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DATE

Friday, April 24, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Christopher L. Winfrey
  • Chief Financial Officer — Jessica M. Fischer
  • Senior Vice President, Investor Relations — Stefan Anninger

TAKEAWAYS

  • Spectrum Mobile Lines -- 370 thousand lines added, totaling over 12 million, reflecting 17% growth for the trailing twelve months.
  • Internet Customers -- Net loss of 120 thousand, affected by heightened competition and lower connects, with churn rates described as "very low."
  • Video Customer Declines -- 60 thousand loss, a two-thirds improvement from the prior year's decline of 181 thousand, attributed to product improvements and new packaging adoption.
  • Rural Additions -- 41 thousand net rural customer additions and 89 thousand subsidized rural passings, with 483 thousand rural passings added in the last twelve months.
  • Residential Revenue -- Declined 2.7% year over year; adjusted for streaming app cost allocations, the decline was 1.1%.
  • Adjusted EBITDA -- Down 2.2% year over year, or 1.8% excluding $24 million in Cox transition expenses.
  • Net Income -- "A bit under $1.2 billion" for the quarter, a reduction from "a bit over $1.2 billion" in the prior-year period, attributed primarily to lower adjusted EBITDA.
  • Capital Expenditures -- $2.9 billion, up $456 million from the prior-year quarter, driven by higher network evolution spend and WiFi router investments.
  • Free Cash Flow -- $1.4 billion, approximately $200 million lower than last year, due to higher capital spending, reduced EBITDA, and higher cash interest payments.
  • Debt and Leverage -- $94 billion debt principal, 5.2% weighted average cost of debt, with net debt to adjusted EBITDA at 4.15 times (4.22 times pro forma).
  • Share Repurchases -- 4.3 million shares repurchased for $963 million at an average price of $225 per share.
  • Cox Transaction Synergies -- Run-rate operating expense synergy estimate increased to "at least $800 million," driven by procurement and better operating visibility.
  • Product Adoption -- 45% of residential customers in new pricing and packaging launched in late 2024; over 50% of expanded basic video customers have activated at least one included streaming app.
  • Invincible WiFi Launch -- High attach rate and demand for backup battery and 5G-enabled router; initial supply constraints noted.
  • Political Advertising -- 5.3% advertising revenue growth driven by higher political ad sales; non-political advertising down 3.4% year over year.
  • Long-term CapEx Guidance -- 2026 capital expenditures expected at $11.4 billion, projected to decline below $8 billion annually after network investment cycle ends.
  • Cox Approvals -- All federal and state approvals received for the Cox transaction except California; closing targeted for summer, with Spectrum brand rollout planned shortly after.

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RISKS

  • Jessica M. Fischer said, "Including residential and small business, we lost 120 thousand Internet customers in the first quarter, driven by lower connects year over year, partly offset by slightly lower churn."
  • "Revenue was down 1% year over year, primarily driven by lower residential video revenue," according to Christopher L. Winfrey.
  • "Adjusted EBITDA declined by 2.2% year over year in the quarter," reported by Jessica M. Fischer, indicating ongoing earnings pressure.
  • "First quarter free cash flow totaled $1.4 billion, about $200 million lower than last year," explained by Jessica M. Fischer as resulting from higher capital expenditures and lower EBITDA.

SUMMARY

The call outlined key operational and financial shifts, including sustained growth in mobile lines and continued decline of Internet and video subscribers amidst intense competitive pressure. Management highlighted the completion of nearly all regulatory approvals for the pending Cox transaction, with material synergy estimates raised to $800 million. A strong focus was placed on execution of new pricing and packaging, rapid product rollout timelines, and expanded use of technology such as AI tools and hybrid MNO. Capital allocation strategies include ongoing share repurchases and debt leverage targets, with clear forecasts for reduced capital intensity after the investment cycle. Enhanced customer satisfaction metrics and increasing product attachments—especially through innovations like Invincible WiFi—were cited as sources of operational resilience.

  • The reporting structure after Cox close will feature pro forma and separate legacy entity disclosures for key customer and revenue metrics to enable trend analysis for both Charter and Cox.
  • Christopher L. Winfrey stated, "Our issue right now really is a top-of-funnel issue," clarifying that churn remains low but new sales activity is depressed by external competition and subdued housing market dynamics.
  • Management plans to pace migrations of Cox broadband customers to Spectrum pricing based on observed product attachment rates and customer loyalty impact, referencing their approach after the Time Warner Cable and Bright House integrations.
  • The team identified gross add shortfalls as largely concentrated in lower-income consumer segments, indicating targeted retention and marketing adjustments under review.
  • Management reported a deliberate strategy to hold pricing steady in broadband whenever possible, noting that promotional ARPU growth for the year "will be close either way" and not committing to price increases barring further market developments.

INDUSTRY GLOSSARY

  • Passings: The total number of homes or businesses that can be served by the company's network infrastructure but may not be active subscribers.
  • Transition Expenses: Costs directly associated with integrating a major acquisition, such as system integration or personnel realignment following the Cox deal.
  • Pro Forma: Financial or operational metrics adjusted as if a transaction (e.g., the Cox acquisition) had occurred at an earlier period, providing like-for-like comparison.
  • Hybrid MNO: A mobile network operator model combining use of owned spectrum/assets (such as WiFi and CBRS) with third-party partner networks (e.g., Verizon) to deliver wireless services.
  • EBITDA Margin: A profitability ratio calculated as earnings before interest, taxes, depreciation, and amortization divided by revenue, indicating core operational efficiency.
  • Attach Rate: The proportion of primary customers who also subscribe to or activate an additional product, e.g., the percentage of video customers who activate streaming apps or mobile lines.
  • Subsidized Rural Passings: Network passings in rural areas that have received government subsidies to support infrastructure buildout and expansion.

