Charter Communications, Inc. (CHTR) Earnings Call Transcript & Summary

Okay. We're going to get started. Please note important disclosures, including my personal holdings disclosures, all appear on the Morgan Stanley public website. I'm Ben Swinburne, Morgan Stanley's Media and Cable analyst. Very excited to welcome back to the conference, Chris Winfrey, the President and CEO of Charter. Chris, great to see you. Thanks for coming back.

Good to be back. Thank you.

Absolutely. You've been the CEO now for a little over a year. It's been quite the year for Charter and for the industry. I'm wondering maybe you could just reflect back on 2023, your new role and sort of how you think the business has performed.

Yes. Well, if you step back, all the way back, and think about the cable industry, it's really been around since the 1950s. And no, it's not new. We've been through different cycles of temporary competitive cycles as well as investment cycles. And so on one hand, I don't want to ignore and I want to fully recognize the uncertainty that exists in the capital markets today. On the other hand, I would tell you, inside Charter, all the way from the executive team down to the frontline employees, we are both really focused and actually really excited about what's in front of us. And that's because if you step back and think about it, this is the first time that we've extended the network this way since the 1980s. It's the largest physical upgrade of the network since the 1990s, both of which have been done before with great success. And at the same time, we're delivering seamless connectivity and convergence, which hasn't really been done before, and transforming video. So it's pretty exciting inside the company. It's a unique opportunity. Again, I don't dismiss the amount of uncertainty that exists in the capital markets today. But when we step back inside the company, and we think about it, we've got the best networks and we've got the best products. I think we have the best service, and we can save customers money now and in the future, and I think that's valuable.

And you guys have a strategy that you've laid out. I'm wondering if you could articulate that in a little more detail for us. And in particular, Chris, what gives you confidence that given -- we've seen a number of tough quarters for the sector and it's a competitive environment, that this is going to bring the business back to operating and financial growth over time.

Well -- I think it's a good question. If you step back though and think about it for the industry and particularly for us, for the cable industry, we do have the best network. We have the fastest speeds, we have the fastest Internet, fastest Wi-Fi and we have the fastest mobile, and we have that today, and we have the best service, I think. And we've had the willingness to continue to invest in it. Now that being said, our strategy of how do you monetize that hasn't really changed, which is, we have about 56 million passing. So it's a fixed network. And so our goal is to make sure that we get the highest penetration possible on the network because it's a fixed set of cost. It's a fixed network. So getting both the highest amount of customer penetration, but also penetrating each household with as many products as we can, one, because it saves us more -- it saves the customer more money; two, it gets more revenue out of the household; three, it lowers churn and service transactions per product, and the overall cost per passing and the overall cost per customer relationship, both from an operating cost as well as from a capital cost, goes down, which allows you to be more competitive inside the marketplace. So that strategy hasn't really changed, and we're in one of those cycles right now where it's a temporary amount of competition, slightly higher investment cycle that we're going through right now. But we're confident that we've got the best networks, best products, best service, the ability to save customers money. And that's our strategy. And it's also that strategy that we've deployed is also what creates some financial headroom so that when you're in one of these cycles, then you have the ability to continue to grow EBITDA even through a temporary cycle.

Yes. And obviously, the primary focus for the market is broadband. And we've had all...

It's not lost on me.

Yes. We've had pretty much all your competitors present at this conference already. So I think there's a good sense of the competitive environment. The market's mature. Beyond having the best network, can you talk about how you reaccelerate growth in broadband at Charter?

Sure. I mean, look, your -- we're in a lull right now from a net add perspective. Some of that comes about from the success that we had through the pandemic and pull forward -- significant pull forward. And then on top of that, you have a generationally low amount of move activity, which means lower selling opportunities. And even though it's inferior, you have some new competition, which is bad timing. But at the end of the day, if you step back and think about it and say, from our perspective, customer demand for data continues to increase. And our network is best positioned to do that. And I don't think people are looking for necessarily just connectivity to one particular device inside the home. They want seamless connectivity that goes with them everywhere. And if you think about it that way, if you believe that customer demand for data is going up and customers need seamless connectivity, I think we have a big runway still despite the current environment for growth. And I would argue that our connectivity services are underpenetrated relative to their potential now and in the future, particularly when we move into a DOCSIS 4 environment.

