Okay. Good morning, everyone. I’m Brian Kraft, and I’m the Media, Cable &Satellite equity analyst for Deutsche Bank. I’d like to extend a warm welcome to all of our institutional investor clients, corporate clients and all the companies who are joining us this week for Deutsche Bank’s 25th Annual Media and Telecom Conference. So thanks everyone, for coming. We have an exciting group of companies and executives which is standing again this year, which is a great segway. So our first presentation, so with that I like to introduce Neil Smit, President and CEO of Comcast Cables. Welcome, Neil.

Thank you, Bryan.

So Neil, why don’t we get into it? You just reported strong fourth quarter which capped off very strong, 2016 as you look ahead to 2017 what are your company’s strategic priorities for the year?

Well I think we’ve got a strong growth story. We’ve seen consistent growth and we’ve got a well integrated set of products that we’re marketing well. So I think 2016 was a strong year in many regards. With regards to 2017, we are going to continue to drive the growth of the video business, X1 has been a real advantage for us. HSD growth, we want to continue the momentum there. We’ve got DOCSIS 3.1 rolling out; we’ve got new advanced wireless gateways going out that are either the best in the market, in the world as a matter of fact. We’ve got a – the business services growth which is a $5.5 billion business growing at double digit rate so we’ll continue to drive growth there. We want to make sure integrating our products and selling them in the targeted segmented way. We’ve got a great bundle and we are integrating new innovative products like Xfinity Home into the bundle and you know I think the customer experience is going to continue to be a focus of ours, we’ve made a lot of progress on that front and there is lot more to go. And of course we are launching a wireless product later on this year which we are very excited about. So, I think it’s just continued momentum and execution on those set of priorities.

All right, so we’re going to get into a lot of those that you mentioned. Why don’t we start with residential broadband? It’s been such a consistent and strong growth driver for the company over the past several years. How much more runway do you think the company has to increase broadband penetration?

Well we’ve put on over a million subs for the past 11 years. And we had the strongest growth in nine years this year at 1.4 million net ads. I think that there is continued room for growth in the broadband space, both the market it’s about 75% penetrated since we see a market opportunity there as well as share growth. We are growing share in all of DSL markets as well as some of the fiber markets. And we are going to do it through innovation and targeting and continued growth there. We’ve got what we think is the best HSD product in terms of speeds and reliability as well as the best in-home WiFi coverage. And we are investing in both those categories. We’ve increased speeds 17 times in the past 15 years, and we’ll continue to invest in the network and the delivery of great HSD experience.

And from a product perspective, I mean how do you see the residential broadband product evolving over the next few years giving the continued investment that you are making in the network; the advancement of technology, CableLabs is developing and your ongoing focus on innovation.

Well we are going to continue to grow our DOCSIS 3.1. It will be at the majority of our households will be available by the end of the year. We’ve already rolled it out in Atlanta, Chicago, Detroit, Nashville, so we are seeing it – the rollout going very effectively. We are going to roll out – we XP6 which is the Advanced Wireless Gateway which gives us unprecedented throughput and propagation. The broadband, the new product we announced with CES is – it’s compared to X1 where you have a great integrated the best experience with X1 by being able to find a content be it the – in a simple way be it the voice remote, where we launched a way to manage and monitor your network down to the device level. I mean a lot of times I think people believe that the internet stops at the wall of the house and we’re taking it right down to the device level, and you’ll be able to connect new devices automatically as you bring them into the house or whether it’s a Nest thermostat or a Lutron light bulb and it will connect automatically. You can hit pause on the net one WiFi networks, so at dinner time if you want the kids to sit down and eat, you can pause the network, you can monitor and manage right down to the device level so you can diagnose things down to the device level. And a great thing about it is, it will be – it will hit 11 million homes on day one and it will be included in the service of the car. So we think it’s more than just about speed and reliability, we think it’s the experience as well and this will be a new interface, cloud based interface that will help make WiFi management easy in the household.

And you mentioned DOCSIS 3.1, what’s – and you talked about the timing of the roll out, what is you – you know what is it from a speed perspective and how much of an improvement does it make in the speed of this drive?

We’ll get gigabit speed out of DOCSIS 3.1 rollout and then over the next 24 months, we’re going to do DOCSIS symmetrical -- DOCSIS duplex [ph] rather they will get symmetrical speeds, multi gigabit speeds out into the network, leveraging our core network or HFC plant and we continue to roll fiber deeper into the network both with business services as well as with resi and so we feel very confident that our network is extendable and flexible and we can continue to deliver higher speed.