Full Conference Call Transcript

Christopher L. Winfrey: Thanks, Stefan. During the first quarter, Spectrum Mobile remained the fast-growing mobile provider in our footprint, and we now have over 12 million mobile lines, including an increase of 370 thousand Spectrum Mobile lines in the quarter. That is 1.8 million new lines over the last twelve months, for growth of over 17%. We are pleased with that growth given the continued intensity of mobile subsidies from the three big telcos. In addition, our video customer losses continued to improve year over year. A 60 thousand loss was less than a third of last year's first quarter loss, driven by significant product improvements over the past couple of years.

In Internet, competition for new customers remains high, and our first quarter Internet customer loss totaled 120 thousand. Revenue was down 1% year over year, primarily driven by lower residential video revenue, while residential connectivity revenue grew 0.9% year over year. First quarter EBITDA, excluding transition expenses for the Cox transaction, declined by 1.8%, primarily due to a prior-year benefit. Cable industry Internet growth has been pressured for several years now, given new competition, a challenging housing environment, and other factors like mobile substitution. But we remain confident about our ability to win in the marketplace and grow over the longer term.

Ultimately, that confidence and our future success is founded on three building blocks: our powerful advanced network, our core operating strategy around products and pricing, and our focus on improving customer satisfaction. Starting with customer satisfaction, our customers remain the central focus when we make decisions for any product or service, and how we allocate our resources. We have an integrated and detailed approach that starts at the highest levels of the organization. Our customer focus is not just cultural; it is also core to our incentives. Beyond the obvious share price incentives, NPS scores and other service-related metrics now drive a meaningful part of our overall annual incentive structure.

Relentless improvement is also a key component of our approach, and that applies to our network capability and reliability, products that we offer, and to our service. We are constantly working to improve each of these, with examples including new product innovations like our Invincible WiFi and our Anytime Upgrade feature for mobile, and the dramatic decline we have seen in service and trouble calls per customer. We have also deployed new AI tools, now used by our service agents, driving higher customer satisfaction and reducing call times with higher job satisfaction for our employees as well.

We have a seasoned, very competitive team here at Charter Communications, Inc., fully aligned with our shareholders, and that team will only get better with the addition of top-flight talent from the Cox team and Nick Jeffrey, who will join in September. Moving to our advanced network, our high-capacity network is an unrivaled asset. It offers gigabit speeds and low latency everywhere we operate. Those capabilities matter long term as customer data usage continues to increase, including in the upstream, where we are seeing 20% annual growth driven by things like self-driving cars and significant and increasing upload.

By the end of this year, about 50% of the current Spectrum network will be upgraded to symmetrical and multi-gig service, with significant work on the remaining 50% already in play. By deploying remote OLTs and LoRaWAN transponders, we will have fiber-on-demand capabilities and fully active telemetry in the vast majority of our footprint, giving us cost and service advantages. Our network is both wired and wireless. In 100% of our footprint, you can get mobile from us wherever we offer our gigabit speeds, and vice versa. And with our expanding hybrid MNO capabilities using CBRS and WiFi, in conjunction with the Verizon mobile network, we are driving our seamless connectivity advantage.

That is the basis for Spectrum Mobile's fastest overall mobile speeds. In addition, our network is both fiber-based and powered to its edge, which means it can uniquely provide enhanced wireless opportunities that we have not pursued yet. If you think about our ubiquitous deployment of multi-gig, unique seamless connectivity capabilities with low latency, edge compute, and the potential for fiber-powered DAS, nobody has the set of assets that we do. You see us demonstrating those capabilities with early deployments of immersive content with Spectrum Front Row, authenticated offload for AWS, and likely extending that to increasingly autonomous vehicles. We are also deploying other B2B products with edge cache and GPU as a Service.

Our network and data assets really lend themselves to future B2B and B2C applications which require proximity and low latency under ten milliseconds, which we now provide. Our industry has always excelled at finding new products and customers for our key assets. Our core operating strategy remains unchanged: offering great products at the best value with continuously improving service. And that service is uniquely delivered by our 100% U.S.-based employees, 24/7, with the customer commitments supported by money-back guarantees. That core operating strategy has served us well.

It fueled our organic and inorganic growth from legacy Charter in 2013 with just 5 million customer relationships, to Charter today with nearly 32 million customers, and now pro forma for the Cox transaction, with over 70 million passings. We take the responsibility that we have to our local communities personally, and it is reflected in our operating strategy. With those three building blocks in place, I want to turn to what we are doing day to day right now to win in an increasingly competitive market. Our competitors are all talking convergence, but we uniquely provide it now and in the future. Slide 5 of today's presentation clearly shows that we offer more for less than our competitors.

Our results do not yet reflect that reality given the legacy reputation of cable, so we have remained focused on clearly messaging and delivering our superior value, utility, and service to both new and existing customers, and we are doing that in different ways. We launched our $1,000 savings guarantee in February, which demonstrates the value we deliver in a very clear way. If you sign up for Spectrum Internet and switch two or more mobile lines from Verizon, AT&T, or T-Mobile, we guarantee $1,000 of savings in your first year, or we will cover the difference. We also recently launched a new digital buy flow for our online channel.