Chris, can you talk a little bit about how you think -- how you differentiate, if you think you should, the fixed wireless competitive dynamic and fiber?

Sure. Anytime you have a new competitor inside of a marketplace and a particular set of passings, you see the initial disruption. It's relatively minor, but overall, it's painful. And so that's what we've seen. And we know it well from an overbuilder perspective for more than a decade. So in some sense, fixed wireless access isn't that different. Although it's an inferior product, it's inferior to both us and it's inferior to the wireline overbuilder. The one advantage that it has is it's very portable, and it's actually coming in and out of the market. You've heard people talk about selective marketing based on where they have capacity. So one of the interesting things is, in some sense, it's everywhere, and it's nowhere all at the same time. And so I think that says we need to be careful and be patient that we're not chasing too far downstream just for the sake of generating volume. But I do think that one of the things that we could actually do a better job of is actually marketing. And you know I've talked a little bit about this in terms of how we talk to customers about it. A lot of times, these fixed wireless access are what we call cellphone Internet because that's really what it is, it's cellphone Internet. When they're articulating that to customers, they're articulating at an incrementally low price point. But my reaction to that is the only way that you get that incrementally low price point is because you're overpaying on a mobile line. And so I think we need to pivot our conversation with customers, to educate them what's the total bill that you're paying? Because we can save you money and we can get you a more reliable and faster speed. And the industry and us, in particular, I think we can do better.

And then fiber, how would you talk about the -- think through the fiber dynamic?

From a fiber perspective, we've been competing with them for really over 10 years. The thing that I would argue that they've probably done a better job over the past 2 years is marketing symmetrical speed. There's not really a real application for it today. I think there will be over time. And so as we ubiquitously deploy our fully deployed symmetrical multi-gig network, I think it will get usage over time because it will be fully deployed. But our strategy has been the same with wireline overbuilders, compete on the quality of the service. And in addition, now we have the benefit that we can actually add mobile and drive convergence across 100% of our footprint, which is something they can't do. I mean if you took a look at the largest telcos, I won't pick on anybody by name, but they have a mobile service that covers 100% of the country. And their ability to have a converged product offering might be in 20% max or 20% of their footprint. So they really can't go -- I've heard people say, well, we don't believe in convergence. Well, the reason you don't believe in convergence is because you can't deliver it in 90% of your footprint. And so I get it. But we can deliver that convergence at seamless connectivity. It's gigabit wireless everywhere we operate. And I think that's a real advantage in the wireline overbuild and in the cellphone Internet space.

Maybe just going from sort of the macro to a little bit of a micro, if you'll indulge us. I know we don't want to hyper focus on 1 or 2 quarters, but it's been a couple of quarters of underperformance in broadband relative to expectations at least. Can you help maybe unpack some of the drivers of that underperformance that might help us think about the real trends driving these results?

Yes. I mean it's really all the things that we've been talking about, but I would start with what people need to know first, which is, our churn remains at historical lows. And so churn remains at historical lows, which tells you something about the way that we're competing with our existing base. Our larger issue has been a significant reduction in the amount of gross adds. And that's a result of a lower move environment. It's the result of ongoing consistent wireline overbuild, which will tap out at some point, not too far in the distant future right there, not too distant future, as well as an inferior, but novel new form of competition in cellphone Internet. And that all taking place at the same time is really what's driven -- what is underperformance relative to our own expectations and what we know is the long-term potential because we think we're underpenetrated.

Okay. You're doing some good marketing of the cellphone Internet pitch on the...

That's what it is. I mean it's cellphone Internet. I mean the other way to think about it is when you think about Spectrum Mobile, I can give you the residential and I can give you the SMB view. In SMB, we provide wireless Internet backup for SMB and enterprise-as-a-service, but it's a backup, and that's a 5G backup. And if you think about our Spectrum Mobile service that we have today, 87% of the traffic goes over our gigabit wireless, our own Wi-Fi footprint and eventually CBRS. And we use 5G radio as a backup service when everything else isn't going to work. And it's good, but it's not as good as the other 87% of the time, which is why we have the fastest mobile product in the country because 87% of the time, it's running on gigabit wireless. I know that drives people crazy, but it's true. So cellphone Internet is cellphone Internet, and the best wireless companies in the world have the most wires, and we have the most wires.

