Liberty Broadband(US:LBRDA)2025-08-07 17:03GCI Divestiture and Merger - Liberty Broadband completed the GCI Divestiture on July 14, 2025, distributing 0.20 shares of GCI Liberty's common stock for each share of Liberty Broadband common stock held[156]. - Following the GCI Divestiture, Liberty Broadband's primary asset is an equity method investment in Charter, controlling 25.01% of Charter's voting power[145][146]. - The Merger Agreement with Charter was approved on February 26, 2025, which includes the combination of Liberty Broadband with Charter and the divestiture of GCI[147][149]. - The GCI Divestiture is expected to be taxable to Liberty Broadband and its stockholders, with potential corporate tax liabilities exceeding $420 million[150]. - Liberty Broadband's management anticipates that the GCI Divestiture will be presented as a discontinued operation from the divestiture date[159]. GCI Holdings Performance - GCI Holdings operates primarily in Alaska, and its business is significantly affected by local economic conditions, including oil prices and inflation[160][161]. - GCI Holdings has faced inflationary pressures on materials and labor costs, impacting its ability to maintain margins[162]. - GCI Holdings reported a revenue increase of $15 million (6.1%) for Q2 2025 compared to Q2 2024, totaling $261 million, and a $36 million (7.3%) increase for the first half of 2025, totaling $527 million[175]. - Consolidated operating income rose by $20 million (95.2%) for Q2 2025, reaching $41 million, and increased by $35 million (71.4%) for the first half of 2025, totaling $84 million[176]. - Adjusted OIBDA increased by $19 million (23.8%) for Q2 2025, totaling $99 million, and by $33 million (20.0%) for the first half of 2025, totaling $198 million[180]. - Adjusted OIBDA for GCI Holdings increased to $108 million for the three months ended June 30, 2025, compared to $86 million for the same period in 2024, marking a year-over-year increase of 25.6%[213]. - Operating income for the six months ended June 30, 2025, was $107 million, up from $67 million in the same period of 2024, indicating a growth of 59.7%[213]. Charter Performance - Charter added 500,000 mobile lines in Q2 2025, with improved Internet and video losses compared to the prior year[169]. - Charter's revenue increased by $81 million (0.6%) for Q2 2025, totaling $13.766 billion, and by $137 million (0.5%) for the first half of 2025, totaling $27.501 billion[187]. - Operating income for Charter increased by $16 million (0.5%) for Q2 2025, reaching $3.279 billion, and by $122 million (1.9%) for the first half of 2025, totaling $6.516 billion[190]. - The share of earnings from affiliates increased by $48 million (16.2%) for Q2 2025, totaling $345 million, and by $86 million (14.9%) for the first half of 2025, totaling $663 million[184]. - Interest expense decreased by $12 million (23.1%) for Q2 2025, totaling $40 million, and by $23 million (22.3%) for the first half of 2025, totaling $80 million[183]. - Charter activated approximately 123,000 subsidized rural passings in Q2 2025 and 212,000 in the first half of 2025, with a total investment of $545 million and $1.0 billion respectively in rural construction initiatives[172]. Tax and Regulatory Matters - The U.S. Supreme Court upheld the constitutionality of the Universal Service Fund (USF) contribution factor on June 27, 2025, following legal challenges[165]. - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, with expected deferral of cash taxes to future years, though no material impact on income tax expense is anticipated[154]. - The effective income tax rate for the three months ended June 30, 2025, was 7%, significantly lower than the 23% rate for the same period in 2024[195]. Cash Flow and Financial Position - Cash flow from operating activities for the six months ended June 30, 2025, was $169 million, compared to $79 million for the same period in 2024, reflecting a substantial increase[203]. - The company had a cash and cash equivalents balance of $180 million as of June 30, 2025[202]. Revenue Streams - Consumer wireless revenue increased by $4 million and $7 million for the three and six months ended June 30, 2025, respectively, driven by an increase in wireless subscribers[215]. - Business data revenue rose by $16 million and $36 million for the three and six months ended June 30, 2025, respectively, primarily due to service upgrades with existing customers[217]. - The company expects to exit the video business by the end of 2025 after receiving regulatory approval to discontinue video services[216]. Stock-Based Compensation and Expenses - Stock-based compensation expense decreased by $1 million (14.3%) for Q2 2025, totaling $6 million, and by $5 million (35.7%) for the first half of 2025, totaling $9 million[178]. - Stock-based compensation remained relatively flat for both the three and six months ended June 30, 2025, compared to the prior year periods[222]. - Depreciation and amortization increased by $3 million for the three and six months ended June 30, 2025, due to a general increase in assets placed in service after March 31, 2024[222]. Market Risks - The company is exposed to market risk from adverse changes in stock prices and interest rates, which could impact fair values, cash flows, and future earnings[223]. - Interest rate exposure arises from borrowing and investment activities, with a strategy to maintain a mix of fixed and variable rate debt to mitigate risk[224]. - As of June 30, 2025, variable rate debt amounts to $1,488 million with a weighted average interest rate of 6.2%, while fixed rate debt totals $600 million with a weighted average interest rate of 4.8%[225]. - Corporate and other variable rate debt is $1,115 million at a weighted average interest rate of 6.2%, and fixed rate debt is $965 million at a weighted average interest rate of 3.1%[225]. - The investment in Charter, an equity method affiliate, is publicly traded and subject to market risk not reflected in the financial statements[225].