Optimum Communications, Inc. Q4 FY2025 Earnings Call

Greetings. Welcome to Optimum Communications, Inc.'s fourth quarter and full-year 2025 results conference call. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Note that today's conference is being recorded. At this time, I will turn the conference over to Sarah Freedman, Vice President of Investor Relations. Sarah, you may begin.

Thank you. Welcome to the Optimum Communications, Inc. Q4 and full-year 2025 earnings call. We are joined today by Optimum Communications, Inc.'s Chairman and CEO, Dennis Mathew, and CFO, Marc Sirota, who together will take you through the presentation and then be available for questions. As today's presentation may contain forward-looking statements, please carefully review the section titled “Forward-Looking Statements” on slide two. I will now turn the call over to Dennis to begin.

Thank you, Sarah, and good morning, everyone. Before we begin, I want to thank all our teammates across Optimum Communications, Inc., particularly our network and frontline teams. Their proactive preparation and disciplined response during the multiple winter storms that affected the majority of our footprint in early 2026. Our teams worked alongside local, state, and federal authorities as well as power companies to mobilize personnel, equipment, and critical infrastructure. This focus defined by our one. 2025 was a year of meaningful transformation for our business. We sharpened our focus on core priorities, strengthened execution to drive operating efficiencies, enhanced network quality and reliability, and made intentional decisions to elevate the customer experience. This foundational work was critical as competition intensified across nearly every market and promotional activity reached unprecedented levels. Against this backdrop, we took a balanced and disciplined approach to execute our objectives and remain firm in our go-to-market and base management strategies. Turning to slide three, you will see that our fourth quarter financial results reflect that focus. While total revenue declined by 2.3%, connectivity and all other revenue grew 2% year over year. Broadband subscriber results reflect both the intensity of the competitive environment and our conscious decisions to prioritize sustainable pricing and returns. We delivered our best performance on video net losses in the last several quarters, supported by lower video churn and growing penetration of newly launched video tiers. At the same time, we moderated the pace of fiber migrations to balance near-term margins and cash flow. On mobile, we strengthened the quality of our mobile customer base, which contributed to improved mobile churn in the quarter. Looking at customer economics, broadband ARPU grew 2.8% and residential ARPU grew 0.4% year over year. These results demonstrate continued progress in product mix retention, rate actions, and pricing discipline despite market dynamics. In the fourth quarter, improved gross margins combined with cost discipline contributed to a meaningful uptick in adjusted EBITDA. Consistent with our guidance, adjusted EBITDA grew nearly 8% year over year to just over $900 million, representing our first quarter of year-over-year adjusted EBITDA growth in 16 quarters. Adjusted EBITDA margin expanded to over 41%, up 380 basis points, and gross margin reached approximately 70%, up 180 basis points year over year. Adjusted EBITDA growth reflects nearly $60 million of year-over-year operating expense reductions, driven in part by continued improvements in customer experience and operational performance. Our field dispatch rate improved 19% year over year. Our seven-day customer care repeat rate reached its lowest levels ever in Q4. And we ended the year with a Net Promoter Score 11 points higher than when we started the year. We further improved efficiency through the divestment of noncore assets, including the i24 News business in December and the sale of our towers business earlier in the year. Our disciplined execution and capital management drove cash generation, resulting in free cash flow of approximately $200 million for the quarter. In the fourth quarter, cash capital expenditures stepped down 28% year over year, achieving approximately 13% capital intensity, while growing our total passings footprint by 1.8% year over year for the full year. Overall, the fourth quarter reflects the progress we made throughout 2025 to improve the business, drive efficiency, and reset our foundation. With that context, let us turn to our full-year 2025 results. Slide four outlines the commitments we set early in the year and how we successfully delivered on them while remaining focused on controlling what we can control. Full-year revenue came in at approximately $8.6 billion. Broadband ARPU grew 1.6%. Programming and direct costs, along with other operating expenses, were each $2.6 billion. Notably, we made strategic and sometimes difficult programming decisions designed to strengthen the overall economics of the video business while remaining focused on customer needs. We completed several major programming agreements that provided customers with the content they value, increased flexibility and choice, and reinforced cost discipline, resulting in improved video churn and gross margin. Full-year 2025 adjusted EBITDA was $3.4 billion excluding the divested i24 News business, or $3.3 billion on a reported basis. Cash capital expenditures totaled roughly $1.3 billion and we added 177,000 new passings, slightly exceeding our target. Overall, our full-year 2025 performance reflects the deliberate trade-offs and disciplined execution across the organization during a challenging operating environment. Importantly, we entered 2026 with a simplified operating model, improved cost structure, and a clearer path to strengthening our performance. Let us now turn to slide five to review our 2026 priorities, which are centered on further simplifying how we operate to deliver greater customer-first and employee experiences. We are focused on improving our broadband trajectory, simplifying