It better demonstrates our bundle value and savings versus competitors, and the new buy flow is achieving better yield. We are also actively migrating our existing basic customers to our newer pricing and packaging, giving them more product, including Internet speed increases and mobile, for the same price or slightly more than they are paying, so they get more value—creating higher satisfaction and reducing their propensity to churn. Roughly 45% of our residential customers are now in the pricing and packaging launched in late 2024. With respect to providing superior utility, over 50% of our expanded basic video customers have activated at least one of our included streaming apps, with those activating taking nearly four streaming apps on average.

Customer churn for expanded basic customers who activate is one-third lower, and it is meaningfully lower across all customer tenure. Keep in mind that nearly all video customers are also broadband customers, so that is a big help. We also launched our new Invincible WiFi router in February, which effectively guarantees connectivity. When a home or business loses power, Invincible WiFi's battery unit keeps the router running. It also comes with a backup 5G cellular connection, keeping customers online without interruption if a network disruption occurs. The upgrade and attach rate was much higher than expected, and we have had to prioritize our supply to a smaller audience until we get the right level of supply.

It is a little frustrating short term, but Invincible WiFi is a great way to add utility to our service, which improves quality, lowers churn, and earns more revenue. It is a great example of an innovation that provides better utility to our customers. In mobile, we have the most value-rich plans in our footprint, a market-leading Anytime Upgrade program, the most valuable repair and insurance plans, and the best international service plans around.

And in service, I will simply highlight what we have talked about previously—our continuous service improvements through telemetry improvements with our network upgrades, the use of AI in the network and frontline employee tools, same-day service and installation guarantees—often we are at your doorstep in an hour—and a commitment to a U.S.-based service agent. We are America's connectivity company. Before I turn things over to Jessica, I wanted to provide a brief update on where we are with the Cox transaction. We have now received all the necessary federal and state approvals that we need to close except from California, and we are working with the California Public Utilities Commission towards a summer close.

Within a couple of months of closing, we will launch the Spectrum brand and our pricing and packaging within the legacy Cox footprint. Our focus, as always, will be on product penetration and customer ARPU—not single-product ARPU—and, of course, growing free cash flow capacity. Cox's low mobile and video penetration rates are major opportunities, and that is what is going to assist us in migrating the customer base to our pricing and packaging in an efficient manner. That is something we have done successfully several times before, including Time Warner Cable, Bright House, and Bresnan, and Charter in both 2013 and the last eighteen months, really.

In addition to benefiting from better mobile and video products, the Cox communities will benefit from lower promotional and retail pricing, sales channel expansion, including field sales and stores, and our very complementary B2B capabilities, which will help accelerate growth in both Cox and Spectrum Business. As part of the acquisition, we are picking up talent—which we expected—and unexpected capabilities in B2B and network AI. And we are stepping into a very high-quality network asset. The Cox network has been very well maintained with robust investment through the years. Cox’s mid-split process is nearly complete, and it gives us plenty of competitive runway to implement high split and DOCSIS 4.0 after we finish those projects within the current Spectrum footprint.

We can then make that move at lower cost and at faster speed. That is what was included in our original plan, although we do not have to rush it. So we are looking forward to the completion of our multiyear investment programs, the near-term matches to win in our current footprint, and the pending Cox closing and driving growth in that footprint. With that, I will pass it over to Jessica.

Jessica M. Fischer: Thanks, Chris. Please note that any forward-looking financial or customer information that we provide in today's discussion or presentation does not include Cox or any transition costs related to Cox integration planning. Let us please turn to our customer results on Slide 8. Including residential and small business, we lost 120 thousand Internet customers in the first quarter, driven by lower connects year over year, partly offset by slightly lower churn. The operating environment for new sales, in particular Internet, continues to be competitive.

We continue to see expanded fixed wireless competition and higher mobile substitution, as well as ongoing fiber overlap growth at a rate similar to prior quarters, though I would point out that we also have higher market share than our competitors even in mature fiber markets. Collectively, that drove first quarter Internet sales lower year over year. Churn improved year over year, and Internet churn, including non-pay churn, remains at very low levels. In mobile, we added 368 thousand lines, with higher gross additions year over year more than offset by higher disconnects. Net adds in the quarter were lower due to heavy device subsidy activity by the big telco competitors, including the iPhone 17.

Video customers declined by 60 thousand versus a loss of 181 thousand in 1Q 2025, with the improvement primarily driven by much lower video downgrades and customer churn year over year, resulting from the new pricing and packaging we launched in late 2024, Xumo, and the seamless entertainment product improvements, including our programmer streaming app inclusion packaging. New connects and upgrades to our fully featured video package with apps were up year over year. Wireline voice customers declined by 174 thousand, with the year-over-year improvement primarily driven by lower churn. In rural, we continue to see strong customer relationship growth, generating 41 thousand net customer additions in our subsidized rural footprint in the quarter.

Subsidized rural passings grew by 89 thousand in the first quarter and by over 483 thousand over the last twelve months, which is in addition to our continued nonrural infill activity. Moving to first quarter revenue results on Slide 9. Over the last year, residential customers declined by 1.5%, while residential revenue per customer relationship declined by 1.4% year over year, given the growth of lower-priced video packages within our base, $218 million of costs allocated to programmer streaming apps and netted within video revenue versus $47 million in the prior year period, and a decline in video customers during the last year.

