• Consolidated Cash and Cash Equivalents: $108 million, including $70 million at GCI.

• Charter Investment Value: $12.3 billion based on shares held and recent share price.

• Total Debt: $3.8 billion at quarter end, excluding preferred stock.

• GCI Revenue and Adjusted OIBDA: Flat in Q1; growth in data revenue offset by declines in other areas, particularly video revenue.

• GCI Wireless Subscribers: Added 3,500 revenue-generating subs over the last year.

• GCI Cable Modem Customers: Decline of 200 customers.

• GCI Leverage: 2.8x as per credit agreement at quarter end; 3.2x pro forma post-dividend payment.

• Undrawn Capacity: $457 million at quarter end, $327 million pro forma post-dividend.

• Warning! GuruFocus has detected 4 Warning Sign with LBRDA.

Release Date: May 08, 2024

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

Positive Points

• Liberty Broadband Corp (NASDAQ:LBRDA) expects to resume sales into Charter's buyback this summer, with a focus on debt reduction in the near term.

• Charter experienced solid EBITDA growth of 2.8% in Q1, with management confident in achieving EBITDA growth throughout the year despite industry pressures.

• Charter's mobile segment continues to perform well, surpassing 8 million total mobile lines with a 38% increase in mobile service revenue compared to the previous year.

• Liberty Broadband Corp (NASDAQ:LBRDA) reported a consolidated cash and cash equivalents of $108 million at quarter end.

• GCI paid down its revolver by $60 million during the quarter using strong cash from operations, demonstrating effective cash management.

Negative Points

• Charter experienced a 72,000 subscriber net loss in Q1, largely due to increased competition and early headwinds from the upcoming ACP expiration.

• The ACP (Affordable Connectivity Program) was not renewed, posing challenges in retaining ACP customers despite alternative offers.

• GCI's revenue and adjusted OIBDA were flat in Q1, with growth in data revenue offset by declines in other revenue segments, particularly in video revenue.

• Liberty Broadband Corp (NASDAQ:LBRDA) faces a reduced pace of buyback in the near term due to a greater focus on debt reduction.

• The broader NAV discount for Liberty Broadband Corp (NASDAQ:LBRDA) remains a concern, with the market showing a reduced appetite for arbitrage opportunities.

Q & A Highlights

Q: Greg, regarding Charter, is there any hope for an ACP Extension Act given the recent bipartisan support in the Senate? A: Gregory B. Maffei - Liberty Broadband Corporation - CEO, President & Director: While there is bipartisan support, procedural issues could impede its progress. We cannot rely on it, but there is always hope.

Q: Given the current high interest rates, would it be more beneficial for Charter to focus on deleveraging rather than stock buybacks? A: Gregory B. Maffei - Liberty Broadband Corporation - CEO, President & Director: We plan to use more of Charter's buyback proceeds for debt reduction at Liberty Broadband, and Charter is expected to reduce its leverage to the midpoint of its target range.

Q: Should Charter consider slowing its footprint expansion to free up cash for larger share repurchases, especially given the current valuation of EBITDA? A: Gregory B. Maffei - Liberty Broadband Corporation - CEO, President & Director: Charter is being more thoughtful about expansion given market preferences for free cash flow. However, they maintain a balanced approach to growth and capital allocation.

Q: With mobile being a growth area for Charter, is there scope to invest more aggressively in this segment to enhance its material impact on the business? A: Gregory B. Maffei - Liberty Broadband Corporation - CEO, President & Director: Charter is already aggressively pursuing mobile growth. Current market conditions limit further acceleration, but continued success in mobile is anticipated.

Q: Considering the depressed valuations for cable assets, is there an opportunity for Liberty Broadband to consider acquiring other cable companies? A: Gregory B. Maffei - Liberty Broadband Corporation - CEO, President & Director: While not closed to opportunities, synergies with Charter generally make it more advantageous to pursue acquisitions through Charter rather than directly by Liberty Broadband.

Q: What strategies are being considered to address the NAV discount at Liberty Broadband? A: Gregory B. Maffei - Liberty Broadband Corporation - CEO, President & Director: The primary strategy is share repurchases at discounted prices. Long-term mitigation might involve structural changes similar to previous consolidations with other entities.

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

This article first appeared on GuruFocus.