our product portfolio by offering fewer speed tiers, transparent pricing, and driving increased attachment of value-added services. This includes rolling out our refreshed mobile offer to drive deeper convergence and putting greater emphasis on our new video tiers. Mobile convergence serves as a key driver of improved broadband retention and residential ARPU. Following the investments we made in mobile in 2025, we expect that mobile along with other value-added product bundles will reduce churn and increase customer lifetime value. It is important to highlight that our simplified go-to-market strategies reflect testing and trials we started in select markets in late 2025, which showed encouraging results in December, and which we will continue to use to inform our broader 2026 strategy. Improving our broadband trajectory directly supports our second priority of maintaining financial discipline in 2026. Our approach begins with a continued focus on base management, including proactive churn reduction, targeted competitive responses in areas of elevated pressure, a customer loyalty program, and the use of price locks for certain subscriber cohorts. We will also continue to drive product margin expansion across the portfolio. Video is a good example. Industry-wide cord cutting and shifts in consumer behavior have contributed to significant video revenue decline since 2022. Despite this, our video profitability in 2025 was higher in absolute dollars than in 2022, and video gross margins were more than 750 basis points higher in the full-year 2025 compared to 2022. This performance reflects our disciplined approach to programming costs, margin management, and the introduction of flexible packages that resonate with our customers. Furthermore, we will continue to deploy advanced AI tools and automation across the organization, including in network operations, customer service, marketing, and sales. Specifically, we are increasingly using AI tools to support our frontline teams and help improve their productivity, which in turn leads to better employee and customer experience. For example, as a result of our partnership with Google, millions of customer calls are now routed through Google CCAI, which analyzes customer sentiment and agent interactions to identify opportunities for continuous improvement and best practices across our care organization. On the network side, we leverage access network automation, which ingests network telemetry and operational data, including trouble tickets, and applies AI to more precisely identify the location and root cause of a network issue. Taken together, these capabilities help us resolve problems faster and proactively, reduce recurring issues, identify opportunities for self-service, and reduce contact rate and service, which enhance efficiency and improve our overall cost structure. Finally, investments in these tools and automation combined with changing business demands allow us to continue to evolve our workforce and organizational structure. In late 2025, we expanded partnerships with leading third-party service providers to rationalize and consolidate elements of our field services and retail operations, improving accountability and driving operating efficiencies. We will continue to evaluate opportunities, both internally and with key partners, to ensure we have the right workforce structure to drive our business forward. Importantly, our approach to managing costs has not come at the expense of network performance, product quality, or customer experience. In fact, customer satisfaction scores continue to improve and our network continues to lead the market. Just last week, our Optimum Fiber network in the Tri-State once again earned multiple number one rankings from Ookla’s Speedtest for best-in-class Internet performance, outperforming every major 5G home Internet provider on speed, reliability, and consistency. These results reinforce that Optimum Fiber delivers the fastest and most reliable speeds, the lowest latency, and a best-in-class gaming experience across key markets. Finally, our third priority is investing for long-term value creation. This includes continued fiber expansion, targeted network upgrades, and ongoing investment in technology and tools that improve the customer experience, enhance performance, quality, and reliability, and drive operational efficiency. With more than 3 million fiber passings, we view fiber as an important long-term value engine and are actively improving the migration process to increase customer lifetime value while improving ARPU erosion and migration costs, helping to maximize the value of our existing customer base. As these process enhancements are implemented, we expect to expand migrations in a disciplined, returns-driven manner over time. On the new build front, we have more precision than ever in how and where we build, as well as greater command of how we drive penetration to those new passings through a coordinated go-to-market strategy. We will continue to balance our build plans with long-term economics to further enhance our returns. Of note, we can offer one gigabit or higher download speeds to approximately 6% of our entire footprint. We will continue to evaluate markets to deploy mid-split upgrades on our DOCSIS 3.1 HFC network to enable multi-gig speeds and improve capacity and reliability in a highly capital-efficient manner. Regarding our capital structure, as Marc will review shortly, we completed several debt refinancings in 2025 which improved liquidity and expanded financial flexibility, giving us room to operate in 2026. In closing, I could not be prouder of the entire Optimum Communications, Inc. team for their hard work in 2025 and their unwavering commitment to each other and our customers. Despite the sustained competitive intensity, I remain confident that by simplifying how we operate, we can strengthen execution and elevate our operating performance to build a stronger business and deliver long-term shareholder value. I will now turn it over to Marc to review our performance in greater detail.

