Good day, and thank you for standing by. Welcome to the Cable One First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today’s conference is also being recorded. Without further ado, I would like to welcome your first speaker for today, Mr. Steven Cochran, your CFO. You may begin.

Thank you, Carole. Good afternoon, and welcome to Cable One’s first quarter 2022 earnings call. We’re glad to have you join us as we review our results. Before we proceed, I’d like to remind you that today’s discussion contains forward-looking statements relating to future events that involve risks and uncertainties. You can find factors that could cause Cable One’s actual results to differ materially from the forward-looking statements discussed during today’s call and today’s earnings release and in our recent SEC filings. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, today’s remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles or GAAP. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today’s call is our President and CEO, Julie Laulis. With that, let me turn the call over to Julie.

Thank you, Steven, and good afternoon, everyone. We appreciate you joining us for today’s call. Given our exceptional track record of strong financial results and solid customer growth, we hope you’ve come to know Cable One as the team that delivers quarter in and quarter out, building upon our history of long-term consistent performance. This quarter, once again, provided results that exemplify our focus on the execution of our strategic initiatives. Compared to the first quarter of 2021, total revenues increased 25%. Adjusted EBITDA increased 25.6%, and adjusted EBITDA margin was 53.1%. While we are disappointed that our industry-leading results are not reflected in our current stock price, we will continue to execute on our strategy and raise the bar. With sustained HSD customer and ARPU growth, effective management of our costs, and focused capital allocation, we are well positioned to deliver on our long-term goals. And as a reminder, this is the first quarter in which we have deconsolidated Clearwave Fiber from our results. Looking first at our residential high-speed internet service, we added 163,000 customers on a year-over-year basis or 20.4% growth. On a sequential quarterly basis, when excluding the impact of the customers contributed to Clearwave Fiber, we grew by 11,000 customers. As we have said for the past year, it is logical to expect customer growth to return to a more normalized pre-pandemic seasonality. During the first quarter, we moved further towards the positive growth patterns we saw in 2019, which were in line with our expectations. Demand for our premium high-speed data products increased to new highs with 45% of our new customers selecting speeds at or above 300 meg and sales into gigabit service reaching 16% for the first time. These new sales combined with upgrades by our existing customers and the offering of unlimited data resulted in year-over-year HSD ARPU growth of 3.5% for the first quarter of 2022. As we discussed on our last call, we began migrating customers at the end of last quarter from our 100 meg speed tiers to our 200 meg speed tier, doubling their speed for an initial increase of $5 per month. We expect to fully realize the associated ARPU lift from this migration in the second quarter. Turning to our network. Reliability is at the forefront of our long-term strategy and critical to ensuring a premium customer experience. Because of this, we continue to make cost-efficient capital investments as part of our efforts to ensure that the network is never a barrier to growth. While usage has grown at 28% CAGR for the past five years, reaching an average of approximately 560 gigs per customer per month in the first quarter of this year, our downstream and upstream utilization during peak hours never exceeded 21%. Moving to commercial. Business services revenues were $76.5 million, increasing 26.7% year-over-year. When excluding Hargray, CableAmerica, and the operations contributed to Clearwave Fiber, business services growth was 7.3% year-over-year. We continue to see growth, not only from new customers, but also from existing customer demand for higher-tiered product offerings. Business services benefit from a marketing promotion, encouraging customers to increase their internet fees, which contributed to the increase in year-over-year Q1 ARPU of 7.7%. Our business services team has also been deeply engaged in integrating our recently acquired brand and unlocking value. Most recently, we redeployed Hargray talent in support of Hosted Voice services across our larger footprint. This is just one way in which we are leveraging the expertise of our newest associates. With an estimated total addressable market of $1.2 billion, a product portfolio designed to meet the evolving needs of businesses of all sizes and our commitment to delivering white glove service, our business team is laser-focused on continuing to build and defend a strong competitive position in our markets. We are very excited for the robust growth opportunities ahead for business services. Looking at our unconsolidated investments. In total, residential and business data customers grew by approximately 12,500 or 3.2% on a sequential basis from Q4 of last year. The continued growth for our strategic operating partners highlights the value that they bring to Cable One, including the opportunity to share best practices, which enables us to better serve our customers. Keep in mind that Clearwave Fiber net adds are now included in this figure. As a reminder, our Investor Day presentation, which provides more detail on our portfolio of unconsolidated investments is available on our IR website. Transitioning to integrations, teams across the company are making excellent progress, bringing our recently acquired brands together, working diligently to execute on our integration roadmaps. We continue to learn and adopt best practices and solutions from our acquired brands. Whether it’s the company-wide incentive program we implemented from NewWave, the innovative video chat solution from Fidelity that proved essential to connecting and servicing customers during the pandemic, the very recent adoption of Hargray’s HR platform, or the incredible talent that has joined our company across all of our acquisitions, we have many examples of the tangible and intangible values these companies bring to Cable One. Our integration efforts have also benefited from the formation of Clearwave Fiber. As mentioned previously, with the spin-off of Clearwave Fiber, we are seeing evidence of cost savings associated with the Hargray integration with more to come. While Clearwave Fiber is focused on accelerating fiber to the premises investment opportunities, Cable One is expected to benefit from reduced capital intensity and therefore improved free cash flow. During the first quarter, we saw the first signs of this with Cable One’s capital spending as a percent of adjusted EBITDA declining from 48.8% during the fourth quarter of 2021 to 43.9% in Q1 2022, even with a large upfront modem spend. Before I hand the call over to Steven, I’d like to touch on two other items. I’m pleased to share that later this month, we will be awarding $125,000 in grants to non-profit organizations in our markets through the company’s charitable giving fund, which is now in its second year. The fund, which annually awards $250,000 in grants across our footprint, concentrates support in the areas of education and digital literacy, hunger relief, and community development. We are humbled and honored to partner with these organizations to support the communities we serve. Next, I want to take a moment to recognize Steven. As many of you may be aware, Steven recently announced his intention to step away from his role as CFO of Cable One. While he will remain with us until January 2023, serving in an advisory role and working closely with our next CFO, Todd Koetje, this will be Steven’s final earnings call. Over the past four years, Steven’s financial discipline, business acumen, and strategic expertise have enabled Cable One to achieve industry-leading growth and enhanced our opportunities for continued success in the future. Taking over as CFO, effective July 1, will be Todd Koetje, our current SVP of Business Development and Finance. Todd joined the company in September of last year after spending 21 years in investment banking, most recently as the former Managing Director and Group Head of the Technology, Media, and Telecommunications Capital Markets team at Truist Securities. His extensive financial experience and background in the telecom industry, as well as his deep understanding of our business, will be invaluable as we continue to execute on our long-term strategy of delivering exceptional growth and strong operating results. Todd’s core value team-oriented approach to work and alignment with our strategy have made him a great fit within our organization. So we are exceptionally pleased to welcome him to his new role with Cable One. On behalf of the Board of Directors and all Cable One associates, I would like to thank Steven for his exceptional contributions to the company and congratulate Todd, who you will hear from on our next quarter’s earnings call. And now, Steven.

