Shenandoah Telecommunications Company (SHEN) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Shentel fourth quarter earnings conference call. [Operator instructions] Please be advised that today's conference is being recorded. If you require any further assistance please press star zero. I would now like to hand the conference over to your speaker today, Jennifer Belodeau.Please go ahead, ma'am.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the fourth quarter and year ended December 31, 2019. Our results were announced in a press release distributed last night, and the presentation we'll be reviewing is included on our investor page at our website, www.shentel.com. Please note that an audio replay of this call will be made available later today.The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer, Dave Heimbach, Executive Vice President and Chief Operating Officer, and Jim Volk, Senior Vice President, Finance, and CFO.After our prepared remarks, we will conduct a question-and-answer session. As always, let me refer you to Slide 2 of the presentation which contains our Safe Harbor disclaimer and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties.These may cause actual results to differ materially from the statements. Hence, you’ll find a detailed discussion of various risk factors in our SEC filings, which you're encouraged to review. You're cautioned not to place undue reliance on these forward-looking statements, except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements.With that, I'll turn the call over to Chris. Go ahead, Chris.

Thanks, Jen. We appreciate everyone joining us this morning. As you see on Slide 4, 2019 was a busy and successful year for Shentel. We completed major upgrades to our networks that have already begun to produce positive returns on investment.We upgraded our cable networks to DOCSIS 3.1 technology, enabling download speeds of up to one gigabit per second to subscribers across 99% of our footprint. The network upgrades, combined with our new rate card and improvements in customer service and operations, drove cable data penetration rates to just over 40% from 37% a year ago, while broadband churn decreased an impressive 20 basis points year-over-year.This year, we also completed network coverage upgrades and distribution expansion efforts in our south and west markets, including the recently acquired markets in the region around Parkersburg, West Virginia. These network and associated distribution improvements were among the key drivers for Shentel to deliver record gross and net adds in the fourth quarter and year-ending 2019.An important part of our strategic plan is to invest in new services that we believe will accelerate our growth in future years. 2019 was a pivotal year in developing and launching our Fiber-to-the-Home service which we branded Glo Fiber. We are very pleased that we were able to go live in our first market in Harrisonburg, Virginia, approximately a year after our Board approved the initiative. I'm very proud of the efforts of the Glo Fiber team who have stepped up to translate a vision for a new service into a revenue-generating reality within a relatively short time frame.We're just getting started with Glo Fiber, as Dave will explain in more detail later on this call. But I'm very excited about the growth potential of this new initiative. On a similar note, we identified pockets of our existing markets that were underserved or had no broadband service at all and created a business plan to deliver a fixed wireless broadband service to these households. We executed the first part of this effort in 2019 with the purchase of 2.5 gigahertz wireless spectrum that will cover a target market of approximately 300,000 households. We are now in the second phase of development and expect to launch a service offering up to 100 megabits per second download speed in the second half of this year.Although both of these initiatives will be dilutive to broadband adjusted OIBDA in 2020, we have a long history of turning our investments in new services and businesses into contributions to increasing shareholder value. In addition to organic investments, we were also opportunistic in 2019 in completing a tuck-in acquisition in our broadband segment. Big Sandy broadband was acquired in February and added 4,800 RGUs to our broadband segment and expanded our incumbent cable footprint into the State of Kentucky.Lastly, in October 2019, our board of directors authorized our first share repurchase program for up to $80 million, and we repurchased approximately 200,000 shares for an aggregate 7.2 million in the fourth quarter. I'm really pleased with the great progress we made in 2019 as we continue to execute on our strategic plan.Turning to Slide 5, consolidated revenues grew $3 million from 2018 to $633.9 million in 2019, driven by $10.8 million in broadband revenue growth, partially offset by a $7.1 million decline in the wireless segment. The wireless segment was adversely affected by the ongoing dispute with Sprint in resetting the travel fee. We recognized $12 million in lower travel revenue in 2019 compared to 2018. We now expect the arbitration hearing to resolve the travel fee dispute in early second quarter.Consolidated adjusted OIBDA was $260.9 million as compared to $264.6 million due to the $12 million travel revenue decline in the wireless segment, partially offset by growth of $3.9 million in broadband, $3.6 million in the core wireless business, and $600,000 in the tower segment.Operating income grew 4.1% to $97 million and diluted earnings per share grew 18.3% to $1.10 per fully diluted share.As noted on Slide 6, we continue to generate strong cash flow. Normalized free cash flow, excluding the capex for the new Glo Fiber and fixed wireless services, grew 7.9% to an all-time record of $139.2 million, driven primarily by our wireless segment. We continue to take a balanced view to capital allocation in 2019.We invested $35.5 million in new broadband services, $10 million in broadband acquisitions, returned $21.1 million of value to shareholders through both our growing dividend and share repurchase program. We also used $53.2 million to repay debt to qualify for the lowest borrowing rate in our term loan agreement. We expect to take a similar balanced view to deploying capital in 2020.Before I turn the call over to Jim to review our financial results, I'd like to comment on the status of the proposed merger of Sprint and T-Mobile. On February 11, the U.S. Judge in the Sprint-T-Mobile antitrust proceeding ruled in favor of the companies. While there are still a few additional steps for the companies to complete, this ruling appears to clear the path for the merger to close.As discussed on prior calls and highlighted again on Slide 7, our Sprint affiliate agreement provides multiple options that start when the merger closes. We have only had very preliminary conversations with T-Mobile on our wireless segment future, and expect those conversations to pick up in substance over the coming weeks.We cannot comment anymore on these discussions at this time, but we will continue to work toward attaining an outcome that is in the best interest of our shareholders.With that, I'll now turn the call over to Jim to deliver the details of our financial results.