Those factors were partly offset by promotional rate step-ups, rate adjustments, and the growth of Spectrum Mobile lines. Excluding the programmer streaming app allocation headwinds to residential revenue, residential revenue per customer relationship grew by 0.3% year over year. As Slide 9 shows, in total, residential revenue declined by 2.7%, and it was down by 1.1% when excluding costs allocated to streaming apps embedded within video revenue in both periods. Turning to commercial. Total commercial revenue grew by 1% year over year, with mid-market and large business revenue growth of 2.1%. And when excluding all wholesale revenue, mid-market and large business revenue growth was 2.8%.

Small business revenue grew by 0.2%, reflecting year-over-year growth in revenue per small business customer of 0.9%, mostly offset by a year-over-year decline in small business customers of 0.7%. First quarter advertising revenue grew by 5.3%, given higher political revenue year over year. Excluding political, advertising revenue declined 3.4% year over year. Other revenue grew by 14.2%, driven by higher mobile device sales. In total, consolidated first quarter revenue was down 1% year over year, but increased 0.1% when excluding advertising revenue and programmer app allocation. Moving to operating expenses and adjusted EBITDA on Slide 10. In the first quarter, total operating expenses decreased by 0.2% year over year.

Programming costs declined by 9.3%, due to $218 million of costs allocated to programmer streaming apps and netted within video revenue versus $47 million in the prior period, a higher mix of lighter video packages, and a 1.3% decline in video customers year over year, which was partly offset by higher programming rates. Other costs of revenue increased by 11.4%, primarily driven by mobile service direct costs, higher mobile device sales, and higher advertising sales costs given higher political revenue. Cost to service customers, which combines field and technology and customer operations, decreased 1.4% year over year, primarily due to lower labor costs.

Marketing and residential sales expense declined by 3.2% year over year due to lower marketing expenses and labor expense. Transition expenses relating to the pending Cox transaction totaled $24 million in the quarter. Finally, other expense grew by 5.3%, primarily driven by one-time benefits of $75 million in 1Q 2025. Adjusted EBITDA declined by 2.2% year over year in the quarter, and declined by 1.8% when excluding transition expenses.

Turning to net income, we generated a bit under $1.2 billion of net income attributable to Charter shareholders in the first quarter, compared to a bit over $1.2 billion in the prior-year period, primarily driven by lower adjusted EBITDA year over year, partly offset by lower other operating expense, given our non-cash L.A. Laker RSN balance sheet write-down in the prior year. Turning to Slide 11. First quarter capital expenditures totaled $2.9 billion, $456 million higher than last year's first quarter, driven by timing of spend with higher network evolution spend, which lands in upgrade/rebuild spend, and higher CPE driven by new WiFi 7 routers and our new Invincible WiFi unit.

We continue to expect total 2026 capital expenditures to reach $11.4 billion. Looking beyond 2026, we expect total capital spending in dollar terms to be on a meaningful downward trajectory. And after our evolution and expansion capital initiatives conclude, our run rate capital expenditures should be below $8 billion per year. Just to highlight, that reduction in capital expenditures on its own from approximately $11.7 billion in 2025 to less than $8 billion in 2028 is equivalent to over $28 of free cash flow per share based on today's share count.

If we take consensus 2026 free cash flow and substitute our expected 2028 CapEx for 2026 CapEx, our current stock price would imply a free cash flow multiple of only about 3.8 times and a free cash flow yield of over 25%. Turning to first quarter free cash flow on Slide 12. First quarter free cash flow totaled $1.4 billion, about $200 million lower than last year, given accelerated timing of capital expenditures in the year, lower EBITDA, and higher cash paid for interest year over year, partly offset by a less unfavorable change in working capital in cable. Turning to cash taxes. First quarter cash taxes totaled $64 million.

We continue to expect that our calendar year 2026 cash tax payments will total between $500 million and $800 million. We finished the first quarter with $94 billion in debt principal. Our weighted average cost of debt remains at an attractive 5.2%, and our current run-rate annualized cash interest is $4.9 billion. During the quarter, we repurchased 4.3 million Charter shares totaling $963 million at an average price of $225 per share. As of the end of the first quarter, our ratio of net debt to last twelve-month adjusted EBITDA remained at 4.15 times, and stood at 4.22 times pro forma for the pending Liberty Broadband transaction.

During the pendency of the Cox deal, we plan to be at or slightly under 4.25 times leverage pro forma for the Liberty transaction. Following the close of those transactions, we will target the low end of the 3.5 to 3.75 times range, which we expect to achieve within three years following close. Even with this delevering, we continue to expect significant ongoing capital returns to shareholders. Before turning the call over to Q&A, I want to make a few comments regarding our pending Cox transaction. We now estimate transaction synergies, or run-rate operating expense synergies, of at least $800 million, and are likely to grow that further.

Those estimates do not include the benefits of applying Charter's operating strategy to create revenue and operating cost synergies over time, or CapEx savings. We believe those operating synergies will also be significant. Turning to our reporting plans, I wanted to give you a brief preview on how we expect to report and to mention a few things to better navigate our post-close results. Our first post-close results will reflect a full quarter for Legacy Charter, plus a stub period for Legacy Cox, so year-over-year actual comparisons will not be helpful. But we intend to present Charter's quarterly trending schedule with pro forma data along the lines of what you received today.

