Consolidated Communications Holdings, Inc. (NASDAQ:CNSL) Q4 2022 Earnings Call Transcript

Consolidated Communications Holdings, Inc. (NASDAQ:CNSL) Q4 2022 Earnings Call Transcript February 28, 2023

Operator: Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Consolidated Communications Fourth Quarter Earnings Conference Call. Please be advised that today’s conference is being recorded. . Thank you. And I will now turn the call over to Philip Kranz, Senior Director of Investor Relations. Philip, you may begin your conference.

Philip Kranz: Good morning, and thank you for joining Consolidated Communications’ fourth quarter 2022 earnings call. Our earnings release, financial statements and presentation are posted on the Investor Relations section of our website at ir.consolidated.com. Please review the safe harbor provisions on Slide 2 of the presentation. Today’s discussion includes forward-looking statements about expected future events and financial results that involve risks and uncertainties that may cause actual results to differ materially from those expressed today. A discussion of factors that may affect future results is contained in Consolidated’s filings with the SEC. In addition, during this call, we will refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation and press release.

With me today are Bob Udell, President and Chief Executive Officer; and Fred Graffam, our Chief Financial Officer. Following their prepared remarks, we will open the call up for questions. I will now turn the call over to Bob Udell.

Robert Udell: Thank you, Philip, and good morning, everyone. Before I provide an update on the fourth quarter, I’ll start on Slide 4 and discuss our journey from a copper-based telecom to a leading fiber broadband provider. In early 2021, after solidifying our capital structure, we started the most aggressive fiber expansion plan in our company’s 128-year history. Over the last 2 years, we’ve made remarkable progress on this growth plan. Our mission is to turn technology into solutions, connecting people and enriching how they work and live. Our service commitment has never been stronger as we deliver world-class fiber broadband to the communities that need it the most, unserved and underserved alike. Our commitment is born out of the belief that access to education, health care, employment, entertainment and the larger world is what creates vibrant communities and a better quality of life.

During 2022, we achieved several key milestones that demonstrate progress on our ongoing transformation and puts us on a path to return to revenue growth. Our total consumer broadband connections grew in 2022, fueled by the addition of more than 40,000 fiber subscribers during the year. The increase in fiber net adds of more than 2.5x drove our 2021 cohort penetration rate of just over 15%, which exceeded our 1-year target. On the heels of another strong build year in 2022, we surpassed 1 million total gigabit fiber locations at year-end and now have extended fiber to nearly 40% of our addressable market. This is nearly a 4x increase from the start of our plan in 2021, an important inflection point. Also, we bolstered our liquidity and aligned our business with over $600 million of aggregate divestitures during the year.

We’ll prudently redeploy these funds to support our continued fiber expansion plans. Longer term, we’re looking to 2024 for another inflection point with year-over-year revenue and EBITDA growth. Specifically, we are targeting a compound annual growth rate in the mid-teens for EBITDA beginning in 2024 and meaningful margin expansion as our fiber business becomes the majority of our overall broadband revenue. To this end, we believe our EBITDA margins have upside to the mid- to high 40% levels over the long term. We are committed to our plan of reaching over 70% fiber coverage across our markets. Through continued execution on our transformation, I am confident that we will generate significant shareholder value as we increase penetration in our fiber markets and grow fiber broadband revenue within consumer and commercial and data transport.

I’m incredibly excited to enter 2023 with a newly aligned leadership team that supports our evolving company and growth strategy. This includes the addition of 3 highly talented industry executives who collectively have decades of telecom experience at major service providers as well as substantial experience driving fiber penetration and a demonstrated track record of delivering growth. To drive our customer acquisition strategy across our consumer broadband business, we most recently brought on Gaurav Juneja as President of Consumer. Gaurav brings a proven track record in the telecom industry with experience and success gaining significant market penetration and growing consumer fiber revenue, and I’m really excited to have him on our team.

Gaurav most recently led MetroNet’s go-to-market strategy and his work scaling new fiber services and establishing the infrastructure to accelerate performance will lead pillars of his work with us growing Fidium and driving penetration across our expanded fiber base. In early January, Dan Stoll joined the company as President of our Commercial Carrier business. He’ll oversee our commercial and carrier go-to-market strategy and is eager to help us capitalize on our broadband fiber investments and continue to grow commercial and carrier data services. Dan has more than 20 years of experience in the telecommunications and fiber network infrastructure industry. Most recently, he served in key senior leadership roles at Zayo. In December, Fred Graffam joined us as Chief Financial Officer.

