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00:04 Greetings and welcome to the Altice USA First Quarter 2022 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. 00:27 I will now turn the conference over to our host, Nick Brown. Please go ahead.

00:32 Hello everyone, thank you for joining. In a moment I'll hand over to Altice USA's CEO, Dexter Goei; and CFO, Mike Grau, who will take you through the presentation and then we'll open the lines for Q&A. 0:43 As today's presentation may contain forward-looking statements, please read the disclaimer on slide two. Dexter, please go ahead.

00:51Thanks, Nick and good afternoon everyone. Jumping in with the summary of our recent quarterly performance on Slide four, revenue in Q1 declined 2.3% year-over-year, driven by our residential business, partly offset by strength in News and Advertising. Broadband customer net losses were 13,000 for Q1 with trends similar to those at the end of last year as we have not yet realized the full benefits of our growth initiatives. 01:18 Q1 adjusted EBITDA declined 7.7% with a margin of 40.9%, reflecting both the revenue decline and higher OpEx to drive future growth. Free cash flow of $208 million was solid, even though that -- even with the elevated levels of investment as we are accelerating our fiber expansion, new-build activity and other network upgrades. Recall, we launched more competitive Internet plus mobile converged offerings in January, and in March we announced expanded MVNO agreement with T-Mobile, allowing us to offer more attractive mobile promotions. 01:51 We believe we are in a significantly better competitive position today than we were 12 months ago, and we're moving full steam ahead preparing for the launch of our own multi-gig fiber broadband service later this year on our Optimum Fiber network. Additionally, we continue to expand our sales distribution channel to support growth and have commenced the rebrand of Suddenlink into Optimum to drive home a more uniform and fresh marketing effort and customer experience. 02:18 Slide five shows our revenue trends in more detail. Total reported revenue in Q1 declined 2.3% year-over-year, mainly due to the recent expected pressure on our residential business, which declined 3.6%. I'll discuss our residential trends in more detail in a moment. Total revenue was down 2.1%, excluding about $5 million of prior year air strand revenue. To remind you, our backlog contract with T-Mobile was terminated at the end of last year. This will result in the loss of about $125 million of air strand revenue this year when comparing to 2021, with about $110 million of this in the second half of the year coming out of our Business Services division. 02:58 You can see business services revenue in Q1 was flat year-over-year on a reported basis, but grew 1.5% excluding this air strand revenue. News and advertising grew 9.1% in Q1, which is now approaching pre-pandemic levels of growth. 03:14 Moving to slide six and Q1 customer trends in our residential business. We reported a net loss of 21,000 residential customer relationships in Q1 and a broadband net loss of 13,000. Remember, in 2020 we had a big boost in the early days of the pandemic and customer trends have not yet fully normalized and we saw much of the additional growth reversing in last few quarters. We are still seeing a lower level of gross additions across the company and churn in our footprint has now clearly stabilized. 03:44 We did not need to push as hard on marketing promotions as we did in the fourth quarter since we aligned our offers more closely with FiOS. And you can see this reflected in our ARPU trend stabilizing sequentially. The main drag on our year-over-year residential revenue and ARPU remains the loss of video customers, which has increased in recent quarters as the gross add video attachment rate continues to fall and we have been passing through more of the programing cost inflation. Normally we would offset this with broadband and unique customer growth, but given temporary declines here, we're seeing the full impact of the video loss. 04:17 Given the progress we're making on our growth initiatives, we are confident that we will return to broadband customer growth in the second half of this year with our accelerated fiber rollout, multi-gig services and new-build activity, complemented by more attractive mobile bundles and expanded sales distribution channels. 04:34 Turning to Slide seven and business services. Revenue growth of 1.5% excluding air strand revenue is slightly below the last couple of quarters as the comps are normalizing after comparing to 2020 where we saw a reduction in sales volume with less small business activity. Given more positive customer trends, now we expect to see revenue growth accelerate again as we go through this year. SMB and other revenue grew 1% ex-air strand and LightPath revenue grew 0.6%. 05:03 Net sales bookings at LightPath increased 70% year-over-year in Q1, which is a huge jump, benefiting from our recent network expansions, new market launches and expanded sales force. We anticipate that this should also contribute to accelerated revenue growth in the coming quarters. 05:21 Slide eight shows an update on our News and Advertising business. Revenue grew 9.1% in Q1 with year-over-year comparisons normalizing here now as well. Excluding autos, which remain weak, revenue grew about 15%. In particular, we're seeing strength with the travel and entertainment sectors coming back, plus a boost from sports betting as this has now been legalized in certain states, including New York. Additionally, we expect more of a political benefit this year in the second half given the mid-term elections. 05:52 Slide 10 is a recap of the strategic measures we announced at the end of last year to enhance the company's network, product portfolios and customer experience on an accelerated basis. I'll go through each one of these initiatives in more detail. 06:05 Now turning to Slide 11. We are on track to bring 100% fiber broadband delivering multi-gig speeds to more than two-thirds of our entire footprint over the next four years, reaching a total of 6.5 million FTTH passings by the end of 2025. This will include at least 4 million fiber passings at Optimum, which should be done by 2024 and at least 2.5 million fiber passings at Suddenlink. We are confident that this is the right approach to improve the customer experience and enhance the value of the business. 