Thank you, Dennis. Starting on slide six, I will review our subscriber trends. In the fourth quarter, we lost 62,000 net broadband subscribers and ended the year with 4,200,000 broadband subscribers. Net losses were primarily driven by fewer gross additions reflecting continued low household move activity, heightened price sensitivity among customers, and sustained competitive intensity. Additionally, our more measured and disciplined promotional approach combined with the competitive environment contributed to higher churn year over year. As we closed out 2025, we began testing a simplified pricing and product structure with more competitive offers, and those early learnings have helped shape the 2026 broadband strategy that Dennis previewed. Our fiber customer accounts reached 716,000 at the end of Q4, representing 33% year-over-year growth. Net additions moderated in the fourth quarter with 12,000 fiber customer net adds, reflecting our intentional decision in mid-2025 to slow fiber migrations. This approach underscores our focus on executing migrations in the most value-accretive manner, minimizing ARPU erosion, and optimizing costs. Total mobile lines at the end of the fourth quarter reached 623,000 lines, representing 35% year-over-year growth. In Q4, we added 38,000 mobile lines, in line with recent trends. Our focus remains on building high-quality mobile customer relationships to reduce churn and increase penetration within our broadband base. In Q4, annualized mobile churn improved by over 700 basis points, reflecting the effectiveness of programs and initiatives we launched in 2025 to strengthen quality in the mobile value proposition. As we enter 2026, our mobile program is centered on driving high-quality sales, expanding multi-line attach rates, and deepening broadband-mobile convergence to drive growth, strengthen retention, and expand customer lifetime value. We ended the year with 1,700,000 video subscribers, down 13% year over year. In the fourth quarter, we recorded a net loss of 49,000 video subscribers, representing our lowest quarterly video net losses in more than five years and a marked improvement compared to recent trends. This performance reflects our intentional video strategy of delivering the content customers want at a compelling value with choice and flexibility at the center of our negotiations. This proactive approach enabled the launch of three new higher-margin video tiers in 2024, which are performing well, stabilizing gross add attachment rates, and supporting our lowest video churn in more than a decade. At year-end 2025, these video tiers account for over 15% of our residential video customers. Lower video churn was driven in part by higher retention effectiveness as our teams increasingly migrate customers to these new tiers. Across broadband, mobile, and video, all results reflect deliberate trade-offs in a challenging competitive environment. While subscriber trends remain under pressure, we are taking clear actions to drive improved performance in 2026 through simplified product and pricing, a more focused go-to-market approach centered on convergence, investments in AI to improve marketing and sales channel yield, and improved customer value propositions. Next, on slide seven, I will review our quarterly financials. Total revenue of approximately $2.2 billion declined 2.3% year over year. Revenue pressure remains mainly concentrated in video, which declined almost 10%. News and advertising revenue declined 8%, driven by tougher political comps from the prior year. Excluding political revenue, news and advertising revenue grew 6%. Connectivity and all other revenue grew 2% year over year. This was supported by timing of rate actions within residential connectivity, mobile revenue growth of over 40% as well as business services growth of over 8% driven by LightPath revenue growth of 35%. LightPath growth was driven by nonrecurring revenues and deliveries of services to large hyperscale customers, as well as recurring revenue growth from continued positive net installations. News and advertising growth, excluding political, was driven by continued growth in our advanced advertising agency services business, contributing to higher national sales. Residential ARPU grew by 0.4% to $134.49, or grew by $0.54. Of the $0.54 year-over-year growth, video represented a $2.80 decline, while all other products grew by $3.40 driven by broadband ARPU expansion and selling of mobile and value-added services. Residential ARPU remains under pressure as a smaller share of customer relationships include a video product. While this continues to weigh on top line and per-customer revenue, the impact of a declining video base is increasingly being mitigated by continued product margin expansion. Broadband ARPU grew 2.8% year over year to $76.71, our highest quarterly broadband ARPU in fourteen quarters, driven primarily by the benefits of timing of rate actions as well as disciplined rate preservation in care and retention. Continuing on slide eight, gross margin reached 69.5% and expanded by 180 basis points year over year. This reflects the continued mix shift towards higher-margin products such as broadband and new video tiers along with a disciplined approach to programming agreements and ongoing efforts to optimize video margins. We also continue to see favorable mix shifts to our higher-speed broadband with 52% of new customers selecting one-gig or higher tiers during the quarter, bringing 43% of our broadband base to one-gig or higher speeds at year end. Adjusted EBITDA of $902 million grew 7.7% year over year. Fourth quarter adjusted EBITDA margin expanded by 380 basis points year over year to 41.3%, representing our highest EBITDA margin in sixteen quarters, and surpassing the 40% margin milestone. Our fourth quarter adjusted EBITDA performance was supported by a few key drivers. In the quarter, revenue declines moderated primarily