Going forward, we will report similar customer PSU and revenue data for both legacy entities, for several quarters following close, both separately and on a consolidated basis. This approach will allow you to track the development of both Legacy Charter and Legacy Cox. We will not show expenses or capital expenditures by legacy entity. That is not really practical given the shared nature of key large items like programming, overhead, and significant centralized capital spend. We will also continue to report transition expense and capital related to the integration and will provide updates on certain items, including estimates for the synergies we have realized, so that you can better isolate the organic growth of the business.

At close, our outstanding share count will increase, as we will issue the equivalent of just over 46 million Charter shares to Cox Enterprises, comprised of common and preferred partnership units, partly offset by net Charter share reduction of about 6.8 million shares associated with the Liberty Broadband transaction. That 6.8 million figure is lower now than when we announced the Liberty Broadband transaction, primarily due to our ongoing share repurchases from Liberty Broadband. If we had closed on March 31, our standalone share count at close on an as-converted/as-exchanged basis would have been about 179 million. We will provide additional post-close reporting updates as we get closer to close.

And with that, I will turn it over to the operator for Q&A.

Stefan Anninger: Thank you.

Operator: At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. As a reminder, we are allowing analysts to ask one question today. We will wait one moment to allow the queue to form. Our first question will come from Sean Diffely with Morgan Stanley. You may now unmute and ask your question.

Sean Diffely: Great. Thanks very much, team. Can you hear me?

Stefan Anninger: Yep. Hey, Sean.

Sean Diffely: Hey, guys. So, clearly, the focus is on getting the Cox deal done, and thank you for the updates on synergies and timing with the California PUC. But I was curious about your assessment of the potential for further cable M&A from a regulatory standpoint. Obviously, the FCC, when reviewing the Cox deal, mentioned increasing competition from the likes of fixed wireless and satellite. So I am curious how you are framing your ability and willingness to do more meaningful consolidation from here in the cable sector.

Christopher L. Winfrey: Sure. First and foremost, to make it clear, I am not commenting on any particular company or assets, but as everybody knows, we like cable as an investment. I think it is a great business. We would like to acquire more cable assets if it can be done at an appropriate price and conditions. The size of the transaction depends on the synergies. When you hear Jessica talk about the synergies inside of Cox, you can kind of flex that up and down based on the size. I think when you step back and take a look at the environment from a regulatory perspective—and each deal is unique—you have to brush it in its own way.

But at the end, each of the cable companies is a regional competitor. We have overlap, and all of us are competing against national and global competitors. That has never been the case more than it is today when you think about fiber overbuild, when you think about national telcos with wireless, mobile, fixed wireless access, fiber overbuild themselves in many cases. Think about the video space, which is really global competition. In each element of the space that we operate in, it is much more competitive than it was five or certainly ten years ago.

I think the Charter operating strategy—you think about the benefits that we provide in transactions like Cox or what we did with Time Warner Cable and Bright House—has been good for customers and it has been good for employees, and we have demonstrated that. It is not just something that we say at the time of an acquisition. It is actually been delivered: 100% U.S.-based, lower pricing for retail and promotional pricing, and we have been innovative with new products. We have used that scale to improve the quality of the service and the products. So it has helped us to be a better competitor and a better service provider against national and global competitors.

I think there is a significant rationale, but there is nothing that we are looking at today or doing today other than just finishing the Cox transaction. I think the opportunity is there to do more over time, and we will evaluate it when it is available.

Stefan Anninger: Thanks, Sean. Operator, we will take our next question.

Operator: Next question will come from Craig Moffett with MoffettNathanson.

Craig Eder Moffett: Hi. Thank you. Can you hear me?

Stefan Anninger: Yep.

Craig Eder Moffett: So let us stay with the Cox transaction for a second. Once you close, you are now running your own standalone business with about flat year-over-year broadband ARPU. There has been a lot made of the fact that Cox's broadband prices and therefore its broadband ARPU is significantly higher than yours. How do you think about the trajectory of how quickly you can move those customers onto Spectrum pricing, and what does that look like as you give those generally more attractive offers to Cox customers?

Christopher L. Winfrey: Sure. You are right. The broadband ARPU is higher than ours—you can see that—but also, the customer ARPU is actually not that different. And so I think that is the place to focus on: what is the customer ARPU going to do over time and, you know, the margin at a household level. Clearly, the broadband standalone pricing—which is part of the rationale for getting the deal done—is going to be lower, both at promotional and retail, and the broadband reported ARPU for Cox is going to go down.

Our goal is to use video and mobile, given the super-low penetration that exists for those products at Cox, to make sure that the customer ARPU is intact and could potentially likely increase over time, and to drive margin in there. As a result, you will end up with a financial profile and a trajectory that is preserved based on providing more value in the household. The churn rate at Cox is higher than ours, so I think we have a real opportunity to drive benefits there.

Entering into the market with the Spectrum name—we will have a new name in these markets—with lower broadband pricing at retail and promotion, with a free mobile line for a year that does not exist today, with the fastest mobile product in the country at the lowest price really for anything of that scale, and a fully developed video product. In the Spectrum footprint, when we came out with the Spectrum TV app, it improved over time. It did not have paused live TV; it did not have cloud DVR at the beginning. All that exists today. It exists with seamless entertainment in a way that is now easy to activate, which was not the case before.

So in the Spectrum footprint, those products, including mobile and video, just continue to get better. Here, we are going to enter into Cox's footprint with a big bang: new name, great ways to save money both at retail and promotion for broadband, excellent mobile and video products that are fully developed and brand new in the marketplace. I think we are going to make a splash because we are new. That does not go on forever; your service reputation has to earn that. So, is that a two-year tailwind where you are going to have much higher sales because you are new and because you are providing all this additional product and pricing and value?

That will be the case. We are going to have a field sales force that does not exist today. We are going to have service hours that do not exist today. We are going to develop the insourcing capabilities and U.S.-based workforce that can do same-day installs and same-day service in a way that does not exist today. And we have the opportunity to earn a brand-new service reputation in that market and have long-term growth.

All of which, to go back to your question, means that you can have higher sales of broadband; you can have lower churn of broadband; you can have a significantly higher attach rate for mobile and video that preserves your overall customer ARPU and margin; and have more operating and CapEx cost synergies along the way that allow you to fund that growth. I think it is going to be a unique footprint even relative to the standalone Charter that you are looking at today. The pace of migration for the broadband base is similar to what we have done inside the Charter standalone footprint many times and what we did with Time Warner Cable and Bright House.

You can pace the migration based on your marketing efforts to your existing customers and how quickly you put them into loyalty and see what is working in terms of additional product attach to offset some of the lower pricing we are introducing into the market. So I feel really good about where we are going to go, and we are just waiting to be able to bring that type of benefit and those savings into—not California yet; California is about a fifth of the overall Cox customers—but we have four-fifths of the footprint that is patiently awaiting.

We are excited to get going and bring those benefits to the California customers and to the customers across the rest of the country.

Jessica M. Fischer: I have one more numerical item to add to that, Craig, as you are thinking about it. Chris said that the average revenue per customer is not that different from where we sit. The other interesting thing is that the EBITDA margin is also not that different from where we sit today, even though broadband makes up a much larger portion of their revenue than it does of ours, which might have lent itself to a different cost profile. So we have some space, if we move the operating cost structure to look more like ours over time.

In particular, as you move it that way—recognizing that it is a marginal additional business rather than an entire business that you have to fully replicate an overhead structure for—there is plenty of space to then create room for that change that you make in revenue stream over time as well.

Christopher L. Winfrey: Going a different direction—everything that we just talked about really is on the residential side—but I mentioned it in the prepared remarks. I think one of the real pleasant surprises—we have had many pleasant surprises in evaluating the Cox assets and getting to know the team even better—is the B2B capabilities are entirely complementary. Cox has best-in-class hospitality capabilities. They have the longest service reputation in B2B across the country for cable operators. They have product sets, in some cases with rapid scale, that we do not have, and the hope is that we can deploy that across our existing base.

And we have scale in Spectrum Business that can benefit the Cox footprint but also can apply things that they do really well across a much broader footprint, even in hospitality—if you think about what they do in Las Vegas—and applying that across New York, LA, Orlando, and Dallas, all of our major markets. I am pretty excited, and we are going to have a big nucleus of the Cox team that is really helping and driving that part of the business to higher growth for both Spectrum Business and what exists today at Cox.

So, not our biggest portion of our overall revenue base, but I think it is going to be a big revenue contributor for both of those current operations.

Stefan Anninger: Thanks, Craig. Operator, we will take our next question.

Operator: Your next question will come from Vikash Harlalka with New Street Research.

Vikash Harlalka: Hi. Thanks so much for taking my question. I have a two-parter on pricing and ARPU. Chris, you were ahead of the curve on pricing strategy when we compare it with your peers. But do you think you have pulled all the levers on pricing strategy, or are there more pricing changes to come? For example, a five-year price lock that Fios and Optimum have been promoting. Then on ARPU, broadband ARPU was flattish in 1Q. Should we expect an acceleration from here? Thank you.

Christopher L. Winfrey: Sure. We like our pricing and packaging strategy—it works. Clearly, we would like to be having more sales on the front end, and so we are thinking through whether there are other ways to go to market and get a better response rate from customers. We are constantly evaluating that. There is no pride; if we see things that are working elsewhere, we would be happy to adopt them. When we have run some trials around five-year guarantees or five-year price locks—trying different things—we have not seen the necessary lift ourselves, but maybe that is because we did not do it at scale.

We also want to think about not just the promotional price but the roll-off and retail rates, and so it is an entire package of where you end up over time. All of which is to say, we continue to evaluate and look at things. We are very focused on returning to broadband growth. Right now, we do not see any reason to change what we are doing and we will continue to focus on that. It does not mean that we are not trying things left and right to make sure that we can get a better response rate and consideration from new customers.

Jessica M. Fischer: From an ARPU growth perspective across the year, I think you heard Chris say that one of the things that we do in the market constantly is to tune offers to make sure we are driving the right sort of total lifetime value for the business, while also being cognizant of what happens inside the year with ARPU and EBITDA. As we do those things and look at pricing overall, there are a number of factors that can drive ARPU up or down.

On ARPU growth for the year, it will be close either way in terms of whether we end up with net growth—as you noted, we were pretty flat in the first quarter—but it will depend on a number of factors in how we address the marketplace.