06:36 Total incremental fiber passings and related CapEx should peak in 2023 and 2024 at around 1.6 million new passings in both years. Especially as we expand across the Suddenlink footprint at an accelerated pace. We expect with a more differentiated broadband service to drive higher gross additions and reduce churn, given the reliability of the fiber network service, reducing our long-term network maintenance, technical and customer care costs. When comparing the experience of our broadband customers on our fiber network to that of customers on our HFC network, we are now seeing 66% NPS improvement, 7% higher ARPU on gross adds and around 5% to 6% annualized churn benefits and significant reduction in instance rates. And from a trend perspective, we're seeing these customer metrics improve every month. 07:30 Slide 12 gives a current snapshot of [indiscernible] progress with our fiber build and customer trends. You can see on the left, we released an incremental 146,000 fiber passings during Q1, reaching just over 1.3 million total passings, mainly in our Optimum footprint. We expect incremental growth on fiber passings to meaningfully step up in Q2 and Q3 following our increased investment and given that spring and summer months are more conducive to construction and deployment with the better weather. 08:00 On the right you can see our quarterly fiber net adds have been about 11,000 to 12,000 per quarter, and we have now reached just over 6% fiber customer penetration with 81,000 fiber customers. To be clear, our customer penetration market share in these areas including customers on our HFC network is much higher, typically, above 50%. But on the fiber side we are mostly focused on adding new customers onto our fiber network. We are now starting to ramp up on existing customer migrations, which when combined with the rapidly expanding FTTH footprint will lead to an improved churn and faster customer growth. 08:35 Slide 13 demonstrates the runway we have to sell broadband services that can support very high levels of data usage. The average download speeds customers take now has increased to 363 megabits per second, which continues to grow as customers are increasingly taking our one gig service. Our one gig customer penetration increased to 17% in Q1, which is up over 70% from a year ago with just under 50% of all new customers now taking one gig speeds. Around 46% of our customer base take speeds of 200 megabits per second or lower, so we still have a huge opportunity to keep driving customers to higher speed. Average monthly data usage for broadband only customers was 630 gigabits -- gigabytes in Q1 with video streaming still the biggest driver. 09:26 Looking at our highest data consuming customers, 15% of our broadband only customers are using more than one terabyte of data per month. Given these trends and insights we are confident we're making the right decisions and focusing on fiber to future proof our network. Fiber is the best technology that exists today to support high levels of throughput and data usage with very low latency and very high reliability of service. Fiber is also a proven technology which is widely available at a reasonable cost today, so there is also a time-to-market advantage versus upgrading DOCSIS or other HFC network upgrades. 10:04 The fiber network we're building is also very easily scalable and will allow much faster upgrades in the future to enable more capacity and higher broadband speeds. It's a difference of having about a 0.5 million active components in our HFC network today that would need upgrading versus just a few thousand pieces of equipment in our new fiber network for the same number of homes. This is why we will be able to launch multi-gig symmetrical speeds on our fiber network later this year, just by adding modules at our head ends and in our field cabinets without needing to change any of the physical infrastructure. 10:39 On Slide 14 you can see, we added 42,000 new building passings in Q1 and are on track to adding approximately 175,000 this year. We are mostly edging out around the Suddenlink footprint and about one-third of our new total new-build activity this year will be in fiber homes. We are still achieving about 40% penetration after the first year of expanding our network into new areas. So there is a very clear correlation with new customer growth. Separately, we are also on track this year to complete the upgrade of about 100,000 Suddenlink HFC homes in areas where customers previously only received maximum download speeds of 150 megabits per second, increasing this to either 400 megabits or one gig. We upgraded 16,000 of these homes in Q1. 11:27 And lastly, as an update on our broadband subsea applications, we received our first award for 8,000 homes in the Yavapai county, Arizona and the team is actively working to significantly increase our total numbers of applications and awards. 11:42 Slide 15 gives us an update on our mobile business, where we have reached now 198,000 customers as of the end of Q1, reaching 4.3 penetration of our -- 4.3% percent penetration of our residential customer base. In January, we launched our new converged offerings with up to $30 of monthly savings, if you take both the broadband and mobile service from us. And in March, we extended our strategic MVNO agreement with T-Mobile on mutually beneficial terms. This new agreement gives us among other things much more flexibility on pricing, which is why we recently launched an aggressive one gigabyte promotion, that drove about two-thirds of our additional customer growth for the quarter. We believe that as we continue to adjust our mobile and converged offerings, we can maintain a high level of mobile customer growth going forward and expect this will help improve broadband customer churn as well. 12:35 Turning to Slide 16 now is an illustration of our new Let's Reconnect campaign, which kicked off the rebrand of Suddenlink to Optimum. This campaign represents our company-wide commitment to reconnect with our customers communities and employees, unifying all of our products and services under the Optimum brand across our whole footprint. The investments have been describing today, including our network and product enhancements to improve our quality of service and customer experience to support this campaign. And they set the stage for the road map ahead of us as we strengthen the relationship we have with our customers and solidify Optimum’s position as their provider of choice. 13:14 And I'll hand it over to Mike to review some of the financials in more detail.