Thank you, Chris, and good morning, everyone. Before reviewing the financial results, I'd like to first speak to the segment changes that we announced last week and are incorporated into the earnings release and 10-K filings that we made last night.As shown on Slide 9, we have separated our tower and PCS businesses into two segments from the legacy wireless segment. We have also combined our legacy cable and wireline segments into a new broadband segment.The broadband segment now includes our incumbent cable franchises, our Fiber enterprise and wholesale business, our new Glo Fiber and fixed wireless services and our telephone business in Shenandoah County. These changes are consistent with how we allocate resources, evaluate performance and better enable peer comparisons. These changes do not change Shentel's consolidated results.Now, turning to the fourth quarter 2019 financial results. Please refer to Slide 10. Consolidated revenue was $161 million in the fourth quarter 2019, relatively flat with the same period in 2018, as broadband and tower segment revenue growth of $3.8 million, and $700,000 were offset by $4.4 million in lower Sprint travel revenue resulting from the ongoing dispute with Sprint over resetting the travel fee.Consolidated adjusted OIBDA for the quarter was $63.5 million compared to $69.1 million in the same period of last year due to a decline in the wireless segment.Operating income decreased $4.1 million to $22.9 million.Earnings per share for the quarter was $0.27 per diluted share compared to $0.30 per diluted share in the prior-year period.In our wireless segment highlights on Slide 11, wireless operating revenues for the fourth quarter of 2019 decreased $3.5 million to $112.4 million as compared to $115.9 million in the prior-year period. The decline in revenue was due to a $4.5 million decrease in Sprint travel revenue, partially offset by a $1.2 million increase in equipment revenue due to higher postpaid gross adds in the quarter.Adjusted OIBDA for the wireless segment decreased $7 million to $48.7 million in the fourth quarter 2019, compared to $55.7 million in the prior-year period. In addition to the revenue decline of $3.5 million, tower rent and maintenance expenses increased $3 million from 107 more cell sites at December 2019 versus the same date a year ago, $1.6 million in higher equipment costs due to higher postpaid gross adds, partially offset by $800,000 in lower property taxes.Moving to Slide 12, revenue in our broadband segment grew $3.8 million or 8.2% to $49.8 million in the fourth quarter of 2019, driven by an increase of $2.8 million in cable, residential, and small and medium-sized business revenue, primarily from an 11.5% increase in broadband RGUs, and a $1.1 million increase in Fiber enterprise and wholesale revenue.Broadband adjusted OIBDA for the fourth quarter grew 10% to $21.4 million, compared to $19.4 million in the fourth quarter of 2018. The launch of Glo Fiber diluted broadband adjusted OIBDA by $1.3 million. Excluding Glo Fiber, our broadband adjusted OIBDA and margins would have been 16% and 45%, respectively.On Slide 13, tower segment revenues grew 22.2% to $3.8 million and adjusted OIBDA grew 21.3% to $2.3 million for the fourth quarter of 2019 due to a combination of higher intercompany tower rights that were adjusted to market rates in the quarter and 10% growth in tenants.Now, turning to the full year of 2019 segment results on Slide 14, our wireless operating revenue for 2019 decreased $7.1 million to $443.4 million as compared to $450.5 million in 2018. The decline in revenue was attributed to the aforementioned $12 million decrease in Sprint travel revenue, partially offset by $3.2 million increase in postpaid and prepaid revenue from approximately 6% growth in subscribers and $1.6 million increase in roaming and MVNO revenues.Adjusted OIBDA for the wireless segment for 2019 decreased $8.4 million to $204.7 million, compared to $213.1 million in 2018.In addition to the revenue decline of $7.1 million, tower rents increased $10.5 million from 107 more cell sites and higher intercompany tower rent rates, partially offset by $4.3 million in lower backhaul expenses from negotiating lower backhaul rates with vendors and overbuilding high-priced circuits at 99 towers. We also benefited from $2 million in lower operational taxes, $1.8 million in lower advertising and $700,000 in lower retail store rents.On Slide 15, revenue in our broadband segment grew $10.8 million or 5.9% year-over-year to $193.9 million in 2019, driven by an increase of $10.1 million or 8.2% in cable, residential and SMB revenue, primarily from an increase in broadband RGUs, $3.3 million or 13.4% growth in fiber enterprise and wholesale revenue due to $2 million increase in enterprise revenue and $1.3 million increase in intercompany backhaul revenue from replacing high-priced circuits on our wireless segment, partially offset by $3.2 million or 12.3% decline in RLEC revenues.Broadband adjusted OIBDA for 2019 grew $3.9 million, or 4.9%, to $83.8 million compared to $79.9 million in 2018.Higher revenues were offset by $2.9 million in Glo Fiber expenses, $1.6 million in higher cost of service due to the expansion of our network footprint and higher programming and retransmission fees, $1.5 million in higher payroll costs and $800,000 in higher advertising and commissions.Moving on to our tower segment on Slide 16, 2019 revenue grew 6.5% to over – year-over-year to $13 million, and adjusted OIBDA grew 8.6% to $7.9 million due to a 10.1% increase in tenants and a 2.5% increase in the lease rates.Turning to our balance sheet on Slide 17, as of December 31, 2019, we had $732 million of debt outstanding with an average interest rate of 3.26%. Our net leverage ratio was 2.48 using annualized fourth quarter 2019 adjusted OIBDA. We ended the year with $177 million in liquidity, including $75 million in available line of credit.Our strong balance sheet, cost of capital and cash flow generation will be a key advantage in growing our business long term.And now, I'll turn the call over to Dave.