You sort of mentioned that the tough timing of having all this sort of happened at the same time. The other thing that you're dealing with is ACP, which is also, I'm sure...

Yes. So slightly higher competitive environment. You've got an investment cycle. You've got ACP. What else do you want?

Right. That's all upside from here.

But it doesn't change the long-term trajectory of the company...

Yes. Yes. I guess what are your expectations for what happens with ACP at the congressional level? You're the biggest provider and participant in the program.

Yes. So people are watching what we do and what we say, and my hope and expectation is that ACP and its predecessor programs have been very successful in connecting low-income households and keeping them connected. So simply put, I think it's a bipartisan issue. I think there's support to make it happen. And I hope that leadership is willing to bring the issue to the table and get it renewed in a sustainable way, including if it needs modifications or whatnot. But I think it's been a good program. And my hope and expectation is still that it could get renewed and that it happens before too long because I think it will be disruptive if it goes too much further.

I was going to ask you if there's been any impact so far in the first quarter from some of these notices that the FCC has put out. And I think you've had to communicate with customers or potential customers around this.

We have. I think the -- and so that's just letting them know it's going to go away, and it's letting them know that we're going to work with them. We have ways to save some money, as you know. But I think you would say on February 8, we no longer could offer the affordable connectivity plan. And you think about that in terms of new customers. So clearly, there's less low-income customers who are benefiting from ACP at Connect, and so you have less there. But also customers that are moving either within our footprint or moving from another footprint into ours cannot transfer their affordable connectivity plan benefit. And so I'm not giving a Q1 outlook here because there's a tremendous amount of other activities that's taking place inside of the quarter, so don't misread me. But if the question is, are there less low-income customers connected today to broadband? The answer is yes, already, even prior to the program ending.

Any way for us to think about what happens as you move through April and into 2Q if this is not refunded?

Yes. There will be a meaningful impact to net additions for Charter and for others to the extent that ACP is not renewed. I don't think it changes at all our long-term trajectory. And I think we have ways that we can minimize that by saving the money elsewhere. But the reality is that there will be an impact to low-income customers if the program isn't renewed, but it doesn't change our long-term trajectory of where we go. And we have a large stable base of customers with or without ACP.

Understood. You're about a little over a year now into Spectrum One, which you've talked about it a few times already, saving customers money. And I'm a participant in those money-saving exercises, I'm happy to report.

How many lines do you have?

I have two. One free, still, and one I'm paying for.

Good. You must have other people in the household. So we're going to talk afterwards [ about how we can keep it going ].

I guess the question I want to ask, Chris, is how would you assess the impact and the success of the program at this point relative to what you were hoping when you launched it little over a year ago?

Look, Spectrum One has been a fantastic success. The retention rate of these free lines has been better than we've ever expected. And we knew it because the data usage was very similar to any other line. The porting was similar to any other line. And so the stickiness of the product, when you sit back and say, well, why wouldn't they? It's a better product. It's the fastest mobile product in the country. It works better with seamless connectivity in and out of Wi-Fi. It auto authenticates to our network, as you know. And even at $30, which is our retail rate, you can't -- it's an unmatched value and an unmatched product inside the marketplace. So of course, it sticks. I think the bigger question for Spectrum One and mobile lines, in particular, will be if you're in a temporarily depressed environment for Internet gross additions, you have less selling opportunity. That's natural, and that will move with Internet over time. But from a retention standpoint, it's been fantastic. It's been very good.

Has there been an impact positive on broadband? Or is the hopes of convergence driving down churn or maybe driving some connects? We, obviously, talked about the broadband results. There's a lot in there, but has this benefited that business yet?

