we’re very optimistic. We’re seeing all of the right trends and especially as we look at our KPIs, we’re focused on delivering a great customer experience. And so as we look at NPS and the improvements we’ve seen there, reduced contact rate, reduced service visit rates, these are all leading metrics that we know are going to help us have a healthier business, healthier foundation. We’re able to execute much more effectively with self-install and digital. That being said, there’s still a whole host of macroeconomic challenges. When we look at moves being down almost at all-time levels, inflation and so we’re very focused on controlling what we can control so that we can get back to long-term subscriber revenue and EBITDA growth.

Operator: Our next question comes from Kutgun Maral with Evercore ISI.

Kutgun Maral: If I could just follow up on the broadband side. You talked about your win share improving against a number of your competitors. It sounds like that was mostly in the Optimum footprint and broad-based against different competitive technologies. Is there anything you could share on the Suddenlink side as well? And I know maybe you didn’t want to talk about 2024 too much in terms of getting back to stable on the broadband side. But is there anything you could share on whether or not in Q4, you could continue the trend of improving the year-over-year results on broadband net adds against the 19,000 adjusted loss. And just briefly on the fiber passing side. Marc, I believe you’ve talked about new fiber passings to be at roughly 600,000 in 2023. Can you help us think about the build plan for 2024 and maybe 2025 as well?

Dennis Mathew: Thanks, Kutgun. The good thing is that we’ve seen improvements across the entire footprint. When I look at trends, both in the East and the West, when we look at year-over-year trends, we are seeing improvements. And part of that is tied to implementing our new local market structure. We have 5 areas, and we have 5 new general managers that we’ve put in place. And these folks are living and breathing the business every day from competitive perspective, subscriber perspective, customer experience, operating metrics, employee engagement, community engagement, and that’s making an impact. And they are empowered to drive the business. We are supporting them. We traveled the country. We visited each of these areas.

They’ve been in place for quite frankly, less than 90 days. One is brand new, just starting in the role, but we are starting to see improvements across the board across the footprint. When I look at Q4, the competition is very aggressive in — as we head into the holiday season. And so that’s putting some pressure on Q4 trends, but it’s too soon to commit to that Q4 performance. But our goal is absolutely to continue to drive improvement year-over-year. And so as I see the channel is performing whether it’s door-to-door whether it’s inbound, whether it’s retail, we’re continuing to see improved performance in terms of yield and productivity. But we are going to be disciplined. We’re going to be disciplined around driving profitability and sustain growth.

Marc?

Marc Sirota: Yes. As it relates to the 600,000 passings this year, you’re right. As far as our plans for next year and beyond, we won’t give specific guidance, but we’re still very much bullish on the fiber plan and with the benefits that we see coming off of the fiber plan as we talked about previously. But as we said, each year, we’ll evaluate the capital intensity of the business. Certainly, the level of fiber upgrade will be a part of that equation. And we’ll take a very disciplined and balanced approach to make sure we’re maintaining the right level of capital intensity.

Operator: Our next question comes from Jonathan Chaplin with New Street.

Jonathan Chaplin: I’m sorry. I was on mute. Just following up on the last question on the fiber deployment, Dennis. I’m just wondering if it doesn’t actually make sense to continue the sort of the postponement of the fiber process as you just work through some deleveraging next year and potentially kick it off again when subscribers and EBITDA are growing in a sort of a convincing sustainable fashion. And I’m wondering if you could give us some context for — like the reason not to do that, obviously, would be if it would have a material impact on the recovery in subscriber growth. And so maybe you could give us some context around that — around the trends in growth you see in fiber markets versus nonfiber markets? And how much postponing fiber deployment might impact the trends?

Dennis Mathew: Thanks, Jonathan. We are evaluating the pace at which we want to continue that program. The good thing is we’ve got the right partners now in place, as we’ve gone through the process the last couple of months, we’ve identified some great partners, great quality, and we’re ready to continue our fiber construction. We are evaluating the pace at which we’d like to do that going forward. It will likely not be at the same pace that we had initially planned for as we entered into the year, but still working through what that should be and what that — what makes sense as we enter into 2024. That being said, fiber is just one of the tools that we have in our toolkit to drive recovery and long-term sustainable subscriber growth.

We have a whole host of tools. We know that customers want quality and they want value. And so we are doubling down on quality, quality network, quality product, quality service. We’re looking at every element of this business in terms of the CPE, in terms of training, in terms of making sure we fix the issues the first time and that is having a meaningful payoff and benefit in terms of reducing contact rate, increasing NPS, which we know is foundational to helping us drive long-term growth. And then on the value side, with Optimum Complete, we’re seeing that really resonate in the market. We’re seeing that resonate in our sales channels. And so we know that, that also is a great tool. Additionally, as we look at the entire footprint, you’ve heard me talk about 3.1 and continuing to invest there, and we want to continue that journey to make sure that we have 1 gig available throughout the footprint.

We have it available 95% of the footprint, but we want it to be at 100%. And so we’re going to continue to drive that. And so all of these are tools that will allow us to get back to that objective of long-term revenue subscriber and EBITDA growth. And so fiber is one of those tools, and we’ll decide in the coming days at the right level, right pace where we need it. The good thing is we have 2.7 million homes. And so we are going to be focused also on driving further penetration against those 2.7 million.

Operator: Our next question comes from Jessica Reif Ehrlich with Bank of America Securities.

Jessica Ehrlich Cohen: I have two questions. Dennis, you kicked off the call talking about, it’s like just sort of highlighting that it’s been a year and how much has been done. And obviously, the first year, there was a ton of heavy lifting and restructuring, a lot of management changes. As you look at the year ahead, can you talk about what remaining priorities and any other significant changes do you think you still need to make? And then secondly, I think that you said that half of your subs are still taking video. Can you just kind of give us your longer-term view on video? And maybe a comment on just Charter’s deal with Disney indicate anything about how contracts will be dealt with going forward? How are you thinking about contracts with programs going forward?