supported by rate actions and pricing discipline, LightPath revenue growth, and continued momentum in mobile. Strong gross margin performance reflected the benefits of disciplined programming and direct cost management, which help offset some revenue pressure. And operating expenses declined year over year by almost $60 million. Contributing to this was a strategic workforce optimization, which represented over 6% reduction in headcount year over year. In addition, we exercised tighter cost controls across the business, including a mix shift in marketing in the quarter to rationalize customer acquisition costs. Turning to slide nine, I will walk through our network investments and capital expenditures. As shown on the left side of the slide, full-year 2025 cash capital totaled approximately $1.3 billion, reflecting our disciplined approach to capital deployment, increased capital efficiency, and focus on prioritizing higher-return investments. For the full year, cash capital spend excluding LightPath improved by 10% year over year for an improvement of over $120 million. LightPath capital spending accounted for approximately $200 million in full-year 2025. Total capital intensity reached less than 16% in the full-year 2025, our most efficient in the last four years. Excluding the LightPath business, capital intensity would have been approximately 14%, a 500 basis points reduction compared to 2022. On the far right, you can see how that capital translates into network expansion enhancements. In the fourth quarter, we added approximately 65,000 total new passings, bringing full-year additions to 177,000 total passings. In total fiber passings expansion of 43,000 homes in the quarter, resulting in 134,000 new fiber passings for the full year. Underscoring our continued progress in expanding our footprint primarily as fiber passings. Our approach to network investment remains balanced and disciplined. We moderated capital intensity, prioritized fiber and high-return projects, and leveraged targeted upgrades to our HFC network to support improved broadband competitiveness, protect margins, and drive long-term network value. Turning to slide 10, I will highlight the continued strength and momentum of our LightPath fiber business. LightPath continues to increase its position as a provider of AI-grade digital infrastructure and connectivity. At 2025, LightPath awarded AI-driven contract value totaled $362 million. This represents a 40% increase over the $110 million of total contract value awarded in 2024. As shown on the right, LightPath revenue, which is consolidated in business services revenue within Optimum Communications, Inc. total revenue, has grown steadily over the past several years. LightPath revenue reached $468 million in the full-year 2025, representing 13% growth year over year. This growth reflects continued demand from hyperscale customers along with strong underlying recurring enterprise revenue. Profitability continues to scale along with revenue, with LightPath adjusted EBITDA growth of 17% year over year. In addition, in February, LightPath priced an inaugural ABS transaction of approximately $1.7 billion which is expected to close in early March. Proceeds are primarily expected to repay existing LightPath debt. Overall, LightPath continues to serve as a differentiated growth platform within our portfolio, supported by durable revenue growth, expanding margins, and attractive returns while reinforcing the strategic value of our fiber infrastructure and addressing broader enterprise and network connectivity needs. And finally, on slide 11, I will review our debt maturity profile, pro forma for recent transactions. In the fourth quarter, we closed a refinancing through which we received $2 billion of new financing from JPMorgan to voluntarily prepay our existing incremental B6 term loan in full. Subsequent to quarter end, in January, we secured approximately $1.1 billion of additional financing from JPMorgan to refinance our $1 billion asset-backed facility. Both transactions enhance our short-term liquidity and financial flexibility. And as previously mentioned, in February, LightPath priced an ABS transaction, which is included in our pro forma schedule subject to closing. Pro forma for these transactions, our weighted average cost of debt is 6.8%. Our weighted average life of debt is 3.3 years and 81% of our debt stack is fixed. Consolidated liquidity is approximately $1.4 billion and our leverage ratio is 7.3 times the last two quarters annualized adjusted EBITDA. As we have communicated, one of the company's key strategic priorities is ensuring that our capital structure supports our long-term operating goals. We believe meaningful debt reduction and reset of the balance sheet are essential to continuing our transformation, competing effectively, and investing thoughtfully to maximize long-term value for all stakeholders. In closing, 2025 was a year of execution and progress. We strengthened our foundation, improved profitability, and positioned the business to move forward with greater focus and competitiveness. Importantly, we have remained focused on the operating and financial levers within our control. Since Dennis and I joined the company nearly three years ago, our strongest broadband ARPU performance this fourth quarter represents our best adjusted EBITDA margin, our near-lowest capital intensity, and our strongest LightPath performance to date, along with a near all-time high gross margin. While the business environment remains challenging, we look to 2026 with clear and deliberate focus. We are simplifying how we operate and how we serve our customers while improving efficiency through continued disciplined cost management and execution. At the same time, we are investing across the portfolio in a way that protects cash flow and margins and creates long-term value for our shareholders. With that, we will now take questions. Thank you.

We will now be conducting a question-and-answer session. Our first question is from the line of Kutgun Maral with Evercore ISI. Please proceed with your questions.

Great. Good morning and thanks for taking the questions. Two, if I could. First on broadband subscribers, as always, Dennis, thank you for the color and candor. Is there anything more you can unpack as it relates to Q4 and trends into 2026? I know that improving broadband trends is a key priority in the year, but that seems hard for any cable operator in this hyper-competitive backdrop. So do we think about the timeline and path towards improvement as you continue to also focus on financial integrity? And then I know you have not provided, or at least that I have seen, explicit guidance for EBITDA and free cash flow. But following your execution against the 2025 outlook, I wanted to see if there is anything you would be willing to share on how we should think about these metrics in 2026.

Thanks, Kutgun. In Q4, we continued to operate in a very hyper-competitive marketplace. We continued to see unprecedented levels of spending from a marketing perspective, very aggressive pricing and packaging, and value-adds and incentives that were being provided. That being said, we continued to operate with discipline. As I have said, last year was a year where we continued to lay the foundation. We are on a significant transformation journey. 2023–2024, we were focused on stabilizing the company. 2025, we continued to invest to ensure we have a high-quality network, and we are continuing to win awards across various performance metrics. We saw an improvement in our customer experience, which was critical. We are leaning into automation and AI which is really helping us optimize our cost structure and transformation. I mention this because it is critical as we think about how we can now start to ensure we have command of the business. We gained more command than ever as we think about reporting and analytics and ARPU erosion and managing credits while being disciplined on acquisition pricing. This will allow us to really start to go on the offensive in a more meaningful way from a go-to-market perspective. And so as we enter into 2026, we are evolving our go-to-market. I am excited about some of the new programs that we have launched around referrals and platforms for leasing agents and property managers, affiliate programs, and simplified pricing and packaging across all geographies and channels. Q1 remains hyper-competitive with lots of headwinds, but we did foundational work in 2025 that will allow us to go on the offensive more meaningfully in 2026.

Sure, Kutgun. Not going to be providing specific 2026 guidance on this call today. As Dennis was mentioning, we believe that the operational improvements we made in 2025 certainly put us in a better position to support long-term EBITDA stability and, over time, growth. We benefited from the operational efficiencies, including the org redesign and vendor rationalization. The foundation of simply operating, using AI in a more meaningful way really resets our cost base and strengthens our execution while navigating this unprecedented competitive environment. As we think about turning to 2026, the work we did in 2025 allows us to invest in targeted strategies that stabilize broadband trends. This will involve targeted investments in pricing, customer value, and improving the network, but we certainly will share more in our first quarter earnings call.