Why don’t we talk about 5G for a minute, its top on the mind I think for a lot of investors? On the one hand, there are opportunities to leverage a fixed line network for your own backhaul, or for backhaul to service to mobile carriers. On the other hand, 5G can introduce some level of wireless substitution into the fixed line broadband market. How do you think about the balance between the opportunities and the risks associated with 5G?

Well 5G is exciting new technology. I think of it as having two components. One is advanced technology primarily in the intended space as well as higher frequency bandwidth. Both of them come with pros and cons. I think with the advanced technology and the antenna it travels the short distances that frequency does and it’s going to require a lot of small cells, lot of space, lot of power, a lot of backhaul. We’ve been doing backhaul for a number of years and we feel pretty good about that business. With regards to the propagation properties of the higher frequency it doesn’t propagate walls very well, or trees or other obstacles and so we think there is going to be – in order to get it effectively into the home and an antenna is required to be mounted on the house to get the propagation through the house that’s required. The – we feel good about our network. We’ve had two outside independent experts come in and kind of look at our fiber network plans with and how they all relate with the 5G and we see a lot of compatibility there, excellent compatibility, it’s kind of uncanny. And so we feel good about our plant being able to service the 5G and the growth of our fiber network, we’re bringing fiber deeper everyday in the business services base especially and we think we’ll have one year capacity to service the needs of the 5G technology.

What about the capacity on the coax side. I mean, I think you know as obviously if fiber is going deeper, but it’s not going to be ubiquitous after some time. I think a lot of people are wondering whether you can even use coax for 5G backhaul you know so if they suggest that fiber is actually required, can you give a view on that?

We feel that coax on the resi side is going to be fine. We are bringing fiber deeper, we are expanding, we are splitting nodes and coax we find on the resi side and as we go fiber deeper into the network, we should be, we have a 151,000 miles of fiber in our network currently, and we think that the ability of the HFC plant to service the customer and the 5G technology will be fine. So it sounds like it depends on really how much capacity is needed in a given area as to whether it needs to be fiber or coax is right.

Right.

And as I said, our overlay with the 5G overlay – the network similarities are just on candy and the ability of our network to service the 5G needs, we feel very confident with.

Why don’t we move onto X1 and other of the continued priorities that you have in the business. It’s been a pretty transformative product for Comcast customers that have experienced firsthand. You’ve talked a lot about some of the key positive impacts it’s had on the business and on your customer base, in terms of customer satisfaction churn, higher rates, DVR penetration etcetera. Do you continue to see these positive impacts as we further scale X1?

Yes, the sustainability of the impact has been remarkable. So we see customer satisfaction continuing to rise, customer retention improved, so you have a extended CLV. We have three times the DVR buy rate with X1. We have twice the PPV rate, we have more additional outlets for home and so the ARPU is higher, the TLB is higher and we continue to add new services, new features, the X1 remote, voice remote, it’s been remarkable, we get 80 million commands a week, we’ll be over 5 billion commands over this next year and so being able to what they call flatten the UI and get to the content you want in a direct way, it’s just been a great achievement and the technology teams have really done a great job integrating new services into the X1 platform.

And the voice remote is pretty amazing. We use it a lot. In order maybe to talk about some of the other latest innovations and features that you have added to the platform, because I know that you’ve done more than the voice remote even though that’s a big one.

Yes, while the Olympics experience was unique and that where it was the first time that anyone had emerged linear with streaming content. We had it over 40 concurrent streams going out at the same time. So you could watch table tennis at the same time you were watching the 100-meter sprint and so big name events with events that often had not been seen. And that was a great combined effort between us and NBC Universal. We added Netflix content to our meta data and so you know you don’t have to step in and out of the experience. It’s one, you say house of cards, and it will take you right to house of cards. And we’ve added, recently last week we announced YouTube integration. So you’ll be able to see any YouTube content combined with the results of the linear content in one experience. We want to be the aggregator of aggregators and we think that there is – we can integrate the content in a very seamless way and make it if it’s a great customer experience and it all came about as a result of our focus on customer experience. We said you know what’s a better customer experience, have to switch from device to device and input A and input B or just be able to voice promote it and get to the content directly. And in the case of Netflix it’s been very successful. We – let’s see January and February where we increased their overall VOD usage 35% January was our highest month ever and all boards rose. It wasn’t just the Netflix content that drove that, it was there was more usage of VOD; people were getting deeper into the content. So we see integrating these new services is fundamental to the experience and just making it easier for the customer to get the things.