13:19 Thank you, Dexter, and good afternoon everybody. Picking it up on Slide 18, with a summary of our financials for the quarter. As Dexter outlined, our revenue declined 2.3% in Q1 with adjusted EBITDA declining 7.7%. You can see our adjusted EBITDA margin was 40.9% in Q1, which is just over 2 percentage points below the prior year quarter, reflecting higher operating costs to invest in some of the areas we've outlined to drive better customer growth and higher medium to long-term revenue and cash flow growth. 13:51 For example, we are now well over 300 door-to-door salespeople and above 100 retail stores and we've been putting money behind our new mobile converged offers. There will be additional spend later this year as we continue to ramp up in these areas, including additional marketing to support our rebrand campaign, which is more of a one-off. Our cash CapEx was up 84% year-over-year, which I'll come back to in a moment. This all contributed to a 30% reduction in our EBITDA less CapEx or operating free cash flow. 14:23 On Slide 19 you can see our capital intensity was 16.2% in Q1, up from 8.6% in the prior year quarter. Without fiber and new home builds growth investment capital intensity would have been 9.5%. Our CapEx target in [2022] (ph) remains between $1.7 billion and $1.8 billion on a cash basis, including $300 million to $200 million of additional FTTH CapEx and $100 million to $200 million of additional new build CapEx compared to the prior year. Recall that after a couple of years of elevated CapEx to support our accelerated fiber rollout, we expect to start seeing significantly reduced CapEx after 2024 once we start scaling back to build. 15:10 Slide 20 highlights the components of free cash flow in Q1, totaling $208 million for the quarter, which is lower year-over-year, given all of our accelerated growth investments. Our quarterly cash interest payments of about $300 million should be fairly even throughout the year. Cash taxes were $23 million in the first quarter, but this should step up throughout the year. Lastly, other financing activities includes about $180 million of debt pay down using excess free cash flow. 15:43 Finally, on slide 21 we show how we have a very well termed out debt maturity profile following recent and prior refinancing activity. We have no annual bond maturities greater than $1 billion before 2025, all of which could be covered by either free cash flow generation or capacity from our revolver. At the end of Q1 we had liquidity of approximately $1.9 billion on top of maintaining a healthy level of free cash flow generation. The weighted average life of our debt is currently six years and our weighted average cost of debt is 4.6%. And as always, we will continue to proactively and opportunistically manage our liabilities. 16:24 And with that, we will now take any questions. Operator, please open the lines for questions.

16:30 Thank you. [Operator Instructions] Our first question comes from John Hodulik with UBS. Please state your question.

17:01 Great. Dexter just I think it's the topic du jour, anything you're seeing from a competitive standpoint in the -- in high speed data? And then on the new converged fixed mobile offerings, just any commentary on how -- sort of how they've been received? And with just 4% penetration in wireless at this point, how -- can you continue to -- you said you can continue to grow adds, but what do you need to do to sort of accelerate the growth there on the wireless side? Thanks.

17:31 Thanks, John, on the competition side, listen, I think, competition in the East in our Optimum footprint remained stable. We continue, I think, quarter-over-quarter improving our competitive stance relative to FiOS, and we're really looking forward to being able to launch our new multi-gig product in a few months from now and we'll continue to roll it out throughout the year. So that's pretty stable. We don't -- we are obviously starting to see Frontier come into the Connecticut footprint and have some stickiness in their efforts as they drive some of their fiber build there in small amounts. But mainly we are seeing incremental competition in the Suddenlink footprint, which is no surprise as AT&T continues to increase its fiber footprint and we do have some smaller operators out there that are overbuilding. But primarily the results of the quarter are improved to stable churn at lower gross add activity. All right. And we're seeing lower gross add activity, I think really driven by lower move activity, but also some more competitive activity out in the West. 18:48 Related to your fixed mobile commentary, listen, we are very focused on growing that base. We will continue to be thoughtful about how we bundle it with our fixed line product. We had a nice promotion that will end here in the middle of May on one gig, that was very successful and we're seeing a good transformation we believe in terms of being able to upsell those, the one gig product is something more and we'll be thoughtful about our packaging and offers going forward, but we're very focused on it, and it will be part, obviously, about our whole rebranding reconnecting campaign throughout the year where we will come up with some -- with various types of marketing efforts around the mobile product.

19:41 Great. Thanks.

19:45 Our next question comes from Phil Cusick with JP Morgan. Please go ahead.

