Elliot Noss - President and CEO Michael Cooperman - CFO.

Scott Curtis - Cantor Fitzgerald Hubert Mak - Cormark Securities.

Good afternoon, ladies and gentlemen. Welcome to Tucows' Third Quarter 2015 Conference Call. Earlier this afternoon, Tucows issued a news release reporting its financial results for the third quarter. That news release and the financial statements are available on the Company's Web site at tucows.com under the Investors heading.

Please note that today's call is being broadcast live over the Internet and will be archived for replay both by telephone and via the Internet beginning approximately one hour following the completion of this call. Details on how to access the replays are available in today's news release.

Before we begin, let me remind you that matters the Company will be discussing includes forward-looking statements and as such are subject to risks and uncertainties that could cause actual results to differ materially.

These risk factors are described in detail in the Company's documents filed with the SEC, specifically the most recent reports on Form 10-K and Form 10-Q. The Company urges you to read its security filings for a full description of the risk factors applicable for its business.

I would now like to turn the call over to Tucows' President and Chief Executive Officer, Mr. Elliot Noss. Please go ahead Mr. Noss..

Thank you, operator. And thanks everyone for joining us today. With me is our Chief Financial Officer, Michael Cooperman. As per our usual format, I'll begin today's call with an overview of the financial and operational highlights for the quarter. Mike will then review our financial results for the quarter in detail.

And I'll return with some closing thoughts before opening the call to questions. Our financial results for the third quarter continue to reflect the growing contribution of Ting Mobile alongside solid performance from our domains business. We achieved another record for revenue at just shy of 45 million, up 16% from Q3 of last year.

And we continue to realize the benefits of the operating leverage in our business, as our overall gross margin ticked up to 30%, 1 point higher than 29% in Q2 and up from 26% in Q3 last year. It’s worth nothing that largely as a result of the contribution of Ting Mobile, this is up from 21% from Q3 of 2003.

Our growing top-line combined with our operating leverage translated into yet another strong quarter of year-over-year growth and profitability.

Adjusted-EBITDA grew 42% to a record $7 million, and brought our total for the first nine months of 2015 to just over 19 million, which is already well in excess of the 15 million we generated for all of 2014. Earnings per share grew 33% to $0.31 from $0.21 in Q3 last year.

Ting Mobile grew its customer base by another 8% in Q3 adding 9,000 accounts and 14,000 devices. That brings our total at the end of the quarter to 122,000 accounts and 192,000 devices. We’re not satisfied that net adds have essentially stayed the same over the past few quarters, but we’re comforted that gross adds continues to grow.

Q3 was the biggest quarter for gross adds in the history of Ting. Was also the biggest quarter for new visitors and total traffic to the Web site. This indicates that our brand awareness continues to grow and that we continue to convert well on that awareness. Brand awareness is by far the metric with the greatest upside in this business.

Our acquisitions suggest that more people are hearing about us every day and that our message is as compelling and our offering is competitive as ever. On the other side of the equation, our growing cancels are still mostly just a product of a growing base. We did see a slight uptick in our churn rate in Q3 to just under 2.5%.

This appears to be partly the result of a more transient customer base on the GSM service, which makes sense given the increased device portability on that side. These customers typically make less effort and investment to come to Ting, generally bringing their own phones and seem a bit more likely to leave as well.

We’re perhaps also seeing some lagging followed from our customer service issues of the prior quarters. In fact this shows up on both the acquisition side and the retention side. Customer referrals which have always been the centerpiece of our acquisition efforts have been down since the Sprint change in Q1 and resulted in support shortfalls.

I'm relieved to report that we’re once again staffed ahead of our most optimistic projected support volumes and I'm hopeful that this will restore customer referrals and suppress churn a bit in quarters to come. Meanwhile, the other key metrics on the Ting Mobile business remained strong and our financial contribution continues to improve.

Average customer revenue has ticked up a couple of dollars in recent months to about $37 a month, a phone bill of $23 to $24 per device. Gross margins right now are a little higher than the top-end of our range, thus north of 50%. Average cost per acquisition is still comfortably under $100.

Even at a churn rate of 2.5%, we’re paying under $100 to acquire customers that are providing great cash-on-cash returns. Our Ting Internet operations are progressing according to plan.