Thanks, Julie. Before I begin, I’d like to remind everyone again that we contributed certain fiber assets to the newly formed Clearwave Fiber joint venture on January 1. Such assets generated $14 million or approximately 3% of our total revenues in the fourth quarter of 2021. Our reported first-quarter 2022 results do not include these operations. Additionally, the first quarter of 2021 did not include Hargray or CableAmerica operations, while the first quarter of 2022 does. Starting now with revenue. Total revenues for the first quarter of 2022 were $426.7 million compared to $341.3 million in the prior year quarter or a 25% increase. This increase, which included $76.9 million of revenues from Hargray or CableAmerica operations, was fueled by a residential HSD revenue increase of 25.4% and a business services revenue increase of 26.7%. When excluding Hargray or CableAmerica, as well as the impact of the Clearwave Fiber deconsolidation, total revenue growth was 4.2%, residential HSD growth was 8.7%, and business services growth was 7.3% year-over-year. As a reminder, we expect to fully realize the ARPU lift from our annual video rate adjustment and HSD migrations with the second quarter financial results. Residential HSD PSUs grew by approximately 5,000 since the beginning of the year or by 11,000 when accounting for the PSUs that were contributed to Clearwave Fiber. Operating expenses were $119.4 million or 28% of revenue in the first quarter of 2022, compared to $101.5 million or 29.7% of revenue in the prior year quarter, a 170 basis point improvement, driven largely by a $5.4 million decrease in programming costs. Selling, general and administrative expenses were $87.8 million for the first quarter of 2022, compared to $69 million in the prior year quarter. These expenses were 20.6% of revenues in the first quarter of 2022 compared to 20.2% of revenues in the prior year quarter. Net income in the first quarter was $171.5 million, which included a $22.1 million non-cash gain on the Clearwave Fiber transaction and an $84.6 million non-cash gain on the fair value adjustment associated with the call and put options to acquire the remaining equity interest in Mega Broadband Investments. As a reminder, the MBI options are subject to mark-to-market accounting on a quarterly basis. Until these options are exercised or expire, any changes in the assumptions used to determine their fair value could increase or decrease the resulting valuation, which in turn could cause significant non-operating fluctuations in our GAAP financial results from one quarter to the next. Net income per share on a fully diluted basis was $26.85 per share, inclusive of the non-cash gains just mentioned. Adjusted EBITDA was $226.5 million for the first quarter, an increase of 25.6% from the prior year quarter. Our adjusted EBITDA margin was 53.1%. Please note that we are not able to provide adjusted EBITDA growth rates that exclude the impacts of Hargray and CableAmerica acquisitions and the Clearwave Fiber deconsolidation due to the challenges in providing the required non-GAAP reconciliation when taking into account corporate allocations that were part of Hargray’s financial statements in 2021. Capital expenditures totaled $99.4 million for the first quarter of 2022, which equates to 43.9% of adjusted EBITDA. During the quarter, we invested $15.7 million of CapEx for network expansion and $3.4 million for integration activities. Approximately $8.5 million in our capital spend is driven by a proactive pull forward in modem spend to ensure we have materials to support our continued growth in 2022. While capital spend will vary from quarter to quarter, overall, nothing has changed in our long-term capital deployment strategy. Adjusted EBITDA less capital expenditures was $127.1 million for the first quarter and increased 17.1% from the prior year quarter. In the first quarter of 2022, we distributed $16.7 million in dividends to shareholders and repurchased 47,800 shares bringing the total capital return to shareholders during the quarter to $86.4 million. Under the current Board authorization, we had approximately $75 million remaining for share repurchases at the end of the first quarter. We will continue to be opportunistic with how we allocate our capital. From a liquidity standpoint, we had approximately $368 million of cash and cash equivalents on hand as of March 31, and we continue to generate significant free cash flow. At quarter-end, our debt balance was approximately $3.9 billion consisting of approximately $2.3 billion in term loans, $920 million in convertible notes, $650 million in unsecured notes, and $5 million in finance lease liabilities. We also had approximately $449 million available for additional borrowing under our revolver as of March 31. Overall, our debt to last quarter annualized adjusted EBITDA after netting cash on hand against debt was at 3.9 times as of March 31. Also, after the quarter ended on April 1, we contributed our Tallahassee assets in exchange for cash and equity interest in MetroNet Communications totaling $14 million. Lastly, as mentioned on last quarter’s call, we continued to unwind our cable video offerings. While we estimate this initiative reduced video revenue by approximately $1.3 million in the first quarter of 2022, more importantly, it is helping prepare our network for the next generation of high-speed data enhancements, reducing the amount of time and energy spent focusing on an unprofitable product offering and is expected to continue to help improve our margins. With that, Carole, we are now ready for questions.

