solidated munications (US:CNSL)2023-02-28 18:45Financial Data and Key Metrics Changes - Total operating revenue for Q4 was $296 million, with adjusted EBITDA at $101.7 million, and normalized revenues declined by $15.8 million or 5.2% year-over-year [45][46] - Reported adjusted EBITDA for 2022 was approximately $414 million, with guidance for 2023 adjusted EBITDA expected to be in the range of $310 million to $330 million [52][53] - The company experienced a decline in voice and video services revenue, with normalized consumer voice revenue down 11.8% and video revenue down 17% year-over-year [69][70] Business Line Data and Key Metrics Changes - Consumer broadband revenue normalized was $67.9 million, up 5.3%, driven by strong consumer fiber revenue growth of 51% [68] - Fiber broadband revenue normalized for Kansas was $23.7 million, reflecting a 51% year-over-year increase [39] - Commercial revenue normalized was $97.7 million, down 2.1%, while data services revenue normalized was $53.7 million, up 1.3% year-over-year [70] Market Data and Key Metrics Changes - Fiber now constitutes one-third of consumer broadband connections, up from 22% a year ago, indicating a significant shift from copper to fiber [41] - The company targets to grow fiber customer base to over 500,000 by 2026, representing 25% penetration on targeted fiber passings of 2 million [42] - Fiber ARPU exceeds copper by over $13 or 25%, indicating a healthy revenue spread [41] Company Strategy and Development Direction - The company is committed to increasing fiber penetration across consumer, commercial, and carrier channels, with a target of reaching over 70% fiber coverage by mid-2026 [14][60] - The addition of new leadership is aimed at enhancing the go-to-market strategy and driving fiber penetration [25][26][27] - The company plans to leverage public-private partnerships to support its fiber expansion and offset costs [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving significant shareholder value through increased fiber market penetration and revenue growth [25] - The company anticipates an inflection point in 2024 for year-over-year revenue and EBITDA growth, targeting a compound annual growth rate in the mid-teens for EBITDA [60] - Management acknowledged challenges in predicting sequential revenue growth due to carrier contract renegotiations but remains optimistic about future growth [11][22] Other Important Information - The company has been awarded approximately $150 million in broadband partnership and grant funding since 2019 to support its expansion projects [34] - The average cost per passing for fiber build is estimated to be approximately $650 in 2023, significantly below peer group averages [48] - The company maintains liquidity with cash and short-term investments of approximately $414 million and $225 million of available borrowing capacity [51] Q&A Session Summary Question: What is the subscriber cadence and how to get back to positive net adds? - Management noted a slight decline in subscribers due to weather impacts but is confident in achieving significantly positive net adds in 2023 [84][85] Question: Can you elaborate on the EBITDA guidance for 2023? - The reduction in EBITDA guidance is primarily due to $50 million from asset sales, $20 million from legacy phone revenue, and $10 million from carrier business pressures [87][88] Question: How is the CapEx structured for 2023? - CapEx is expected to be approximately 70% related to the fiber business and 30% related to the carrier and commercial business [90]