We’re learning from early customer responses and experiences and optimizing aspects of the service from our purchase path to our customer support processes to our network monitoring.

In both Westminster Maryland and Charlottesville Virginia our first two markets, awareness and consideration of the service are growing every month and adoption so far have been encouraging. In both markets, the greatest limiting factor so far has really been the expansion of the network.

In the Westminster, we’re waiting for the town to build out the second phase of the network in 2016 to reach beyond the current 500 or so serviceable addresses.

In Charlottesville, where we’re building the network ourselves and currently pass about 4,000 addresses, we tend to wait for the required pool permits and partnerships in order to expand further and we’re only starting in earnest to deal with multiple dwelling units or MDUs in the last few weeks.

Just a couple of weeks ago in October, we announced the Holly Springs, North Carolina would be our third Ting town. Holly Springs invested in the core fiber network in 2014 and had been seeking a provider to lease that fiber, expand that network and service the entire city.

They were disappointed when Google Fiber announced that they were bringing gigabit Internet to Raleigh, Zuru and other nearby cities and we’re delighted that Ting was ready and willing to fill that gap.

Surrounded by world-class universities, the thriving research triangle and again other higher profile fiber initiatives, Holly Springs’ businesses and residents are as gigabit ready as any community we've seen.

We've begun demand assessment which has gone quite well so far and if all continues this well, we’ll start building out the network in early 2016. We hope to start servicing customers there by this summer.

With a local government that is eager to facilitate our build and prospects that are thirsty for faster Internet and better service, we’re optimistic that Holly Springs will be a tremendous success.

Meanwhile, perhaps the most exciting developments on Ting Internet are the external trends that continue to move in our favor, first customers are increasingly cutting the cord moving away from large traditional television packages to get more of their video entertainment over the top, that is from the Internet.

Research from MoffettNathanson estimates the pay TV providers lost 566,000 video subscribers in Q2 2015, compared to 321,000 in Q2 2014, and that the number pay TV households is now shrinking at an annual rate of 0.7% compared with 0.1% a year ago.

The customers are no longer dependent on bundled TV and Internet packages, they’re free to choose the Internet service that offers the greatest access and customer experience, and that landscape obviously favors Ting.

Second, the most popular content providers continue to move towards direct subscription models that make cable TV packages even less necessary. HBO and Showtime have now both taken that step, and ESPN continues to be rumored that it will there soon.

Finally, thanks to Google Fiber’s campaign and perhaps broad dissatisfaction with the incumbents, more and more towns all over the country are prioritizing their own fiber initiatives and soliciting providers like us to come service their communities. Holly Springs is a great example of this.

Just a year ago, we were aggressively hitting the phones trying to get our foot in the door of municipalities. This year almost all of our pipeline is inbound. As I have said before, I do not expect the returns on Ting Internet to be material in 2016 and I do not intend to provide specific results on subscribers or financials for a while.

But I am quite confident that both our internal efforts and these external forces are putting us in a great position to have a strong, profitable, sustainable business for years to come. Our Domain Services business delivered another quarter of solid performance in Q3. In our wholesale channel, total registrations were up 2% year-over-year.

We were thrilled to see our renewal rate of 79% in Q2 hold through the third quarter, while the renewal rate on new gTLDs ticked up a couple of points to 72% from an already impressive level. During the quarter, we added another 46 new generic top level domains which took the total number of TLDs we support including country codes to just over 600.

The number of resellers who have registered at least one new gTLD grew to 2,260 as of the end of September, up from 2,100 at the end of June and 1,900 at the end of March. It’s worth noting that the average margin per domain in our wholesale channel in Q3 was up 10% year-over-year, and 25% compared to Q3 two years ago.

This is the product of a continuing shift in our sales mix to higher margin registrations. While margin per domain will vary from quarter-to-quarter, the longer term number is trending in the right direction. And in fact Q3 saw its highest level in several years.

Our international resellers continue to be an important driver of our wholesale channel growth with markets outside of North America and Western Europe once again accounting for a quarter of new registrations.

The retail component of our domains business Hover delivered another quarter of strong growth with revenue and gross margin up 17% and 16% year-over-year respectively. Hover’s customer base continued its strong growth as it expanded 13% from a year ago.

