CABO - NYSE

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cable One's Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Jordan Morkert, Vice President of Investor Relations. Jordan. Please go ahead.

Good afternoon, and welcome to Cable One's Third Quarter 2025 Earnings Call. We're glad to have you join us as we review our results. Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future broadband revenue, customer growth, connects and churn rates, new product rollouts, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, anticipated benefits from our mobile service pilot program, future cash flow, ARPU and capital expenditures, future levels of competition, potential uses for our cash flows, our ability and sources of capital to fund the retirement of our 0% convertible notes in 2026, the estimated MBI put purchase price, MBI's future debt levels, our CEO succession process, the anticipated timing for closing of certain asset sales, and our future financial performance, capital allocation policy, leverage ratios and financing plans. You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call and today's earnings release and in our SEC filings, including our annual report on Form 10-K and our forthcoming third quarter 2025 quarterly report on Form 10-Q. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles or GAAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our President and CEO, Julie Laulis; and Todd Koetje, our CFO. With that, let me turn the call over to Julie.

Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us for today's call. Our subscriber results in the third quarter were weaker than expected, reflecting higher churn from the combined impact of macroeconomic factors, competitive pressures, promotional roll-offs and billing migration activities. While overall customer losses were disappointing, we saw modest improvements in third quarter connects as compared to the prior year period, a trend that carried into October. ARPU performance along with disciplined execution allowed us to deliver financial results largely consistent with the second quarter. We anticipate ARPU to remain stable for the remainder of the year. We believe our focus on simplified pricing, segmented marketing campaigns and value-enhancing product and service offerings is laying the groundwork for improved financial performance over time. However, we continue to navigate a challenging macro environment, which is why our focus remains on execution, retaining existing customers, retooling our go-to-market approaches, and working to position Cable One for durable long-term growth. I'll first review residential broadband customer trends. Residential data customers declined by 21,600 in the third quarter, driven by the factors I noted. As I mentioned, momentum in connect have continued with year-over-year growth for the quarter and sequential gains each quarter of this year, and that momentum has carried into October. Positive signs that our initiatives are resonating even in a complex and competitive landscape. One major initiative enabled by our billing platform transformation is the launch of a new go-to-market pricing structure across our MSO footprint. By significantly simplifying our pricing, Sparklight representatives can now more easily match products and price points to individual needs and are doing so faster, thereby improving overall customer experience. At the same time, during the third quarter, we experienced increased churn. Given the economic and competitive pressures in the market, we believe some customers were particularly sensitive to promotional roll-offs and to touch points tied to our billing platform transformation. Similar to our systematic efforts to drive new connects, we are taking an equally aggressive approach to addressing churn. We saw churn improve in October in line with October 2024 results following this period of significant customer impacting activity. As we continue aligning our products with customer needs, we are advancing our customer segmentation strategy. Our Lift product positioned as value by need resonates with cost-conscious customers, providing a sustainable path to reach incremental households and expand penetration. We are also seeing strong sell-in among our premium tiers, with about half of new customers choosing gig or faster speeds, including our expanding multi-gig offerings, up from roughly 40% sell-in last year. Average monthly usage is now around 775 gigabits per customer, underscoring sustained demand for high-capacity service, while peak utilization remains below 20%. Through these and other initiatives, we are extending our reach across a diverse range of customer segments. Turning to ARPU. The increase this quarter was primarily driven by realizing a full quarter of the segmented pricing changes implemented during Q2 as well as a higher-than-usual level of promotional expiration. Looking ahead, we expect some of our retention initiatives will put downward pressure on ARPU, partially offset by the continued adoption of value-enhancing products and services, resulting in stable ARPU through the balance of the year. As part of our segmentation strategy, we have been expanding our value proposition beyond the core broadband service. A key example is Tech Assist our $10 per month support service that offers customers expert support for a wide range of Wi-Fi connected products from PCs and smart TVs to tablets, security cameras, thermostats and more. Tech Assist helps customers keep their technology running smoothly and strengthens our role as the trusted neighbor in their homes. While we initially view Tech Assist as a modest contributor in the near term, adoption has exceeded our expectations to date, and we are optimistic about the long-term opportunity it represents. We are building on the success of this initial launch with our recent introduction of 2 new Tech Assist products, one covering home entertainment and connected portable devices and another that adds device protection to the tech support assistance included in the original offering. Turning to our mobile initiative. I'm especially proud of the speed at which our team has worked to bring this product to market. We announced our plans to pilot this product on our August earnings call, began associate testing in October and plan to launch unlimited plans starting at $25 per line in select markets later this month. We believe mobile will help reduce churn, deepen the adoption of our services and increase customer lifetime value. As we launch, we'll continue to learn through targeted pilots and refine how mobile fits within our broader strategy with plans to share additional details on our go-to-market strategy once the pilot phase is complete. Before closing, I want to briefly address our leadership transition. As we've previously shared, I will be retiring from Cable One, but will remain as a Senior Adviser through 2026 to support a seamless transition. The Board has retained a leading executive search firm and has made significant progress in the comprehensive search process for the next CEO of Cable One. The goal is to achieve a smooth transition and facilitate the continued execution of our long-term growth strategy. We remain focused on executing our strategy, and I am confident that our talented leadership team and dedicated associates will continue to move the company forward. To close, we're encouraged by the continued progress, stronger connect trends through the quarter and in October, year-over-year connect growth paired with another month of sequential churn improvement. We remain focused on executing initiatives that both strengthen connects and reduce churn, and we are looking forward to the results of our upcoming mobile pilot, which we believe could further enhance the customer experience and support growth over time. And now, Todd, who will provide a recap of our third quarter financial performance.