Thank you, sir. Our first question comes from the line of Frank Louthan from Raymond James. Please ask your question.

Great. Thank you. Just want to start with the JV contribution. I see that subscriber decline there and about 6,000 or so subs kind of go away. Can you give us a little bit more color on the nature of those properties, the kind of penetration they have and why those were selected for the JV? Thanks.

Sure. So the Clearwave part of Clearwave Fiber was the entire asset that we bought as part of Clearwave, net of the tower business associated with the carriers. We looked at that piece as more of a part of the overall Cable One strategy, that’s more a nationwide effort to sell fiber to the tower to the various carriers. And then on the Hargray fiber piece, it was really Hargray fiber, which was a concept within Hargray but not a legal entity within Hargray. It is what they had done to do their own version of network expansion on a fiber basis. So mostly, it was the markets that were inclusive within that. And the best – we also pulled out the tower business associated with that too. So it was kind of handpicking the assets that fit that business model and had been part of what they were doing; high capital intensity, new markets, relatively low margins, and extensive expansion capital versus legacy markets would be the way I would describe it. It’s primarily a business services business today. That there was a 6,000 resi HSD customers, but that was a much smaller piece of the overall business compared to the business services side. Certainly, launching residential for them is part of what they’re doing in a number of those markets. And I mean it will certainly be fairly capital intensive on their part and one of the reasons we thought it made sense to deconsolidate from our base business.