And how far in the subscriber base do you expect to drive X1, is it something that all your video subscribers are going to eventually get?

We drove it to 48% of the base in 2016 which was up from about 30% in 2015. So we are seeing good increases. We’ll be at about 65% low sixties let’s call it by the end of 2017 and I think eventually we’ll get it at 75% to 80% of the base. It’s success driven, and for the time as you mentioned earlier its great benefit for the business overall. We grew the business 161,000 subs in 2016 amidst the more competitive environment and a lot of – driven by X1.

Maybe that’s a good segway over the top competition. The market is beginning to see increased competition in video from Internet delivered pay-TV services. And as you just mentioned, 2016 was the best year for Comcast video, net ads and I think within 10 years I'm curious as to what impact you’ve been seeing more recently from the over-the-top pay-TV packages and also what tools you have to mitigate the competitive impact and what might be potentially vulnerable segments to the customer base?

Well, X1 is our primary video platform and we think it's very competitive versus the OTT offerings. There been a number of them have been come out in the last couple years, whether its Fling or DirecTV now or Sony product. So there been a number of different releases. I think that what we offer is unprecedented quality of service. There been some problems with the releases of some of the OTT technology and our technology is well-developed and established. I think unprecedented quantity of content, we don't have -- we have all the local content, all the live content and 100,000 VOD choices, VOD and X1 is 85% of the customers use it for at least 20 hours a month, so we’re seeing there no holes in the content quantity. And then finally, I think we've been competing for years. We know how to complete. The value of the bundle is a wonderful thing and when we can combine video with HSD with phone, with XFINITY Home its really ties together the bundle very effectively.

Why don’t we talk about regulatory from a minute? The regulatory environment hasn’t been an easy one for the industry over the past few years. But the election results seem to have shifted those regulatory wins in a favorable way. What is the change regulatory landscape mean for your business particularly as you look at opportunities to invest and grow, and innovate in the business?

Well, I think tax reform would be very beneficial to us. We’re large U.S. taxpayer. And so that would be one benefit of the current conversations in Washington. I think an open Internet, net neutrality. We've always believed that an open Internet free and open Internet, but I think we didn't believe the Title II was the way to get there. So I think the conversations around possibly eliminating Title II are positive. The privacy conversations, we always believe that there shouldn’t be too privacy regimes. And so having one-privacy regime would be beneficial. But it’s in the early days and we’ll continue to focus on driving the business and hopefully some of these regulatory changes will manifest themselves.

Customer service, that's been a major focus for Comcast ever since you joined the company seven years ago. Can you talk about that journey if you will from then to now and what you and your team have accomplished in terms of improving customer service and also how you accomplished it?

Well, we accomplished it by getting -- it's really more of a cultural change than anything and getting the whole culture focused on the customer experience we put in one measurement system, Net Promoter System and everyone is measured on that and paid on that including Brian and myself. It focuses on what the customers want and need, and whether they would promote your service to a friend or family, and we also have an employee NPS score, which gets the feedback of the employees who are fundamentally trying to service the customer. So it’s been a real morale lift for the employees. We’re refocusing on a number of different aspects of the journey from the move process, when people have to move, let’s make that easy for them to the billing process, to the repair process, but right now we’re very focused on digital transformation where we would enable customers to do anything, any change to their service or change to their bill or setup appointments digitally and online and taking lot of noise out of the system. We took out for example 22 million calls last year while at the same time adding 858,000 new customers, new customer relationships. And so, it’s taking noise out of the system and it’s enabling us to operate more efficiently and effectively for the customer. I think there's a lot of room for an opportunity there still both in the digitals going digital and giving the customers the same tools, the agents have to be able to fix their problems. They can now reboot by themselves service if its goes down. The technician arrival is automated. So it will update you when your tech is going to arrive via NAV. And the customer service after we have is 40% of the people are using it to digitally manage their relationship. So, in that -- we think there's a lot of room for growth in there as well. So, it's been a great journey. I credit all the employees with getting aboard and focusing on it and really fundamentally transforming it.

It’s interesting. It seems like customer services even integrated into X1 to integrate recently on one of her older boxes, I tried to use the Netflix app, but it didn't work on that. It was really one of the first X1 same [ph] clients that you rolled out and basically it prompted me to order another set-top box through my remote control and two days later it was shipped to me with instructions to set up the new box and with a return ship label, send the old box back, which is not something I've ever experienced with the pay-TV service before, so I thought that was a pretty cool development?