Understood.

Thank you both.

Our next question is from the line of Frank Louthan with Raymond James. Please proceed with your question.

Great. Thank you. Can you give us an update on the balance sheet? You have done quite a few debt refinancings and the LightPath ABS deal. So what is the net impact there? And you have a debt stack going current this year. Just give us an update on the balance sheet and how you plan to address that in the next twelve months.

Yes. I will take this, Frank. Again, pleased with the work that the team has done this year. As we have communicated, one of the key strategic priorities is ensuring that we have the right capital structure to support our long-term goals. We do still believe that meaningful debt reduction and a reset of the balance sheet are essential to continuing our transformation and really allowing us to invest thoughtfully to maximize long-term value for our stakeholders. We are not going to comment further on the capital structure. I will just call out our LightPath team for pricing their inaugural ABS, $1.7 billion, that is expected to close shortly, probably early March. Those proceeds will be primarily used to repay existing LightPath debt. Beyond that, we will not comment.

Alright. Great. Thank you very much.

The next question is from the line of Michael Rollins with Goldman Sachs. Please proceed with your question.

Hey, good morning. Thank you so much for the question. I just have two. First, I was wondering if you could talk a little bit more about the residential broadband ARPU strength, $77. I think that this is the second highest on record. So if you could talk about that and whether you see that as a good baseline for next year, that would be helpful. And then I just have a quick follow-up.

Jump into that, Marc?

Sure, Michael. Yes, really, again, proud of the team for all the hard work. Overall, total residential ARPU grew 0.4% year over year. This is despite all of the video headwinds, nearly a $3 decline in video contribution. We overcame that with $3.50 of connectivity and other ARPU expansion, really driven by broadband. The broadband results just continue to demonstrate our continued progress on product mix. We now have 43% of our customers taking one-gig services. Our selling is over 50% selling on one gig. When our fiber customers are over 50% on the one-gig platform, it shows the continued discipline that we have in retention, our pricing strategies, and price actions. Just executing with a different level of discipline, leveraging AI at a high level, and that is despite all of the competitive pressures. Certainly made trade-offs this quarter to focus on driving ARPU expansion and EBITDA stabilization. Came at a slight cost to subscribers, but still positive on how the team managed ARPU this year. When you think about video ARPU, that is up over 4% year over year. Mobile ARPU is up 2%. So the team is really operating at full capacity and really controlling what we can control.

Great. Yes. And I will say just on ARPU, the ability to control erosion, the ability to strategically drive our acquisition pricing, we are just gaining more control across all channels and geographies that will improve our discipline going forward.

Great. Wonderful. Thank you for all that color. Second, I wanted to ask about your expectations around video programming costs per subscriber. You know, really good favorability from that this quarter. You know, I can appreciate there are a lot of moving parts as we think about next year. The impact from, you know, the more skinny bundles perhaps, I know there are some comps on, like, carriage disputes. You know, do you see opportunities to work down programming costs there? Just any thoughts there would be helpful. Thank you.

Yes. We have been laser-focused on programming and our video strategy as you have seen over the past year or so. We are going into these conversations with much more data and clarity than ever. We have a clear understanding of the value of this content relative to our customer base, which gives us the opportunity to have some of these hard conversations. We are fighting for our customers to make sure that we have got flexibility in terms of tiering and packaging, and ensuring that ultimately our customers are at the center of these discussions to deliver value and choice. We continue to have ongoing programming discussions throughout the year, and that is going to be the focus: to ensure we have very disciplined conversations to deliver for our customers and see the results we are able to produce. For example, these new video tiers that have been very well received and are helping us drive acquisitions while also stabilizing the base.

Sure. Again, the team is doing a fantastic job renegotiating and resetting programming. Our costs are down in the quarter, 16% on programming costs, which I believe is an industry-leading measure, and 15% for the full year. We know that there is pressure on revenue, so we are targeted and focused on driving our gross margin for every dollar of revenue declines that we see, we offset with $1.20 of programming cost reductions. We are taking a different approach—typically you see steady inflation in pricing for programmers, but we are down almost 3% in the quarter on cost inflation. So we are heading in the other direction. That is really just optimizing our packaging, getting customers onto these skinnier tiers that meet their needs, so we are really pleased with that.

