Charter Communications Q4 2021 Earnings Call Transcript

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Provided by Quartr
January 28, 2022

Key Takeaways

  • Charter added 380,000 mobile lines net in Q4 and over 1.2 million internet customers in 2021, driving total customer relationships up by 940,000 for the year.
  • Full-year 2021 revenue grew by 7.5%, adjusted EBITDA by 11.4%, and free cash flow by 23%, reflecting strong financial execution despite a challenging environment.
  • In 2022 Charter will expand its network capacity with DOCSIS 3.1 high-split upgrades for symmetrical gigabit speeds and is developing DOCSIS 4.0—recent tests delivered over 8 Gbps down/6 Gbps up.
  • The multibillion-dollar rural construction initiative under RDOF will add over 100,000 miles of infrastructure and nearly one million new passings over five years, enhancing long-term growth.
  • With its October multiline pricing, Charter’s fully bundled internet and mobile offering delivers up to 50% savings versus competitors, helping capture only 27% of household connectivity spend in its footprint.
AI Generated. May Contain Errors.
Earnings Conference Call
Charter Communications Q4 2021
00:00 / 00:00

There are 12 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to Charter's 4th Quarter 2021 Investor Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to your speaker today, Stefan Anninger. Please go ahead.

Speaker 1

Good morning, and welcome to Charter's 4th Quarter 2021 Investor Call. The presentation that accompanies this call can be found on our website, Factors and other cautionary statements contained in our SEC filings, including our most recent 10 ks filed this morning. We will not review those risk factors and other cautionary statements on this call. However, we encourage you to read them carefully. Various remarks that we make on this Call concerning expectations, predictions, plans and prospects constitute forward looking statements.

Speaker 1

These forward looking statements are subject to risks and uncertainties that may Actual results to differ from historical or anticipated results. Any forward looking statements reflect management's current view only And Charter undertakes no obligation to revise or update such statements or to make additional forward looking statements in the future. During the course of today's call, we will be referring to non GAAP measures as defined and reconciled in our earnings materials. These non GAAP measures as defined by Charter may not On today's call, we have Tom Rutledge, Chairman and CEO Chris Winfrey, our COO and Jessica Fisher, our CFO. With that, let's turn the call over to Tom.

Speaker 2

Thank you, Stefan. We continue to execute well in the 4th quarter With solid customer growth and strong financial growth, in October, we launched our new Spectrum Mobile multiline pricing and We had our strongest mobile quarter ever with 380,000 line net adds. For the full year 2020 We added 940,000 new customer relationships and we added over 1,200,000 Internet customers for growth of over 4%. We also grew our mobile lines by $1,200,000 Finances were also strong in 2021. We grew full year revenue and EBITDA by 7.5% and 11.4% respectively and free cash flow grew by 23 As we look forward to the rest of this year, we remain focused on Several strategic priorities and goals, including product development and network evolution, our rural construction initiative and driving customer growth And although the business environment in which we're operating remains unusual, we believe our goals and priorities will continue to foster our growth and prepare us well when the marketplace returns to historical levels of marketplace activity and sales.

Speaker 2

Fundamental Our success is the delivery of products and services that are superior to what our competitors can offer. Delivering more speed and throughput to our In December, Internet customers who do not buy traditional video from us Used over 700 gigabytes per month, more than 35% higher than pre pandemic levels. And nearly 25% of our Non video Internet customers now use a terabyte or more of data per month. So we continue to see very high demand for throughput by our customers. In order to increase the capacity of our network for next generation products and services, we've developed a multifaceted approach Our network evolution comprised of a number of technologies, which will be deployed where they make the most sense strategically and economically, delivering the very At the lowest cost and time to deploy.

Speaker 2

In 2022, we'll increase the number of projects to deploy high splits in our service areas. High splits are powerful cost efficient upgrades that use our existing DOCSIS 3.1 infrastructure and allow us to comfortably offer gigabit speeds at symmetrical speeds and multi gigabit speeds in the down Additionally, Highsplits will significantly reduce our network augmentation capital spending, including node spending. We also continue to actively develop our DOCSIS 4.0 technology, plant architecture and rollout, which will allow us to We offer higher multi gigabit speeds in the future. We recently ran a DOCSIS 4.0 test Using frequency division multiplex or duplexing and we successfully delivered over 8 gigabits in the downstream And over 6 gigabits in the upstream and there's more to come from that technology. Other areas of product development in 2020 Both of the speed boosting enhancements I just mentioned are included in our mobile pricing at no extra charge.