Glad it worked out. Its interesting because there been so many things along the way -- along the path that we realized where practices or policies to be put in place for a very good reason at the time that we’re just questioning and saying what’s the best thing for the customer to do here? And how could we put it in, make it easier for them to accomplish what they want to do and you arrive at things like that. Let him order it online and let ship it to them directly and let’s make the installation process easy.

Business services, this is the second largest contributor to revenue growth in cable. Where are you in terms of market share now among the small and medium businesses? And as you look forward to the next leg of growth what from a product and customer segment is going to drive that growth?

Well, business services let’s put in perspective, is about a $5.5 billion business. We think that within the small and medium space its $20 to $25 billion opportunity within our footprint. In the small business segment it’s about 70% of our revenue, 60% of our growth. We think we have about a 40% market share there, so there still a lot of room and opportunity you mention there. The medium-size business is about a $1 billion business for us right now. We think we have about a 20% market share and it's growing at the fastest rate of any of our segments. The enterprise space, we’ve just entered. We have about a 5% -- less than a 5% share there. It's going gangbusters. We think it's another $13 to $15 billion opportunity within our revenue opportunity, within our footprint. And we just took on a small, fast food restaurant chain with about 6,000 locations. We took on our small retailer with about 13,000 locations and we’re Wi-Fi'ing up their properties and providing internet service. And if it doesn't fit in our footprint, we have cooperative agreements with other MSOs where they get their percentage of billing outside of our footprint. But we do the master bill, so the customer has just one bill to deal with. So, we see a lot of room for growth. I think we’re differentiated that we have superior new product not legacy products, so better technology, better product at a more competitive price point.

Are there certain segments of enterprise that are more attractive versus others?

Now, the ones that we signing up the fastest right now or kind of like small regional hub with a number of small outlets and a small businesses. So we know how to wire up small businesses and that need to be changed. So banks, small retailers, fast food companies seem to be the highest growth for us right now.

And just – what about on the competitive side, I mean, particularly in small business where you actually have substantial share now, albeit with room to grow, but have you seen any change in how your competitors are behaving or reacting to your success over the past 12 months?

The RBOCs seem to woken up bit in the small business space and they are competing more aggressively. We got a dedicated sales force, a dedicated service force and I think superior products, so we continue to see strong growth over that segment.

Let’s talk about wireless. You mentioned also, as one of things you focus on this year launching wireless products around the middle of the year and this is going to utilize your Wi-Fi network as well as your pre-existing MVNO agreement with Verizon. Brian said on the fourth quarter call that he’d like the Wi-Fi first, MVNO strategy to be a permanent one. However some investors question the feasibility of using another company's network as a permanent strategy given the limited ability for you to control that network, ensure a premium experience and also provision of a full feature set, and it also seems to be some questions I think over the economic viability of an MVNO without the owner's economics. Is there legitimacy to these concerns or are there something that the skeptics are missing?

Well, with 29-customer -- with 29-million customer relationships, 16 million hotspots and a perpetual MVNO agreement, we think we’ve got the great set of assets to offer very compelling value proposition to the customers. I think there are three principles we are managing the business by. One is, we want to run a profitable business. Our economics indicate we can see after a short period the NPV positive at the subscriber level over a short time period. Secondly, we think that this can help reduce churn and be a sticky product within the bundle, and we’ll sell it within the bundle focusing initially on existing customers, so we see that as an important principle. And third, that this can bring new customers to our business that aren’t there now. And XFINITY Home for example 50% of the customers in XFINITY Home are new to Comcast. So we think if we stick by those principles and we have a very compelling value proposition and we’ll get out of the gates later on this year.

Let’s talk about programming expenses, programming cost growth even in the better years seems to be running in the high single digits, given the continued erosion in television audience levels, do you think that high single digit growth is sustainable over the long term or do you think that will moderate at some point?

Well, we announced the 13% increase this year which was driven by some contracts that were up at the end of 2016 in the first quarter of 2017. We see that it’s moderating in the subsequent years down to the high – mid to high single digit levels. It’s driven primarily by force and retrans costs. We don’t see that changing the whole lot in the near future those costs increases, but we are able to offset that and managed our margin by driving high margin businesses like business services, high-speed data, by reasonable rate increases and by managing our non-program [ph] expenses effectively as possible. So, we said last year we would manager margin to a 0 to 50 bps decline. We came in at 40 bps and we said again this year we can manage to 0 to 50 bps decline in the overall business. And I think we’ve got great momentum and we should be able to do that. And I think we demonstrated we can manage margins pretty effectively even with the programming increases we’re seeing.