Thanks, Julie. Starting with the top line. Total revenues for the third quarter of 2025 were $376 million compared to $393.6 million in the third quarter of 2024. Residential video continued to account for the majority of the year-over-year decline, down $8.7 million or 16.2% due to video subscriber churn. Residential data revenues decreased $2.8 million or 1.2% year-over-year, driven by a 5.1% decline in subscribers, partially offset by a 3.2% increase in ARPU. On a sequential quarterly basis, residential data revenues declined by 0.8%. Third quarter business data revenues grew 0.4% year-over-year. This growth was driven primarily by our fiber and carrier segments, offset by some continued subscriber and pricing softness in the SMB segment. The Fiber and carrier segment benefited from strong sales momentum, higher connection volumes and our ability to capitalize on new market opportunities. Compared to the second quarter business data revenues increased 0.2% sequentially. Operating expenses for the third quarter of 2025 were $96 million or 25.5% of revenues compared to $104.6 million or 26.6% of revenues in the third quarter of last year, with the decrease driven largely by a reduction in programming costs. Selling, general and administrative expenses were $100.8 million for the third quarter of 2025 compared to $88.4 million in the prior year quarter. SG&A as a percentage of revenues was 26.8% for Q3 of 2025 compared to 22.5% for Q3 of 2024 with the increase driven largely by noncash stock-based compensation, other labor costs and investments in growth enablement platforms. As discussed last quarter, the implementation of these platforms is expected to generate meaningful OpEx and SG&A savings over time as we realize greater automation and operating efficiency. Adjusted EBITDA for Q3 of 2025 was $201.9 million, representing 53.7% of revenues compared to $213.6 million or 54.3% of revenues in Q3 of last year and $203.2 million or 53.3% of revenues in the second quarter of 2025. Capital expenditures totaled $71.8 million in the third quarter, a decrease of $5.2 million or 6.8% year-over-year. During the quarter, we invested $4 million of CapEx and new market expansion projects and $2.7 million in integration activities. We now expect full year CapEx to come in at the high $200 million range versus our previously articulated $300 million area estimate. Adjusted EBITDA less capital expenditures or free cash flow, was $130.1 million in the third quarter of 2025, equating to a conversion ratio of 64.4% of adjusted EBITDA. In the third quarter of 2024, free cash flow was $136.6 million and 64% of adjusted EBITDA. Our business generates a significant level of cash flow and we continue to assess the optimal use of those funds in order to maximize long-term shareholder value with our current primary focus on disciplined debt repayment. Supplemental to our operating cash flows. During the third quarter, we monetized our equity investments in

[Operator Instructions] Your first question comes from the line of Craig Moffett with MoffettNathanson.