And I’ve spoken about many times customer service and experience, are cornerstones of both our wholesale and retail channels. We focus on driving customer satisfaction every day, and our success continues to be evidenced in our renewal rates, which remain well above the industry averages for both channels.

I’d now like to turn the call over to Mike to review our financial results for the quarter in greater detail.

Mike?.

Thanks, Elliot. As Elliot stated at the offset, the third quarter once again saw us deliver record revenue which increased 15% year-over-year to 44.6 million from 38.9 million. Cost of revenues before network costs increased 11% to 28.8 million from 26 million in Q3 of last year.

This resulted in a 22% increase in gross margin before network costs to 15.8 million from 12.9 million in Q3 last year. As a percentage of net revenue, gross margin before network costs increased to 35% from 33% in Q3 of last year. Breaking down gross margin before network costs a little further.

Gross margin for network access increased by 3.4 million, or 85% to 7.3 million from 4 million for the third quarter of last year, primarily due to the contribution of the much larger Ting Mobile customer base relative to a year ago. Gross margin as a percentage of revenue for Network Access expanded to 44% from 41%.

Gross margin for Domain Services decreased by 5% to 8.4 million from 8.9 million from Q3 of last year, this decrease was primarily attributable to the sizeable contribution our portfolio group received in Q3 last year for withdrawing our .group new gTLD application.

As a percentage of revenue gross margin for Domain Services was down slightly at 30% versus 31% for Q3 of last year. Now breaking gross margin for Domain Services into its component pieces, gross margin for the wholesale channel of Domain Services increased by 3% to 5.6 million from 5.4 million for Q3 of last year.

As a percentage of revenue, gross margin for the wholesale channel increased to 24% from 22%. Gross margin for Retail Services increased 16% to 1.7 million from 1.5 million for Q3 of last year, as Hover continues to grow its customer base, as well as it sells to existing customers.

As a percentage of revenue gross margin for Retail Services remained comparatively flat at 55% when compared to Q3 of last year.

Gross margin for Portfolio Services for the third quarter of this year was 1.1 million and benefited from a one-time bulk sale of domain names, this compares to 2 million for Q3 of last year, which as I mentioned a moment ago, included the benefit we received for withdrawing our .group new gTLD application.

Turning now to costs, network expenses for Q3 of this year increased by 445,000 or 34% to 1.8 million from 1.3 million for the same period of last year this increase is largely the result of the additional costs we now incur as a result of our now providing high-speed Internet access, Internet hosting and network consulting services to customers through our acquisition of a majority stake in BRI in February of this year.

Total operating expenses for the quarter were 8.9 million up 1.3 million or 16% from 7.7 million in Q3 of last year. The increase is primarily the result of the following.

First, workforce related expenses were approximately 700,000 higher in Q3 of last year, primarily due to our servicing of much larger Ting Mobile customer base and our newly acquired Internet Access Services business.

In addition, we continue to exceed the adjusted-EBITDA target set for fiscal 2015 under our overachievement bonus program and workforce related cost include an additional accrual of $200,000 due to this higher performance attainment.

Second, our marketing spend increased by approximately 400,000 primarily to support and acquire Ting Mobile and fixed Internet access subscribers, as well as for other marketing programs. And third, credit card processing fees increased by approximately 200,000 primarily to support the growth of Ting Mobile.

These increases in operating expenses relative to Q3 of last year were partially offset by the following.

Professional fees and stock-based compensation decreased by approximately 400,000 when compared to the fourth quarter last year, primarily the result of the pre-acquisition due diligence and other costs we incurred in Q3 of last year not being repeated, and stock-based compensation expenses decreasing by $100,000 primarily as a result of our decision to implement a minimum basing requirement to formulate option drowns to our non-employee directors under our 2006 equity compensation plan.

As a percentage of revenue total operating expenses were essentially unchanged from Q3 of last year at 20%. Net income for the third quarter of 2015 increased to 3.2 million or $0.29 per share from 2.7 million or $0.24 per share with last year's figure again benefiting from the outsized portfolio contribution.

Turning to the balance sheet, cash and cash equivalents at the end of the third quarter of this year were 11.9 million compared to 15.3 million at the end of Q2 and 13.6 million at the end of Q3 of last year.

The decrease relative to the end of Q2 of this year was primarily related to our using nearly $10 million during the quarter to repurchase 390,000 shares under our ongoing share buyback program. We also invested approximately 700,000 to acquire additional property and equipment almost all of which was increasing our fiber footprint.

These uses of cash were partially offset by generating 6.8 million in cash flow from operating activities. Deferred revenue at the end of the third quarter was 74.4 million up 2% from 73 million at the end of the third quarter of last year and less than 1% from 74.3 million at the end of the second quarter of this year.

And with that I would now like to turn the call back to Elliot..

Thanks, Michael. As Mike discussed earlier, we continue to deliver on our commitment to return capital to shareholders through our ongoing share buyback program, which allows us to repurchase of the $20 million over the 12 month period beginning mid-February of this year.

During the third quarter, we repurchased 398,000 shares nearly 400,000 shares spending a little under $10 million. That brings our total repurchases for 2015 to just over 637,000 shares for a total spend of $14.5 million or $22.76 a share.

It is worth nothing that as our share price and trading volume continues to increase, so is our ability to spend more capital through our open market buyback program. In general this probably means, slightly more open market and slightly less such options.

We continue to analyze conditions each quarter and assess the variables that we’ve talked about so many times in making the determination as to what to do. Inside of our solid financial results there are some things that are important to understand about this year for Ting Mobile.

The Sprint changes in February took a bite out of our conversion and challenged our reputation. Our customer support team got hit hard, which necessitated months without marketing, comprised our services levels, depressed referrals and provoked churn.

It also fundamentally changed some of our customer service ratios, leading to understaffing which exacerbated the problem. We realized that the recovery is not quite a switch from off to on, but a process that takes time and effort to regain the momentum. We are well into that now and I believe our greatest assets are intact.

We have a pricing plan that can save the overwhelming majority of Americans hundreds of dollars a year on those telephone bills. We still offer the greatest customer experience and support in the industry as validated by our consistently strong net promoter scores.

And in the midst of that adversity and that quite period, we actually added a second network that gives our customers even greater choice of devices and coverage. Plus, we are coming into this holiday season with an opportunity we’ve never had before.

We have just entered into partnerships with Krogers, the supermarket giant and Staples the nationwide office supply and technology chain to distribute Ting sim-cards in nearly 2,000 stores across the country. We have no idea how this program will perform or what volume of new customers these deals would contribute to our business.

But I am proud to be keeping that sort of company, I am thrilled about what that sort of presence does for our mainstream awareness and credibility and I am confident now that we will discover more opportunities like these in 2016.

Interestingly on the Mobile business, neither the problems that I implemented nor the opportunities that I have deemed about which show up in our financial performance anytime soon; first of all, we never stopped growing it what we tend to measures ourselves on is growth in our growth; second, more importantly, we have a large enough base now contributing recurring revenue each month.

But the difference between our best and worse projections in net customer adds made very little difference in our 2015 or in our 2016 projected financials. The game we are playing now on Mobile is for results in 2017 and 2018 and of course to generate the cash we need to better capitalize on the fiber opportunities.

There are some EBITDA implications in the above analysis however, both customer service being understaffed for period and the secession of marketing for a good portion of the year will make 2015 EBITDA slightly overstated as we correct those shortfalls in customer service and have returned to regular marketing activity and the year-over-year comparisons next year will be more challenging.

As I mentioned at the outset, EBITDA for the first nine months of 2015 was just over 19 million, 19.3 million to be exact. As I’ve discussed in the past, our fourth quarter historically tends to be a little softer than the third, despite that we are comfortable reiterating the guidance we provided last quarter of $25 million for the year.

The business is strong, we have successfully navigated a challenging year in Ting Mobile. We’re extremely pleased with our learnings on Ting Internet and domains is showing its growth prospects in years. All-in, we’re looking forward to the upcoming holiday season and to 2016.

And with that I’d like to open the call to questions, operator?.

[Operator Instructions] And our first question comes from the line of Scott Curtis from Cantor Fitzgerald. Your line is open..

So just starting on Ting Mobile, looking at gross margins I think consolidated for the network access is 44%.

I think you mentioned that the Ting Mobile ex the fixed Internet is doing did you say 50%?.

Yes, that’s right. And remember the difference there will be primarily the device purchases..