Thank you Jim, and good morning, everyone. I'll start by going over some of our operational highlights from the fourth quarter of 2019.On Slide 19, we showed the key metrics of our postpaid wireless business. We had approximately 844,000 postpaid subscribers at the end of the fourth quarter.Net additions for the fourth quarter 2019 were approximately 21,000 for postpaid compared to 10,000 in the fourth quarter 2018. The incremental net gain year-over-year was driven by the second consecutive quarter of record phone additions and record connected device additions on the continued strength of terrific local market execution. Combined postpaid churn rose 15 basis points year-over-year to 2.05%, with phone churn increasing 13 basis points year-over-year and connected device churn remaining relatively flat. Approximately nine basis points of the year-over-year increase in churn was driven by higher port outs to Verizon as a result of more aggressive unlimited pricing in the retail business and continued inroads by Comcast Xfinity Mobile in our region. The balance of the churn increase relates to connected device add-a-line promo roll-off.In contrast, gross adds increased an impressive 32% year-over-year by over 17,000, with phones representing 70% of total postpaid activations and up 19% versus the prior year. Postpaid ARPU declined approximately $1.93 year-over-year, driven primarily by Sprint promotional discounting and, to a lesser extent, the increase in the mix of connected devices in the base. This quarter marks the ninth consecutive quarter we've enjoyed a positive port-in to port-out ratio with a 1.09:1 ratio for the fourth quarter of 2019. We have, however, seen a steady decline in our porting ratio over the last several quarters as weakness in the Sprint brand has begun impacting consumer behavior in our markets, particularly in relation to Verizon. In spite of these headwinds, we continue to increase our retail presence and finished the quarter with 178 Sprint postpaid-branded doors which was an increase of 10% year-over-year. Lastly, 8.6% of our postpaid base upgraded their phone in the quarter and 12.2% of the base was comprised of connected devices such as watches and tablets at the end of 2019.Now, moving to Slide 20, we had approximately 274,000 prepaid subscribers at the end of the fourth quarter. And prepaid gross and net additions were just over 39,000 and 2,400, respectively, for the fourth quarter which was largely consistent with the prior-year period. Fourth quarter prepaid churn dropped four basis points year-over-year to 4.52%, while ARPU increased $0.44 as the mix of our prepaid subscribers on the Boost brand continued to increase slightly to 91.2%.Lastly, we increased our Boost-branded door locations 2% to 162 year-over-year which represents a slower rate of growth than we expected related to the announced plan to sell the Boost-branded subscribers to Dish as part of the Sprint and T-Mobile merger concessions.Turning to Slide 21, in our broadband business, total RGUs grew 3.4% in the fourth quarter to approximately 169,000 compared to approximately 163,500 in the prior year. We added roughly 1,000 net broadband RGUs in the quarter through organic growth and are pleased to report that our legacy broadband penetration increased from 37.4% in the fourth quarter last year to 40.6% this quarter on the strength of our new broadband speeds and rate card. Average revenue per customer increased to $114.19 year-over-year, driven by a combination of broadband speed upgrades and annual video price increases.Substantially all of our homes passed in our cable markets are now capable of broadband speeds of up to 1 gig per second, with approximately 54% of our base in the upgraded areas having migrated to the new PowerHouse-branded rate card. As Chris noted in his opening remarks, the speed upgrades, service improvements and new rate card we've launched in the second half of 2018 continued to improve customer satisfaction and reduce churn. In fact, we've enjoyed eight consecutive quarters of year-over-year broadband