It has. I'm good at arguing out of both sides of my mouth because I'd like to give both sides of the coin. On one hand, you could say, well, of course, churn is lower -- Internet churn is lower for a customer who has Spectrum One because there's a self-selection process that's going on that they like you to begin with. They took an additional product. They were going to turn less to begin with. And so somebody could argue, that's true. But now when you get to the type of scale of mobile lines that we have, I think that starts to whittle away at that argument. And I think we can safely say that having that value, having that quality product has lowered Internet churn. It's done a little bit on the gross addition side. It's a little bit harder to see on the gross addition side in the current marketplace where you've got all these other factors that we've talked about. But we do see a higher attach rate to new Internet sales of mobile than we had before, it continues to increase. So that would argue that it's having an effect, but it's hard to estimate how much the incremental impact has been to Internet today. I think that's the real opportunity going forward. We have, as you know -- we need to -- as successful as we've been on mobile, we still need to make sure that we have full brand recognition throughout the marketplace. This is not just a cheap alternative to mobile, it's actually the best alternative for mobile. And it's not even mobile, it's seamless connectivity. And until we can get that message fully soaked through, I think people take a look at it and say, well, if it's free for a year, if it's $30 at retail rate, could it be that good? The answer is yes, and word of mouth, like yours today, helps get that done over time, and I think it can be a big driver for gross additions of Internet over time. It could form a completely different class of product, which says, your broadband is not an ethernet into the house. It's not a single router off a cellphone Internet. It really travels with you wherever you go. And that's the promise and the hope.

Yes. Makes sense. Let's talk a little bit about the financial performance and outlook for the business. There's at least an expectation, Chris, and I think frankly, a pretty high degree of focus on EBITDA growing for Charter in '24. I know you don't give guidance, but can you at least help us think about some of the key swing factors that we should consider in shaping our expectations for this year?

Yes. I think the start, the big picture, we recognized the importance of EBITDA growth at all times, but particularly when you're inside of an investment cycle. So it matters to us to -- we understand that's put -- allow us the flexibility to go do these long-term investment programs. And so we're focused on that. We think about our revenue model. It's actually pretty straightforward to put together. That's the beauty of a subscription business. You have units and you have ARPU. And we have a stable amount of customer relationships with or without ACP. We have a fast-growing mobile business with lines like yours that will roll to a $30 price point, and that takes place during the course of this year. We have political advertising. And then we have the mobile business itself. Because of its scale and because the subscriber acquisition cost is a lower percentage of our operating cost for mobile, you have an improving EBITDA profile of mobile that gets built in. You have the significant operational efficiencies out of all the investments that we made in our service and sales infrastructure, which is now behind us. It's just beginning to take hold. And then we'll take a look for other expense management opportunities that exist inside the business. As I mentioned, one of the benefits of our operating strategy is it does provide financial headroom that might not otherwise exist. And we'll take advantage of that, too.

Yes. I was going to ask you actually. I think, Jessica, your CFO mentioned on the call that you'll be looking for additional efficiencies to help grow EBITDA this year. Do you have any update on that at this point?

Yes. I don't -- there's -- I don't think it makes sense to go through a litany of issues because there are plenty of opportunities. Each of our business units is going through and taking a look for opportunities that are small, some that are structural, some of that are large. Some of that will get implemented already right away and some of that will take maybe until the end of the year or even next year that are great ideas that just take a while to make sure that it's executed properly. I think what you need to know is that our guidelines around that are, we're not going to do anything that we wouldn't be proud of 2 years down the road, and we're not going to do anything that would impact our frontline service or sales capabilities now or in the future. And I think we have opportunities to do that in a way that's faithful to the long-term value creation of the business.

Yes. You touched on, Chris, that over the last kind of 12, 18 months, you guys have invested into the organization, particularly around your sales agents and call centers. You've also noted though, as we've talked about, the marketing improvements you'd like to see. So I'm wondering if you could just sort of reconcile that and talk about whether these investments have delivered the results you were hoping for.

Yes. The marketing improvements being it's just a different pitch and approach in the marketplace. I think our marketing is quite good. But we also need to be nimble and recognize what works, what doesn't work because it's a changing environment. So we look at all those things. But I think generally, the marketing machine is pretty good. The investments that we made in our frontline sales and service capabilities include compensation, benefits, training, and we did that in an environment coming out of the pandemic where the labor market was very difficult. It feels like a long time ago, but it was actually very difficult to get service. We had the benefit that it's all in-house, onshore, so we weren't relying on contractors or outsourcers to make that happen. But our point of view at the time was we wanted to make sure that our employees were hired by Charter, paid by Charter, had a career with Charter. And the benefit of that is, one, is they get more tenure, they get better at what they do. Think about yourself as a customer, when you call in, do you want the rookie? Or do you want the tenured agent? Of course, you want the tenured agent. And if they're committed to the company because they see a career and the opportunity to earn more, do better for their family, they're actually better for our customers in addition to their tenure. So that's all paid off. It's just the very beginning. Our attrition for sales and service frontline has never been lower that I've seen or measured. And we're now at a point where our tenure is back to where it was and starting to increase. And throughout all of that, our transactions per customer relationships have continued to decline and it's beginning to decline faster, particularly in an area like mobile as we get that tenure inside. So I think that's one of -- we can talk about cost saving opportunities, but the biggest expense driver and benefit for the company is providing better service. You get that through the investments that we've already made inside of our employees. And I think that plus the digitization of our systems provides operating leverage for many, many years to come. I think that's an untapped or not understood upside to our business, but others in the cable industry as well.

