Good morning, everybody. I'm Jim Schneider. I'm the telecom analyst here at Goldman Sachs. It's my pleasure to welcome Charter Communications and CEO, Chris Winfrey, to the stage today. Welcome, Chris. Thanks for being here.
Thanks for having us back.
You know, Chris, we've heard a tremendous amount over the past couple of days, and even the first preceding three sessions, from NVIDIA to the venture capital community, to our own CIO, about artificial intelligence and the impact it could have. In the telecom industry, a lot of people talk about edge computing-
Mm-hmm
As a central opportunity, and also about potential cost savings related to customer service, so at the highest possible level, what is your personal view? Do you think AI is much more hype or a lot of reality at this stage?
Look, I think AI is very much reality. The question is, how fast is it really gonna come, and how fast is it gonna be deployed? We've been investing in really starting with machine learning and AI now increasingly for some time, but really from a service function. And by that, I mean, not only investing in customer-facing machine learning and AI capabilities through IVR, through chat, all the things you might imagine, but probably even more so to improve the quality and the ease of the job that our frontline employees do.
So, you know, that can include the utilization of machine learning and now AI to provide a better set of information to the agent, that allows them to make a better recommendation, and increasingly, not even have them need to make the recommendation because the machine is actually listening to the conversation, doing real voice-to-text translation, putting that into a machine learning model. We have millions of transactions. There isn't, you know, ten different best ways to solve this problem. There's really one. And providing that to the agent in a way that allows them to get to a better answer faster, and actually show more empathy along the way, and that works not only for the customer, obviously, but it works for our agents as well.
In an environment where you have turnover, and you have training expenses, and you know, and want to have our employees are not just here for the short term, but develop a career with the company, and having tenure means a better service experience for the customers as well, so it's part of our, you know, service investment, and so on the cost side, we're already seeing the benefits of that. There will be a flywheel that takes place, and when it catches, it'll be a significant impact to not just the service capabilities, the service infrastructure, but the cost as well. It's a little bit difficult to estimate on the timing of that.
Yeah, yeah. But on the flywheel, do you think it happens in the next kind of two to three years in terms of where we start to see big leverage on the cost side?
I think it's already starting to happen, but I think there will be some bigger, dramatic steps that come along the way. It's a little bit hard to predict the exact timing, and so kind of similar to edge computing, I know you'd asked about that as well. It's difficult for us to put that into our business plan because you need to be fairly accurate in terms of predicting it, when that's gonna take place. And we know it's happening. We're making the investments. Edge compute, when you think about our network, the distributed nature of our network, we have fiber, power, and right of way everywhere we operate. Everybody knows that. But we actually have low latency, high compute capabilities at a local level through all the hubs and headends that we have.
These hubs and headends are much more localized than other competitive networks, and they're freeing up in terms of space because of the high split upgrade that we're doing, is taking what used to be, you know, big racks of integrated CMTS and moving those out to a software-based CMTS. Now, that's more information you asked for, but all you need to know is that we are clearing out vast swaths of space inside of our hubs and headends for that are ready to go to put in third-party equipment as needed, with cooling space and all that equipment ready to have when the edge computing demand and product really results. Again, none of that's inside of our business plan 'cause predicting when customers are gonna need that and exactly how it will look, it's still a little bit hard to define.
Yeah, but it'll be exciting to find out how it evolves, for sure.
Agree.
Maybe pivoting to a macro question for you.
Yep.
You know, the state of the U.S. consumer has been a big debate point among investors over the last several months or even longer. Charter touches almost thirty million consumer households. What have you been seeing in terms of the health of the U.S. consumer, their ability to trade up and take more incremental services in the bundle? Or are you seeing a propensity for some consumers to trade down at this point?
So we have really good insight because we service 41 different states across, you know, not only just geographies, but all economic situations across the company. We have products that service, you know, each of those different types of customers across video, still wireline voice, internet, and mobile, and so we do have a lot of that. Leaving ACP aside, the health of the customer for us, in terms of what we see, is still very good. The non-pay rates outside of ACP are still way below where they historically had been. And in addition to that, you know, balances that we see reported by banks still continue to be higher than pre-pandemic levels. Now, they're declining, and so that could, you know, continue to change.