Dennis, thank you, Marc.

Thank you.

The next question is from the line of Sebastiano Petti with JPMorgan. Please proceed with your questions.

Hi, thank you for taking the question. I guess just housekeeping or just clarification. On the fourth quarter EBITDA, I did think, Marc, in your prepared remarks, you did say that there was some nonrecurring product revenue that drove some of that strength. Should we assume that that is zero or very low-margin contribution to the overall EBITDA in the fourth quarter?

Yeah.

From the fourth quarter, again, really pleased with the revenue trajectory. As we looked at the connectivity business specifically, just as it relates to the revenue side, really where we saw some of that one-time stuff was around LightPath tied to the hyperscaler activity that we have in the business. I’m really pleased with where LightPath is growing. As you heard, over $250 million of contracts awarded in 2025, up from $100 million about in 2024. We are just at the start of the cycle, I believe, for LightPath growth. So I am really pleased with the contracts that we have awarded and the growth that will come from that. And, more importantly, the pipeline looks solid—as far as where we are positioned in the marketplace to win incremental contracts and continue to drive our large AI-driven data center connectivity business. So, really pleased.

Got it. And then lastly, on competition. I mean, is it concentrated in one specific market or one specific legacy operating footprint as you think about Suddenlink versus Fios in the Northeast perhaps? Just any kind of help about where the competitive intensity is coming from.

Thank you. Yeah. The competitive landscape continues, in line with what I have shared in the past. You know, when we look at the East, we are 70% fiber overbuilt, primarily with Verizon. You know, we have got fixed wireless over 85% now across the East. In the West, based on the BDC data, we are 45%–46% overlap with fiber that is now up to 50%. And almost 80% in terms of fixed wireless. That intensity remains, but I believe that we are really well positioned in terms of having the right products, the right pricing, the right network to be able to compete, and that is exactly what we are going to be doing in 2026. Leveraging all of the hard work in 2025 to invest in our ability to go to market from an acquisition perspective and manage churn.

Our next question is from the line of Craig Moffett with MoffettNathanson. Please proceed with your question.

Hi, thank you. I want to stay on this topic of LightPath because it really is, obviously, a pretty dramatic set of numbers. First of all, what portion of the growth was characterized as nonrecurring? And I am curious as to what makes it nonrecurring. It is not obvious that contracts—if you see future growth in significant contracts with hyperscalers and cloud providers—that would necessarily be nonrecurring. So I wonder if you could just talk a little bit more about that and what we can expect from LightPath going forward.

Certainly. I will take that. Craig, the LightPath business is accelerating in growth. 35% growth in the quarter, very strong results overall. You see EBITDA along with that growing 17%. When you look at the core LightPath business, excluding the hyperscaler activity, it grew 8% year over year. There is still strong underlying demand for just the core business. As we enter into the hyperscaler business, maybe nonrecurring is not the right choice of words, but revenue is recognized as we build those projects. And as we continue to scale and get more contracts under our belt while building these networks, we will see continued growth from that. So, we feel pretty optimistic about where we stand today with the contracts that we have awarded and the growth that will come from that. More importantly, our pipeline looks promising, and we are well-positioned in the marketplace to secure more incremental contracts and drive our large AI-driven data center connectivity business. So, really pleased with the outlook.

And outside of LightPath in the business services segment, what are you seeing outside of the enterprise and hyperscaler market? Particularly, I am thinking with small-medium business in your core footprint. What do those trends look like?

Yeah, Dennis. For small-medium business, we remain disciplined. The environment is competitive. There is a lot of focus for us in terms of moving beyond just core connectivity. We have launched a whole host of new products like our Connection Backup product, our Secure Internet product, a relaunch of WiFi Pro, and so we believe that there are opportunities here. We also completed the launch of fiber products on the fiber network as well. We see steady trends there and are going to continue to lean in, as we are on the residential side, to move beyond just connectivity and offer solutions to drive growth in our core B2B business as well in the small and medium space.

Thank you. The next question is from the line of Vikash Harlalka with New Street Research. Please proceed with your question.