And going forward, will the focus be more business or residential? And what else do you anticipate contributing on an annual basis either in cash or in other assets?

Yes. So we would expect – so one, it’s both. Certainly, we want to continue to expand their commercial business, but our ad residential as a bigger component of that. But there’s no expected ongoing commitments. There was over $320 million of cash contributed by our partners. There’s no leverage on it today. So between the cash and the leverage capacity, which will grow over time as that business grows, we wouldn’t see putting more cash in that unless there were significant M&A opportunities that they chose to pursue that profile more so, we have the opportunity, too, but we certainly have no obligation to, and certainly can have impact on whether that would happen or not.

Our next question comes from the line of Greg Williams from Cowen. Please ask your question.

Great. Thanks. For Steve, I just wanted to say that it was a pleasure working with you and best of luck. I did want to ask about the 5,000 subscribers you grew on the resi data side. Is that apples-to-apples as I think about the 2,000 subscriber adjustment upwards or Hargray’s? So how many subscribers came through the door on residential data? It seems like it would be more like 3,000, about 5,000? Maybe I’m missing something there and you can help me, that’d be great.

Yes. Greg, the number – go ahead. Let me just answer that one first and then we can go, and thank you for the kind words. I appreciate that. The net ad was 11,000. So if you back out what was contributed and the 2,000 adjustment was actually put into the starting number too. So from a true organic growth standpoint, we added 11,000 new customers during the quarter.

Okay. Got it. And then I’m just asking if – are you seeing any encroachment on fixed wireless? I know you haven’t in the past, but there were some big numbers by Verizon and T-Mobile taking roughly half the net ads in the quarter. Every ISP during earnings season has been rather dismissive. So you guys are more rural. I’m just wondering if it’s coming from you, and if not, where do you think it’s coming from?

Yes. Do you want to go?

Go ahead. I’ll add in.

Actually, I have a diabolical plan that since this is Steven’s last earnings call that he should have to answer all the questions. But first of all, let’s just review our competitive footprint. We would consider about 29% of our total footprint to have another provider who can offer 100 megs or greater and about a smaller subset, less than 20% or around 20% fiber to the home competition. Fixed wireless is certainly something that we have our eye on. We are actually – we have some associates who are customers of fixed wireless so that we can keep an eye on their speeds and the experience of buying and maintaining that service. Our overlap, to the best of the information that I have with T-Mobile is actually quite small and smaller than other operators you may know. So at this point in time, I don’t expect to see them. There is a movement in our market, but it doesn’t mean that they won’t get there over time. But also over time, their network is going to be needed for mobile customers versus fixed wireless. So for us, it’s really not an issue at this point in time. Quite honestly, my assumption is that customers are coming from more urban areas, regardless of what said.

Yes. And the only thing I would add to that is implying, did they come from us? Obviously, our numbers are still really consistent with where we were in the first quarter of 2019. And in 2019, pre-pandemic, that was the highest growth rate we have had after becoming public. And so – and probably even before then. And so clearly, we haven’t seen a pullback at all, and we’re still what we would’ve considered kind of what was the accelerated pre-pandemic level. So we’re not really feeling like they’re coming from anywhere that we’re losing anything, because we’re still kind of growing at the rates we saw before them.

Our next question comes from the line of Steve Cahall of Wells Fargo. You may ask your question.

Thank you. So in Q1, with that 11,000, I think that’s about 1.1% sequential growth. Do you feel like you might be able to annualize that rate? Or do you have any kind of outlook maybe for the full year in terms of net ad growth? And I know you had the upgrade to make the base 200 megabits per second for that extra $5. Did you see any elevation in churn on customers where you put that modest speed and price increase through?

I’ll start with the second question and then will move backwards. Yes, Steven, the churn is still at basically historically low levels. So the churn is typically driven quite honestly, from video rate adjustments. And given our low video base, we’re less inclined to have that issue than maybe other operators. But quite honestly, customers got double the speed and double the data allotment for that increase. And so, so far so good and really looking forward to seeing those results flow into our ARPU in the second quarter.