Todd, thank you for the update on the balance sheet and the debt you've paid off. Can you just update a little bit more about where you would like to target your leverage and how low you think you might take it? And then a more kind of general strategic question, which is just what might a more dramatic approach to try to address the -- particularly the broadband ARPU issue in my mind, but the broadband net add problem in general I'm sure you talk internally about sort of what are some potentially more dramatic approaches to try to right the ship, if you will. What might those look like?

Craig, thanks for the question. I'll kick that one off on the balance sheet inquiry. Specific to leverage as we articulated in our prepared remarks, we've already paid off over $300 million in debt this year, and that will continue to be one of our primary capital allocation priorities. The business generates a meaningful amount of free cash flow, leverage free cash flow. We benefited from some of the congressional tax payments. Tax legislation recently passed as you've seen this quarter, where that was a really miniscule amount of cash taxes. So we'll get the benefit of that going forward as we've discussed in the past. We do have to continue to focus on deleveraging. We've operated this business in the past between kind of 2.5x and 4.5x. But that being said, you have to be conscious of what the cost of capital environment looks like when we were willing to take it up to higher levels. It was for strategic transactions. It was in a much lower cost of capital environment. It was in a much less competitive environment, to be honest with you. And so we think about all those things when you think about targeting or philosophical approach to balance sheet management which I would say is much more in the high 2%, low 3x overall leverage ratio that we're going to continue to focus on driving towards with disciplined debt repayment.

And I'll hop in on the second one to you, feel free to join as well. I mean I don't think we'll specifically outline details of what we would be doing to grow our customer base, given the competitive environment and understanding who listens to calls. But what I can say is that work has been done and progress is absolutely being made now that we can move past some of these very large platform installations and migrations. Those are behind us. And I think that it might actually be instructive to understand what happened in the third quarter and what things have looked like since the third quarter. There's no doubt that the third quarter customer loss was disappointing. But thankfully, October seems to be different in some significant ways. But first, let's go to the third quarter. In the third quarter, Connect showed modest improvement over the last third quarter. And actually, August, September and October all outperformed last year's connect. So that's half of the net add equation, right? And that is why we made the comment that we feel like our initiatives seem to be resonating to bring more customers in the door. However, in the third quarter, disconnects were elevated. And we had a confluence of activities in a compressed time frame from the overall macroeconomic environment, competitive pressures continuing, of course, higher-than-ordinary promotional roll-offs, so they're going to higher rates and a billing migration that touched three quarters of all of our customers. Our churn did spike with all of that happening at the same time. And regarding the billing migration, I mean, we are super pleased with the increased capabilities and the efficiencies of this platform, and we can even talk about how we've used it already. It's agility much better than our previous one. We have been able to isolate that this was also a factor in our increased churn. So in a world where there are multiple choices for broadband, a touch in the form of a new name on the bill that they've never seen before. A new bill date, a bill date gets moved. Normalized rates as acquisitions come into Sparklight, all of those things with the billing migration give customers an opportunity to review who their provider is. Now the good news is we believe that any heightened churn associated with the billing migration is now behind us because churn has continued to improve in October. We saw connect at higher levels than last year, same period October and connects grew sequentially month-over-month in October as well. So that was the third quarter. Going into October, again, October connects continue to be higher month-over-month and year-over-year and disconnects in October fell back to pre-third quarter levels. So that's not enough. I mean, that's fairly good news, we think, but that's not enough. We're continuing to drive initiatives to bring connect levels higher, lots of work in the segmentation area, multi-gig launches, 2 and 6 gig, web sales, a lot of work being done on our online platform now that we have a centralized billing platform. That's the same for all the companies. And we're also working on loyalty and retention that side of the business as well. A lot of work going on with high LTV [love], if you will, segmentation and targeted save offers as well as uses of AI and our churn models. So hopefully, that gives a little more flavor, a little bit of story behind the numbers of the third quarter and what we see going into the fourth quarter.

Your next question comes from the line of Greg Williams with TD Cowen.