churn improvement with a 19-basis-point reduction in broadband churn this quarter as compared to the fourth quarter in 2018.Notably, in 2018, over half of our broadband data subscribers were on rate plans of 10 megabits per second or less. Whereas now, two-thirds of subscribers are on plans of 25 megabits per second or higher, with an average subscribed download speed of 63 megabits per second which is well out of the reach of our DSL competitors. I'm very pleased with our team's continued progress in achieving our goal of constructing an even deeper competitive moat in the cable markets we serve.Turning to Slide 22, we added 17 towers in 2019 and increased total tenants by 10% year-over-year to 404. We have 11 towers slated for construction in our 2020 plan and had a backlog of over 140 open orders related to upgrades of existing tenants or the addition of new tenants at the end of 2019.We wanted to provide you a brief update on our progress in the launch of our new Fiber-to-the-Home service, Glo Fiber. Glo offers a compelling suite of services with residential Internet speeds of up to 2 gigabits per second, paired with a whole home WiFi offering. We also offer four tiers of video service delivered via our Glo-branded streaming app and a residential voice offering delivered via Voice Over Ip.On Slide 23, we depicted our fiber and cable footprint, including a table to summarize our progress in each Glo Fiber market. Construction is well under way in our first four markets which include: Harrisonburg, Staunton, Front Royal and Winchester, Virginia. And we'll also begin construction this year in Lynchburg and Salem, Virginia, as just last week, received franchise approval in Roanoke. Together, these first seven markets comprised just over 77,000 target passings.As Chris mentioned earlier, we launched our first Glo Fiber market, Harrisonburg on October 28, with 1,723 households passed at the end of 2019. And as of December 31, Glo Fiber had 126 customers totaling 177 RGUs. We're seeing a 30% attachment rate for our streaming TV service and a 12% attachment rate for our home phone service which is consistent with our projections. While still very early, we're also seeing ARPUs consistent with our current cable markets. And based on our first handful of neighborhoods, we're achieving a broadband penetration rate of approximately 15% after 90 days.Notably, roughly one-fourth of our broadband subs are electing our one gig symmetrical broadband service which retails for $90 a month with whole home Wifi.As Chris noted at the start of the call, we're also making great progress toward our goal of launching new fixed wireless broadband offering in the second half of 2020, targeting roughly 300,000 rural households across portions of Virginia, West Virginia and Southeastern Ohio, where we recently completed the acquisition of 2.5 gigahertz licensed spectrum. We will continue to update you on status of both our Glo Fiber and fixed wireless initiatives as we progress in our build plans and launch of commercial services over the next several quarters.Finally, Slide 24 provides an update to our 2019 capital spending results. Capital expenditures were $139 million at the end of 2019 as compared to $137 million in 2018. For 2020, we plan to spend between $136 million and $154 million in capital, with a year-over-year increase driven entirely by our investment in our new broadband services. The step-down in wireless spend year-over-year relates to a deferral of certain network expansion projects in the Richmond Silver territory as we await further clarity on the impact to our wireless business related to the Sprint and T-Mobile merger.This planned level of spend in wireless this year is more consistent with the maintenance level of spend, assuming no additional territory expansions. And it relates to maintaining sufficient capacity for both the increases in data consumption of our existing subscribers, as well as anticipated subscriber growth in our existing territory.So, thank you very much. And operator, we are now ready for questions.