19:50 Hi guys, thanks. I guess I'll take first -- following up first on the wireless. The 3- gig wireless customers, what does it cost you to add those? Are they bringing their own handset? Is there substantial fact there or is it sort of almost a free trial on your part?

20:08 I mean it's pretty much a free trial, and we see about 35% of our new mobile subscribers buying new handsets and about two-third of them are bringing their own device. And so, they're signing up three gigs. I think, today we're charging $25 for three gigs if it's not connected to your mobile and then depending -- not connected to your fixed line subscription and then you get a discount on your mobile and your fixed depending on what type of speed you're taking on your fixed line side. But from a stack standpoint, we don't look at it as an individual one product stack, we look pretty much at our overall marketing spend throughout our mobile product, which is really an allocation relative to our overall marketing spend, more of an accounting allocation. I think that if we were to try and figure out what we would attribute the losses in mobile during in the first quarter, that's probably somewhere around the $17 million, $18 million. But it's very, very difficult to attribute unique marketing spend to mobile because of the converged offerings in the way we market it out there, which is really about the Optimum brand and fiber and fixed line products as well. 21:29 So -- but to give you just some context in terms of the size of the loss in the first quarter from an accounting standpoint, it probably end about being $17 million, $18 million. But we don't really encouraged disclosing that all the time because it's just -- it's more of a funny accounting number more than anything.

21:49 Okay, thank you. And it seems -- I don't mean this to be flippant. But do you think you can grow broadband subscribers this year? Weak in the first half, stronger in the back half. I know it's not perfect visibility, but any idea at this point?

22:04 Yeah. I mean, Phil, it's in perfect visibility. I mean, we definitely believe we're only growing subscribers in the second half of this year. I can't tell you where the math will end up, whether it will be positive or not. But we're clearly pushing to be positive, and we've got some good momentum, we think, in terms of some of the initiatives that we've been working on for the last six months. So I think that's probably as much foresight that I can give you at this point.

22:35 Thanks. And then -- and lastly, if I can, these Federal awards, the 8,000, what does that process look like? Is this sort of building momentum? Or are they still a little bit parsed right now?

22:48 It's not a Federal process. These are local community processes. As you know, this is Federal money being allocated to states and then states in many respects, allocating them to communities. And not every cat looks alike, every single state and communities has got a different process. But we are applying for every single community where we have a competitive advantage. And they take a life of their own. There are twists and turns in every single one of these. Sometimes they start with RFP taking 20,000 homes. They can come back and, say, now we actually want to do 5,000 homes and then we'll figure out the other 15,000 homes, some of the places. And as you can think about it, it's really a lot of backdoor politics in terms of how to allocate money locally into something called infrastructure. 23:45 And so, I think that having followed this very closely for the past six months, it's starting to get quite organized today. I think it was very disorganized in the back half of last year. And it's starting to get a lot more organized. We have a ton of applications that are pending, but the decision-making process takes a very long time. And really just every single process is very different. 24:14 Typically, once you are awarded the grant, the subsidy, they're looking for two to three years for you to deploy your network, within that, just in this Yavapai one that I believe we've got 24 months to deploy. Our expectation is to deploy, hopefully, in the next 12 to 18 months as quickly as possible and just move on to the next. But we've got teams across our 21 states working actively on all of these subsidy programs.

24:47 Good. Thanks Dexter.

24:51 Our next question comes from Craig Moffett with MoffettNathanson. Please state your question.

24:56 Hi. Thanks. Dexter, I'm going to stay with broadband. The -- two questions, if I could. First, can you talk about the difference that you've seen in the legacy Optimum footprint versus the legacy Suddenlink footprint? It seems like Verizon actually hit a relatively weak fiber result. And yet there's been very poor new household formation and sort of census demographics in legacy Optimum. But I'm wondering what you're seeing in legacy Suddenlink where it's presumably a more ripe target for fixed wireless access. 25:35 And then second, I wonder if you could just talk about the pricing strategy a little bit for broadband. Your ARPU is not growing very much, and yet you're adding a lot of one gig subscriber. Should we understand that to be that you're sort of readjusting some of the pricing or promotional pricing that some customers are on in some of the lower tiers?

26:00 So just on your first question, Craig, is the overall theme to talk about fixed wireless and that competitive threat or just kind of just overall commentary on each one of the footprint?

26:14 I guess overall commentary in each one of the footprints, but fixed wireless is obviously very topical in the Suddenlink footprint for a lot of investments.

26:22 Yes. So on the Optimum footprint, I think I mentioned this in my commentary, in my prepared comments on the presentation. I think we've been performing a lot better relative to FiOS. Obviously, the bundling of our mobile product has been good. We have been promotional -- very promotional in the back half of last year going into this year as well. All of the customer service metrices are meaningfully higher and we're being very thoughtful in pushing the fiber products. 27:00 So, we've got good momentum on the Optimum side, which probably reflects a little bit in the FiOS numbers that they announced. The one part where we are seeing increased competition is in Frontier in the Connecticut footprint, which is going to be a couple of hundred thousand homes eventually when Frontier builds out there. But we will be fully fiberized in Connecticut by the end of this year. So I think we've got good momentum in terms of being able to address that competitive threat. 27:34 On the Suddenlink footprint, I think obviously, the primary competition is coming from AT&T as it upgrades fiber. It's gone from about 300,000 homes passed to about 600,000 homes passed in our footprint over the last 12 months. And so that incremental 300,000 homes passed is creating more competition for us. And then, we've got pockets of competitors like Vexit, Takis and some guys like that, that are rolling out fiber, particularly in our Texas footprint, there that's creating competition as well. 28:16 And so we're not seeing meaningful moves in terms of overbuild. We believe we're still at about the 25% overbuild level. But we clearly will see incremental competition going forward over the next several years as some builders continue to build out. And so, when we look at some of our penetration levels that fall off, 500 subscribers here, 500 there, that is affecting our growth in the Suddenlink footprint. But we think we are very well positioned to address that over the next coming quarters and years with our fiber rollout, with what we're doing on our branding side and what we're doing with mobile. 29:04 In terms of the fixed wireless side, we continue not to see a lot of competitive threats there. Definitely not in the Optimum footprint. If you look at even like what Starry is saying that they cover about 15% of our footprint is covered by them. We don't really see them active other than in certain MDU units. And then, on the Verizon side, I think just looking at their numbers, a big chunk of their FWA numbers came from businesses, construction sites and mobile businesses and as such. And so we're not really seeing a lot of pressure there. 29:50 And on the West, I think equally, we're not seeing pressure today in our selling footprint. It doesn't mean that we don't expect to see it going forward. But today, we're not seeing any traction there on the FWA side. And then on pricing strategy, I think I mentioned already in our year-end commentary that we were going to increase prices this year. So we will be looking to increase prices, particularly at the higher levels there at the one-gig level. So very pertinent to your question, we've been very promotional as we're going through a transformational side on the operating side over the last six months. 30:33 We've stabilized really the churn numbers, the churn numbers are keeping on getting better. And it's really about driving gross adds going forward with product and service and less about through price. And so we'll adjust those prices going forward, particularly as you mentioned. A lot of our gross adds are taking one gig, and we've been meaningfully cheaper than the competition on one gig over the last six months. So we will be starting to move those. 31:05 And I had mentioned that, if we had kept our promotions for the whole year that we would be flat on broadband ARPU, we are up a buck and change on broadband ARPU, sequentially Q4 to Q1. And we expect to continue to grow that broadband ARPU throughout the year.

31:28 Helpful, thank you.

31:33 Thank you. Our next question comes from Brett Feldman with Goldman Sachs. Please go ahead.

31:37 Yes, thanks for taking my question. I'm curious for a little more insight on who is taking the fiber-to-the-home product? And so for example, to what extent as you roll it out? Are existing customers getting excited, calling in and asking for it? Or maybe to what extent are you finding that most of the customers who are taking it are moving into the residents or maybe it was a new build that had fiber from day one? 32:01 And I think on the last call, you talked about your strategy for actually doing the connect in a way that's friendly for the household. I think you're going to do two truck rolls and you had shared some insight on how long that was taking and the cost. And I'm wondering if any of that hasn't changed or improved since the last update? Thank you.

32:18 So Brett, we've been not active on migrations. We launched migrations in March on a 1P basis. And we've launched migrations on a 3P basis here in April, but we have not been actively pushing them. So the customers that have been taking FTTH are really gross add customers. We don't offer HFC in the zones that we have fiber-to-the-home, unless there's a problem. So 85% of our gross additions in the areas where we have fiber available are taking fiber. The remainder is, there's a technical issue or there's a preference on the video side to have the old equipment or certain exceptions like that. But fundamentally, we will not be offering the HFC product in areas where we have fiber available. 33:16 In terms of the migration strategy, we are literally right now starting to accelerate our migration strategy, because all the statistics to your point about the install side have gotten significantly better in terms of install times. Yes, we are going to two truck rolls on -- over 80% of the installs are two truck rolls. There are certain areas where we just say it's not efficient for us to do that, so they are longer truck roll times, which has allowed us to expand the windows of availability in terms of the install times. And where an HFC install typically takes about 45 to 50 minutes typically, the FTTH install for the customer is around 1.5 hours. And so we've meaningfully made that experience a lot more attractive for the customer and which is why we're starting to launch the migration side of the process a lot more aggressively. 34:25 The goal today is, we're about averaging 5,000, 6,000 net adds per month. We'd like to double that as quickly as possible and being much more aggressive on the migration side. And so -- and as we start releasing more and more homes over the rest of the year, that's the target for us to get those types of numbers. I mean, the target for the year is to try and get to -- close to 200,000 fiber homes -- fiber subscribers by the end of this year. And hopefully, we'll be on track to deliver that with the efforts that we're doing.

35:05 Thank you.