Yes. I mean, you mention that retrans in sports is really what's driving that, that high rate of growth. Is there – I mean, it sounds like you certainly have visibility over at least for next few years on that not changing. I guess if you think about really long time now is there anything unsustainable that could continue 10/15 years. I don’t know, how would you think about that?

I would think – I would hope that would be case, but we don't see it over the near-term. Long-term sustainability I guess it depends on the value being offered to the customer. And one of the nice think about X1 is we can bring in different packages and offerings to bring value to the customer even if it's not the traditional programming, so Netflix beginning an example of that. And where there isn’t sports or retrans cost, but we’re still bringing the content the customer wants to them. So we think the X1 platform is real advantage to us going forward in terms of its ability to integrate different program.

And so, giving your comments on margins, its reasonable think that we could see operating leverage driving margins expansion in 2018?

We don’t project our past the year in terms of the margin or programming costs, but I think that the great thing about the customer experience work we’re doing is taking -- as I mentioned previously a lot of noise out of the system. And I think we can drive non-programming costs very effectively and are two highest growth businesses, HSD and business services are both accretive. So the objective of managing and drive effective margins we’ll continue on down that path.

Let’s talk about CapEx. You talked about talk about the innovative smaller or less expensive boxes being deployed for video. The X1 rollout is no longer accelerating. On the surface this should imply a decline in capital intensity, but CapEx sales remains at 15%. Can you explain why the increased investment in the network is offsetting the declines in CPE CapEx and what happens directionally to capital intensity looking beyond 2017?

So, there has been shift in CapEx as a percentage of the total CPE is coming down as a percentage of the total and network investment is going up slightly. We said it would be around 15% capital intensity and 16% which is where we came in. I think that the capital intensity of CPE will continue to drift downward as a percentage and that the network capacity will continue to go upward. So, in 2016 we went from 55-gigs per household median usage up to 88-gig average, so 55% increase and that's a good thing. We want we want to see that happen. People are placing more value on our network. So, we’re very positive about that and we’ll continue to invest there. We’re driving our business services. We use to drive business services just to customer-by-customer base whereas now we’re going to an industrial park, and if we get one customer we build in, we pull in the fiber, the Metro e-fiber or to – because we’re know we’re going to get 30%, 40% of the customers within the reasonable time period, so we’re building out proactively. So, I think it’s reasonable to assume that capital intensity may drift downwards, but if we see opportunities we’re going to jump on and certainly the network capacity and the business services aspect of CapEx will continue to invest in because we see good growth and good margin there.

When did you make that shift towards more proactively connecting commercial premises?

Well, we look at all our CapEx and the ROI on the CapEx and we -- the business services basically the team came forward and said, we think we can invest more proactively and get a higher ROI and so we tried in a few markets and they’ve delivered on their commitments and we said okay, here’s more CapEx, go bill. And so it’s on a success base program and the people who can drive more on that customer growth get more CapEx and it’s been very successful.

I wanted to ask you about Symphony. I think a lot of just what you guys call it, a lot of investors are trying to figure out how the strategy landscape is going to reshape through industry consolidation. Comcast had citied relatively earlier that distribution and content belong together, which I think gives you a pretty unique perspective. Now that universe and we’ve seen Universal’s been under the Comcast group for six years, how would you describe the major benefits or synergies that have accrued to the cable business and also to NBCU as a result of the combination.

Well we are very collaborative business. I mean Steve and I speak at least every week and there hasn’t been an issue that’s come up between our companies that we can solve in two minute conversation. I think that the most obvious synergy was the Olympics as I mentioned where we collaboratively came together and brought a very unique experience to the viewers in X1. The other types of things we’ve done together is EST electronics sell through where you can purchase a movie with a click of the remote, of voice command over the remote and that was a program that we worked on and developed. I think the stocking, full season stocking is something we were able to work on and develop together. So, I think the real advantage is that we can test and try things and collaborate over things without getting into multiyear agreements, arguments. I think that you know the fact that we grew video subs for the first time in ten years. We have the highest HSD numbers in nine years, coupled with the fact that NBC has been the highest ratings ever they are doing the best movie business that they have done in since the beginning of the Universal Studios and the theme parks are booming. I don’t think it’s any coincidence that both businesses are performing at such a high level. And I think it’s due to the fact that we are integrating. We do work closely together and I think 2017 is going to be another continued year of success.

All right. We’ll wrap up there and thanks very much for joining us.

Thanks you.

Appreciate it.

Thank you. Great to be here. End of Q&A: