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425
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

WiFi is already a part of our budget. By that I mean a significant portion -- a majority of our Internet customers, both residential and S&P, have WiFi deployed through service that we provide. And so we're already investing significantly in WiFi. TWC and Bright House and now Charter also doing out of home WiFi deployments that we've made commitments around that as part of the transaction to do more of it. So, is it usually material? No. But is that already inside the numbers that you're looking at for the three companies, it is and will continue to do so.


Unidentified Participant

So we're estimating your pro forma leverage ratio will decline to about 3.9 times EBITDA by the end of 2017. Even if we assume the recent no proceeds were used to buy Spectrum, which (inaudible) participate or not, that would still leave you at 4 times and declining. How should we think about capital allocation once you hit the low end of your leverage target?


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

With the $1.7 billion that we just raised, that was really for refinance. And so our intended use of the $1.7 billion is to re-finance existing notes. And, we did hold on to the cash in the event that there was stock market dislocation and our stock price was lower and the TWC shareholders elected for the higher amount of cash, that effectively we would have pre-funded some of the high-yield bridge. As we sit here today that doesn't look very likely, but we have that available to us, but we intend to really use the $1.7 billion for re-financing. But your point -- you brought a point about leverage, so we have a target leverage between 4 times to 4.5 times in the context of the new company we said we would target at the lower end of that range. Even if you try to do that, because of the size of the Company in the amount of cash flow that it generates, it's going to be a challenge; a first-class problem to have is -- this would be a challenge to redeploy that amount of cash simply because the fact that we expect to grow fast, it mechanically delevers and we have big large tax assets, which means that you're throwing off a lot of cash flow. So if you intend to stay to target leverage range below four times, that means we're going to be looking for opportunities inside the business that have a very high ROI to invest inside the business. While that's not what we're looking for today because we have our hands full, to the extent there is attractive M&A down the road that's somewhere obviously we would look at. In the absence of those, we do share buybacks, which even if you go through those three categories, it's a lot of any one of those three items, and it's a lot of all those three items, in order to sustain that type of leverage. In the worst case scenario, we'd create equity value through mechanically deleveraging and bring it down below that level, if we didn't have a better way to generate a return for shareholders.


Unidentified Participant

How do you think about your opportunity in the wireless business over the medium to long-term and maybe from both an offensive and a defensive posture?


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

I think we view ourselves as already a serious player in the wireless business today. Over 80% of the wireless traffic that's being provided by mobile operators, it's actually being carried over our Wi-Fi network. And they use us in many cases for cell backhaul. So, we're already there. The big difference is that we're not really monetizing that service that we're providing. And so that's something that interest us overtime. It could be a combination of a bunch of different ways of getting into the space, could be through MVNO, could be through partnership, could be through buying some Spectrum. I think in all those cases, none of which really would be mutually exclusive to the other, it's probably in a much more capital light intensity way that most people would imagine because of the existing network infrastructure that we have, the Wi-Fi services that we already provide in the home, in the business, out of home overtime increasingly and the architecture of how our networks (inaudible) ability to actually cooperate with other wireless providers at the time.


QUESTION AND ANSWER


Unidentified Audience Member

(inaudible - microphone inaccessible)


Unidentified Participant

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