His experience spans 30 years and includes financial management, operational leadership and expertise within the technology and telecom industries at both public and private companies, including Level 3 and Comcast. He’s already had an influence on our planning process, our priority and his passion around the unit economics is contagious. He looks forward to meeting with the members of this investment community throughout the year. We have also realigned various leadership functions. John Lunny, who previously served as our CIO became our Chief Technology Officer. He will lead the combined areas of network planning, business intelligence and IT and will leverage his past experience leading these areas. Gabe Waggoner continues as our Executive Vice President of Operations and now has responsibilities for all aspects of our fiber deployments, allowing for all areas associated with fiber construction to be integrated into one team.

, this new team streamlined functions providing added efficiencies with a focus on increasing market penetration through the ramp of additional sales channels. I am more confident and energized than ever before in our ability to carry out and achieve our growth plans. We remain extremely bullish on fiber and will leverage our fiber investments to grow across all areas of our business. Fiber is a superior product offering symmetrical speeds not available from cable or fixed wireless. Fiber provides decades of runway to meet customers’ evolving broadband needs as demand for data continues to rise. Put quite simply, fiber is best suited to serve our communities today and for years to come. Importantly, and central to our investment thesis is that we enjoy several distinct structural advantages as we continue on our transformation.

This includes our incumbent position. We know our fiber expansion markets very well, given our long operating history and our historical deployment of fiber hubs deep into these communities. We have a fiber-rich carrier-class network that we can cost-effectively extend including existing conduit capacity for buried facilities and pole access, where we have aerial . These network advantages provide us with favorable unit cost and with significant return economics as we execute on our plan. Now let’s turn to Slide 10, where I’ll update you on our fiber build plan. In the fourth quarter, we upgraded 60,700 locations and completed more than 400,000 upgrades in 2022. Our total fiber passings now extends to just over 1 million locations or 38% of our overall service area, up from 10% in 2020.

By reaching this critical milestone, we’ve seen an inflection point in consumer broadband such that we are now generating positive broadband adds on the strength of our fiber business. This also was the catalyst for achieving consumer broadband revenue growth in both Q4 and for all of 2022. Looking forward to the next few years, we plan to build fiber to more than 70% of passings by mid-2026. While this is roughly 2 quarters later than we previously predicted, it’s consistent with our plan to maximize public private partnerships as we execute on our builds. Once complete, this will mark a 7x increase in fiber passings from 2020. As a result, for 2023, we are targeting a minimum 225,000 new fiber locations. I’ll note our 2023 build target is a moderated level versus the prior 2 years as we focus on driving penetration within our existing base of fiber passing, and we benefit from broadband revenue growth as a result of reaching the previously mentioned critical fiber coverage level of nearly 40%, and also actively pursue any grant or infrastructure funding opportunities that align with our build plans that we can maximize the economies of our builds for complete areas.

With governmental funding opportunities, which we will continue to sink with our build plans help to offset rural high-cost passing and extend our reach to entire communities allowing a return consistent with our model. As we’ve noted in the past, this is an important aspect of our expansion strategy. In fact, since 2019, we’ve been awarded approximately $150 million of broadband partnership and grant funding to support projects across just a few of our states. I am happy to report a recent award from the New Hampshire Office of Broadband Initiatives of roughly $40 million to support our build of approximately 25,000 locations across rural New Hampshire. When combined with our own investment of capital, the entire project will provide reliable fiber Internet services to more than 57,000 homes across the states.

Another recent award includes $16.7 million as part of the state of Maine Connect the Ready grants that will support our fiber build of more than 18,000 locations within our footprint. These awards reflect the recognition of Consolidated as a quality partner through its incumbent advantages with a stellar track record of building fiber. We are really excited to bring Fidium Fiber superfast symmetrical Internet service to additional communities in both Maine and New Hampshire, and this is just the beginning. We are tracking roughly $100 million additional broadband government partnership opportunities across our markets and feel well positioned to provide partnering communities the best fiber broadband service at the best value. We are confident in our plan and bullish on fiber, which is our future.