Christopher L. Winfrey: Operationally, just so you have a sense of how that works: the pace of loyalty migrations for the existing customer base—how aggressively you lean in—has a high customer lifetime value impact, but it can have a short-term broadband ARPU impact. So the pace of proactive and reactive migration of your existing base and, to a lesser extent, some of the offers that we try at the outset for new acquisition—you have to trade off the customer lifetime value and the ROI of some of those efforts versus the short-term impact to ARPU and things that all of us would like to see from an ARPU development standpoint.

That is an active—if not daily, then monthly—practice of reviewing where we are and making sure we are doing the right thing for the long-term health of the business and for the customer relationship, while at the same time meeting our financial commitments along the way. Thanks, Vikash.

Operator: Your next question will come from John Hodulik with UBS.

John Christopher Hodulik: Thank you, guys. Maybe can we get some additional color on the competitive environment? I think, Chris or Jessica, you laid out what you are seeing in each of the segments. Are you seeing more pressure on fixed wireless with AT&T's effort in that area? And then on the fiber side, it seems like there is an aggressive promotional environment, especially around converged offerings—just wondering if that is having an impact. And then, lastly, on the satellite side, obviously a lot of focus on these LEO constellations—are you seeing any pressure in rural markets, or do you expect that to intensify over the next couple of years? Thanks.

Christopher L. Winfrey: There is a lot in there, so let me start from the very top about the operating and competitive environment. Our issue right now really is a top-of-funnel issue. What do I mean by that? Our yield at the point of sale is as strong as ever. Our churn remains at historical lows, and that is really products and everything that we are doing to bundle in, which is driving churn lower. The external factors on top of that funnel—the same ones we have talked about—are new competition in various forms. Yes, we see continued footprint expansion from cell phone Internet.

Where others have slowed down, AT&T has filled the gap with a fixed wireless access product that originally they said they did not think made a whole lot of sense. On the other hand, the pace of overbuild growth continues at the same pace it has been. Our share in those fiber overlap areas, as Jessica mentioned, including particularly mature fiber overlap areas, remains above the competition across our footprint. The level of promotional activity varied throughout the quarter and by competitor, but it is not a fundamental change in the level of promotional activity.

On the external side, we have a continued muted housing environment—slow household formation, low move rates—and mobile substitution growth is still there but seems to be slowing a little bit, hopefully. So what does that all mean? Our yield across all channels is good and improving. Churn is low. The issue is about consideration and sales traffic at the top of the funnel, and that really comes down to continued improvement in our service reputation, our marketing, our offer expressions, and the way that we are using mobile and video to drive broadband. We are fully focused on those areas.

I am not going to tell you we are sitting here waiting on a better housing environment—which I do think will happen—but in the meantime, we are focused on what we can do and the opportunity to be an even better operator along the way. Through both the external conditions and our own efforts, I think we can get back to broadband growth. On AT&T and fixed wireless access, yes, they are filling the gap where growth from others is subsiding. On converged offers we are seeing from other providers, there is a bit of flattery going on—everything that we do seems to be copied, even branding around Spectrum One.

But competitors’ capabilities are limited in terms of footprint, whereas we have the ability to provide convergence in 100% of our footprint. You have seen multiple competitors try to talk about a savings guarantee—they do not do that against us. We do a savings guarantee against AT&T, T-Mobile, and Verizon; we guarantee $1,000 of savings. On service commitments, if you look at the fine print on others who copied our service commitment, it is not the same. We actually provide a guarantee. We will pick up the phone, not just call you back when we do not, and we will show up on the same day if you have a service or installation need.

Our capabilities are better, our ability to save customers money is higher, and the quality of our service as America’s connectivity company with 100% U.S.-based sales and service—we have made that investment. We need to execute better, but we have made the investment. On satellite, we do not underestimate any competitor, particularly one that is as well-capitalized and innovative as they are—not just Starlink but also Amazon and others. So far, our tracking and data do not suggest a significant customer share loss to satellite.

We do see evidence that in some of the subsidized rural footprint, we would be doing even better if some of that market had not been preceded by satellite—which, in certain low-density markets, long term is actually a great product. If the density is low enough, it can serve enough capacity and enough customers. It is ideal for full broadband coverage of the country where fiber-based solutions cannot and probably should not go. I also think from a satellite perspective there are probably more areas to cooperate than to think of as a direct competitor in suburban and urban environments. One example: we have already done 5G as our backup service through Invincible WiFi.

There could be ways to attach satellite and to become a seller of that product to the extent that they were willing to have us as a reseller and bundle that together with our broadband service. So we are keeping a close eye on it. So far we do not see a major impact, and it could be more friend than foe.

Stefan Anninger: Great. Thanks, John. Operator, we will take our next question.

Operator: Your next question will come from Sebastiano Petti with JPMorgan.

Sebastiano Carmine Petti: Thank you so much for taking the question. Just wanted to circle back on prior expectations to grow EBITDA excluding the transition costs. Is that still the plan for the year? That is my first question. And then, thinking about broadband ARPU, you did see a little bit of a slowdown there. Could you help us think about the balance of the year? Chris, you talked about near-term tradeoffs for the longer-term health of the business. Should we anticipate your pricing strategy or the annual cadence of price increases within those comments?

Is a broadband pricing increase later this year maybe not necessarily something we should expect as you try to help CLVs in the long term and keep churn down? Thank you.

Jessica M. Fischer: I will start on the EBITDA side. We do continue to plan to grow EBITDA slightly this year, with the benefit of tailwind from political advertising and, as you point out, excluding transition costs. As we go through the year, we talked about the tuning exercise around offers, and changes in that tuning are going to have an impact on how close to the line we are on EBITDA growth. But that continues to be our plan.