Yes, I would add to that that we did give the notices to people that were moving into the 200 meg. They did experience the price move up. And so what you saw from a growth standpoint reflected that all of these customers knew it, and we still hit the growth targets that we did, and all we got was no revenue out of it so far. And so all of that will be coming in the next quarter as well as the video revenue. So the fact that, I mean, I know people were worried about the churn impact of this move, because it’s the first time we’ve had even something that approximates a rate increase in a long time. But the subscriber impact, we’re kind of through that piece of it already. So I think that’s encouraging.

And I would say, there’s a difference between price and value.

And on the second question, I think we’ve continued to point to 2019 as a full year. We also believe that seasonality is going to return; that is our best guess. And so if it looks like it did pre-pandemic, then you have a pretty strong first and third, a worse second and so forth. That’s what has historically been the case. We haven’t seen that for the last two years. So I don’t know that any of us can say with confidence that we know these things are happening, but that would be our anticipation because things feel a lot more normal than they did even this time last year or six months ago.

Great. And then, sorry if I missed this earlier, but do you have a target for growth in passings this year maybe both organic and total?

Yes. I wouldn’t say we’ve ever kind of given that up. I mean, I think you can look at historical and get a feel for what we’ve done. We have some that’s coming through the network expansion that we’re doing. That’s captured in the network expansion capital that we discussed. And we have some that come from just new home growth. And I think we continue to be fortunate that we’re in a lot of markets that are growing. And because of that, we get that. So we don’t really give that as a target, because it’s not something that we completely control. We are certainly opportunistic when passings arise and try to take advantage of them, but I can’t say that we actually target what those are going to be; we more take advantage of those.

You are next, Brandon Nispel of KeyBanc Capital Markets. Your line is open.

Okay, great. Two questions. Julie, you’re going to hate this question because it’s on video, just to deal with more strategy. But so in your filings, you guys have programming expense, the percentage of video revenue going up. So in the mid-60%, it’s been going up for the last couple of years. You guys take rate regularly, but it’s not all offset from a margin standpoint. And I guess, when do you just consider exiting the business? And when and if you do that, does it change your view on whether or not to bundle something else with your broadband service like mobile? Then question for Steven, EBITDA margins were up sequentially despite this video rate mismatch. You have a big HSD price increase coming for those 100-meg customers moving up. I mean, what factors do we need to keep in mind when modeling EBITDA margins for the remainder of the year? Thanks.

Sure, sure. Yes. So on the EBITDA question, clearly, the contribution of the Clearwave Fiber assets, which were lower margin assets helped impact that. We also had a significant portion of the management team at Hargray who had stayed with us through the end of the year. Many of them went over to Clearwave Fiber, and some of the others left. So I would say it was a bit of – part of what the strategy was with Clearwave Fiber was to literally take the high capital intensity, lower margin business that has the potential to grow really high and put that in an entity where it has the ability to invest heavily and grow quickly, but do it in a low margin environment without kind of the pressure of the public company view of needing to be higher margin. And so that’s what’s reflected there. I think, as we move forward, clearly, the HSD ARPU impact will – there’s really none of that in the first quarter because of the timing of the way some of the unlimited rolls-off for those customers; we really got no ARPU lift tied to that particular move in the first quarter. So we’ll get it all in the second quarter. And on the video side, we essentially get the equivalent of one-sixth of the rate increase. And while we don’t pass – we don’t try to maintain margin percentage, we try to more than maintain margin dollars on a per-customer basis. So making sure that on a fully EBITDA basis, not just a programming cost basis, that we’re passing through all the incremental costs that’s going to come into a year so that we’re not stepping backwards on an individual customer basis. Then Julie strategy – the bundling strategy first?

Yes. So would we consider bundling something else with internet? I think the answer to that is, yes, whether that’s value-related items, which I feel like we already do it as we’re offering unlimited data as an example. But are there other products that will be coming down the line after taking advantage of this super robust pipe that we have directly into consumers? Not sure what it will be. We’ll watch and see. But for sure, it’s going to be something that is profitable, not video, and that we control our destiny with, where we own the customer; I think that’s what we’d be looking to bundle, risk our super reliable HSD product.

Our next question comes from the line of Jay Li with MoffettNathanson. Your line is open.