Okay. Makes sense. I want to ask you about the video business, Chris, because you, obviously, have -- Charter's sort of been on the front lines of trying to move the industry to what I think you would describe as the more consumer friendly approach. And you're trying to migrate really all of your programming deals. You've been very clear about that. You've done Disney. I think TelevisaUnivision as well. What does all this mean for Charter? I mean if you're successful, how does this translate into value for Charter shareholders?

Look, we've renewed more agreements than just those 2, so...

You can announce them here.

No, I'm not going to announce that. They're still our programming partners, and we do that together. Look, what we're after here is two things. It's value for the consumer and it's utility. And value means that if a customer is going to pay a lot of money for video, which has happened because the programmers took programming rates up, they insist on minimum penetrations, they insisted on packaging. The cost got high and then they turned around and sold that same content and sometimes better content, a la carte. It meant there was a reduction in value that took place. The second place is utility. So Xumo provides that, the ability to integrate your linear TV experience, whether it's from us or from somebody else, together with all of your direct-to-consumer and SVOD apps in a single place, authenticated behind the modem, unified search and discovery. And so the combination of those 2 allows us to start putting packages together that can tailor the market because we'll do better on rates, I think, over time. We'll have much more flexibility to package appropriately. We can carry the direct-to-consumer apps if the programmer doesn't want to go that way. And we can package it all together with Xumo in a way that provides utility to our connectivity services.

And are you confident you can migrate all of your deals over to these new structures that work for Charter and your customers?

Yes. Ideally, that's going to be through a combination of a traditional programming relationship and a hybrid distribution model with the direct-to-consumer. But at the end of the day, if a distributor says -- or sorry, if a programmer says, I would rather sell this product a la carte, exclusively, then to go provide that, then I'm okay with that. In fact, we're happy to distribute direct-to-consumer apps and we're doing that as part our -- these deals. But I'm happy to do that exclusively with the programmer as well if that's where they want to go. We have Xumo. We've got a great interface to be able to do that. And if that's where customers want to go or our programmers want to go, our customers, because of the way it's priced, maybe that's where they want to go. And for programmers, if they think the grass is greener on that side, I'm okay with that, too. We'll be happy to distribute it obviously at a margin, but we'll do that, too.

Couple of weeks ago, there was this new joint venture announced with a new sports-first streaming product coming to market and actually thought of you when I saw the news because of the battle you had with Disney last year. I guess my question, Charter has really had a lot of success with getting bundles, like you're probably the one most sort of nimble in bringing those to market. But you don't have the opportunity to sell this package of channels today. Would you like to have that flexibility? Do you think you should have that flexibility? What is your view on this product?

Let's start with the product. It's unclear -- we don't have a lot of the details, and I'm not sure that the deal is totally final, it sounds like either. But from what I hear, whether it's 60%, 65%, 70% of the sports content, I'm not sure it really scratches the itch for a sports fanatic or that a sports fanatics has no interest in news or entertainment. But leaving that aside, there are other ways that you could package around it. What I interpreted from the announcement is that three of the largest programmers decided that genre-based packaging is the way to go. And when I look at that from a distributor standpoint, I actually agree with that. The distributors have been saying that for a couple of decades now that we'd like to have the ability to do genre-based packaging. So if you step back, it's an admission from the programmers that, that is the right way to go together with a la carte, which is also something you thought you would never see. And I fully expect that we'll have the ability to distribute content in a similar fashion. And in the same vein, I think it's customer-friendly. The removing minimum penetrations, doing genre-based packaging, allowing for a la carte is very consumer-friendly. And so those notions, particularly when we're allowed to do the same thing, we're very much in favor of doing that. It's pro consumer. And I think Xumo providing that utility function can make it where it's a workable solution for the customer as well.