Great. Just maybe Julie dovetailing off the last topic. Any way to quantify between the competition and the promo roll-offs and the billing migration friction? Is there one more to blame than the other? Or is it just sort of a equal perfect storm of events here because some of them are onetime in nature, it will go away. But things like competition will remain, if not get worse. Second question is just on the broadband strength. You gave great color on the fourth quarter with puts and takes. As we think ahead in 2026, obviously, not asking for guidance today, but just generally in '26, if you can help us with sort of puts and takes. Are price hikes on the table? Are there more promo roll-offs? And maybe as an offset, are you attacking more value segments? Any color would help.

Okay. I'll try to tackle that one. There's a lot there, Greg. It was -- when I said a confluence of a lot of activities in a compressed time, all of those things affected third quarter churn, which was unusual for us, right? We have had historic lows, and this was definitely a spike. Part of it, the billing migration touching 750,000 people with different things on their bills was part of it. But when you go through a billing migration, for those of you who've done it, you have to put a freeze on your current customers as you move everything over. And what that means is that there's a section of customers that don't get their bill and they don't go through their normal cycle for a period of time. Those get delayed for about 2 weeks and some a little bit longer, 3 weeks. What that means is customers have larger bills by the time they actually have to pay, which does cause a spike in nonpay. So it really was a confluence of a lot of things. And we have thorn apart, the pieces in parts and no one piece bigger than the other. On the competition side, do we get disconnects because of competition? Of course, we do. But by and large, our problem related to competition has been primarily related to cell phone Internet and not getting connects. And that is an area that we've made a lot of inroads on. So all of the things that I mentioned were part of the reason for our increased churn, which we've now seen come back down to pre-migration levels. In terms of 2026, CABO has not had a cadence of annual rate adjustments for our high-speed data customers. We do that for video customers due to programmer increases. So we do not have a planned rate adjustment for our HSD service for HSD customers at this time. But we do continue to explore other avenues to increase revenue. For example, we are currently exploring our AutoPayPlus program and seeing how it aligns with others in the broadband telecom space as an example. I hope that answers your question?

It does.

Yes. And Greg, just one thing to jump in on that I think would be helpful for the audience and for you, hopefully, as Julie was talking about that nonpay cycle, we have and we're obviously talking quite a bit about October because when you go through a migration like that, there's quite a bit of noise and it was the confluence of events. But the non-pays in October, as we've seen from an attrition rate are approximately half of what we saw in those spikes in August and September. And so that is something that I would say is also maybe like you said, an anomaly that's behind us and not something that would be recurring. The competitive intensity, it is recurring. We have to be on our toes, the pricing, the packaging, the continuous state of rivalry, how we think about every single day going to market is what we've done to build the team that we have now, why we made the critical investments in those platforms and now really starting to see the agility of executing on those playbooks as we've talked before.

Your next question comes from the line of Sebastiano Petti with JPMorgan.

And I guess just kind of following up on the theme of questions thus far this evening, but related to broadband competition, I think your larger cable peers have kind of called out low end kind of pressure. And I don't know if that is just FWA as AT&T may be Internet Air scale, but -- can you maybe perhaps comment from a competitive standpoint as you kind of think about your subscriber base, the churn that you saw on a nonpay basis, but maybe voluntary churn, is there any low-end pressure there to speak of? And then I think, Julie, I think you did talk about the Lift products in your prepared remarks, but where are we with the FlexConnect rollout? Is that still in the early stages as you guys think about the improvements in connect volumes in the fourth quarter and beyond as you look to stabilize things? And then lastly, I guess, Todd, I mean, following up on the leverage kind of question or balance sheet. Are you still confident in remaining below 4x net leverage as you kind of bring MBI in over the next 12 months?

Great. I'll go ahead and start. Low-end pressure I would say, yes, as it relates to cell phone Internet increased marketing, there affecting connect. However, again, August, September, October, all higher connect months. We seem to have found some go-to-market strategies that are resonating with our customers. And listen, the onus is on us, to provide services at levels and price points that customers want and Lift and Flex go directly to that. Lift accounted for a modest but growing share of our gross adds this quarter, and the product is allowing us to reach that value by need customer segment. And we have been tracking them and the retention of these customers tracks meaningfully better than our overall base. It, of course, requires customers to demonstrate financial need in order to qualify for that service, which naturally limits broad cannibalization and helps preserve the integrity of our core broadband tiers. We expect Lift to be net accretive supporting incremental growth and strong retention amongst these price-sensitive segments, this low end that you referred to. Flex is a product that can help the value by choice versus value by need customer. Someone who can't qualify for Lift but once something in that same price range, which you could imagine, would be the same sort of people who might be interested in cellphone Internet, but with much more reliability and unlimited data, higher speeds, et cetera, et cetera, in many cases. Flex relaunched late in Q3 and only one channel in our sales center, and it's expanding to multiple channels, all channels in the fourth quarter. So we will be able to report out on it on our next call. The good news is our connects are trending nicely even without the benefit of Flex in Q3. So there's the silver lining.