35:08 Thank you. Our next question comes from James Ratcliffe with Evercore ISI. Please go ahead.

35:13 Thanks. Two, if I could. First of all, any commentary on any impact you're seeing from inflation and the cost structure in general and particularly around the cost of your fiber builds, both labor and equipment? And are you -- any supply chain issues there? 35:31 And secondly, did you have any significant impact from the migration from the emergency broadband plan to the ACP at the start of this year? How big a business is that for you? Thanks.

35:45 On the first one, clearly, we've got about 1% of our overall cost base which relates to power, whether it be powering of the network or part of our facilities side. And that has remained pretty stable over the past couple of years. But clearly, we may see pressure on the energy side, but it's only about $100 million of our entire cost base per year. Other things, we've locked in on the supply chain, the fiber and the CPE cost and the labor side for the next -- for this year and going into next year. So we've got a pretty good predictability in terms of what we believe the cost per home is going to be on the fiber side and the new build side. 36:44 And there are places, pockets of jurisdictions and communities to try to take advantage of things like cost of the police force that certain communities insist on escorting our trucks as we lay out fiber, which is not peanuts in terms of numbers, because they will affect maybe $10 million, $20 million of additional cost in terms of things that certain communities are trying to extract from us. But overall, we've got the cost base pretty well contained here in terms of what we've planned and what we expect the cost to deliver over the next 12 to 18 months to be. On the second question, I'll let Mike answer that.

37:35 Yes, James. So on the actual migration from the former EVV program to the ACP program has not been problematic. It's been fairly seamless. It's not a material part of our business. I'd caution when you see the numbers the government disclosed about total enrollees, a substantial majority of those, at least two-thirds are using that subsidy for a mobile product rather than a broadband product. We have about 30,000 customers currently in the ACP program on our fixed side of the business.

38:03 Got it. Thank you.

38:07 Thank you. Our next question comes from Michael Rollins with Citi. Please go ahead.

38:13 Thank you. Good afternoon. Earlier in the year, you outlined the size of some of the incremental investments in the operations to make the pivot, invest in marketing and service. I'm just curious how those items are trending for the year? And how you see the impact for EBITDA over the course of 2022? 38:36 And then, as you're looking out at the business model, if you can give us an update on as you make this progression, what the new state for Altice might look like in a few years, whether it's the prospects for revenue growth or how margins may look as you pivot to a more fiber-centric portfolio?

38:57 I think we're well on track relative to the targets on OpEx. We're maintaining a lot of flexibility on our marketing dollars to increase that going forward. So, if we were kind of estimating 125-ish plus of incremental OpEx going into this year, some of it being onetime relative to the rebrand. I think we would clearly reserve a pocket of $25 million to $50 million of additional OpEx if we think that was useful for our growth initiatives, particularly as we're looking to accelerate and do more fiber and new build than what we had budgeted to do back in November. So we'll continue to remain very flexible on that side. 39:43 In terms of how we think about, let's call it, a new steady-state cost base and CapEx base going forward. We've spoken about this in relative detail over the course of the last years or so. And we're getting a lot more granular in terms of the affected cost base and CapEx. If you look at just the overall CapEx budget today and you exclude fiber-to-the-home and new homes built, you're probably around $1 billion. That $1 billion is about $600 million, which is what we would have -- we would look at in terms of maintenance CapEx and another $400 million of growth CPE-driven customer CapEx. 40:38 And if you look at those numbers and you have a 100% fiber network or predominantly fiber network going forward, that maintenance number comes down probably about a couple of hundred million, maybe up to $300 million. So we're probably on the maintenance side, closer to $700 million than we are $1 billion pre any fiber build-out, which will be over. And then it's really about how much we're spending on any extensions of the network, which have been averaging about a couple of hundred million going up to about $300 million this year given the acceleration we're doing in terms of edge-outs. 41:21 So that's probably the indication as to what we look like from a CapEx standpoint going forward that's called post 2025 and onwards. And on OpEx standpoint, we have about $800 million to $1 billion of addressable OpEx . OpEx that we could isolate that relates to network and service-related issues is about $400 million or $500 million, it can expand probably to $600 million depending on how you define things. And as you think about really driving reduced OpEx, you're looking at saving -- it's hard to guesstimate, but you're probably out there saving $200 million to $300 million easily of that OpEx. 42:19 And hopefully more, as we are seeing already the early returns from the reduction of incidence rates, lower churn numbers, higher ARPU numbers, etcetera, right? So we're very confident here that the strategy is here. It's a very attractive return on invested capital and will really drive very good financial statistics on a steady-state basis after 2025.

42:52 Thanks

42:56 Thank you. And our next question comes from Doug Mitchelson with Credit Suisse. Please state your question.