Okay. Let's talk a little bit more about your capital programs and your network upgrade. You're going to have, I think, a reasonable amount of your footprint upgraded by a high split this year. And you can correct me if I'm wrong, but my question, Chris, is when does that start to help the business? Because you talked about symmetric speeds. Jason Armstrong talked about the sort of super user. You're not -- at the beginning, you're starting to really add some footprint, get some real capacity.

Yes. So we are adding footprint -- significant footprint this year, in addition to what we already did last year. But in terms of measurable impact, I don't think you'll see measurable inside of this year. I think you'll maybe start to see it more next year. The more footprint we complete, the more vocal we'll become about asserting that marketing claim of full symmetric, market-wide in each of the DMAs. So we'll have the benefit of marketing claims. We'll also have -- once you get through a market, the operating cost, the service transactions and the capital cost on a go-forward basis becomes more efficient. And so we'll have that benefit. But I think the biggest advantage isn't just for the super users, I think because Charter, Comcast, Cox are all going on a DOCSIS 4.0 path means that you're going to have a ubiquitous, symmetrical, multi-gig capability across the entire country, which, for the first time, provides a scaled platform for product and software developers to develop new products that only -- that not only use that bandwidth and that data and that seamless connectivity, but actually require it. And I think that's good for all of our businesses. In fact, if you think about DOCSIS 1, DOCSIS 2, DOCSIS 3, DOCSIS 3.1, now DOCSIS 4, that's always been the case. But when you have a fully deployed network in front of consumers and in front of product developers, they'll develop the product that really needs and insist on having that type of capacity and seamless connectivity, which is new.

Yes. No, that makes sense. You also guided to continuing to build out the rural footprint. '24, I think, 450,000 new subsidized passings. Is that sort of the kind of the peak build rate? Or does that further accelerate as you look out over the next couple of years?

We're not constrained from a supply or from a labor perspective. In fact, we have a lot of our own in-house capabilities as well as to contractor capabilities there. But we are hitting our stride fully in terms of what we need to do to complete our commitments, and we're actually completing our commitments, our build commitments ahead of schedule.

You've had some pretty nice penetration gains in the early cohorts that you've -- and you've got some good disclosures, thank you for that, on the rural build. Any reason why these curves and the ARPUs you're able to generate aren't sustainable or indicative of the full project as we go through the next couple of years?

No. I'm kidding. I'll add to that. The terminal penetration, obviously, is going to be higher than what you're seeing, and you can see a steady movement up on terminal penetration. But one of the things that you also see is the additional uptake of video even wireline phone and of course, Spectrum Mobile, all of which adds in. So you have ARPU that's coming in at an early penetration of those products, which will rise, in a promotional period, which will rise. And so I think the goodness of those curves will continue for years.

Yes. I mean you're roughly around $100, I think, of ARPU or less?

Yes. No, the company average is closer to $120.

Yes, makes sense. Okay, let's talk about BEAD, which is -- we've got still a lot of uncertainty around what the rules are going to be. I know how you feel about building more cable. So we know where your ambitions are, but when you look at what's been put in place or what's being talked about at the state level, the NTIA level, are these attractive opportunities for Charter? Or are you feeling a little more skeptical at this point?

I think the build opportunity is generally very attractive. It's a question of what are the rules that come along with it. And a lot of the NTIA rules have been -- have developed over time in a way that's fine and favorable. But if we get into an environment where there's de facto rate regulation, that's not something that we're going to be able to move into that space. And so the states have an opportunity to request waivers, which I understand many are doing. And to the extent those waivers are granted in a way that's actually manageable for us, then I think you'll see us continue to invest in the BEAD space. I think the natural selection process will mean certain states ask for those waivers and others may not. And because the opportunity is so large, I think we'll have plenty of opportunity to go bid in states where it actually makes sense for large private capital from seasoned operators to go do that in a way that makes sense for us, too. And in those states -- and there probably will be several inside of our footprint. In those states where the BEAD rules are not conducive to private investment, most of those states we've got significant ongoing RDOF build, state ARPA grants. And so we're a good citizen in those environments anyway with or without BEAD.