So where do you think looking forward a few quarters here, do you see gross margins capping out around 50 on the consolidated side?.

Well Scott we look at that as a managed variable. So, the trade off there is always going to be one between price and growth. So, going back to February of ’14 I want to say when our margins drifted up a little bit we dropped our price and when we drop price, we drop it typically just on our rate chart across our whole base.

So, if margins were to continue to climb upwards we’ll always be considering whether we want to shave their price. We like that 45%-50% range as a good balance of profitability and growth..

On the Ting Internet side, you guys still starting five or six markets, I guess it would be four or five new markets now in 2016 given Holly Springs?.

Yes, so the -- Holly Springs is one of the four to six that we expect to do in 2016, and I don't think that’s changing I mean there is two things there, one is that inbound interest truly is ramping up there is no question, the second which is true both about picking Ting town and about just building and growing this business it really takes time.

We feel very good about the rate that we’re investing, the rate that we’re building and the rate that we’re adding customers, and they are still relatively speaking small numbers, but we like them all.

If you see a fair parallel if you look at the way Google Fiber has ramped up, it's been years now and you can see where their numbers are and they think that they are achieving great success and I agree with them..

From a competitive standpoint do you find that you're running into the likes of Google Fiber or other parties or are they, I mean I know they are looking at larger markets no doubt, but I know you mentioned that some of the surrounding smaller markets in Holly Springs where there is Google Fiber competing in those markets, just some thoughts on that?.

Yes, so I don't think you’ll ever see us in the either overbuilding or building contiguous with Google in the same markets.

We look at Google Fiber as a net positive so what you see with Holly Springs is as we descried they missed out on Google Fiber and they become hungrier and more eager, they are spurned and I don’t mean Holly Springs in particular but in general communities around Google Fiber cities it creates a halo, so we would not be surprised if there were other Google Fiber halo towns that we add to the 2016 roster..

Our next question comes from the line of Hubert Mak from Cormark. Your line is open..

But I guess maybe first of all the higher level question here, and overall you guys have a very good economics on the Ting Mobile side now you suggest that before that you can’t let -- just be dumping at dollars and growth in sub base because well I think you might just diminishing return here.

Now obviously I think in a very high level here as you guys increase your sub base your churn obviously on an absolute basis will take you higher. So I guess the real question is your growth adds I think kind of around 56,000.

Now if you look at two or three years out what kind of level of growth adds do you think you could hit based on what you guys have in terms of your I guess infrastructure?.

So I think there is a few things for me in that, the first is that I think especially given some of those issues that we dealt with this year, I think that the net adds it helds up rather nicely, and we’re encouraged you know Hubert that we've always cried at ourselves on the phone rings the customer service person picks it up right away, we were out of that promise for a significant portion of 2015 and now we’re with a couple tight exceptions but rarely enough we’re back in promise and that’s a very important thing for us.

And we I think internally we’re quite pleased that we've been able to hold up as well as we have on the net side. The second comment I would make there is the gross does continue to grow. I can walk you through the data but our gross adds are continuing to grow.

So they are not growing where they picked up from the 9 over the last few quarters but they are growing. And then the last point is you're seeing now we kind of got through the operational challenges we had to deal with this year and you're seeing now things like we announced on the call the retail presence with Krogers and Staples.

So again and I go back to some of the experiments we've done in the past, we don't know what to expect from this but we know that it's either not going to help much it's going to help a little or it's going to help a lot, but at a minimum it could have increased the brand presence and awareness and we think that that’s a positive.

So I think you're going to see sort of things like that, so think of that as a whole different type of initiative and there might be sort of another one or two of those through the course of ’16.

And things like that materially change the arch? So when it comes to looking two to three years out to us we’re not stopping trying to be creative or nor do we believe we’re out of opportunities to ramp growth..

So based on that I don’t know it is kind of too farfetched but….

Yes..

Would you be comfortable by saying that you are probably up hold this sort of net adds even looking three years out based on what you are suggesting gross adds over the… [Multiple Speakers].

Ask me next year about two years, but for now we’re pretty comfortable with steady as she goes..

And then on the competition side you have had Verizon and you’re moving to a low contract there I guess in recent announcement.

So can you just sort of update what the competitive landscape is, as you are there moving towards your monthly contract side?.

