Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew 29% to $85.8 million in the second quarter of 2024.
- Glo Fiber broadband data ARPU is about 10% higher than original assumptions.
- Monthly churn rate continues to be in the low 1% range, indicating strong customer retention.
- Net promoter score for Glo Fiber broadband service was 69, significantly higher than competitors.
- Completed the acquisition of Ohio-based Horizon Telecom, with significant progress in integration and synergy targets.
Negative Points
- Commercial revenue declined due to the expected decline in T-Mobile revenue.
- RLEC revenue decline driven by DSL migrations and a decline in government support revenue.
- Adjusted EBITDA margin declined from 29% to 27% due to lower margin in the former Horizon business.
- Incumbent broadband market revenue decline due to lower data subscribers in competitive areas.
- Broadband data churn increased slightly to 1.18%, driven by customers moving out of markets.
Q & A Highlights
Q: Have you seen any changes or indication that Verizon is expanding its fiber upgrades in your markets?
A: (Edward McKay, Chief Operating Officer, Executive Vice President) We have not seen any material activity from Verizon in our markets. There have been a few isolated neighborhoods with fiber-to-the-home builds, but no significant announcements or construction projects.
Q: Can you quantify the pace of revenue lost due to T-Mobile's decommissioning this year?
A: (James Volk, Chief Financial Officer, Senior Vice President - Finance) Most of the disconnects occurred in 2023, with a few lingering into the first half of 2024. We expect about $7 million less in T-Mobile revenue in 2024 compared to 2023, with approximately $3.5 million of that realized so far.
Q: When does your 2026 debt stack go current in 2025, and what are your refinancing plans?
A: (James Volk, Chief Financial Officer, Senior Vice President - Finance) $150 million of our term loans mature in June 2026. We plan to address refinancing in the second half of next year, exploring options to minimize our cost of debt.
Q: Do you feel pressured to lower pricing in competitive markets or when entering new markets with Glo Fiber?
A: (Edward McKay, Chief Operating Officer, Executive Vice President) No, we do not feel the need to offer significant discounts. 95% of our Glo Fiber passings do not have a fiber competitor, and we focus on superior product, local customer service, and fair pricing.
Q: Are Glo Fiber customers quickly opting for higher speeds, or do they transition after some time?
A: (Edward McKay, Chief Operating Officer, Executive Vice President) Over half of our customers select 1 gig speed or higher from the start. Last quarter, 43% chose 1 gig and 7% chose 2 gig speeds.
Q: Given rising costs, do you plan to accelerate CapEx this year?
A: (Edward McKay, Chief Operating Officer, Executive Vice President) We do not plan to accelerate CapEx. The biggest challenge is permitting and make-ready work for pole attachments, which keeps our construction pace where it is currently.
Q: Can you provide an update on the integration progress of the Horizon Telecom acquisition?
A: (Christopher French, Chairman of the Board, President, Chief Executive Officer) We are pleased with the integration progress, including back-office system conversions. We expect to complete system integration by the first quarter of 2025 and have made significant progress on synergy targets.
Q: What is the current status of your Glo Fiber expansion and customer growth?
A: (Christopher French, Chairman of the Board, President, Chief Executive Officer) We ended the second quarter with approximately 298,000 Glo Fiber passings and over 53,000 customers, representing a 62% year-over-year growth rate. We have strong sales momentum entering the third quarter.
Q: How has the T-Mobile network rationalization impacted your commercial revenue?
A: (James Volk, Chief Financial Officer, Senior Vice President - Finance) Commercial revenue declined due to the expected reduction in T-Mobile revenue. We expect about $7 million less in T-Mobile revenue in 2024 compared to 2023, with commercial fiber revenue returning to mid- to high single-digit growth rates starting in 2025.
Q: What are your expectations for broadband data penetration rates in new Glo Fiber markets?
A: (Edward McKay, Chief Operating Officer, Executive Vice President) We typically see data penetration rates of approximately 17% in the first year after launching a Glo Fiber market, exceeding 25% after three years. We expect average terminal penetration rates of about 37% five to six years after launch.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