Yes. When would you have more visibility that you could share with us on sort of the BEAD [ drop ]...

The timing for responses for those waivers is really not in our hands. So I think certainly by late this year, we should have a lot better visibility, but it still appears like it's going to take some time.

Okay. And how about timing on sort of CapEx around BEAD? What should we expect?

I think it will be hard until you get through the whole auction process around that in '25. I wish I could be more prescriptive, but we recognize that there's a certain limitation in terms of how much operationally can we really do and the overall size of the capital bill and our capital structure. And so we're watching all those things. I don't want to turn down attractive opportunities. I think that's not in the interest of shareholders, but we're going to manage through that with capital allocation, capital structure and the size and the quality of the opportunity that's in front of us.

Okay. So does that mean we're probably not looking at significant investment until '26, if it all plays out that way?

I think you could see investments starting in '25. And I think you can have clarity where we think we're going to go in 2025. I wasn't -- I'll reserve the right to check that with Jessica and our government affairs department, but I think we'll have clear visibility in '25. And I do think we'll be doing some build for BEAD inside of '25, even if it's prework.

Okay. I want to ask you about your CBRS trials because it is that something that -- I feel like it was a big focus, maybe 1 year, 1.5 years ago, and it's kind of died down a little bit among investors, but...

The attractiveness of CBRS has only gotten better. So we fully deployed to a single market, which is Charlotte. It's not a trial, it's a full market deployment. We're rolling out in the second market this year. It is true that as you take a look at everything else that we have going on, we have our hands full from network evolution, network expansion, convergence, video transformation. We're taking on a lot. CBRS itself is not that big of a capital-intensive project, but we're watching the overall size of the pie. And the returns for CBRS will be there today. They'll be there tomorrow. In fact, the more mobile lines we have, the better the returns get. So that's one where you can be a little bit more discretionary on the timing. So we're still moving ahead at a pretty good pace. But at some point, we'll want to go faster and we're not doing that just yet.

Okay. And my last question, Chris, before we wrap up. I wanted to at least ask you about the Bloomberg story from a few weeks ago about a potential interest in Altice USA. Anything you can tell us about that speculation in the press at this point?

So it's our policy not to speculate on -- or to comment on speculation around M&A. That hasn't changed. But even as late -- as recent as late last year, I was pretty clear that we stick to our guns on M&A in a space where we think we can generate value for shareholders, a space that we know well, that typically tends to be cable. So we do generally like cable M&A, but it has to be in a way that generates value for shareholders. And what I said back in November was when you think about all the cable M&A that we've done over the years, some of those acquisitions required us to reprice the product in the marketplace, which is a negative synergy. Some of those acquisitions also required us to invest more in the operating cost to get the service structure back. And that's also a dissynergy and sometimes capital as well. But the M&A that we've completed in the past always had the opportunity that if you made those investments, you had the opportunity to actually grow the target asset at a faster pace. And depending on that ratio of how much dissynergies are there versus the synergies and what's your opportunity to grow determines the attractiveness for shareholders. And sometimes, that means that the value of the company is worth its equity. Sometimes it means it's worth a premium to the equity. And sometimes it means it's not worth the principal debt. And so all those things factor into how we think about it. I would tell you that in this market climate, one, the bar for M&A has always been high. And in this market climate, it's probably higher. And we have enough to do already with all the different activities that we've got. But that's just a general statement. I'm not talking about any particular situation.

Understood. All right. Well, anything you'd like to add as we wrap up, Chris, and obviously, a lot of investors focused on performance this year for the company. Any last thoughts?

Yes. I mean I'd start by saying, we clearly recognize the uncertainty and a bit of volatility in the capital markets. We pay attention to it. It matters to us. But at the same time, when we think about the long-term potential of what we have, we have the best networks, we have the best products. I think we've got the best service. We save customers money. And we're investing in all that to make sure that we actually create even further distance for all of that. And so all of that ties to our philosophy of driving long-term free cash flow generation. That's how we're incentivized, it's how we're motivated, create value for shareholders and we're really committed to go doing that even in unique investment and competitive cycles, which we're clearly in today.

I really appreciate the time and thoughts. Chris. I hope you come back again next year. Thank you.

We'll be here. Thank you very much.

Thanks, everybody.