Hi, thank you. So it sounds like from the questions so far, you anticipate a pretty normal activity level back in 2019. I’m curious if you could comment on just kind of break it down growth at environment, the churn level, or even just competitive dynamic. Has that all returned to a pretty normal level for you? In data, obviously, different from the experience of some of your peers. So maybe you comment on maybe contrast to why the difference in how you’re experiencing right now.

Yes. We talked about that a little bit last quarter that we seem to be experiencing something different than others in that throughout 2021, our connects remained high. They were still robust, even though churn remained at low levels. I’d say that, generally speaking, connects and churn are continuing at that pace. I mean, churn is lower than it was in the pandemic. And quite honestly, we know that we did benefit from moves in our markets. Our moves in our markets and what our markets look like have typically been below national average. But starting in 2020 and throughout, if you can call it the pandemic for at least those two years, our moves escalated above national average. And they still are, although, coming back in line, which is where we’re getting this rhetoric around, we think we’re starting to look normal again, where we think that there’s going to be the normal seasonality, the normal pattern, the things that we love about this business that so predictable. We think we’re coming back to that.

Got it. And just a quick follow-up on, I know AT&T is in a fiber pricing strategy. Any comments given there’s some overlap there with your footprint, any comment on your view of that strategy versus what you guys are doing?

Yes. So half of our footprint is covered by AT&T, half by CenturyLink, a teeny tiny portion Frontier. We are not seeing anything out of AT&T or CenturyLink, quite honestly. We have seen Frontier doing builds. They seem to be the biggest mover out of those three. And for us, they are a – as I said, a teeny tiny piece.

Yes. And on – I mean, CenturyLink, we certainly have not seen much at all. AT&T, we haven’t, and clearly, they’re being active. And I think based on everything you read, their activity is much more focused on areas that were originally fiber to the curb that they’re taking fiber to the home. And that makes sense. It’s the quickest way to get more fiber homes. And because of that, those were heavy suburban areas when they did that, which means they’re not ours. Will they eventually come to our markets or the ones that they’re not already in because if you think of our fiber competition, they’re half of what we have today from a fiber competitor standpoint? And that was all part of their obligation to build 13 million homes as part of the DIRECTV deal. And so we saw that in the Gulf Coast and some of the Texas properties and stuff. And so we’ve seen that we’ve been through it. We managed to grow through that. And so we expect to be prepared to be ready to do it again, but we think what we constantly talk about is there’s competition coming eventually someday, maybe not in all of our markets, but certainly in more than there are today. But it’s always going to be slower and lower than it is in the rest of the industry and maybe never in parts of our markets. And we think that’s one of the pieces that people don’t completely understand is it’s not that we’ll never see competition, but we’re always going to see it in a less intrusive way than what the rest of the industry does.

And we also are pretty confident in where we’re getting our customers. And so we have competitive intelligence on that. And during the pandemic specifically, we got customers from everyone. We got customers from wireless only. We got customers from DSO, we got customers from fiber. We got them from all types of technologies and types of competitors. And I think that goes to having a reliable service that is robust and takes care of the customer’s needs. We have a deep knowledge of these markets. We aren’t new entrants. We know them. We are their neighbors.

Thank you, Julie.

And we have a follow-up question from the line of Brandon Nispel with KeyBanc Capital Markets. Please ask our question.

I had to come back in and ask about the buyback. This quarter, you guys spent $70 million. What’s the intention for the remainder of the year? Or how much are you authorized to buy back in your stock? Thanks.

Yes. So I said in the script that we have $75 million left of the authorization. So I think our intentions are always to be opportunistic, which is what we’ve always said about that component of our capital allocation strategy. We talk about a consistent growing dividend, investing in network, investing in growth, and being opportunistic as it relates to the share purchase side. Obviously, Julie mentioned in her script portion, that we’re certainly disappointed with where the stock is from the standpoint of it doesn’t make sense to us. But that also presents an opportunity for us to deploy our cash into something that we’re huge believers in.

Our last question comes from the line of Hudi Miller of GoldenTree. Your line is open.

Hey Steven, Julie, thanks for taking the question. So two quick follow-ups for me from some earlier points. I think a year ago, you guys said that your fiber overlap was 14%. And I recall you said today is 20%. How do I think about how much of that is inorganic versus geographies you guys acquired versus new build? And then if that 14% went from 20% in like 12 months, where can we see that going in the next 12 months?

