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00:05 Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the WideOpenWest Third Quarter twenty twenty one Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. 00:34 Andrew Posen, you may begin your conference..

00:38 Thank you. Good morning, everyone, and thank you for joining us for our third quarter twenty twenty one earnings call. With me today is Teresa Elder, WOW's Chief Executive Officer; and John Rego, WOW's Chief Financial Officer.

00:38 Before we get started, I'd like to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy, the expected effects of the recently closed transactions to sell five service areas that we announced on June thirty, twenty twenty one, and other matters related to our business.

01:11 These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties and other factors that may cause our actual operating results, financial position or performance to be materially different from those expressed or implied in our forward-looking statements.

You are cautioned not to place undue reliance on such forward-looking statements. 01:36 We disclaim any obligation to update such forward-looking statements.

For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the Risk Factors section of our Form ten K filed with the SEC, as well as the forward-looking statements section of our press release.

02:01 In addition, please note that on today's call and in the press release, we issued this morning, we may refer to certain non-GAAP financial measures.

While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

02:25 Reconciliations between GAAP and non-GAAP metrics for our historical reported results can be found in our earnings releases and our trending schedules, which can be found on our website. 02:36 Now, I'll turn the call over to WOW!'s Chief Executive Officer, Teresa Elder..

02:36 Thanks, Andrew. Welcome to WOW!'s third quarter earnings call. In addition to our press release and quarterly trending schedule that are available on the Investor Relations page on our website, we have also included a presentation to complement our prepared remarks.

Last week, we announced the completion of the sale of our Chicago, Evansville, and Anne Arundel Service areas to a Astound Broadband. This follows the sale of our two Ohio service areas to Atlantic Broadband, which closed on September one. 03:20 We are really pleased with how quickly both transactions closed.

Combined, the sale of these markets generated one point eight billion in gross proceeds for WOW!, which were used to significantly reduce our debt by approximately one point five billion, strengthen our financial position, and better enable us to make significant greenfield investments funded by free cash flow generated by the business.

03:53 Our broadband first strategy continues to yield positive results as evidenced by another strong quarter of performance for WOW!.

To help you better understand our third quarter results and compare them to our historical performance, we have adjusted our trending schedule to reflect a proforma view, which excludes the five service areas that we sold.

04:20 Furthermore, the metrics and results referenced on this call and in our accompanying presentation also exclude the service areas we have recently divested.

In the third quarter, total pro forma revenues were one hundred and eighty four million, up slightly compared to the same period last year, driven by growth in high speed data revenues, which grew by fifteen percent year over year on a proforma basis to one hundred and three point three million.

This growth was partially offset by the decline in Video Telephony revenues during the quarter. 05:05 Pro forma adjusted EBITDA increased six percent to sixty six point seven million in the third quarter, compared to the same period last year, driven largely by the growth in our high-speed data revenue.

Third quarter, pro forma adjusted EBITDA margin was thirty six point three percent. 05:28 We continue to report both sequential and year over year improvements across all the categories shown on this slide, demonstrating the strength of our core broadband business.

During the third quarter, we added sixteen hundred high speed data RGUs bringing our total number of HSD RGUs to over five hundred and nine thousand. 05:52 Although we saw slower HSD subscriber growth during the quarter, our levels of churn remained low, and we increased the total number of subscribers during the quarter.

Now that we have enhanced our balance sheet, following the completion of the service area divestitures, we are in a very strong position to more aggressively invest in our broadband first strategy, which we expect will result in a reacceleration of HSD subscriber growth in twenty twenty two.

06:24 We will provide greater detail on these initiatives at our Investor Day in December. When competing specifically for broadband customers, our key differentiators are the strength and reliability of our network, which can deliver speeds of one gig across our footprint.

06:44 Our exceptional customer service, which is consistently recognized by our customers, and lastly, our ability to deliver our service at a competitive price. All of these are possible because of our talented and passionate people.

07:01 We have maintained a sell-in rate of approximately eighty seven percent of new customers purchasing our HSD only service for the fifth consecutive quarter, which we view as another great indicator of our broadband strategy’s success. When coupled with our low churn, this demonstrates the value our customers see in WOW!’s service.

07:26 Not only is broadband becoming more important, but customers are required higher data speeds. In the third quarter of twenty twenty one, eighty seven percent of new customers purchased speeds of two hundred meg higher, reflecting the continued demand for high speed data. 07:46 HSD ARPU increased to sixty seven seventy in the third quarter.