Thank you. [Operator instructions] Our first question comes from Rick Prentiss with Raymond James. You may proceed with your question.

Hey, good morning guys.

Good morning Rick.

Good morning Rick

A couple of questions. First, I know you can't talk much about it. But with the Sprint-T-Mobile deal looking like – and it's got a good shot closing April 1. What is the process? Chris, I think you started talking about very preliminary about pickup in the coming weeks. Is that something that you think we might get a resolution on within the second quarter, or how long might that process drag out?

Yes, Rick, this is Dave. The agreement, as you know, contemplates waterfall events as it were. And assuming April 1, we've got 180 days to negotiate an addendum for the agreement. So, that takes us out to, let's say, October 1. And then if we can't agree on an addendum to the agreement, then new T-Mobile would have 60 days to exercise their purchase option of our wireless business which would take us out to December 1. And if they decline to do that then we get 60 days to exercise our purchase option of their subscribers and network in our footprint. And that would take us all the way out to February 1, 2021.So, as you know, the parties could negotiate something outside of the agreement as well. And as Chris noted, we've been in preliminary discussions with the folks at T-Mobile.

And Rick, this is Jim. Just to add to that. If there is a brand conversion, if T-Mobile decides to use their brand, then everything would accelerate by roughly about 90 days.

Okay, that makes sense. Assuming though T-Mobile wants to move things as fast as they can from their side because they just feel the Sprint side was deteriorating fast, not anew. But on the Sprint side, as you know it all, there are several types of problems. Okay, second question, the 274,000 prepaid customers, what happens – with Sprint-T-Mobile deal closes, what's your anticipation of when the Dish deal would close? And how does that affect your prepaid base?

Well, our prepaid base and our postpaid base are really one and the same with respect to how we would characterize our wireless business and Wireless segment. And so, as I think you know, they were excluded in some of the public commentary related to the merger. And so, we would anticipate negotiating with new T-Mobile, or pointing to the agreement and the waterfall events with new T-Mobile with the prepaid subscriber base, consistent with how we would think about the postpaid subscriber base.

Okay. And then final one, when we think about market share in the wireless world, if you think about your – before you expanded into Parkersburg and Richmond, what kind of penetration rates in wireless were you guys having of covered POPs? And what do you think T-Mobile's market share is in your territories?

Well, if you go all the way back to pre nTelos, we were in the mid-20% range, Rick. And then, of course, that got diluted with taking on additional territory related to the nTelos acquisition. But our most mature markets have historically performed at around that level. And we have some subsets of those mature markets well above that, some even approaching 50%.And so, our overarching goal as we model territory expansions was to, at a minimum, get to about a 20% market share. And we don't have any reason to believe that we couldn't achieve that. And certainly, we'd be more than willing to try on Magenta and see how that would work for us as well. I'm sure it would work quite a bit better than the Sprint brand.

And if you think about the Magenta Cowboys out there, what penetration rate do you think they have in your markets currently?

We estimate – and it's kind of our own analysis, we estimate probably roughly half of what we've got.

Okay. So, in the high-single-digits and maybe double-digit range?

Yes, so, said differently, Rick, we think – we reckon they have about half the number of subs that we do.

Okay great. Thanks guys. Going to be an interesting year.

You bet.

Thank you. Our next question comes from Zack Silver with B. Riley FBR. You may proceed with your question.

I wanted to follow-up on Ric's question around how sort of your wireless business evolves in the context of Sprint-T-Mo. And I guess, the first one is just, Dish has been pretty vocal about looking for both infrastructure partners and retail partners as it enters the wireless space. You guys checked –totally checked both of those boxes. Can you remind us of how the Dish piece of the T-Mo-Sprint consent decree affects what you decide to do with the wireless business?

You want to take that one, Jim?