And Sebastiano, on the leverage and the balance sheet question. We're going to continue to tackle that numerator, as I already talked about in terms of the debt repayments, whether that be through our organic cash flow or monetization of strategic investments as we were able to benefit from this quarter with

Got it. And then any way to maybe quantify the proceeds from the tower -- fiber-to-the-tower sales from yourselves and Clearwave?

So $42 million is the agreement. No proceeds yet. We just entered in the agreement on a direct basis, and that is effectively some contracts that we still owned that were in the Clearwave fiber market. The agreement that Clearwave Fiber, our joint venture entered into with the same third-party is for all of the network assets in that specific region, and that is an undisclosed amount. But effectively, our direct proceeds will ultimately be in that $42 million area.

Your next question comes from the line of Steven Cahall with Wells Fargo.

Maybe first, just wanted to ask about move activity in this context of a lot of competition for subscribers. I think historically, when move activity picked up, it was a tailwind. I know it's been muted the last few years. But if we do see lower rates and more activity, given all the products that are out there, do you see that as a headwind or a tailwind to your Connect activity? And then relatedly, as we kind of get to churn from here, do you think it's similar to where it was in the first half of the year? Or is it still a little bit of headwind? And then last one, Todd, just wondering if SG&A slows in Q4, if it remains at levels where it was in Q3?

So move activity is still low. And so this is a game of jump balls. So it's, again, incumbent upon us to win any opportunity to have folks look at Sparklight. It's interesting, one of our go-to-market strategies is to have a very particular claim for each market place that is verified by a third party. So it's not just us talking about ourselves. So it might be a claim on speed, for example, from Ookla, maybe open source. But one of the claims that several of our markets use is customers who come to Sparklight, stay with Sparklight. And that is based on Kagan, the Media Research Group of S&P Global Market Intelligence, who declared Sparklight #1 in customer loyalty among major U.S. broadband providers in their Q1 2025 media census survey and that was due to our lower churn. So it's -- whenever there is a chance for Connect in town, it's incumbent upon us to get that win. And I think, again, with connects trending up, we're finding some things that work. I think your second question was about churn in the fourth quarter. Am I right?

That's right. Yes.

Okay. Yes. As Todd said, October was half of what August and September were in terms of nonpay, right? And overall churn is back to pre-migration levels. So we would consider us back to normal.

Yes. I would say, Steven, that we definitely feel like there's still an opportunity for us to improve on that. To your question around like pre -- even some of the migration levels. And we recall, we started this migration in Q4 of '24, and it was a phased approach. So it's been an important and critical process that the team did well on in navigating, but it's also been putting us in a little bit of a hamstrung situation relative to not only the Connect side of the equation, but a lot of the new retention initiatives that we have. So we're going to really focus on that execution of retaining customers driving into that loyalty factor that Julie just alluded to, retooling a lot of the go-to-market strategies to even capture more of those moves. I don't think we or maybe even the industry did great on those in the past. But we all know that there are additional alternatives and there's different tactics to drive that awareness from a branding perspective and from a connect perspective. And then just really reignite the growth mindset in terms of how we bring that element of winning strategies to bear each and every day with our associates and in our communities. You asked about SG&A, I think, as well. It is heightened this quarter. I talked about it in the prepared remarks, a little bit of the noncash stock comp that I talked about last quarter, that will still be in Q4 of '25 here. But when you're going through these migrations, you have incremental labor expense, both internal labor as well as contract labor. And then, of course, we talked about last quarter, we will start to see the benefits, some of these cost savings coming into the financials in both OpEx and SG&A at the tail end of this year, but really more on the run rate basis for 2026. So I would anticipate that you see that come back in line.