We are proceeding with a prudent build pace in 2023, and we have proven that we can ramp and build quickly as circumstances warrant. Over the last 2 years, we have averaged just over 90,000 upgrades per quarter, and we remain ready to quickly ramp fiber expansion as planned . Our cumulative 2021 cohort fiber penetration at the 12-month mark is 15.1%, which is above our target of 14%. We’ve achieved this largely through penetration of the Single-Family Home or SFU channel on passings that are ready for sale. We have a comprehensive strategy to increase penetration across all cohorts. First, we doubled our door-to-door sales team headcount since the end of the year. Second, we introduced the Fidium Fiber brand in November 2021. Based on this timing, several of our communities where we constructed fiber prior to that date didn’t have a chance to experience the game-changing customer experience that we are offering with Fidium.

We are doubling back or rerouting these areas highlighting the Fidium value proposition driving additional penetration. Third, we’ve expanded our alternative channels recently adding several new consumer sales partners to augment digital door-to-door and call center sales efforts across select markets. And fourth, we recently launched Fidium@Work, a simple, highly competitive fiber broadband service with the Attune@Work WiFi app to support small businesses. Fidium@Work leverages a digital online sales channel to offer plans, including 2 gig over a 10 gig capable network targeting the small business or home office customer at a highly competitive price. Now let’s turn to Slide 13, where I will cover the momentum we’re experiencing in the consumer fiber business, which is contributing to overall consumer broadband growth.

This is a key catalyst for us as we progress towards year-over-year growth in revenue and EBITDA in 2024. In Q4, we added 10,600 Fidium Fiber subscribers, an increase of more than 2x the prior year. Fiber broadband revenue normalized for Kansas was $23.7 million, up 51% year-over-year and 12% increase from the third quarter, and positive traction we are generating in fiber contributed to overall consumer broadband revenue growth of 5% in the fourth quarter and 3% for the full year of 2022. Fiber subscriber trends remain consistent with over 70% choosing a 1 gig service while the vast majority are new subscribers. Our shift to the fiber from copper is evident as fiber now makes up a full 1/3 of our consumer broadband connection, which is up from 22% a year ago.

Looking at ARPU, fiber ARPU exceeds copper by over $13 or 25%. This is a healthy spread, and it provides us with ample upside to continue to drive meaningful revenue and EBITDA as our mix shifts to fiber. In the fourth quarter, consumer fiber broadband ARPU was up 4.5% year-over-year, driven by the increase in speed mix. Now I’d like to turn to Slide 14, where I will outline the tremendous opportunity that lies ahead for us within consumer broadband as we provide our communities with a superior fiber broadband product and continue our positive momentum. We completed 2022 with roughly 123,000 consumer fiber broadband customers or penetration of 12% on our fiber passings of 1 million. As we look to 2026, we believe we can grow our fiber customer base to over 500,000, the equivalent of 25% penetration on our targeted fiber passings of 2 million.

Under this scenario, our fiber broadband revenue would approximate $450 million in 2026, up from $80 million in 2022, an increase of more than 5x. Further, with fiber projected to represent over 80% of our consumer broadband revenues, we expect considerable margin expansion as we leverage our revenue growth with improved efficiencies that come from fiber. Let’s turn to our commercial and carrier channels, where we experienced data transport growth in both the fourth quarter and the full year normalized for Kansas. An advantage in our commercial go-to-market strategy is our ability to differentiate with high-quality and scalable fiber-based network connectivity. This is supported by our cloud service tool kit, including UCaaS, ProConnect Voice, SD-WAN and data security enabling solutions, which meet our customers’ needs and help to reduce churn.

In carrier, we benefited from capacity upgrades in the fiber-to-the-tower business and a favorable delay in tower negotiations, which have largely offset expected market rate adjustments during 2022. New fiber passings within our consumer routes provide opportunities for us to leverage the same fiber to grow both carrier and commercial data and transport services. We increased our lit buildings by 7% in the fourth quarter after normalizing for Kansas, which correlates to higher margins, increased opportunity to upsell and greater ability to ensure the best customer experience and more opportunities for Fidium@Work. I will now turn the call over to Fred, who’ll provide more insights on our fourth quarter financial results. Fred?

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Fred Graffam: Thanks, Bob, and good morning to everyone. I’ll start by saying I am excited to have joined Consolidated at such a unique point in our history, and I am grateful for the opportunity to work with this management and board as we transform the company and realize the benefits of our ongoing fiber expansion through accelerated revenue and EBITDA growth. I’ll now provide an overview of our fourth quarter results. This year, we simplified the company with over $600 million of asset divestitures, which has significantly bolstered our liquidity in support of our fiber expansion plans. Most recently, we closed on the Kansas divestiture on November 30 for approximately $82 million in gross proceeds. To help provide some context on our results in certain parts of our discussion today, I will provide normalized results to exclude the impact of Ohio and Kansas divestitures from the appropriate periods.

When doing so, I will refer to this as normalized. Total operating revenue for the fourth quarter was $296 million, and adjusted EBITDA was $101.7 million. Our normalized revenues in Q4 was $288.3 million, a decline of $15.8 million or 5.2% versus the prior year. Approximately 64% of the decline was driven by lower other products and services revenues of $5.7 million due largely to reduced recognition of public private partnership construction projects and lower subsidy revenue of $4.3 million. The lower subsidy revenue reflects the CAF II step-down and transition to RDOF, which was partly offset by the recognition of Texas High Cost Fund settlements related to prior years. The remaining decline was primarily due to lower voice and video services revenue.

Importantly, we experienced healthy revenue growth across the strategic areas of our business, including consumer broadband and commercial and carrier data transport, which partly offset these declines. In 2024, we expect these areas of our business to drive improved revenue and EBITDA as we leverage our fiber infrastructure investments. The decline in reported adjusted EBITDA of $24.5 million was impacted by the factors mentioned above, in addition to lower wireless partnership distributions of $5.7 million. The fourth quarter marks the last quarter for these distributions given the sale of our 5 wireless limited partnership interest to Verizon, which closed in September 2022. Now I’ll review revenue by customer channel. Turning to our consumer channel, normalized total revenue was $112 million, down 2.8% compared to a year ago.

Normalized consumer broadband revenue was $67.9 million, up 5.3% driven by strong consumer fiber revenue growth of 51%. Consumer fiber net adds were up more than 2x from a year ago as Fidium Fiber continues to gain momentum. For the full year, we delivered consumer positive broadband net adds of , a significant turnaround from nearly net consumer broadband losses in 2021. With fiber coverage of almost 40%, we are well positioned to continue generating positive net adds moving forward. Consumer fiber ARPU was $67.14 in the fourth quarter, up sequentially and year-over-year, driven by speed mix as customers continue to take higher speeds of our fiber services. The fiber speed mix of Gig+ is up 15 percentage points on a year-over-year basis. Consumer voice revenue normalized was $34 million, down $4.6 million or 11.8%, primarily due to continued erosion of access lines and associated services.

Video revenue normalized was $10.2 million, a decline of $2.1 million or 17% year-over-year as we continue to deemphasize our linear video. With the Kansas divestiture, we reduced our video revenues by nearly 18%. Further, we are accelerating our efforts to transition customers to streaming over-the-top video services to drive higher speed broadband adoption. The transition from video is also driving a reduction in video programming costs, plus improving margins and free cash flow. Commercial revenue normalized was $97.7 million, down $2.1 million or 2.1%. Data services revenue normalized was $53.7 million in the fourth quarter, up 1.3% year-over-year, primarily driven by direct Internet access growth. Looking ahead, our fiber expansion provides opportunities for commercial data growth with new products such as our recent launch of Fidium@Work.

Voice services revenue normalized was $33.9 million, down $1.8 million or 5.1% in the recent quarter, primarily driven by a decline in traditional voice services led by long distance and associated voice services. Carrier revenue normalized was $37.6 million, up $0.7 million or 1.9% versus the prior year. Data and transport services revenue normalized was $33.6 million, up $1.2 million or 3.7% from a year ago. Our Q4 carrier transport revenue benefited from capacity upgrades in the fiber-to-the-tower business and a favorable delay in tower negotiations, which have largely offset expected market rate adjustments. As previously discussed, our fiber-to-the-tower business is under pricing pressures due to contract renewal negotiations with the major wireless providers.

Specifically for the full year 2022, including the effect of churn and pricing step-downs, we had expected to see revenue reductions in the range of $6 million to $7 million. Based primarily on the timing of finalizing some of the contracts during 2022, we ultimately recognized approximately $4 million of lower revenue. With that said, for 2023, we expect to see an impact in the $14 million range, an increase of approximately $10 million versus the impact experienced in 2022. We believe there remains meaningful upside in our carrier business and our carrier team is pursuing new revenue opportunities through capacity upgrades for our wireless and wholesale customers as well as adding new towers. Wireless tower connections under contract totaled approximately 4,100, up 9% versus last year.