We also may be a little bit blinded by the fact that our services generally are paid pretty quick because they're staple services. When you think about the internet in your home, you know, even your television service, these are things that even if you were unemployed, you'd want to do everything you could to maintain those services because it's critical not just to your entertainment, but also, you know, how you live your life, how you communicate, how you socialize, and how you, how you work or try to look for work. So, you know, we have staple products, which may mean that we may not be the best canary in the coal mine because I think historically we tend to do well even in more difficult economic climates because of the type of products that we offer.
Mm-hmm. And what do you see from business customers? Any change in terms of their propensity to spend more on services?
Yes. We haven't seen any dramatic change up or down as it relates to SMB. The key measure that we can take a look at on SMB oftentimes is the source of churn is business closures. We haven't seen a dramatic uptick there, so I think the SMB space is generally pretty healthy. The enterprise space, the larger scale customers that we service today, they've, through the pandemic and post-pandemic, and it's still strange talk, it's now four years on, but they've been a little bit more erratic in terms of the timing of when they're willing to make changes, and I think that is sometimes a signal of what larger businesses are fearing could take place with the economy, but that can change pretty quickly from one quarter to the next, in terms of propensity to buy or propensity to switch.
In that area, for sure, we're a little bit insulated from what most people would see, because at the end of the day, for residential SMB and enterprise, we do have the best network, we have the best products, we have the best, you know, pricing and packaging, and so even in a down market, we may not be able to see it as well as others, because in some cases, in a down market, it actually accelerates acquisition force because of our pricing and packaging across all of those, all of those groups.
Mm-hmm. So I want to pivot a little bit to a short-term question then on many investors' minds, and that's the Affordable Connectivity Program, which expired back in May. You know, I believe you said the last quarter, well over a hundred thousand subscriber losses you saw were due to ACP, about half of which were voluntary churn, half from lower growth additions. And I think you said you expected to see a step-up in ACP-related losses this quarter, Q3, given non-pay activity, and then a smaller impact in Q4. So I was wondering if you could provide us with any sort of update on the trends you've seen through September, and any sense of what we could expect for ACP impact in Q3?
Sure. Well, we don't provide intra-quarter guidance, but what I can tell you is that our voluntary disconnects continue to be lower than what we had expected even from the last time we did a call. And in addition to that, the payment trends have been better than we expected those, slightly better than we expected those to be. So that really comes as a product, a function. One, it's early on, so the majority of the non-pay disconnect that we'll experience will be through September and October and a little bit inside of November. So it's early. So I'm telling you what we're seeing today. I caveat that. Two, it's a function of the significant work that our team has done to preserve these relationships. We believe these households deserve to be serviced with broadband.
We have the best product to do it. We have pricing and packaging that can do that, and whether that's through moving them through tiers on internet or whether that's attaching a free for the first-year mobile line, which then rolls to a cheaper price than you can get anywhere else in the market. We think we can provide value. We've been, so far, very successful in retaining those relationships at a better rate than what we expected, and it's a community that, with or without government subsidy, is very important for us to continue to service, you know, going forward.
Mm-hmm. Then I want to kind of connect that and take the opportunity to sort of talk about a concept you discuss all the time, which is the core value proposition you believe Charter is bringing to the consumer in terms of a bundled service experience across broadband and wireless, which is affordable. Can you outline for us the budgetary choice you think consumers are making today, and what level of savings are you able to provide them on an aggregate basis?
Sure, so take a typical two-line household today for mobile. If you were with one of our competitors, typically, you're gonna be paying $130-$140 a month, and in some cases, that's not even including taxes and fees. If you take Spectrum Mobile, two lines at retail rate, not at promotion, at retail rate is $60, including all taxes and fees, no contracts. So if you do the math, that's upwards of $80 per month of saving. Times twelve, it's $1,000 effectively a year of savings that we provide. Now, you can use that to buy other products. You can use that to fund your broadband from us and have the fastest mobile, the fastest internet, the fastest Wi-Fi, and still save money. That's the customer proposition that we have and have been delivering.