43:03 Thank you so much. Dexter, a couple of questions. First on -- just a follow-up to Brett's question on the fiber installs. I think you said fiber install times are down to 1.5 hours. And I think you said from a customer perspective, so that's probably the in-home truck roll, right? I'm just curious what's driving the improvement. And the reason I ask is, I'm just thinking over time, you have to transition more and more of your workforce from installing HFC to installing fiber. I know in the past you indicated there was a need to train. I'm just -- how quickly do you think over the next couple of years, you're going to have to move more and more workforce into the fiber side. And do you think you have that lockdown where that training or the improvements that you're making are scalable? That's the first question.

43:46 Yes. I mean what we used to do in the initial days of fiber installs is have one truck roll for the whole day, right? Which looked for the full drop into the home from the OLT and the entire installation process in the house. Now what we do is, we do the drop ahead of time so that the final drop into the home is what the install process and the customer faces. And it's an extra half an hour relative to HFC, half an hour, 40 minutes relative to HFC because you're actually dropping a new distribution wire into the home and working with the homeowner as to where to drop that into and through what side. Could be a drill into the side of the home, could be just the drop into their garage. I think that's what takes the additional time is to identify really the geographical location as to where you're going to drop the fiber into, which drops into the gateway. And then the whole distribution of the gateway over -- and the installation of the WiFi, that takes just a little bit longer than through HFC. 45:06 And we continue to see improvements as people get trained more and more. We do believe we have the right balance today in terms of training. We are heavily recruiting more internal workforce to be able to keep those on standby as the key fiber installers and not subcontract all of that out. And so, we are ramping up those efforts commensurate with what we expect the ramp-up to be in terms of the amount of installs. 45:40 So we're pretty well-oiled machine today after fits and starts over the last couple of years here, in particular with COVID as well on there. And in terms of just delivering new homes passed here, we had a big permitting issue in the State of New York. That, we believe, has been solved. That's about 400,000 or 500,000 homes that will be released. We are well on track in the Connecticut footprint to upgrade our entire Connecticut footprint to Fiber this year and also I have been working very closely with the state of New Jersey. So we're on track to deliver approximately 1 million fiber homes this year. Hopefully, we'll do better than that in the Optimum footprint. And then we're also starting to launch a couple of hundred thousand of fiber homes in the West as well.

46:34 Great. That's helpful. And the second question, on the wireless side, I was just hoping you would compare and contrast sort of the wireless strategy now versus last time. And the reason I asked the question is, I feel like through the pandemic, perhaps a little bit of less of a retail focus, more of a greater ability to facilitate through digital sources. But I'm sure there's other dynamics as well that perhaps you think is different. So just curious there.

46:59 Well, I think when we launched, we went very digital-first strategy. And unfortunately, the US market still remains not that adept at a digital-first type of distribution of mobile. Retail and inbounds continues to be the bulk of our sales on mobile. And that's one of the reasons why we're aggressively pushing out our retail network. We've got 75 new stores set to open this year. We've already opened up 10 this year, and we'll continue month-over-month to continue to increase that and just getting better at the entire sales effort through the call centers as well, both in retention and in straight marketing side. 47:49 So we feel good about where we are today, particularly since we've got our new T-Mobile agreement that we think is very attractive and allow us to be very flexible in terms of how we think about our offers going forward. And as our distribution footprint continues to increase, we're optimistic that we'll continue to be able to push that. So it's really just a thought process around a digital-first strategy, which did not work very well given the complexities in the US market on mobile, with the handsets and with porting and with the SIM changes is -- those three things are not necessarily very normal activities, let's call it, for the US consumer relative to other markets that we've seen, which they're very, very well in tune with all three of those things. 48:46 So pivoting into a more traditionally distribution-oriented side, we see is going to do as well on the distribution of our mobile product.

48:57 Great. Thanks so much.

49:02 Thank you. Our next question comes from Kannan Venkateshwar with Barclays. Please state your question.

49:10 Thank you. So Dexter maybe on the -- the first question is on the churn stabilization that you talked about. As you've gone through this process of stabilizing the base, could you give us some insight into why people were leaving? Was it the product? Was it a desire for symmetrical fiber speeds? Was it marketing or price or something else? And what has changed in terms of retention strategies? Or is it merely just upgrade to fiber or something else? Any insight on that would be useful. 49:50 And on the subsidy side, the subsidy that you've got in Arizona, could you just give us a little more sense of what you can use that money for and when the money starts coming in? And can you use this, for instance, for extensions, edge-outs or do you have to do this as a new build? And when does the money start coming in once you do the work? Thank you.

