Charter Communications Inc at Goldman Sachs Communacopia & Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Chris, we've heard a tremendous amount over the past couple of days and even the first preceding 3 sessions from NVIDIA to the venture capital community to our own CIO about artificial intelligence and the impact it could have. In the telecom industry, a lot of people talk about edge computing as a central opportunity and also about potential cost savings related to customer service. So at the highest possible level, what is your personal view? Do you think AI is much more hype or a lot of reality at this stage?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah, yeah. But on a flywheel, do you think it happens in the next kind of two to three years in terms of where we start to see big leverage on the cost side?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. But it will be exciting to find out how it evolves for sure. I agree maybe pivoting to a macro question for you. The state of the US consumer has been a big debate point among investors over the last several months or even longer. Charter touches almost 30 million consumer households. What have you been seeing in terms of the health of the US consumer, their ability to trade up and take more incremental services in the bundle? Or are you seeing a propensity for some consumers to trade down at this point?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : And what are you seeing from business customers? Any change in terms of their propensity to spend more on services?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : So I want to pivot a little bit to a short-term question on many investors' minds, and that's the affordable connectivity program, which expired back in May. I believe you said the last quarter, well over 100,000 subscriber losses you saw were due to ACP, about half of which were voluntary churn, half from lower gross additions. And I think you said you expected to see a step-up in ACP-related losses this quarter, Q3, given non-impact activity and then the smaller impact in Q4. So I was wondering if you could provide us with any sort of update on the trends you're seeing through September and any sense of what we could expect for ACP impact in Q3.

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Then I want to kind of connect that and take the opportunity to sort of talk about concept, you discuss all the time, which is the core value proposition you believe Charter is bringing to the consumer in terms of a bundled service experience across broadband and wireless which is affordable. Can you outline for us the budgetary choice you think consumers are making today? And what level of savings are you able to provide them on an aggregate basis?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : And what are your ambitions for how much local penetration you believe you can drive over time?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. And relative to smartphones, upgrade rates to EMEA for the industry are about as low as they've ever been, I think. And I do think there's some excitement around the smartphone launches that we've been seeing, particularly the iPhone 16 launch just a couple of days ago. So wondering how you're thinking about that as an opportunity in terms of the smartphone upgrade cycle for your business?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : And maybe just talking about your wireless network strategy in the longer term, you obviously have a very important wholesale relationship with Verizon on network side. You've also talked about some in some detail about your strategy to offload more of your customers' data traffic onto your own network. So maybe kind of lay out your strategy, if you would, and whether you expect more effort on WiFi or the small cell side in terms of your own network deployment?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : And do you expect your relationship with Verizon to evolve at all over time, whether it's with respect to pricing or the terms of the contract?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Got it. And just in terms of overall assets, are you kind of a net buyer or seller of Spectrum assets, do you think over time?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. And then you mentioned before in terms of offload, one potential margin opportunity for your wireless businesses to sort of offload more of that network traffic onto your own network. There's a view that some of that usage can be offloaded whether it's the work at home, coffee shops REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 4:30PM, CHTR.OQ - Charter Communications Inc at Goldman Sachs Communacopia & Technology Conference and like. Based on the network patterns you're seeing today, how much traffic do you think can incrementally offload? And how should we think about the savings impact over time?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. Now back in January, I think you sort of outlined a multiyear CapEx outlook, which includes investing in network evolution, expanding your footprint, about $12 billion of CapEx reached in the next two years, then stepping down in 2026 and after that, what is your ambition for the broadband service level that you're going to be delivering to customers at the end of that exercise?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Now from a competitor standpoint, what are you seeing today in terms of the competitive intensity from the fixed wireless access providers? And how these sort of adapted your offerings to compete more effectively against them? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 4:30PM, CHTR.OQ - Charter Communications Inc at Goldman Sachs Communacopia & Technology Conference

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. Now also competitively, you've competed against cyber companies for a long time now, especially traditional carriers. More recently, we've seen some of the announcements from over-builders getting more capital, whether that is T-Mobile with their JVs with MetroNet and others or Verizon announcing the acquisition of Frontier, which operates in several of your markets. So how do you think these announcements change the competitive landscape for you at all -- if at all, for the next kind of two to five years or so.

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. And maybe just help us from your perspective, when a new fiber player comes into your internal footprint aggressively, how do you convince consumers of your value proposition and incentivize them to stay?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : I want to pivot a little bit to a segment of the market, which I don't think you of investor airtime, namely SMB and enterprise, which has actually been a pretty good growth driver for you historically. Can you talk us through kind of any opportunities you see to capture incremental market share in the commercial segment? And conversely, any segments that you think are a little bit more challenging right now?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Very good. Just wanted to ask one question on your rural strategy. You've announced $7.7 billion of CapEx investment over the next few years to reach about [1.8 million] passings, I believe. Maybe frame for us the higher penetration of customer value you think you can drive from that initiative. So maybe just talk about how, if at all, BEAD plays into that.

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : And does BEAD play into that?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Got it. A couple of more questions for you. One, financially related. This past quarter, you delivered very strong cost performance in terms of service programming costs. Can you help us understand where these cost efficiencies are coming from, maybe what inning we're in with respect to additional efficiencies you expect to kind of drive strong EBITDA growth.

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. Well, that baseball analogy of what inning is that is -- by the time you get to the end of this year, those cost synergies are fully realized, is that inning two? or is that inning eight?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. Then capital allocation. Your leverage stands right about 4.3 times, more or less in the middle of the target range you've outlined, so how are you thinking about the medium term, not the short term, but medium term? And at what point do you feel comfortable devoting a bigger portion of cash flow to buy back through the debt pay down? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 4:30PM, CHTR.OQ - Charter Communications Inc at Goldman Sachs Communacopia & Technology Conference

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Yeah. And maybe on those, I mean, buybacks versus debt, very clear. Maybe just talk about longer term sort of investing organically in the business through CapEx versus the M&A priority?

Question: Jim Schneider - The Goldman Sachs Group, Inc. - Analyst : Great. Well, that was a great overview of the investment case. But unfortunately, we're out of time. Thanks, Chris, for being here.