Related to retention as well, I mean, we talked about some of the things that we were somewhat pleased at how things are proceeding since the billing migration but that we will be leaning into even more to drive even more connects and really working on the retention side as well, even as churn comes down. So working on retention overall, but also a lot of tests going on. We talked about promo roll-off. And when someone goes from a promotional rate to a full price or higher rate, that certainly can elevate churn in the short run, but we have done deep analysis on these cohorts and how they roll off in their first month and subsequent months, and it proves that the overall retention of these customers as we track them versus the control of the business as usual customers is a good ROI. Obviously, that's because of increasing ARPU. Well, we are working on tests for retention for our promo roll-offs because those promo activity will continue at those elevated levels through the end of the year. And so we are doing test against those segments to see what we can do to help keep more longer. So working retention on all sides of the business.

Your next question comes from the line of Brandon Nispel with KeyBanc Capital Markets.

Two quick, I think, on the competitive environment. One, could you just update us on where you think you are from a fiber overlap standpoint within your footprint? And then two, you talked about fixed wireless sort of being the main competitive factor. AT&T has talked about rolling out AT&T Air more broadly, really starting this month. How are you thinking about the competitive impact of that product starting to roll out more broadly going forward?

Brandon, it's Todd. The fiber overlap that we talked about last quarter being in kind of that low to mid-50s is pretty consistent this quarter. As you do recall, and we've talked about before, one of the most ambitious kind of movement in that was AT&T's upgrade from DSL to fiber. And we did see that slow a little bit undoubtedly because of where they're putting more emphasis in some of the markets that are smaller, more rural, where we do have a considerable model overlap with them on the AT&T Air product. So kind of answering both of your questions is one is fiber overlap, pretty consistent. You'll see it in select areas. But from the primary drivers of it being LEC upgrades, that hasn't accelerated in any way. And then the FWA, we've got meaningful overlap in our markets from what we see from ground truth as well as third-party research with T-Mo. We have basically nearly all of our markets that have it from one of the 3 providers. And AT&T was, I would call it, the laggard in launching that. But has here in the last, really, 3 to 4 quarters has been the most aggressive of rolling it out in areas where they are still copper only, and we would anticipate that, that will continue.

Yes. And I mean I think that's where Flex finally getting out has a good chance. So it will be interesting to see how it performs. And don't forget, we're launching mobile in November, which is amazing given that we just signed the deal in August. But at any rate, we're going to be able to market to our customers just like they market to theirs. So it's going to be a more level playing field.

Your next question comes from the line of Sam McHugh with BNP Paribas.

Two questions, I guess. One is a follow-up on gross add and churn. You're talking about gross adds being up. I think I heard you say churn was down year-over-year in October. So maybe you could clarify. So I guess with that in mind, could we see broadband losses actually stabilize in the fourth quarter? Like how confident are we in that momentum continuing? And the second one on the sale proceeds, kind of multipart, sorry, Todd. The $123 million you booked, that's a pretax number. That was the question one. And then on the fiber proceeds, same question. Is that pretax? And is that only your direct sales? Like could there be some pass-through from Clearwave as well? And I guess lastly, like how much do you think you have left to divest now? Are we looking at similar amounts to left?

I'll start with the churn question. October, yes, down year-over-year. That is correct. You mentioned something about gross connects, Sam, but I'm sorry, I did not catch it. Go ahead.

Just saying that you're talking about, they were up in October again and through, I think, August, September too. So if we flow that through for the rest of the quarter, if gross adds are up and churn is down and that would suggest a pretty decent improvement in Q4.

You said it, not me.

Yes. I would -- maybe one anecdotal thing, Sam, just to add is the month of October, it's a month, right? But both from a connects improvement year-over-year and a disconnects improvement year-over-year. That's the first month that's happened in 17 months.

Yes.

So it's definitely a good indicator in our mind, but definitely something that we have to continue to execute upon. And I think then moving into the other question on the sale proceeds. Yes, those are pretax but as I'd previously articulated, we've got some pretty good tax or kind of tax insulation there relative to some of the other previous losses that we had taken on strategic investments. And so a very meaningful amount of that flows through in terms of what we paid off in debt for this quarter. And then with the announced agreement with the fiber-to-the-tower contracts, again, that's not a sale of fiber. That's just a contract. The actual infrastructure was owned by Clearwave Fiber. That will also have a pretty high tax efficient flow-through as it relates to proceeds to be allocated under our capital allocation philosophy right now. What's left is very speculative. I would say that we've talked about what the path has been and a disciplined focus on monetizing these strategic investments and using those proceeds to pay down debt, starting even in 2023. We do expect to continue to see interest and likely ongoing consolidation just from a broader sector perspective. But beyond that, from a policy perspective, we don't speculate on M&A.

Your next question comes from the line of Frank Louthan with Raymond James.

This is Rob on for Frank. So you kind of you kind of touched on this a bit earlier, but what are some of the products you're having particular success with? Are there any offerings you're seeing an especially strong take rate for? And then switching gears slightly, how would you assess the trajectory of your video declines right now relative to your internal expectations? And what can we sort of expect for the pace of those declines going forward?

When I think about what we see resonating. I think it is not one thing. It is a lot of things put together to tell you the truth. We talked about our go-to-market strategy that Tony and team have been working on and using third-party and AI data to deeply segment customers and bring to them the things that they most want and need seems to be those sorts of messages in an environment where we are seeing as trusted neighbors to our customers in terms of how we deliver service, again, seems to be resonating. What else can I tell you about what's working? Well, wallet share, our prices for HSD, our ARPU is driven by people are high LTV base, and then we sell in multi-gig, whether that's 2, even up to 6 gig symmetrical in some cases. But also, we've had just tremendous success with products that customers get to choose for themselves. In other words, they see a need and they pick and choose whether they want it or not. So Secure Plus part of securing their Wi-Fi environment in their home, very important to a lot of customers. Our Tech Assist program service really is doing so well. That's $10 a month that we're launching a $15 a month and a $25 a month service that is similar to those that cover certain different devices and services but very much similar to that original Tech Assist. So we've been successful in wallet share. And it's not just wallet share for us. It's helping customers with the need that they have. They get very frustrated with having a doorbell connect to Wi-Fi or thermostats, for example, or -- and then the newer products will be handling things like home electronics like TVs and laptops and headphones and gaming systems, things like that. So things that actually help make their life easier. That gives a bit of flavor.

Yes, Rob, I'll just jump in there as well. You heard Julie talk about [eero], but our adoptions continue to see really good increasing momentum there. We actually had our strongest quarterly sell-in to date with that product. And we also look at that as what are multi-device options for that, really, all of it about solving problems in home given we have such a high reliability standard to the home, we were also now in an -- in a position to benefit from the opportunity of really having a much better insight inside the home with that partnership. And then the multi-gig sell-in that Julie was alluding to, that was also meaningfully higher than any other category as it relates to growth for this quarter. So you see those driving good support for the stability of our ARPU. And I say stability, as I've said numerous times, even though you saw it move up a little bit this quarter. But I would anchor investors and our analysts to some of the previous comments that we've made in Q2 around stability being plus or minus $1 because it's going to move from time to time and quarter-to-quarter. But about $1 plus or minus off of that $81-ish Q2 reported ARPU. And then on the video side, sorry, you asked that. Yes, we're continuing our strategy around converting the video customers to IP, those that want to remain a video customer of ours. Obviously, the number of video customers that we have left is quite small and getting smaller and has been a philosophical approach from over 10 years ago that, that wasn't really going to be what was driving the power of the bundle as much as that was the data product. And so Tony even mentioned to it, that's a product we're going to focus on keeping profitable through passing on price increases. That isn't the greatest experience for customers so that attrition rate has continued to be pretty consistent. I wouldn't expect that to be much different and we're going to be very focused on getting that IP conversion complete, which then allows us to reallocate that QAM spectrum to the data upload capacity and capabilities.

We have reached our allotted time for the question-and-answer portion of today's call. I will now turn the call back over to Julie Laulis for closing remarks.

Thank you, Tiffany. Before wrapping up, I want to thank our associates for navigating a tremendous amount of change in driving meaningful progress over the past year. As our major platform initiatives become fully embedded into our daily operations, we're leveraging these tools to serve our customers with greater efficiency and effectiveness than ever. Thanks again for your time and interest in Cable One.