What are your ambitions for how much mobile penetration you believe you can drive over time?
Look, it's easy to sit back and think about it from a traditional cable perspective and say, "I don't get it. We've got the best network, we've got the best products, we've got the best price. Why don't I have 100% penetration?" and the reality is that there's inertia and there's friction in the market, so I think as a theoretical max, there's no logical reason that it wouldn't be every single one of our internet customers, but that'll take time, and it takes, you know, literally digging them out, as we say in cable, to get them to convert over time and to eliminate that friction along the way.
Yeah. And relative to smartphones, you know, upgrade rates in the year for the industry are about as low as they've ever been, I think. And I do think there's some excitement around the smartphone launches that we've been seeing, particularly the iPhone 16 launch just a couple of days ago. So wondering how you're thinking about that as an opportunity, in terms of the smartphone upgrade cycle for your business.
You know, our strategy has always been about delivering the best, speed in mobile and the best price for the monthly service, and that hasn't changed. It's never been about subsidizing phones, because customers have the ability to go finance, you know, with us or somewhere else, and really trying to keep their bill, as low as possible with the highest quality product. So I never say never, but we haven't been in the significant subsidizing business. We will provide, you know, initial, you know, one-time credits. We do some other programs that you're aware of to, you know, reduce that friction in the marketplace. But I think we stand behind the quality and the pricing of our product and service, and we'll let customers decide, you know, how and when they wanna upgrade their devices, and we help facilitate that for them.
Mm-hmm. And maybe just talking about your wireless network strategy in the longer term, you obviously have a very important wholesale relationship with Verizon on the network side. You've also talked about some in some detail about your strategy to offload more of your customers' data traffic onto your own network. So maybe kind of lay out your strategy, if you would, and whether you expect to more effort on Wi-Fi or the small cell side in terms of your own network deployment.
So 87% of the traffic for Spectrum Mobile today is offloaded to our small cells, and to our partner small cells, which means that 13% is utilizing the Verizon 5G network, and it's a good network. But it's only when our network isn't available, and so some sense, the 5G radio is the backup network. It's the slowest portion of our network, and where we have gigabit wireless everywhere in the 87% of the data that we offload to our own small cells. So we have a good relationship with them. To some extent, the amount of additional incentive to offload is gonna be tempered, you know, by the relationship that we have with Verizon, and it's good. And so we will fully deploy CBRS everywhere that we've purchased that spectrum.
We're only partially the way through our advanced Wi-Fi deployment, which allows us to do more Wi-Fi. But we're not in a race because of the setup that we have today, and we like the setup that we have today.
Mm-hmm, and do you expect your relationship with Verizon to evolve at all over time, whether it's with respect to pricing or other terms of the contract?
We have a very long-term relationship with Verizon. I think people are pretty well aware of that, thanks to comments by others. And it's a good relationship, and we want to keep going with it. I think it's a symbiotic relationship. If you took from our perspective, for all the reasons I just mentioned, it's a good relationship. But even from a Verizon perspective, if they counted the Comcast and Charter mobile lines, I think they'd be by far the fastest-growing MNO in the business. And if you include the revenue and the EBITDA that we provide, it's good, and it's healthy, and it's a symbiotic relationship. And so I don't see any need for major changes from where we're going.
Got it, and just in terms of, you know, overall assets, are you kind of a net buyer or seller of spectrum assets, do you think, over time?
We're a buyer of spectrum assets, and that's gonna spook some people, but that's not by intent. The buyer of spectrum really means because we are a significant lessee of the Verizon network, and so we're buying spectrum through the Verizon relationship every day, and we like that relationship. We've also purchased CBRS licenses for shared license. We think that framework is very pro-consumer, and it's good for a lot of other participants in the spectrum space, and so we expect to continue to be active in the shared license spectrum space as well.