Yes, so two things I’d say there, the first is that that Verizon stuff in particular looks eerily similar to me I mean if you look at that page and you look at the colors and you look at the small, medium, large, extra large, I felt like I’ve seen that somewhere before. So if imitation is certainly the sincerest form of flattery.

I think the second thing is we kind of feel like and this is both what we’re seeing on the ground based on what we’re seeing on the ground and what we’re kind of interpolating from various CFO comments we think that probably the price competition in 2016 will not be as aggressive as it has been perhaps in the last year or two in Mobile from the incumbents..

May be I should think that pricing will be less pressure and just….

Less pressure that’s right, and that does mean I don’t want people raising prices but I think it’s not going to be as aggressive downward as it’s been in the past. I think that the move downward is typically been led by Sprint and T-Mobile and each of them have good reasons, both balance sheet and income statements to perhaps to take a pause..

I am not sure you touched on this, but on the Holly Springs is that going to be sort of a build out where you have to incur a CapEx? And if that’s the case can you sort of provide an update on where you think CapEx is going to be and whether it’d be quarterly or yearly basis for next year?.

Yes, so let me deal with the general question first. So I am going to be talking about CapEx for 2016 on next quarter’s call. So I’ll give a fair bit more color then. Holly Springs is a weird building so I definitely want to note that, that will be our capital we’re really happy to be deploying it there.

The second thing I want to note about Holly Springs is it really will be the first market where we’re going at it in the way that I would say what we expect a traditional Ting town to look like.

So there is already a Web site up that is -- as I noted earlier in the call there is a Web site up where people from Holly Springs can come in and indicate their interest, we’re able to track those neighborhoods, we’re able to plan our build around that tracking, the volumes have been extremely encouraging.

Last week we were at Holly Fest which is one of the bigger events in Holly Springs and we had people on the ground manning a booth, meeting and talking and the vibe was great. So this is -- we're going to be able to do that demand collection upfront, we’re going to be doing more community engagement upfront, we’re going to be doing marketing upfront.

And that’s something we haven’t had the opportunity to do in our first two markets whereas I’ve noted a few times what we were really-really learning with the operating side of the business..

And then just in terms of when do you expect this Holly Springs would begin revenue here, do you think it will be -- are you guys are looking at potential different structures….

Yes it’s not a 100% -- so we saw the couple eyes 2.NTFROS but assuming we go ahead probably sometime around the middle of the year..

And I think maybe you’ve touched on this.

But can you also provide an update on the existing market that you’re in right now in terms of the Internet how is that going?.

Yes, we’re continuing to not get into customers and financial data, I talked a little bit about it but not much. So I don’t mind expanding.

We sort of in -- well first of all in Westminster there is a really pretty small group of addresses there no more than 500 that we can service and the town is planning the next phase of the build where we really -- that will take it all a lot deeper. In Charlottesville things are going really well.

We’re continuing to build we now are collecting demand aggregation data for Charlottesville which we hadn’t been doing up until a few weeks ago. We’ve also started to take all of the people that have expressed interest previously and to map those and with a little bit more granularity.

Just the operating processes and systems on the ground continue to improve every week. The numbers continue to tick up. So I think it’s doing what we would want it to do..

And lastly what was the subscriber adds or net adds in the quarter….

It was nine in accounts and 14 in subscribers. 14,000 phones 9,000 accounts..

Our next question comes from the line of Kaycee Ryan from Lyon Street Capital. Your line is open..

I know you guys didn't want to talk too much about fiber but I am wondering now that you have some more experience if you feel like there is a model that is shaping up because I think in wireless and mobile you guys have done a really nice job of laying out $100 par exact number of $100..

Yes..

Which has then provided a lot of visibility, do you guys still feel like the model is coming together, or do you feel like hey it's going to look something like mobile or it is going to -- customer life is longer or something like that, but I'm just wondering how much you learned and how much you guys are sort of making progress on getting to there?.

Sure, so a few things last quarter I true out kind of a $2,500 CapEx to hookup a customer of $1,000 in gross margin a year from a customer, and that’s continuing to play out like we see more reinforcements of that data.

