• Revenue: GCI achieved record revenue, crossing the $1 billion mark for the first time in 2024.
• Revenue Growth: Increased 5% in Q4 and 4% for the full year, driven by strength in data revenue.
• Adjusted OIBDA: Decreased 4% in Q4; up $1 million to $362 million for the full year.
• Free Cash Flow: GCI generated solid free cash flow and distributed $150 million of dividends to Liberty Broadband.
• Capital Expenditures: $193 million spent in 2024, slightly below the $200 million expectation due to delays in rural fiber projects.
• Cash and Restricted Cash: $229 million at quarter end, including $75 million at GCI.
• Debt: Total principal amount of debt at $3.7 billion at quarter end.
• Charter Investment Value: $15.9 billion based on shares held as of February 1.
• GCI Leverage: 3.1 turns with sufficient cushion relative to the 6.5 times minimum net leverage covenant threshold.
• Undrawn Revolver Capacity: $342 million at GCI, net of letters of credit.

• Warning! GuruFocus has detected 9 Warning Signs with CDUAF.

Release Date: February 27, 2025

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

Positive Points

• Liberty Broadband Corp (NASDAQ:LBRDA) entered into a definitive agreement to be acquired by Charter, providing certainty and enhanced trading liquidity for shareholders.
• GCI achieved record revenue in 2024, crossing the $1 billion mark for the first time, driven by strong data revenue.
• The distribution of GCI is expected to provide incremental value to shareholders not captured in the exchange ratio with Charter.
• Liberty Broadband Corp (NASDAQ:LBRDA) has a strong partnership with Charter, which is expected to continue through the 2027 close date.
• GCI's proactive approach to rural connectivity projects is critical to securing necessary government funding, with significant CapEx planned for 2025.

Negative Points

• Adjusted OIBDA decreased by 4% in the fourth quarter due to higher SG&A expenses from increased labor-related costs.
• GCI Consumer saw a decline in revenue-generating wireless and cable modem subscribers, partly due to the expiration of the ACP program.
• Delays in rural fiber projects led to capital expenditures being slightly below prior expectations.
• The Alaska market is stable but faces competition from Starlink, particularly in rural areas where service disruptions have occurred.
• There is potential risk from government subsidies changes, particularly with increased focus on satellite operators like Starlink.

Q & A Highlights

Q: Can you provide insights into the competitive landscape for GCI Liberty, especially with the emergence of Starlink and other satellite operators? Also, what are the key factors affecting the timing of the spin-off and the Charter transaction? A: The Alaska market remains stable, with GCI competing primarily with AT&T in wireless, while Verizon has limited impact due to the lack of C-band spectrum. On the wireline side, GCI and ACS are the main competitors. Starlink is a competitor in rural areas, especially where service disruptions occur. The spin-off of GCI is expected to close in late Q2 or early Q3, with the Charter transaction timeline set for June 2027, unless mutually agreed to accelerate.

Q: How do government subsidies for broadband build-outs impact GCI's future plans, and what is the outlook for these subsidies? A: Government subsidies are crucial for both capital and operating expenses in Alaska. The state has set an April date for bead applications, targeting about $1 billion for Alaska. Changes in administration may influence the terms and conditions of these grants, but GCI expects to continue its rural fiber network construction despite potential competition from Starlink.

Q: What are the potential risks of reductions in subsidies for health care and broadband in Alaska, and how might an economic slowdown affect GCI? A: Alaska's economy is typically countercyclical, benefiting from energy production. While Starlink may qualify for future federal grants, GCI believes its largest customers require more capacity than Starlink can offer. Health care subsidies are significant, and while there is a pending Supreme Court case that could affect the Universal Service Fund, the probability of material changes is low.

Q: How does GCI plan to address the competitive threat posed by Starlink in rural areas? A: GCI has lost some wired subscribers to Starlink in rural areas due to service disruptions from fiber breaks. However, once fiber networks are fully built and redundant rings are completed, GCI anticipates fewer disruptions. Starlink is expected to be a competitor under revised bead rules, but GCI believes fiber remains the preferred choice for enterprise users.

Q: What is the current financial position of Liberty Broadband, and how does the Charter transaction impact it? A: Liberty Broadband had consolidated cash and restricted cash of $229 million at quarter-end. The Charter transaction allows for early transition on governance rights and helps reduce net debt. Charter will repurchase $100 million of its Class A common stock from Liberty Broadband monthly until the transaction closes, providing financial certainty and reducing debt obligations.

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