Yeah, and then you mentioned it before, in terms of offload, one potential margin opportunity for your wireless business is to sort of offload more of that network traffic onto your own network.
Mm.
There's a view that some of that usage can be offloaded, whether it's the, you know, at work, at home, coffee shops, and like, you know, based on the network's patterns you're seeing today, how much traffic do you think you can incrementally offload, and how should we think about the savings impact over time?
We've said historically, we think about a third of the the MVNO traffic we could offload. That's still the case. The way you get at that is through small cell offload, which is a combination of Wi-Fi, where just over 50% of our deployed Wi-Fi devices are advanced Wi-Fi that enables the Spectrum Mobile SSID. So we have, you know, significant room to grow in residences and businesses and even some outdoor places for Wi-Fi. But in addition to that, the continued rollout of CBRS. So we've deployed in one market. We're deploying in another right now. In some sense, we've not been in a race because of the relationship and the setup that we have with Verizon, and some of that is tempered. Some of that build-out is tempered by the relationship with Verizon.
We also have a significant amount of other capital projects and work and labor that needs to take place, but we will fully deploy the CBRS, but we're not in a rush to do it. Interestingly, the more lines we have, the better the return on investment for the build. So at the return of deploying that spectrum and deploying these small cells just continues to get better.
Yeah. Now, back in January, I think you sort of outlined a multiyear CapEx outlook, which includes investing in network evolution, expanding your footprint, about 12 billion of CapEx over the next two years, then stepping down in 2026 and after that. You know, what is your ambition for the broadband service level that you're gonna be delivering to customers at the end of that exercise?
So we're finishing up the phase one or step one of our high-split upgrade today. That is on a traditional DOCSIS 3.1 high split, allows us to do take two gigabit down, one gigabit up. We'll be fully deployed on that this year. It's about 15% of our footprint. The next, fifty percent of our footprint, we're already starting with, distributed access architecture for, high split, which allows us to go five gig down and one gig up. And then the final piece will be, the last 35%, will be DOCSIS 4.0, which allows us to go ten gig by one gig.
Now, across that footprint, we're also putting what's called remote OLT inside of the nodes, which allows us to do fiber drops on demand, which will allow us to go 25- and 50-gigabit symmetrical speeds, if and when that need ever arises. But the reality is that the DOCSIS 4.0 standard and capabilities is gonna continue to improve, and there will be further iterations of DOCSIS along the way, and we have a boatload of options available to us in terms of continuing to address the market needs along the way, now and in the future.
You know, what we've done today with this high-split upgrade, the network evolution, is very low cost, $100 per passing. And you know, attractive and still a lot of work, a lot of physical construction activity that has to take place on all the actives in the network, but on a relatively short period of time to go achieve that.
Mm-hmm. Now from a competitor standpoint, you know, what are you seeing today in terms of the competitive intensity from the Fixed Wireless Access providers, and how have you sort of adapted your offerings to compete more effectively against them?
Sure. You know, the marketplace for competition with fixed wireless access hasn't changed dramatically. We continue to believe that the demand for bandwidth is just gonna continue to increase, and that'll put pressure on them, and that the value of what we provide is higher. Now, you could sit back and say, "Well, the best strategy for us to do is just sit back and wait, because ultimately, the capacity will be reached, and the quality will go down. Our network and product will prevail, and the customers will wise up and understand that the only way that you can get that cellphone internet at that price is if you pay for a very high-priced mobile line." But I don't think we should wait.
I think, you know, us as Charter, but also the industry, could do a better job articulating to customers why it isn't cheap. Not only is it lower quality, but it isn't actually cheap. You're actually spending more money, and so I think we can do a better job articulating that. I also think from a Spectrum perspective, meaning Charter, the Spectrum, the brand, we have not made full use of the assets that are available to us to support internet, and that really goes into mobile, and it goes into video. In the case of mobile, because we were a new entrant in the marketplace, we had a free mobile line. We needed to do that so that we could get brand reputation, and we could get some volume. For the most part, we've achieved a lot of that.