Our team continues to leverage our core network upgrades to provide a path to 10 gig backhaul capabilities at the tower site for carriers. Network access revenues normalized totaled $26 million, down $1.2 million or 4.3%, primarily due to declines in special access circuit revenue as carriers move from TDM to Ethernet-based transport solutions. Cost of services and products expense declined $4.2 million, largely due to savings from lower video programming costs, including the impact of the sale of our Kansas operations and a decline in IRU fiber costs related to additional PPP initiatives in the prior year, partially offset by higher utility and fuel expense. Selling, general and administrative expenses increased $8.9 million, primarily due to marketing and advertising expenses related to the expansion of the company’s consumer fiber product, higher professional fees for customer service and process improvement initiatives as well as severance costs.

Net interest expense was $33.2 million, a decrease of $4.9 million compared to a year ago. The decrease was primarily a result of noncash interest of $7.3 million in 2021 on the Searchlight note, which was converted to perpetual preferred stock in connection with the second stage closing of its investment in December 2021. Partially offsetting the decrease was higher interest on the term loan. Committed capital expenditures totaled $124.3 million in the fourth quarter and were $601.1 million for the full year. We had strong execution of our fiber build, upgrading nearly 403,000 passings, which exceeded our target for 2022. Included in our CapEx spend in the fourth quarter was the acceleration of certain pre-committed inventory purchases, which will have a beneficial impact for us in 2023.

In addition, as previously discussed, during 2022, we experienced some inflationary pressures in the form of equipment surcharges and increased contractor labor. A significant portion of our build activity in 2023 will continue to be in our Northern New England markets, where we are ultimately targeting 70% of our fiber upgrades. We have significant cost to build advantages in M&A, which results in a favorable cost to pass. We continue to estimate our average cost per passing to be approximately $650 in 2023 per passing build. This remains significantly below our peer group. Looking to 2023, we are in good shape with our supply chain, having thoughtfully purchased inventory to support our build as well as CPE to support continued growth in our fiber business.

Our average direct cost to connect is in the $750 to $800 range. This is up in part due to some inflationary pressures combined with our use of WiFi extenders to improve the customer service experience. Even with the slightly elevated cost to connect, the unit economics of the fiber business remains strong. On the strategic front, we will continue to review all markets in our portfolio for investment or monetization. We view any such asset divestitures as further funding to execute on our fiber expansion plan. Our criteria in this market-by-market review includes evaluating the economics of the fiber build, market level competition and potential valuations. Moving to our capital structure. Approximately 77% of our total debt is fixed. Recall that we have $500 million interest rate hedge against our $1 billion term loan through July 2023.

Further, our $1.1 billion of senior notes have fixed coupons. Notwithstanding the heightened interest rate environment, our overall average cost of debt is 6.48%, up nominally from 6.2% in the prior quarter. Our net debt leverage was 4.18x at December 31. As of December 31, the company maintained liquidity with cash and short-term investments of approximately USD414 million and USD225 million of available borrowing capacity on our revolving credit facility, subject to certain covenant ratios. As announced in late November, we extended the maturity of our $250 million revolving credit facility from 2025 to 2027, subject to a springing maturity and enhanced our financial flexibility. With ample liquidity, we are well positioned to continue executing on our growth plans with no debt maturities until 2027.

Today, we are providing 2023 guidance, which is outlined on Slide 18. It is as follows. Adjusted EBITDA is expected to be in the range of $310 million to $330 million. Capital expenditures are expected to be in the range of $425 million to $445 million. Our capital allocations are approximately 42% supporting the fiber build, 40% supporting success-based opportunities and 18% for maintenance and digital transformation initiatives. Cash interest expense is expected to be in the range of $145 million to $155 million. Cash income taxes are expected to be below $10 million. Given our NOLs, we do not expect to be a meaningful federal cash taxpayer until 2026. Now let me provide an EBITDA bridge from 2022 to 2023. Reported EBITDA for 2022 was approximately $414 million.

The lower level of projected EBITDA in our guidance versus 2022 includes approximately $50 million resulting from 2022 asset sales, including Kansas and our wireless partnerships, an expected $20 million reduction in legacy voice, the fiber-to-the-tower contract pricing step downs of approximately $10 million in the carrier business, as well as increased marketing and sales expenses. Again, I am excited for the future of Consolidated and I look forward to getting to know each of you in the upcoming weeks. Now I’ll turn the call back to Bob.