50:13 So on churn stabilization, I mean, there is less activity in the market as people require, obviously, broadband to be working 24/7 all the time. And so, I think people are a lot more patient with their providers than they have been historically. But also, obviously, the improved customer care metrices that we've seen, the continued investment in the network plays into it. And a big majority of our churn comes from voluntary because people are switching over to another provider for either price reasons or performance reasons, right? 50:52 And so there's nothing as particularly differentiating that's driving the churn reductions other than old-fashioned, good service and good network performance is allowing -- and obviously, from a behavioral standpoint, people are, I think, are a little bit more cautious about switching providers given how they need their service to be working nonstop. And if it's working very well, what's the point of changing? 51:23 On the subsidy side, typically, the money comes in when we deliver the homes pack. Each RFP by the way, is -- does not look like the next one. Each community looks at different things. Some may look for -- to your point, may look for line extensions. Primarily the number one desire is to get symmetry of at least 100 megabits of symmetry. And so, a lot of the cable providers who do not provide FTTH build-outs are a little disadvantaged relative to operators that are providing FTTH rollouts, particularly on the symmetry side. So we've seen instances where cable providers will say, listen, I'll do one gig, but I only can do 50 on the upstream, and they fail to get the contract because they want symmetry. 52:33 And so, as we basically have committed on each and every one of our subsidy RFPs to go after -- to deliver fiber-to-the-home, which has been a very successful strategy, and we think we're going to continue to have good traction on that going forward. But I can't tell you what the rules of the game are in every single one of our applications because each application looks very different.

53:02 Got it. And just as a follow-up, I mean, is there -- is the activity around subsidies big enough to offset some of the CapEx pressure potentially next year or the year beyond once they start scaling?

53:15 No, this is all incremental CapEx to it. And if you think about it, these are underserved or unserved markets. And so, the cost of building out typically is prohibitive historically. And so the subsidies help it to make -- help to make it relatively attractive to be able to be the only provider in certain markets that no one will want to ever overbuild because it's prohibitive to kind of create a second network out there. So this is incremental CapEx, this is not synergistic CapEx. There are situations, to be fair, where we are able to upgrade backbones or head ends or extensions with subsidy money because it allows us to hit these underserved or unserved markets and is part of our responses to RFPs. But by and large, this is all incremental CapEx.

54:17 Got it. Thank you.

54:23 Thank you. And our next question comes from Jonathan Chaplin with New Street. Please go ahead.

54:31 Hey, guys. Thanks for taking the question. So I just wanted to touch on ARPU for a second. Dexter, I joined a bit late, but I heard you say that you’d expect ARPU to grow for the year. And it's --

54:46 No, I was just a question about broadband ARPU, Jonathan. Craig asked about broadband ARPU. And so, our broadband ARPU has grown from quarter-over-quarter, and we think that we will continue to be able to grow that.

55:01 Yes. And so my question on broadband ARPU, Dexter, is whether given the pressures you're seeing on subscriber growth and the competitive environment intensifying, whether that's the right strategy right now? Whether on the cable business, so where you're deploying fiber you've got a phenomenal product for all the reasons that you've articulated, and you can price that product at a high level because it does solve? But in markets where you're competing with cable, does it make sense to be pushing price in those markets given the competitive intensity that you're facing?

55:46 Yes. It's -- we're not pushing price -- well, maybe take one step back, Jonathan. We look regularly at what our competition is and we are definitely not price leaders in terms of pricing over our competition, right? So where we do compete against a FiOS, as an example, you'll see regularly right now, there's a big differential of $20 plus depending on what product you're taking, and we're going to narrow that gap with price adjustments. But we're never going to be more expensive or even on par. We've always been pretty much slightly below FiOS historically. And as we launch fiber that may change over time, given that we probably will have a superior product for a bit of time. 56:40 In the West, this is something that we monitor very closely. Some of the fiber providers are very aggressive and come in and price very low price points to try and monetize the network. And in those cases, we obviously -- we tend to address that much more in retention than in changing overall all of our promotional efforts. We want to try and keep a unified marketing strategy across products and price across our entire footprint, but allow our local teams to be flexible relative to retention or other types of add-ons to the extent we see competitive pressures there. 57:24 But we are not looking to push price or push ARPU based on pushing price. It's really -- we're seeing ARPUs increase because our customers are mainly taking the one-gig product or 49% of our customers are taking one gig. On fiber, I believe that's 56% or 57% of our gross adds are taking one gig today. And so that is driving naturally to the higher ARPU numbers.

57:55 Right. So Dexter, correct me if I'm wrong, but I think your promo pricing in Verizon markets is lower than Verizon, but your rack rate is higher. And I'm wondering if it's maybe the step-up from promo to rack rate, which is making competitive dynamics more difficult. And we've seen sort of most of the fiber providers got a flat pricing for broadband over the course of the last couple of quarters, and I'm wondering if that's hurting you guys competitively.

58:26 It's a very good comment, Jonathan, because that's literally like three presentations on my desk about this type of stuff that you're addressing right now, that we're being very thoughtful about how we're thinking about the step-ups in pricing over the next two, three years, typically, is when the step-ups come in and how we think about price guarantees or whatnot either for life or for periods of time. So I can't comment on it right now, but it's a live topic here that we're dealing with, and we will have a very clear response on this in the next couple of months.

59:09 Got it. Thanks Dexter.

59:14 Thank you. I'll now turn the floor back to management for any closing remarks.

59:18 Thank you, everyone for joining. Do let us know if you've got any further questions, and I hope to speak to you soon. Thank you.

59:24 Thank you.