So even at retail rate, our $30 price point is very attractive. It's a fraction of what our competitors charge, and so maybe we should use mobile in a way that's slightly different that advantages internet, both at promotion and at retail. Similarly, with video, we had moved away from bundling video because the price-value proposition or the value proposition to consumers had gone down over time as programmers increased the cost of programming, didn't provide flexibility, and then started to sell around us with direct-to-consumer applications. Over the past year, we're not there yet. We've got still a ways to go to operationalize the deals that we've already done. But we now feel that the ability for us to put that video charge on a broadband bill makes more sense because there's real value that sits behind it.
These DTCs already, with what we just announced, the latest being AMC+, is $40 of value in retail DTCs, that the customer no longer has to get charged twice. And so by making better use of our assets, which include not just the better network and the product reliability and the speeds, but also making better use of video and mobile, I think we can advantage internet, which is very similar to what cable's done historically in the past, and still have, importantly, I just wanna be clear, have higher ARPU per relationship, both at Connect and at retail, because of the way that we're using our assets. And have actually better margin and cash flow per household as a result of that as well.
So more to come, but I think, I think sitting back and just waiting for what we know will take place isn't the right strategy. I think we can go more on the offense here.
Yeah. Now, also competitively, you've competed against fiber companies for a long time now.
Yes.
Especially traditional carriers. More recently, you know, we've seen some of the announcements from overbuilders getting more capital, whether that is T-Mobile with their JVs, with MetroNet and others, or Verizon announcing the acquisition of Frontier, which operates in several of your markets. So, you know, how do you think these announcements change the competitive landscape for you at all?
Yep.
If at all, for the next kind of two to five years or so?
I think the timing for some of these overbuilders who are ultimately gonna be capital-constrained is very fortunate. But having said that, in our plans, the build was always gonna take place, and the fact that you have some traditional telcos who are purchasing some of the more new start fiber overbuilders, I don't think dramatically changes the amount of fiber overbuild that gets developed. And it's not that some of the companies that were being acquired had passive or unproductive management teams along the way. They were competitive. And so I don't see a big dramatic change for us. In some cases, it's just a geographical extension or even a recovery of assets that were previously sold and are now being brought back in.
Yeah, and maybe just help us from your perspective, when a new fiber player comes into your footprint aggressively, how do you convince consumers of your value proposition and incentivize them to stay?
Sure. Well, look, we know in advance, prior to a competitive overbuilder even beginning construction. You know, we have feet on the street, and we also have other ways to identify where that's gonna take place. So we know where construction is taking place, we know where the build's taking place, and we know where providers are starting to build, and we can do things tactically to address that. But I think the bigger point is that we've always... You know, I know, Jim, we've only known each other recently, but if you think back to ten years ago, investors would know we always, at Charter, always spoke about operating the network as if we had a fiber overbuilder everywhere. And a lot of investors would say, "Well, why don't you take price? Why don't you have a lower service level?
Why don't you do this, this, this, and this?" And we said, "Because you're inviting competition in, and you have to be... You have to assume that there's gonna be competition there." So we have a national strategy that assumes competition everywhere we operate, and for the most part, it's because we do. And so I think that positions us very well to compete because we don't have to make a change when somebody comes in. Offer the best network, invest very well in it, have the best products, price, service capabilities, package it all in a way that's very difficult for your competitors to go replicate.
From a fiber perspective, it you know those pieces, in addition to video, really do come down to mobile and the ability to have convergence and seamless connectivity, and really to start beating the drum on what is a unique capability that we have and others don't have on a ubiquitous basis.
Yeah. I wanna pivot a little bit to a segment of the market, which I don't think gets a lot of investor airtime, namely SMB and enterprise-
Yep
which has actually been a pretty good growth driver for you historically. I mean, talk us through kind of any opportunities you see to capture incremental market share, in the commercial segment and, commercially, any segments that you think are a little bit more challenging right now.