Christopher L. Winfrey: On broadband ARPU—you asked about pricing increases—we have not made any determination on that yet. For obvious reasons, it has always been our strategy to try to keep prices as low as we can so that we can have enhanced competitiveness. That allows you to have better acquisition and better retention. That is still the case. So we try to minimize price increases but also recognize that we are still, in certain parts of the business, in an inflationary environment. We think through those in real time as the year goes on. There is a multifactor consideration that Jessica talked about and I talked about before. We have not made any decisions on that front yet.

Jessica M. Fischer: Because of that, from an overall Internet ARPU growth perspective, it will be close either way in terms of where we land on overall Internet ARPU growth for the year. It will depend on a number of those factors that Chris talked about and the tuning around offers, as well as what we do with the overall pricing profile across all of our products.

Sebastiano Carmine Petti: I appreciate that. Just quickly, any context you could provide around the increase to the synergies at Cox? You are giving the upgrade here today—short sources of that and how we should think about it? Thank you.

Jessica M. Fischer: In moving from $500 million to $800 million, there is a portion related to procurement synergies, including programming, as well as better visibility into the financials. We are baselining some of those costs that we see at a more detailed level against what we expect based on how we operate, and that is really how we get from place to place. I think there is space for us to continue to find more there.

Christopher L. Winfrey: I think there will be.

Sebastiano Carmine Petti: Alright. Thank you for the generosity.

Operator: Thanks.

Stefan Anninger: Operator, we will take our next question, please.

Operator: Your next question will come from Steve Kahle with Wells Fargo.

Steve Kahle: Thank you. Chris, yesterday, Comcast reported a pretty strong inflection in their subscriber trends. It came on the back of a huge quarter for event marketing, and they have been pretty aggressive lately on ARPU and price locks as well. I know you all have been very active and proactive in the market with the way you have done pricing and packaging. You also talked about a lot of the competition.

Do you feel like, at this point, you need to get even more aggressive on either the marketing or the pack front to cut through this competitive noise, or do you feel like if you continue doing what you are doing, things will start to improve as we get through some of this competitive hump? And then just one on churn and gross adds. Traditionally, you have done really well with jump balls when we have seen move activity. It sounds like your gross add environment looks a little different now at the top of the funnel than it did historically.

If we do start to see a pickup in move activity, how do you think that can drive the business forward? Thank you.

Christopher L. Winfrey: First off, we were pleased to see the change in trajectory for Comcast in Internet and their success in mobile. We do not have any overlap with Comcast, and we partner with them on all kinds of different fronts from a technology and platform perspective, so we are cheering them on. I think it is good for everybody. They may be coming from a different place and timing regarding pricing and packaging, but of course our team immediately started to see if there are any nuggets there that might work for us to adopt. So far, we have not seen that, but we know they have been complimentary of us when we have done things around Spectrum Mobile.

We will take a look and see if there is anything consistent with our long-term competitive and financial objectives. They may have had some one-time benefits and may be coming from a different place, but there is no pride here in adopting something that works. Are we going to stand still? No. Our head is not in the sand. I think our issue here is less about offer expression—we have tried a lot of different things. I do not think that is our underlying issue. Our ability to cut through and message to customers around our value and utility is actually the thing that is creating pain for us.

Some of that ties to service reputation, which then feeds back in. If you think about our willingness to think out of the box, the hiring of Nick Jeffrey as our Chief Operating Officer really ties into those two things. I think that could be good for us and for the industry, having somebody new to the team who has dealt with a highly competitive wireless market in the UK, a global B2B business with Vodafone, and then as an overbuilder and attacker—a successful one—here in the U.S. Adding that skill set to an already talented team that executes really well is going to be good for us.

On jump balls and gross adds: the variance year over year was in gross adds. Our churn did better. The vast majority of that gross add variance came from the low-income segment. As we dug more into that, we realized there are probably some offers we have had in the market before that were not as prevalent and we need to reevaluate some stuff that worked. That is probably a decent-sized driver of the variance we had year over year in sales, and we are working through that as well.

To get back to full-time growth across all segments, it comes to doing a better job of communicating our value and utility and earning the service reputation that we have already invested in. I do not think we need to spend more on marketing. You could even argue we might be able to simplify and improve effectiveness without increasing spend.

Jessica M. Fischer: One more thing to add on movers. We actually do really well with the mover cohort, and it has to do with the scale of our footprint and what we can do with transitioning customers from one location to another. Even when you look at overall market share shift, more movement—people moving from one household to another—continues to be a net benefit to us. So more movement between homes in the marketplace and more movers is an overall benefit, to the extent there is a recovery in the housing space. As we think about joining our footprint with the Cox footprint, that will improve as well.

And as we can cooperate with some of our peers, we try to do everything we can to take good advantage of those customer relationships where we have them.

Christopher L. Winfrey: As Jessica alluded to, not only will the Cox footprint help both footprints in terms of off-footprint move retention, I think there is a lot more that we can do within the industry. We have had some efforts in the past—not as successful as they could and should be—and we are working together with some of our partners to do even better on that front.

Stefan Anninger: Thanks, Steve. That concludes our call. Operator, back to you.

Operator: Thank you for joining. This concludes today's call, and you may now disconnect.