solidated munications (US:CNSL)2021-07-29 21:13Financial Data and Key Metrics Changes - Operating revenue for Q2 2021 was $320.4 million, down 1.5% year-over-year [25] - Adjusted EBITDA was $126.7 million, aligning with guidance that includes startup investments for the fiber build plan [25] - Net interest expense increased to $45.4 million, up $14 million from the previous year due to a new capitalized balance sheet [35] Business Line Data and Key Metrics Changes - Total commercial and carrier revenue was $143.8 million, down 1.4% [26] - Data and transport revenue grew 1.4% year-over-year to $19.8 million, driven by increased demand for dedicated Internet bandwidth and VoIP solutions [20][26] - Consumer broadband revenue was $68 million, reflecting a 3.7% increase, marking the highest growth rate in recent years [28] Market Data and Key Metrics Changes - Fiber upgrades reached 122,000 locations year-to-date, with a target of over 300,000 for 2021 [6][8] - The company added approximately 3,000 consumer fiber gig-capable subscribers in Q2 2021, totaling nearly 7,000 year-to-date [15] - Penetration rates in early Q1 build areas with cable competition achieved double-digit growth [15] Company Strategy and Development Direction - The company is focused on a "fiber first" strategy, aiming to upgrade 70% of its service area with fiber gig-capable services over five years [43] - Investments in digital transformation projects are expected to enhance customer experience and operational efficiency [12] - The company is cautiously optimistic about meeting its construction forecasts and is already planning for 2022 and beyond [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving top-line growth by 2023, driven by fiber broadband and commercial segments [47] - The company is not currently facing significant bottlenecks or inflation issues in fiber construction [54] - Management highlighted strong relationships with community partners and a solid track record in securing funding for broadband expansion [17] Other Important Information - Capital expenditures for Q2 totaled $119.2 million, with 40% supporting fiber network expansion [42] - The company expects cash interest expense to be in the range of $130 million to $135 million for the year [44] - The Searchlight investment is expected to total $425 million, with the second stage of investment pending FCC approval [41] Q&A Session Summary Question: Wireless cash distribution trends - Management indicated that wireless cash distributions are running ahead of expectations, potentially exceeding the previously guided range of $37 million to $39 million for the year [49][51] Question: Bottlenecks and inflation concerns - Management reported no current bottlenecks in fiber construction and noted improved delivery on commit dates, although they are cautious about chip supply for Wi-Fi 6 [54][56] Question: Competitive response from cable companies - Management observed that cable companies are naturally upgrading speeds in response to fiber deployments, but they believe their product offerings are superior [57] Question: Fiber build customer acquisition - Approximately 60% of new fiber customers are net new ads, with increasing competitive activity leading to higher gross new ads [62] Question: Top-line growth aspirations - Management is optimistic about offsetting legacy declines in voice with growth in commercial and carrier segments, particularly in Ethernet and SD WAN [64][66] Question: Promotional pricing strategies - Management confirmed they are competitive on pricing but not underpricing competition, focusing on customer relationships and tailored solutions [72][73] Question: Labor market and operational challenges - Management stated they have sufficient resources to meet their plans and do not foresee labor shortages impacting operations [75][76] Question: Potential for acquisitions - Management remains focused on executing their current plan but is open to evaluating M&A opportunities with their partner Searchlight [78]