Hi, thanks so much for taking my questions. Two, if I could. One, since you mentioned the slowing down of the pace of fiber migrations in Q4, I was wondering if you could sort of elaborate on that and just help us understand how you are thinking about 2026. Has your thinking around fiber changed at all for the long term? And then, second, are there any further opportunities for you to take out non-programming costs from the business, especially in 2026?

You know, on fiber, we remain very bullish on fiber. We see churn benefits and NPS benefits from it. Our new builds at over 177,000 new passings are fiber-rich, the majority of which are fiber. On fiber migrations, as you know, this has been a transformation journey. When I first joined, there were numerous technical challenges in migrating folks, and we spent a significant amount of time solving those defects to ensure that from a technical perspective, we could do that seamlessly, efficiently, and deliver the right customer experience. As we continued that journey, we now need to refine the process so we can capture maximum customer lifetime value. Full transparency, a lot of that activity was happening in our retention channel and care channel. We have the opportunity to leverage our base management strategies to maximize customer lifetime value and ARPU while ensuring the best experience. This is why we intentionally decided to slow down the migration process. We are continuing to drive from gross add, but will reassess and finalize our strategy on migrations over the next few months to really execute it during the second half of the year in a scalable manner. And again, we are going to operate this in a disciplined fashion, much like we did in 2025, focusing on delivering value to our enterprise.

On the cash for OpEx in 2026, just first reflecting on 2025, down nearly 9%, $60 million year over year in the fourth quarter really reflects all the optimization we have done over 2025, from workforce transformation to taking a hard look at our SAC costs and marketing to rebalancing that. We expected lower consulting costs as we entered the second half of the year, and that certainly took place. So, pleased with how we are acting with discipline around managing OpEx lower. As we think about 2026, we still think the work we did in 2025 sets us up for a strong foundation. It will allow us to make strategic investments in 2026, but we continue to optimize our workforce, leveraging AI, and driving out noise—unnecessary truck rolls, and phone calls—out of the ecosystem. We believe there remains opportunity for continued optimization.

We are really pleased with the early results that leveraging AI is delivering, but we are still in the early stages. We have seen a 12% increase in digital interactions, transitioning from phone calls to chat, mobile, and self-service support, and we remain optimistic about the trends. We are leveraging solutions to optimize our network management, seeing tangible results in call and service visit reduction. For the year, we reduced dispatch rates by almost 20%. There is more opportunity, and we are committed to continuing our focus on AI and efficiency, which also enhances customer experience.

Thank you. The next question is from the line of Steven Cahall with Wells Fargo. Please proceed with your question.

First, just wanted to drill down a little more into the ARPU trends. So as you talked about, really strong Q4 in terms of sequential growth. It sounds like gig selling is a significant part of that. You also spoke to looking at doing some targeted competitive responses, including maybe price locks in 2026. So how do we wrap all that together? Do you think you can continue to grow ARPU in 2026 and sort of maintain that strong Q4 trend? And then a big-picture question on the balance sheet. You know, on a good day, the debt is 25 times the equity. On a bad day, it is closer to 50 times. I know you have a lot going on with your creditors to look at ways to improve the indebtedness over time. What do you think the scope is for something strategic to significantly reduce that debt stack? There is so much potential for equity realization if you can do that.

I will talk a little bit about our strategy on ARPU, and Marc, you can fill in anything I missed, then discuss our balance sheet. From an ARPU perspective, we spent 2025 laying the foundation. We have much more control of ARPU holistically now. When I first joined, we had little to no visibility into ARPU erosion and the channels involved. We have now implemented solutions and tools to manage that effectively. We have gained visibility into customer segments so we understand exactly what is happening and how much erosion occurs within promo rolls, with each rate event. This enables us to control pricing much more strategically, leveraging these insights as we go to market.

The only thing I would call out is to think about broadband ARPU, which was up $2 year over year, nearly 3%, very strong, also up $2 sequentially. It is really about the product mix we talked about. There were timing from the annual rate event. We did have some of that hit in the fourth quarter, but we will take a measured approach to rate and volume as we turn to 2026. We are pleased with how we are executing and managing our rate strategy in a disciplined manner.

Thank you, Marc.

Thank you. At this time, we have reached the end of our question-and-answer session. I will turn the floor back to management for closing remarks.

Thank you all for joining. Please reach out to Investor Relations or Media Relations with any further questions.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.