Sure. Yes. So I would say there are actually three components. You mentioned two of them. One of them is clearly buying stuff. Some of what we bought has had an impact on that. I would say actually the biggest impact we’ve had is just our own focus on getting it right. As you saw, though, the overall competitive dynamic hasn’t moved that much. And so we’ve seen a little bit of upgrade activity, a little bit of new market entrance, but mostly what we’ve found is where we’ve gone back and found where people actually have fiber. And I would say we actually err on the side of if there’s fiber in the geography, then we have those fiber homes, even though because of the nature of the phone upgrades and what they are, they aren’t necessarily all that. So I would say a lot of it, as we’ve mentioned on previous calls about the competitive mindset and digging deeper and understanding every market, just even in the time I’ve been here, if you look at the data we get on the competitive footprint today compared to what it was then, it’s unbelievably different and way more focused and down to the really small communities and even within the communities down into the neighborhoods and a better understanding of all of that. So that’s the biggest component, honestly, of the increase in this last year, with some going to the M&A piece and some going to just some fiber overlaps. I would say, the build itself has been a portion, but it’s a relatively small portion of the change in the last year.

Agree. And then it has really put a focus on competitive mindset for at least the past two to three years. And boots on the ground intelligence has just ramped up. And so we’re just getting better information about what is. That’s not to say there isn’t some building either. I mean, again, the overlap with Frontier, clearly, we’re seeing building.

Got it. And I think you said that the Frontier overlap was small and you’re seeing most of the build from AT&T. Is that right?

I’d say I’ve seen most of our footprint today – I mean, if you took the 20, she talked about over 10 of it is AT&T and that goes historical, not what’s happening currently. And I would say, Frontier is where we’ve seen the most activity. They’re also the smallest from an overlap standpoint of any of the ILECs.

Got it. And then Steve, you talked about M&A for a minute. You guys spent a lot of time talking about the non-consolidated investments on a balance sheet at the Investor Day, a few months ago. With Mega specifically in that put call agreement and where valuations have come in on the space. How are we supposed to think about that investment as it sits here today?

Well, I think the way I would think about it is it’s growing nicely and we own 45% of it. So we’re participating in that growth. We have a call that we can choose to exercise sometime between the middle of 2023 and the middle of 2024. If we choose not to do that, our partners have the opportunity to go sell that asset and we could theoretically participate. I mean, we would participate in the upside created through that venture, or in 2025, they can put it to us at a lower multiple. And so I think for us, we’re looking at where we stand today, where we’re trading today, and what the best use of cash is. I would tell you, if we weren’t buying shares back, we would be thinking about solidifying the balance sheet to make sure we’re in the best position to do this. But when we can buy Cable One at the price we can buy it, we just don’t think there’s anything better to invest in. And so right now that’s where we invested the dollars. It doesn’t mean that we won’t figure out a way to do Mega sometime, which I would argue is probably more likely in 2024 than in 2023. But today, all we can do is control how we operate, how we execute, how we grow. We can’t control the stock price. And so if the stock price isn’t where it needs to be and we have the opportunity to buy that at a much lower valuation than potentially where we can do other M&A, then that’s what we should do.

Great. Thanks.

Sure.

There are no further questions at this time. I will now turn the call over back to our CFO, Mr. Steven Cochran for closing remarks.

Thank you, Carole. I want to thank Julie and the entire Cable One team for all their support over the past four years. I’ve really enjoyed my time at Cable One and will continue to work with Todd, our next CFO, to ensure a seamless transition. Todd and I will both be attending the JPMorgan TMT Conference later in May and the Wells Fargo Streaming Day in mid-June. We hope to see many of you there.

Thank you, Steven. We are sincerely grateful for all that you’ve done since joining the Cable One family. My thanks also go out to our associates who continue to execute at the highest level so that we can stay true to our purpose of connecting our customers and communities to what matters most. As we’ve said, since our spinoff nearly seven years ago, our focus is on long-term results, and that remains true today. Despite the macroeconomic environment in which we find ourselves, I have the utmost confidence that we will continue to grow the business and provide excellent long-term results for our investors. We appreciate everyone joining us for today’s call. Thank you.

This concludes today’s conference call. Thank you again for participating. You may now disconnect.