Sure. SMB continues to grow. We're under-penetrated in that market, and we have a very good set of products. You know, as I said, we're under-penetrated. We have a small impact that's going on, similar to residential, from cell phone internet, but despite that, it's still growing. On enterprise, you know, vastly under-penetrated. We've made significant investments into the product set that's available to us and the brand reputation that we have for enterprise, Spectrum Enterprise, in the marketplace. That's allowing us to, instead of just being a secondary provider for connectivity, to be a primary provider, and instead of just being a provider of connectivity, to have additional value-add services added on top, whether that's, you know, hosted voice, managed services, SD-WAN, all of which we're selling at a very good rate right now.
So we are moving upstream in enterprise. It's only begun, and I'm very optimistic about that having a very long runway for growth.
Very good. Just want to ask one question on your rural strategy.
Mm-hmm.
You've announced $7.7 billion of CapEx investment over the next few years to reach about 1.8 million passings, I believe. Maybe frame for us the higher penetration and customer value you think you can drive from that initiative.
Yeah.
Maybe just talk about how, if at all, BEAD plays into that.
Sure. So the returns model for rural build is actually pretty straightforward. You have a construction cost. Operationally implementing it is much more difficult, but you have a construction cost, and you have penetration of your products over a period of time with the revenue, and you have a, you know, at a margin, and that produces the return. So the returns are very good. They always were inside of our plans. The penetration rates are higher than what we'd originally planned. The ARPU is higher because we're getting higher attach rate of things like mobile, video, and even, believe it or not, wireline phone. Because you think these rural markets, they've been overcharged for phone service for years and years, and so there's still a wireline phone market that's there, and so we are doing very well in that space.
So that's the kind of technical return model that exists. It's going well. The bigger picture is that these markets, particularly where you have a market that has significant growth, we've been building at an average of ten homes per mile. In a state like my home state of Florida or the Carolinas or Texas, you know, what is ten homes per mile today, five, ten, fifteen years from now probably is not gonna be ten homes per mile. It's gonna be a suburbia. And so the added upside is that you end up with a footprint that isn't at a cost of ten homes per mile, but ultimately, you know, the ability to go get fifty, sixty customers in the same capital spend that you made many years ago.
And then, in addition to that, when you think about those higher growth states, in particular, the ability to have the option for future extensions over time to go do the same thing over and over again, that wouldn't be there for you if you hadn't done the initial build. It's how cable was built in the 1980s, so this is not a brand-new concept. So I think well after the capital deployment has actually occurred, the fruit of what we've done and the ability to go service additional communities and passings will continue to grow at a very low incremental cost, and it can provide a boost of growth for many years to come.
Yeah, and does BEAD play into that?
I think BEAD does play into that. It's a little trickier because, as you know, a lot of the rural build that we're doing today was subsidized, and it was subsidized under pretty favorable pro-private capital regulation, and BEAD has more difficult, more cumbersome regulations around it than either RDOF or the state grants, where we've had significant success, so I do think it's gonna require discipline on our part on a state-by-state basis, based on how those regulations ultimately are applied, but yes, I'm still, despite that, excited about BEAD under the right circumstances.
Got it. Couple more questions for you.
Yes.
One financially related. This past quarter, you delivered very strong cost performance-
Yeah
... both in terms of service programming costs. Can you help us understand where these cost efficiencies are coming from, maybe what inning we're in with respect to additional efficiencies you expect to kind of drive strong EBITDA growth?
Sure. Let me start with where it's not coming from. What we are not doing is making any cost adjustments that would impact our sales or service capabilities across the company. It's fundamental. You can't, you can't have short-term growth at the expense of long-term growth, and so we've protected that and made sure that frontline, our investments in tenure, sales, and service all remain. But there's always opportunity to any company when you think about overhead, organizational design, procurement, those type of activities, that you really go back and take a look and say, "You know, given where we are, can we go do something there?" And we've been successful around that, including on programming.