So that’s feeling pretty good at a high level and I should note that build costs really do vary market-to-market, in Charlottesville we are actually probably doing better than that, but Charlottesville has reasons why it's probably a little bit less expensive to build but then in other ways it is more complicated to build, it is all -- I will keep going back to the head originating but it's the highest level that’s sort of the core of the model.

Gross margins are extremely high in this business. We do expect lifetime value to be a lot higher.

Both because of the gross margin and because there is much greater stickiness it's really with fiber to a house in a market like this you're really going to have to sort of either move or die to be getting rid of the service and of course I'm exaggerating, but we think it's a lot stickier and the last thing in terms of the business model is the tact is a much different creature with mobile because we’ll be doing so you think about we’re going to be going into a town the people of Holly Springs have never really heard of us.

There sure we have a few phone customers there, but generally our unaided awareness is relatively low and if you think about going in with a business like this you really want to get on the radar, so you have to do some aggressive local marketing that’s a lot more traditional.

As we’re starting to do that stuff we’ll start to share some of those tactics but that’s where a little far is going and the way we're looking at it as really if you wanted to think about sort of at a business model level is we look at where we think a town stands alone gets to in steady state EBITDA contribution.

And then we look at what we think the investment is to get there and we look at if we’re happy with that.

So it's a little bit fundamentally different modeling approach or financial approach than the mobile business is but it's one that I think as we start to go forward and start to be able to provide numbers as they become more material the investors will be pretty comfortable with because all we’re doing is we’re making kind of little acquisition investments if you will..

Right, okay, yes..

Does that make sense?.

Yes, it does.

Because I guess we can think about each town looked at their relative population and then we can come up with what we think the EBITDA contribution should be from that population I suppose right?.

Yes. I think especially if you get flushed out that’s right..

Our next question comes from the line of Patrick Russo from Venture Capital. Your line is open..

Just a general question I know you don't want to get too granular on the fiber business but in general has that met your expectations exceeded them or fallen short?.

Met. I think we’re comfortable with demand it is as complex as we thought it was and it's probably exceeded our expectations a little bit in how it plays to our strengths. We really think that it's a business that we’ll be very natural in being great at..

I want to compliment you on the ongoing stock buyback and also the deal with Kroger and Staples to raise the profile of the company.

With regard to the new markets you’re getting into for fiber that you haven’t announced, do you anticipate they’ll be similar in size to the three within the range of the three deals you’ve gotten into thus far or might we see a couple that are larger or how would you characterize that?.

So I’d say two this is -- probably I’ll make a comment on each end. I would say in terms of larger so sort of materially larger we’re viewing that as opportunistic there are opportunities we’re pursuing them. They may or may not come to fruition.

So I think larger we’re opportunistic -- that what you’re seeing around these population sizes when I comfortably kind of make a range of 25,000 to 100,000 there it’s likely to be the sweet spot at least through ’16 as we learn. And then as I noted last quarter we are likely to try an experiment in 2016 in a smaller geography.

We’d really love to see if we can make it work at an even smaller level because we believe that if we can there is a tonne of opportunity there. And it’s again something we think can play to our strength because we’re pretty nimble and probably more nimble than a lot of the people we might be competing with.

So being able to do something like that we think could be very interesting. So we’re probably going to have one experiment and like all experiments it may or may not work..

And our last question is a follow-up from Hubert Mak from Cormark. Your line is open..

Just a question here on the share buyback, so you guys spent $10 million here in a share buyback.

What is the remaining amount that you guys can repurchase?.

I want to say there is 3 million-4 million left I may say even 5, up to 5..

Yes just under 5 million..

Just under 5 million..

And then given your balance sheet and given your CapEx spend as you expect which I guess you guys will talk about in the next call.

Do you have enough cash to probably execute on the rest if need to be while also investing in the CapEx?.

Yes, we’re far from capital constrains and that’s going to continue through 2016 comfortably unless there is some amazing really expensive acquisition that comes along which would surprise me. We have lots of cash, cash generation and access to capital.

So I wouldn’t be willing to spend enough in 2016 just based on where we are on fiber to even stress that..

And there are no further questions in queue. I’ll turn the call back over to presenters..

Thank you, operator. And thank you all for joining. We look forward to speaking with you again next quarter..

Ladies and gentlemen, this does conclude today’s conference call. Thank you for joining us. You may now disconnect..