Robert Udell: Thank you, Fred. Before opening for questions, let me highlight on Slide 16, our key strategic priorities in 2023. Our transformation to a fiber-first broadband company is progressing well. We’ve reached several important milestones over the past 2 years, and we intend to reach several more as we execute on our growth plan in this year. Accordingly, our first priority is increasing fiber penetration across what we call our 3Cs, consumer, commercial and carrier channels. On a normalized basis, we grew strategic revenue across our 3Cs in 2022. With over 1 million fiber passings, we now have a solid fiber infrastructure and expanding sales channels that we will leverage across our business to generate additional material growth.

Our second priority is to deliver an improved customer experience through higher NPS scores, which will result in increased customer retention and referrals. With an industry-leading NPS score with Fidium Fiber, we know how to deliver an exceptional customer experience. Success with this priority means we reduce churn and turn our customers into promoters of our company, making our job a little bit easier. Our third priority for the year is to drive operational efficiencies, improving unit costs across our business by reducing costs associated with repeatable activities as we optimize processes and productivity. And as Consolidated transforms into a fiber-first broadband company, we remain committed to sustainability and our ESG priorities.

As we build fiber, we are building a more sustainable network. We continue to make good progress with our ESG goals, and we’re excited to share an update with you when we release our annual ESG report in the coming months. With new go-to-market key leaders on board, driving additional sales channels and market penetration supported by an exceptional Fidium customer experience and a strong liquidity position, we’ve entered 2023 with tons of energy and excitement and look forward to reaching additional milestones as we execute on our fiber transformation. Operator, we will now take questions at this time.

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Q&A Session

Operator: . And we will take our first question from Greg Williams with Cowen.

Gregory Williams: Great. First one is just on the subscriber cadence. It looks like you lost 184 subs, and I think that excludes Kansas. I just want to make sure and help us with the cadence and how you think about getting back to positive net adds? And just unpacking that, I think you said that the vast majority of your fiber adds are new. So that implies most of your copper is going somewhere else. Are they going to cable or is fixed wireless encroaching unit territory? Second question is just on CapEx and the fiber-to-the-home pullback. It sounds like CapEx is coming in lighter than the $500 million range we’re sort of expecting. And it sounds like it’s a function of the fiber-to-the-home pullback from your original plan.

Is that essentially the decision of why you pulled back to save on CapEx? Is this like a financial decision or is it more of an operational decision? Like a couple of days ago, your peers were saying they wanted to synchronize their installs and distributions with their aggressive builds. And just trying to figure out if this was more of a — done for financial reasons rather than operational.

Robert Udell: Yes. Thanks, Greg, and appreciate the question. Let me start with that point first on the CapEx. And so when you look at our plan, the overall objective has been to get to 70% fiber coverage, and we’re going to exceed that. If you do the math with the sale of Kansas City and normalize it out, we know that we’re going to be greater than 70%. We just don’t know how far. And so we feel like we’ve made excellent progress on the build-out. And we can see in some markets that we’re — our trajectory is good towards the second year and others were not quite satisfied. And so we’re still having started really robust with the digital channel. We’re still building out the post build rally plan for the re-rally areas, the second and third wave, if you will.

And we don’t have the synchronized customer acquisition engine to go back into the even pre-Fidium locations as well as those approaching the post 1-year, second year phase of the next growth. So we’re not far off, but we just can see that we need to strengthen and build out that channel. And thus, you see grabbing one of the premier executives we think that can help lead that from a go-to-market strategy. So then going back to the net positive for the year, yes, we were slightly under positive in the fourth quarter. We got hit pretty hard with weather in Northern New England. We’ve seen that subside in first quarter. And so we’re very confident in being significantly positive in the 2023 year and look at fourth quarter as really nearly flat to being totally positive for the year.

Fred Graffam: Yes. And just to add your question about whether that is adjusted for Kansas, yes, the Kansas sale is not reflected in those numbers. So that is a true net add number for the quarter, excluding the impact of the sale of Kansas.

Gregory Williams: Got it. And anything on fixed wireless?

Robert Udell: Yes. In terms of fixed wireless and cable, we’re seeing primarily a single competitor in 90% of our operating areas, and one competitor less. On the fixed wireless side, it’s still around the edges. You’re going to see that, I think, as an interim solution, but there’s nothing that beats the symmetrical fiber product and the nature of a 10-gig capacity at the side of the house. So I think it’s going to be out there, but it’s not going to be a significant impact.