Yes Zack, so our agreement with Sprint which T-Mobile would assume when the transaction closes is a holistic approach to either they exercise their option to purchase the whole of business or we exercise that they decline, we would have options to purchase their legacy subscribers and network in our service area. It doesn't contemplate any subset of that. So, anything related to the Boost customers, Virgin Mobile customers, I guess they are now being converted to Boost.It would have to be done through a separate negotiated transaction. And until that or it would be part of the larger transaction. And until that occurs, we'll continue to service those customers and sell under those brands and receive the same revenue that we're receiving today under them.

Okay, I think, that's fairly straightforward. Then second, related, it's just – I think we've talked about this before. But you guys have invested a lot of both CapEx and OpEx in lighting up the two acquired Sprint territories. You haven't, at least I think for Richmond, you haven't had a lot of time to sort of ramp up penetration there. So, you're not getting potential subscriber contributions in the financials. And when you think about whether it's a private negotiation or an appraisal process, can you remind us of how you get credit for those sort of more fallow territories?

Yes, the agreement contemplates a structured, Zack, whereby we would get the greater of the return on investment from the investments we've made in those territory expansions or the capital that we had spent if we were not – if there was not sufficient time for us to recover our investment in those growth territories.And I think we've mentioned this before, but we really didn't expect much in the way of incremental subscriber growth this year in 2020 contributed from the Richmond Silver territory, that was really more of a 2021 phenomenon. And so, we don't foresee any slowdown, specifically attributed to the lack of contribution from Richmond Silver this year.

Got it. And last one for me. I think a couple of quarters back, you had mentioned that due to the uncertainty around the – I guess, the Dish announcement with Boost, some of the dealers have pulled back activity. This quarter, you're saying that the store growth is not as high as you expected, but that certainly makes sense.But I'm just wondering if you are detecting any pullback in activity from the existing dealers, I guess, quarter-to-date, year-to-date.

Well, yes, I mean look, Zack, it's – I think it's reasonable to assume that there are a lot of folks that have a lot of unanswered questions with respect to how the merger is going to impact their businesses, particularly in third-party distribution channels. And we have a substantial portion, as you know, of our footprint, where we rely on third parties, and that's true of both prepaid and postpaid. So, we're trying to manage that as best we can.But certainly, it is difficult and becoming more difficult now that the judge has given his blessing for the merger to proceed. And so, yes, we have uncertainty related to the Boost brand with respect to the prospect of a new owner in the form of Dish. But also on the postpaid side, where folks are a little uncertain as to what their status will be in a new T-Mobile world.

Okay, that makes sense. Thank you.

Thank you. [Operator Instructions] Our next question comes from Hamed Khorsand with BWS Financial. You may proceed with your question.

Good morning. Thanks for taking my questions. Can I take a different track on the Sprint-T-Mobile conversation? Looking forward for the next year once the deal closes, can you provide some color on to how you think ARPU with regards to Sprint's promotions, T-Mobile promotions is going to look?

I wish I could. It is unclear to us at this point what exactly is going to come with the Sprint rate card, and promotional discounting, and so on and so forth in the context of the merger. We do know that there have been a lot of public disclosures about no price increases and so on and so forth as part of the behavioral remedies associated with the merger. But we're uncertain as to what kinds of offers are going to hit the market with respect to bringing these two brands together. So, we're going to take that one day at a time right with you.

Okay. Next question, similarly on ARPU. As you're doing the Glo Fiber rollout, does that – are promoting to get the customers to sign on? Is that going to impact ARPU next year?

We are not, in fact, running any promotions or whatsoever. We've gone to market with a standard rate card and been quite disciplined about that. We are contrary to what a lot of folks do in the industry, not taking a get it now for half price for six months or twelve months kind of an approach. We are taking a very transparent approach to the rate card, selling services with whole numbers instead of 99 at the end of the pricing tag line and trying to be very transparent about any fees, and taxes, and surcharges, and so on and so forth which is why I pointed out the fact that roughly a quarter of our subs are taking gig speeds at a rack rate of $90 a month.So, we're quite pleased with that. And I think it really demonstrates that the market's willingness to pay for value provided by someone other than Comcast.

Thank you very much.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Jim Volk for any further remarks.

Well, I'd like to thank everyone for joining the call this morning, and we will keep you posted as we march forward here into the New Year and a lot of the new developments. It looks like it's going to be an exciting year. Thanks, everyone.

Thank you, ladies and gentlemen. This concludes today’s conference call. Thank you for participating, you may now disconnect.