Our HSD revenue during the period included a two point nine million, previously deferred revenue. Excluding that revenue, our HSD ARPU would be sixty five eighty, an eight percent increase from the same period last year, driven predominantly by customers purchasing higher data speeds.

08:14 Our Edge-Out strategy continues to deliver growth in homes passed and RGUs and increasingly positive penetration rates. Penetration for both the twenty nineteen and twenty twenty Edge-Out vintages also increased this quarter.

With the twenty nineteen vintages increasing to eighteen point eight percent, up from seventeen point eight percent in the second quarter. And the twenty twenty vintages increasing to twenty point six percent, up from seventeen point six percent in the second quarter.

08:48 We are continuing to see incremental improvements and acceleration of Edge-Out and expects those trends to continue. You can especially see why we are so optimistic about our Edge-Out strategy based on the results we are seeing so far this year with the twenty twenty one vintage of new homes passed.

09:08 Even though it is a relatively small sample size, penetration rates of our twenty twenty one vintages have increased to twenty one point one percent this year, up from fifteen point four percent at the end of the second quarter.

This is a great indicator for our core business, demonstrating the strength and opportunity for growth following the divestiture of the five markets.

09:34 To conclude, I'm really excited and pleased about the continued successful execution of our broadband first strategy and the progress we've made in strengthening our financial position following the divestitures.

09:48 The success of our core broadband first business in driving high speed data is clearly evident in the continued growth of our top line and EBITDA, driven by our ability to deliver fast, reliable and affordable broadband products and services to new and existing customers.

I look forward to giving you an update on our strategy and outlook at our Investor Day on December ninth. 10:16 Now, I'll turn the call over to John, who will go over our financial results in more detail..

10:23 Thanks Teresa. We accomplished a lot in the third quarter and took significant steps towards accelerating our broadband first strategy. We're pleased to have successfully completed the divestitures generating gross proceeds of approximately one point eight billion.

Teresa mentioned that we've updated prior periods in our trending schedule and presentation on a pro forma basis to reflect the new WOW!. 10:49 As we disclosed last quarter, due to GAAP accounting rules, our income statement includes a required column for discontinued operations to reflect the impact of the transactions.

Note that these figures only reflect those items that are immediately identifiable as being associated with the service areas we sold. The revenue numbers in continuing operations exclude the full impact of the divested service areas.

11:13 Operating expenses that are part of the transaction services agreements remain in continuing operations, but are netted out in a pro forma adjusted EBITDA as the reimbursement for those expenses are included in other income. You'll also notice that the earnings release includes two definitions of adjusted EBITDA.

11:32 The first reflects the total reported figure. The second shows the pro forma adjusted EBITDA, which excludes all five of the divested service areas. We believe that this best reflects the ongoing business. The trending schedule, which is available on our IR website has a third definition.

Transaction adjusted pro forma EBITDA, which includes the estimated cost savings we expect to realize over time as we reduce the corporate overhead. 12:01 As we go forward and incrementally right size the business, the transaction adjusted and pro forma adjusted EBITDA will begin to converge. Each quarter we’ll provide an update on our progress.

12:13 Now, let's to talk about our third quarter results. In the third quarter, our total pro forma revenues increased to one hundred and eighty four million, compared to the same period last year, reflecting fifteen percent increase in high speed data revenue.

HSD revenue in the third quarter increased due to the addition of new customers as well as existing customers upgrading to higher speed tiers. This was offset by declines in video and telephony, which decreased sixteen percent and eleven percent respectively.

12:45 HSD revenue included the recognition of two point nine million dollars of revenue attributed to work completed during the third quarter in Dothan Alabama as part of the Connect America Fund.

Even though this revenue represents work over the past two years, GAAP accounting rules only enable us to recognize the revenue upon the completion of the network upgrade. It is also not one-time in nature as we will realize approximately three hundred and ninety thousand dollars of HSD revenue on a quarterly basis as part of the program.

13:16 The outperformance in our HSD business contributed to the growth in pro forma adjusted EBITDA in the third quarter, which increased more than six percent from the same period last year to sixty six point seven million with a pro forma adjusted EBITDA margin of thirty six point three percent, up from thirty four point four percent in the same period last year.

13:37 Our results to date are also very strong. Total pro forma revenue increased zero point eight percent to five hundred and forty seven point four million, driven by a more than thirteen percent increase in high speed data revenue to two hundred and ninety eight point six million.

Pro forma adjusted EBITDA grew twelve percent to one hundred and ninety two point six million with an adjusted EBITDA margin of thirty five point two percent.

14:03 As you could see in this next slide, our incremental contribution margin increased in the third quarter to seventy one point eight percent, up significantly from sixty six point four percent in the third quarter last year. Consistent with the improvements we are seeing in our adjusted EBITDA, and adjusted EBITDA margin.

14:23 Now, I'd like to spend a few minutes talking about our current debt, leverage ratio, and our balance sheet. On November one, we completed the second of the two transactions generating six sixty one million in gross proceeds from the second transaction.

Due to the tax efficiency of the transactions, we now have reduced our debt by approximately one point five billion dollars as a result of the divestitures. 14:48 The debt reduction significantly improves our capital structure, while also creating a new well that continues to operate a robust business with numerous growth opportunities ahead of us.

For the first time in WOW!’s history at two point six times, our leverage ratio was more than two turns below our historical average as a public company.

15:08 On a pro forma basis, our CapEx increased by five point nine million in the third quarter, from the same period last year, but decreased sequentially by more than eight hundred thousand, primarily due to the timing of network spend. We'll provide an update on our CapEx spending expectations at our Investor Day.

15:26 We ended the third quarter with total cash of fifty nine point six million, reflecting thirty point seven million of free cash flow generation in the third quarter. 15:36 Finally, before we open the call for questions, I'd like to talk a little bit about our upcoming Investor Day, which we will be hosting on December nine.

We'll send out the details regarding the agenda and logistics over the coming weeks. At the meeting we will layout our strategy and path forward, including plans on greenfield and Edge-out expansion, as well as our thoughts regarding investments we plan to make to grow our commercial business within our existing footprint.

All with the strict eye on capital allocation, profitable growth and further generation of free cash flow. 16:07 In closing, we continue to make good progress in executing our broadband first strategy, building on our momentum, delivering strong results, and taking steps to keep us on a promising and upward trajectory.

16:21 And now, we'd like to open up the line for questions..

16:25 Thank you. [Operator Instructions] Your first question comes from Kyle Evans from Stephens. Please go ahead..

16:38 Hi, thanks. Good morning and congrats on the new leverage profile. Looks good on you.

Could we maybe start out with any you possible reverse operating economies of scale on the service sales? John, you mentioned that you were going lower overhead going forward, I just wonder if there's anything else that's tougher about being a smaller company going forward? Then I’ve got a follow-up..

17:04 Yeah. So, we talked about that when we first announced the question. So, we have a very highly centralized organizational structure here, so we identified there’s a probably about thirty five million dollars in corporate overhead that we need to get out of the business. Some of that's easy to get out, some of it’s a little bit more complex.

17:21 And we believe it's going to take about three years to get it fully out and so by giving these two definitions of EBITDA, Kyle, we'll let you see where we're tracking, we’ll report back every quarter.

17:31 Some of it will be – easier things will be some reductions in force, harder things are getting out of software contracts, we're getting out of real estate contracts, but all within the window of three years we think we could be done. We think will be about a third of the way there through twenty twenty two.

I think with my expectation right now..

17:48 Great. It sounded like you didn't want to talk about CapEx until the Analyst Day. So, I'll take a turn and go that the HSD only in the two hundred meg uptake, which is both in the high eighty percent range are those numbers where you want them, and how could you move those upwards further? Thanks..

18:11 Yeah. Thanks, Kyle, I'll go ahead and address that. I think we're very pleased with the progress that we've made in really focusing on broadband first, our customers are responding well to that. And that itself takes a lot of cost out of the business since it is a much different product to service than for example, higher video subscribers.

So, we're feeling good about that and we continue to have programs and promotions in place, then I think customers are avail themselves, and we feel good about where the numbers are. And if they go up higher, we certainly are well positioned to take advantage of that, but will lift the strength and reliability of our network..

18:55 Thank you..

18:58 Your next question comes from Frank Louthan from Raymond James. Please go ahead..

19:05 Great. Thank you.

Can you walk us through on the Edge-out? What are you doing maybe differently now to try and continue to get traction there and how much plant can we expect you to build on an annual basis or you get a number of homes passed or some other metrics you can give us on how much you're going to reinvest and grow that part of the business? Thanks..

19:28 Thanks Frank. Great question and as you can see, we really are focused again on Edge-out and I'm really pleased with how rapidly we're growing the penetration in our most recent cohorts or advantages.

19:43 We plan to lay out on Investor Day more about the plans for the future, but what the deleveraging has really done is, put us in a position to have low leverage and really focus on high growth.

I think the success we've had with the recent vintages really shows how focused we've been on making sure that we're investing in the right areas is we're also focusing more on the MDU side of things, which allows us the ability to I think penetrate faster too.

20:15 So we have a number of strategies for the future, and we're excited with the position that the divestitures and deleveraging really have put us in for high growth for the future..

20:26 Yeah. Let me jump on that Frank. I think when we look at CapEx, we break it into two parts and we'll get more into this on December ninth, but if I consider base CapEx, which supports the business, that is naturally starting to come down and the reason that's coming down is because video cord cutting is happening.

The de-levering and our ability now to choose how we allocate our capital a lot better than we had opportunities to before, what we'll talk a lot about on Analyst Day is, hey, we have an opportunity now to really go out and build the kind of homes here and through a greenfield strategy or a continuation of the Edge-out strategy and we'll take you through our thinking of that, but we're going to make you wait a month.

But I think we're in a very, very different situation now that we were. 21:10 To give you some perspective on that, I mean, just what this de-levering actually means, cash interest expense on [indiscernible] debt was one hundred million dollars a year, and now it's not. So, it's going to be significantly less.

So that really opens up a lot of opportunities to put the capital to better use, that's the plan..

21:28 All right, great. I'm sure you’ll walk us through what the plan is going to look like as well.

So, I'll await for that, but just one last quick follow-up, what if any EBDT customers do you currently have in the base? Are you counting them towards new customers under that plan of subscribers? And what are your thoughts on that program going forward?.

21:48 Yeah. The emergency broadband benefit certainly has been a positive for customers who are in financial need. That continued to grow within the footprints of our existing base now that we've done with divestitures. In fact, it was a sixty percent growth. So, we had about five thousand customers last quarter on the EBB plan.

Now, we're sitting at about eight thousand. 22:11 We do not count those as new customers unless they truly are new customers. So, the vast majority of those as we said before are really helping our existing customers get the ability to take advantage of that program, if they're eligible for that.

So, that eight thousand we show is predominantly existing customers and it's one of the many contributors in addition to our reliable network and the value of our service on continuing to keep terminal..

22:43 As that evolves to the permanent broadband benefit plan under the infrastructure bill that I assume is going to get signed, any thoughts around marketing towards that customer base going forward?.

22:55 Yeah, we definitely communicate with those customers and we're going to continue to look at what is in the infrastructure bill and how we can best take advantage of that for our customers.

So, stay tuned with that, but I think we've done a good job trying to make customers aware of the program if they're eligible for it and then helping them get through all the steps to sign up for the plan as well. So, it's definitely been good for our customers..

23:24 Okay, great. Thank you..

23:27 Your next question comes from Dan Day from B.Riley Securities. Please go ahead..

23:34 Yes. Good morning guys. Appreciate you taking my questions here.

So, obviously shifting to a growth year stage and understanding you’ll plan us to provide more detail on the Investor Day in a couple of weeks, but just in general, should investors be thinking about this business is something that can support both capital returns and this Edge-out/greenfield expansion growth opportunity for the next call it one, two, three years or do you see this more as the expansion opportunities eating up most of the free cash flow for the foreseeable future?.

24:08 I think we're in just an amazing position after the divestiture, because we have now very low leverage and we plan to keep it at a relatively low level certainly for the industry and certainly historically for where we have been as a company.

This will allow us to fund growth capital for Edge-outs and importantly for greenfield through the existing operations of the business. 24:36 So, we are quite excited about that. And yes, you're right, we do plan to layout more on that come Investor Day.

John, is there anything else you'd like to add?.

24:45 No, I mean the company just prior to the divestitures started moving into sort of a continued free cash flow generation that hasn't changed.

In fact, it gets a little bit better now that will be new WOW!. And yes, we are going to fund whatever expansions we want to do to the network from our free cash flow generation, but I think if you follow along with me and again December ninth isn't that far away.

25:10 We will have a lot of opportunities and we'll be having to make real decisions on how we want to allocate our capital. I think we're going to be fine. So, the answer, the long winded answer is yes, there'll be opportunities to do other things with the capital..

25:22 Got it. Thanks, guys. And then just leverage ratio longer term, like you're going to be well below your peers in terms of the leverage profile.

I mean, do you see that as sort of the right leverage longer term, are you willing to cover up even a bit more from maybe three times or something or I guess, how are you thinking about that if you, can fund with free cash flow or incremental debt?.

25:47 Yes. So, I mean, I think it is rewarding after having been so levered to get it down to two point six times. And for an infrastructure company, that's probably too low to be honest with you, but we're a smaller infrastructure company. So, my perception is, I don't see us getting every about three point half turns.

26:06 And when Teresa joined, we were at six point five turns. When I joined at five point five turns and it was literally sort of choking the business. So, we want to keep a proper balance there. So, there's opportunities.

And so, no, I don't think it's two point six forever, and if real opportunities for investment present themselves, and we'll take a look, but always with an eye towards, I think three point five times is probably a good number for us..

26:32 Yes. Brilliant. Looking forward to the Investor Day. I'll turn it over. Best of luck..

26:38 Your next question comes from Brandon Nispel with KeyBanc Capital Markets. Please go ahead..

26:45 Awesome. Thank you. Two questions.

Teresa, can you talk about the HSD subscriber trajectory thus far into the fourth quarter? Last year, you added, I think two point two k, but you mentioned to slow down, so trying to understand what expectations should be into the fourth quarter? Second, on the new market expansion to Edge-outs, have you’ve gotten to the point where you ramped back to sort of full capacity? What is that capacity? Should we be thinking about the new home passed in terms of like the twenty nineteen did pinch in ten thousand? And what should we be thinking about in terms of cost per home passed? Thanks..

27:26 Thanks, Brandon. So, taking your first question about the HSD subscribers and the trajectory, what I really need to say there is that the fundamentals of the business are just stronger than ever. What we're still seeing though is that we are in a dynamic and often difficult to forecast environments still because of the pandemic.

As I had said last quarter, I'd really hadn’t hoped to see that we would have a strong back to school season, but that really didn't come back in Q3. 27:56 With that said though, as I mentioned, we did have customers that we were able to move on to the emergency broadband benefit, a few new ones, but mostly existing.

And we did see a number of other areas of some green shoots or some positives as we start to see small business and some of the commercial activity improve. 28:15 So, we're seeing some things that look good and then some things that are taking a little bit longer than previously.

I look forward to the rest of the quarter, I think it's, we still are looking at twenty nineteen as a reasonable approximate for this year, but we'll see what happens. I can tell you that we are still seeing low churn and still feeling very good about the plans that we have in place.

28:43 As I look forward to the new market expansion, we will continue to look at capital allocation and how we do these things up between Edge-outs, which we define as an extension adjacent to our existing network; and greenfield, which are not adjacent and really entering into new markets.

And we're going to be able to share more about what our plans are again on December nine. 29:09 So sorry to keep pushing the questions to them, but I think that’s when we will be able to share more about what kind of momentum and what kind of capacity we have for the future. But clearly, the deleveraging has been transformative for this business.

And we'll be able to really focus on growth and we’ll be very clear and transparent you as we always are and what we're looking for in the future..

29:37 If I could just follow-up quickly, you mentioned, some sort of more like twenty nineteen, could you just square away what was the fourth quarter twenty nineteen in terms of the HSD net additions?.

29:49 Yeah. I was really think about the full year number on that. And of course, we did republish a trending schedule that goes back up. I think for twenty nineteen we just put in the full year number on that. So, we'll see what it looks like for fourth quarter..

30:06 Fair enough. Thank you..

30:08 The full-year number was just over thirteen thousand..

30:14 Your next question comes from Batya Levi from UBS. Please go ahead..

30:19 Great, thank you.

Can you talk a little bit about the competitive environment within HSD footprint, since the beginning of the year we’ve heard many telcos looking to build fiber and six wireless access ramping up [indiscernible], are you seeing any indication for maybe competition picking up? Couple follow-ups, the thirty five million corporate overhead, is that fully loaded or should we expect another increase now that all the deal is closed? And if you could remind us, how much NOL is left? Thank you..

30:54 Why don't I take the first one and then turn to John for the second question. So, thank you Batya.

On the first side, in terms of competition, every day, we compete against some of the best in the business, and absolutely can hold our own and continue to grow our HSD net adds and grow our subscriber base, while keeping churn low, and that nothing has changed on that in this quarter at all.

31:19 We have a relatively small overlap with fiber subscribers from other companies. And I think that is because of the dynamics of us being an over builder into these markets and already creating a competitive position for the bigger operators. Fixed wireless, we've really not seen having much of an impact at all on our competitive framework.

31:19 So, we continue to just stay true to what we know we're good at and that is providing a choice with a speed and reliability, the value that we provide, the ease of doing business and our customer centric legacy. So, those things continue to resonate with customers throughout the pandemic and really beyond.

John, did you want to address the corporate overhead?.

32:11 Yes, on the overhead Batya, that's fully loaded, thirty five million is the number. We will start cutting some of that before the end of this year, we just closed on November first. So, you will see us take a couple of million out in twenty twenty one with another big chunk coming out over the course of next year twenty twenty two.

32:29 The reason we provided that, if you go to the trending schedule, that other definition of EBITDA transaction adjusted sort of shows you what we look like had it been out on day one. That's aspirational, but we plan each quarterly earnings call from this point forward.

We’ll track along with you, so you guys know where we are and actually pulling the cost out of the business. 32:47 Again, some of it's relatively easy to do. Some of it's more complex. Anything tied to like contractual relationships that we can't get out of we're going to take a little bit more time, but I think you'll see that.

I think also another benchmark I'm looking at is, how quickly does it take us to get to the Q2 twenty twenty one EBITDA margin exit rate? At least to know when did we get back to where we started from. 33:10 So that’s another way to look at it. That by the way was forty point five percent EBITDA margin.

So, we can also grow out of this as well, but the intention is it's cut the full thirty five and to grow..

33:22 Got it. And you still have about two hundred million of NOL left.

Is that right?.

33:28 Yes. We have over two hundred. I think it was two and twenty five million dollars of NOL because I think about the NOL is and there's all these strange three eighty two and the fairly rule limitations is that much of that NOL is really will be fully usable and specific to the Southeast properties that we maintained.

So, yes, we have that and even though we'll be generating EBITDA and generating cash flow, we'll still be generating more NOLs going forward, it’s the nature of an infrastructure business. So, yes..

33:57 Got it. Thank you..

34:00 Your next question comes from Matthew Harrigan from Benchmark. Please go ahead..

34:06 Thank you.

We've seen in the market that if a company misses their broadband number by very slight amount, you basically have a meltdown in stocks, and it's not nearly commensurate attention on pricing, and clearly you're getting more utility to the consumer twenty five percent, thirty percent usage increases per Nielsen's Law, not a physical law, kind of an empirical law.

And nobody really talks about pricing power in a longer-term.

Could you give us your sense on that, particularly given the advent, more competition? And then secondly, a little more clarity at the FCC, I think a lot of people probably welcome Jessica Rose and Warsaw being officially the head, but then you've got GG ZONE who is a bit of a [indiscernible] and could probably make a lot of noise that could upset the market maybe not quite as badly after the results last Tuesday, but maybe enough to [rally people's cases] [ph].

So, I had some – moving off from the blocking and tackling questions, I thought I'd toss a few more conceptual things in there. Thank you..

35:16 Thanks, Matthew So, on the HSD pricing question, clearly, we always have rates that are competitive, if not a bit more value based than our competitors out there. What you've seen though is that our ARPU has continued to rise and our overall HSD revenue rose by fifteen percent, so significant growth.

What we're seeing is that customers really are using the service. 35:48 So, they are buying higher speed and they are buying ancillary products such as home Wifi or home business Wifi and other services that we offer, which continues to contribute to ARPU. So, we look at the overall relationship with the customer.

I think, we also had launched usage based billing, as you know, we trialed it back in Chicago, which was one of the markets that we previously sold, but we are starting to roll it out in a couple of other markets where the competitive dynamics makes sense to do that.

36:26 And that is also a contributor to the pricing strategy, while still giving customers a great value, compared to competitors in the marketplace. So, I think we try to be very smart and savvy with always making sure we're giving customers good value, while also not leaving money on the table.

36:45 Regarding the FCC, we of course, work with the FCC closely as they are our regulator and we'll just see what happens with the new leadership there.

We work through our own regulatory group, but also with our industry associations like [MCTA] [ph] to really work with them on policies that hopefully make the most sense for our industry, while balancing the demands of consumers. 37:17 So, I probably won’t say much more about that at this point..

37:21 Actually, sorry to pile on, but do you think that broadband, you've got sustained pricing, maybe a couple hundred basis points better than the pace of inflation or is that probably just, I know nobody has a crystal ball, but is that kind of your instinct on that or a little hard to say?.

37:39 Well, I mean, what we're selling is not static. Our customers usage continues to change and increase. So, I think customers are paying for that increase in usage that they have. The value that they're seeing from the product. So, we are able to continue to take advantage of that. And I guess, we'll see what happens.

We always want to be competitive in providing good value to our customers. So, I think we've done a good job of really looking at the analytics and seeing what's appropriate moving forward. So, we're very pro customer, but also like I said, making sure we don't leave any money on the table either..

38:20 Thanks, Teresa. Congratulations on the deals and the numbers..

38:24 Thanks, Matthew..

38:27 [Operator Instructions] And your next question comes from Grant Joslin from Credit Suisse. Please go ahead..

38:37 Hey, good morning guys.

First, I was wondering if there are any factors that are different in the twenty twenty and twenty twenty one agile vintages versus twenty nineteen that you think might explain some of the difference in penetrations, like, are those bills in front of different competitors? So, more MDUs versus single family or some other factors? And then second, I have a model question.

So, the leverage was already at two point six x at September 30, which is nearly the two point five level that was mentioned when the sales were announced without receiving the sound proceeds yet.

So, will you be well below the two point five level at year end after those proceeds you received or is there an offsetting use of as cash in the fourth quarter we should be thinking about? Thanks..

39:18 Let me get that one quickly for you. So, yes, there's going to be an offsetting use of cash. So, I'm going to be parking on the balance sheet, couple hundred million dollars of cash that's going to be used to make those tax payments.

So, when you look at it on adjusted basis, when we post the next set of figures, you know look like we're like two times leverage, we're really not. So, we're going to adjust that for you, so you can see it. 39:42 We'll exit at around two point six times, so that's the right number.

And you'll see the full, you'll see the full pay down of where we are on the debt, but to take the mystery out of it, I think our debt right now has been roughly about seven and thirty five million dollars gross debt post the pay downs that we've made..

40:06 Okay. And then on the second – the other part of the question about the Edge-out from what might be different.

In twenty nineteen, as many of those homes passed were delivered in the third and fourth quarter, generally, we would have seen a real focus on field sales and our other tactics in the first and second quarter of twenty twenty to really drive that penetration, similarly with the twenty twenty Edge-outs, those that were delivered in the second and third quarter, we would really had a focus on driving penetration earlier.

40:39 That's right when the pandemic hit and for the safety of our people, we – and I think with the comfort of consumers as well, we really took a lot of people out of the field and used other tactics and that didn't drive penetration quite as quickly as what we're seeing with the twenty twenty one vintage.

So, it's less about I think the demographics or any nature necessarily those Edge-outs. It's really, I think just the wave of our tactics and how we had to adjust them pre-vaccine and in the earlier days of the pandemic, but we're continuing to see those grow. 41:20 On average, though sixty percent of the homes passed net adds since twenty twenty.

Also, I just wanted to point out are coming from the retained properties.

So, new WOW!. So, the focus has really been on the properties that we are keeping. And you are really seeing the pickup rate and the penetration across all the vintages.

Also, in twenty twenty and twenty twenty one, we did invest a bit less, so they're smaller numbers, but we feel like we've been very precise and focused on some areas that made a lot of sense for us. So, that's I think a bigger issue on why the penetration rates are a bit different..

42:01 Okay, great. Thanks so much. I’m looking forward to the Analyst Day..

42:06 Great. Thanks..

42:07 And there are no further question at this time. I will turn the call back over to Teresa for closing remarks..

42:14 Thank you all so much for joining us and thank you for your continued interest in support of WOW!. We really are looking forward to speaking with many of you in the coming weeks and at our Investor Day on December 9. Have a great day..

42:28 This concludes today's conference call. You may now disconnect..