And, so, you know, that benefit will fully manifest itself at the second half of this year, and from a year-over-year comparison basis, will still be inside in the first half. We'll also continue to have more and more impact from where we started this conversation of AI and its ability to dramatically improve the quality of the job for our employees, but I think the biggest piece when you think of cost management is just being a great operator. The best way to have good cost management is by having low service transactions, and that requires investment in your people, and it includes investment in your networks and your process and systems. We're doing all those things, but then layering AI on top will give us an opportunity to make some pretty dramatic shifts along the way.
So, having lower service transactions, being a good quality operator, but also having higher penetration on your network. If you have higher penetration on your network, you have more customers, you have more products that are covering a fixed network and its associated costs, which means that your margin actually increases, and your capital efficiency per customer actually goes up. That's always been our model, and that hasn't changed, and it's very easy to actually think through why that's the case.
Yeah. Well, that baseball analogy of what inning is that? Is this, you know, by the time you get to the end of this year, are those cost synergies fully realized? Is that, you know, inning two or is that inning eight?
That's tough. I'm more of a soccer and football guy. I think it's when you think about the overhead and procurement, I think it's a later inning. When you think about the real money, the ability to be a great service provider, it's the second inning.
Mm-hmm.
And when you think about AI, it's the first or second inning. So I think we have a long runway to not only continue to grow from a top-line perspective, but actually be more efficient underneath by being a great operator.
Yeah. Then capital allocation, you know, your leverage stands right about 4.3 times, more or less the middle of the target range you've outlined. So how are you thinking about the medium term? Not the short term, but the medium term, and at what point you'd feel comfortable devoting a bigger portion of the cash flow to buybacks rather than debt paydown?
Today, you know, we're actually not doing debt paydown. What we're doing is lowering our leverage through EBITDA growth.
Mm-hmm.
And we have the ability to do that through our EBITDA growth in a pretty comfortable way. And so, as you said, we've moved to the middle of the range. We're moving to the middle of the range. And we're trying to continue to do buybacks along the way. You know, when you think longer term, that remains the strategy. So grow into a target leverage range through EBITDA growth, and then continue to maximize the buybacks to the extent there aren't better investment opportunities along the way, which is always the discipline that we've applied. That includes organic investments, which we've certainly had a lot of, I admit, but they're good, as well as M&A to the extent it actually presented itself.
Yeah, and maybe on those, I mean, buybacks versus debt, very clear. Maybe just talk about, you know, longer term, you know, sort of investing organically in the business, through CapEx-
Yeah
versus the M&A priority.
Look, our capital allocation priority since I joined the company in 2010 actually hasn't changed, which is first port of call is to have organic investments that produce good and better cash flows over time and preserve your terminal value. Second is, to the extent there's M&A that's more attractive than buying back your stock, you do M&A. Third, you buy back your stock, and fourth, if you really have nowhere to go and you wanna just turn cash back over to investors so it can be taxed, you do dividends, and that's never really been in our profile, so our views on that hasn't changed. You can see over time... On one hand, our capital allocation philosophy has not changed.
Our set of opportunities over the years that I've been here, I guess fourteen years now, has changed. So when I first got here in 2010 and Tom Rutledge got here shortly thereafter, it really was about investing in the business, going all digital and driving sales and marketing and whatnot and fixing the network, and so we put a lot of capital into that. In 2016, obviously, it was through M&A, through the acquisition of Time Warner Cable and Bright House, and then through the subsequent integration. Then we went through a period where, because we were throwing off so much cash flow, a period of significant buybacks, and then the rural opportunity. I know that network evolution is a decent amount of capital, but it's actually not the bigger one.
The bigger one is the rural expansion, where we've chosen to deploy that organic investment, and it's long term. It's a long-term investment, but it's a very secure return, and that's where we've been putting it. Now, that's about to slow down, subject to BEAD, which means we'll be back into applying the exact same capital allocation philosophy with rigor and discipline. All else equal, it'll mean that buybacks, you know, would increase.
Great. Well, that was a great overview of the investment case, but unfortunately, we're out of time.
Good.
Thank you, Chris, for being here.
Thank you very much. It's good to see you.