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CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 425 on 03/08/2016
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MARCH 07, 2016 / 07:05PM GMT, CHTR - Charter Communications Inc at Deutsche Bank Media, Internet & Telecom Conference

Chris Winfrey - Charter Communications, Inc. - EVP & CFO

We have operating momentum at Charter, because we have a very highly competitive product set and because we have this service that's very good and it's improving and it's now being recognized in the market. I think all cable assets are under penetrated, and that's one of our core beliefs at Charter is that if managed properly and if you provide significant bandwidth into the Internet product and you have consumer-friendly operating practices about the way that you deploy your products into the household that you can have significant outsize unit growth for a prolonged period of time.

As good as our growth has been, we remain significantly underpenetrated and satellite still has as much market share in our footprint as Charter does despite all the improvements that we've made and how competitive we've become. And so I think Charter is -- the legacy Charter footprint has operating momentum, it's actually very difficult to get operating momentum, but once you have it, there is [inertia], which means that it continues to go along the way. And as we've seen over the past year, Charter's momentum has been accelerative. Now we get to look forward into a bigger set of assets as well.

Unidentified Participant

One of the main concerns that we hear from investors in the period following closing is the CapEx is going to end up being higher than initially thought because of more upfront investment required to bring Time Warner Cable's plant CBS to Charter's standards, is this something that investors should be concerned about?

Chris Winfrey - Charter Communications, Inc. - EVP & CFO

I don't think it's something they should be concerned about. Look if we see opportunities to grow revenue faster and to deploy more capital earlier, so that we can grow faster for more prolonged period of time, I'll be honest, we'll do it. We are not going to manage quarter-by-quarter for even a full year's reported result if we think it's the right thing to do to put the business in a position to grow. That's not me telling you I think we are going to spend more money, I don't, relative to what was in the proxy statement. But if the opportunity exists to do go all digital faster, we're not going to allow ourselves to be controlled by what a business plan would have said was the pace at which we could go. If we can go faster on Spectrum Guide than what we'd anticipated, that's the right thing to do as well and we would go do that.

You mentioned one of the reasons that we could spend more capital would be the quality of the TWC network. The quality of TWC network is actually very good. It's in much better shape than where Charter was back in the 2011 and 2012 time frame. They didn't go through a long period of financial distress. The Bright House Networks have been very well cared for. So the quality of the infrastructure and the plant is in much better condition than what it was at Charter. And even some of the assets, particularly in TWC that exist when you think about data centers and IP video on demand, central locations, these are assets that Charter was either building today or would have to build in the future, we get to step into some very high-quality assets along the way. So, this is not a set of assets, either for TWC or Bright House that's been under-funded. I think the areas of investment so to speak will be investing in their willingness to sell product on the increment at a lower price to being willing to put in more functional CPE and per transaction we need to raise set-top boxes and to in-source labor to be able to provide a better quality service through your own employees, which means deploying a lot more tools, test equipment, trucks, facilities to house all these people. That type of capital will need to be spent, but these are all things that we anticipated and there's been no real surprise as we've gone along with this process of what we're really getting at Time Warner Cable or Bright House.

Unidentified Participant

Maybe as a follow-on to that, Worldbox, does that offer significant set-top box cost reduction opportunity for the acquired assets based on -- at least based on what you think they're spending today, you guys put a lot into that project obviously.

Chris Winfrey - Charter Communications, Inc. - EVP & CFO

The beauty of Worldbox is it enabled us to achieve much lower unit cost pricing even before we had Worldbox developed and deployed. It was the idea that we were heading down a path of going to a downloadable security, which has been a key Charter tenant, and that it meant that you would have a competitive box industry with the ability to buy boxes anywhere in the world at very low prices, which meant that the incumbents that were already in this space here in the US for boxes knew that if they wanted to be a supplier of Worldbox, needed to significantly bring down the existing box prices. First, we had a waiver box, where we had a waiver from the FCC on the integrated security, but also for CableCARD box prices have come down as a result of this pending competition, now real competition as a result of buying Worldbox and I think the vendors cooperated very well with Charter put themselves in a good position to go do that. So on the increment on a relative comparable two-way set-top box, I think Worldbox already has achieved all of that and it's going to continue to get better and we'll be able to deploy that type of technology on TWC and Bright House. That's a little bit of a tricky question that you asked because on the increment we're going to be deploying two-way set-top boxes as opposed to even lower cost one-way DTAs and that's a fundamental belief of Charter that being able to provide video on demand, just significant infrastructure and investment already inside the business that sits behind it, being able to enable two-way video on demand on every single outlet and having very good security of knowing exactly where your boxes are and having a better user guide and user interface in search and discovery on every single outlet in the home, was actually pretty important to us in terms of the competitive advantage of having a two-way network. So that's an area we're willing


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