Speaker 2

We're also rolling out our 5 gs hybrid mobile network operation In fact, for the last 10 quarters, Mobile Wireless Solutions has ranked our mobile service the fastest in the country because we combine our Internet and mobile connectivity together with our state of the art Wi Another key piece of our long term strategy is treating customer service as a product itself and giving our customers the flexibility to manage their spectrum services and interactions with us whenever and however they want. We continue to work on improving the quality and efficiency of our interactions with customers by expanding our customer self-service and self care capabilities Our rural construction initiative also remains a key focus. Our multi year, multibillion dollar construction project Through the Rural Digital Opportunity Fund or RDOF, we will add over 100,000 miles of new network infrastructure to our approximately 800,000 existing models over the next 5 years. We're also in the midst of hiring more than 2,000 employees and contractors to support our rural expansion. Our rural construction initiative is not limited to RDOF commitments.

Speaker 2

We'll continue to build in other rural areas as well and we will pursue We'll also extend our network past homes in areas adjacent to our We'll also extend our network past homes in areas adjacent to our subsidized builds that our network does not currently reach Ultimately, our rural construction initiative is not only good for the millions of rural customers that will finally have access to fast and reliable Internet, It's also good for Charter and its shareholders. The expansion of our footprint will help us drive additional customer growth and financial returns. Finally, As we look to the balance of the year, we remain focused on driving customer growth, market share growth and penetration by offering high quality products and services at attractive Our network allows us to deliver a unique fully converged connectivity service package, While saving customers 100 or 1,000 of dollars per year and our share of household connectivity spend, including mobile and Fixed broadband is still very low. In fact, as Slide 4 in the presentation shows, we only capture about 27% of household spend on wireline and mobile connectivity within our footprint. So there's a large opportunity for us to increase the market share with Superior products saving customers money and through our latest offering we can do that.

Speaker 2

An average household mobile broadband spend with 2 lines of mobile broadband and wireline broadband is approximately $200 a month. With our new multi line pricing and packaging launched in October, a Spectrum customer can purchase our Internet product and two lines of our unlimited mobile product with Faster service for nearly 50% less and save at least $700 a year. So far, we've seen A very strong response to our offering with our 4th quarter being our strongest quarter for mobile lines net adds yet. In fact, despite a very competitive environment, we continue to gain lines at a very rapid pace because of the value in our bundled service offering, which drives more EBITDA and free cash flow per customer and for passing value for shareholders. Now I'll turn the call over Jessica?

Speaker 3

Thanks, Tom. Let's turn to our customer results on Slide 67. Please note that we will continue to reference COVID-nineteen related financial impacts from 2020 and included again on Slides 1920 of today's presentation to help with year over year financial comparisons. We grew total residential and SMB customer relationships by 120,000 in the 4th quarter and by 939,000 in the last 12 months. Including residential and SMB, we grew our Internet customers by 190,000 in the quarter and by 1,200,000 or 4.2% over the last 12 months.

Speaker 3

Although our Internet customer growth remains strong in the 4th quarter, the business environment in which we are operating has not yet Similar to the Q3, we saw both lower Internet churn and lower Internet connects than in 4th quarters of 2020 2019. Turning to video, video customers declined by 58,000 in the 4th quarter. Wireline voice declined by 100 and 4,000 and we added 380,000 mobile lines. As of the end of the 4th quarter, we had 3 point And despite the lower numbers of selling opportunities from cable sales, we continue to drive mobile growth with our high quality, attractively Moving to the financial results starting on Slide 8. Over the last year, we grew residential customers by 847,000 or 2.9%.

Speaker 3

Residential revenue per and $22,000,000 of COVID related impacts in the prior period. These effects were partly offset Additionally, this quarter includes $31,000,000 in adjustments related to Sports Network rebates, which we intend to credit These rebates are also reflected in lower programming expense this quarter with no impact to Also keep in mind that our residential ARPU does not reflect any mobile revenue. As Slide Commercial, SMB revenue grew by 5.8%. This growth rate reflects COVID related impacts of $8,000,000 that negatively impacted the Q4 of 2020. Excluding this impact from last year, SMB revenue grew by 4 Enterprise revenue was up by 3.2% year over year.

Speaker 3

2% year over year, primarily due to strong political revenue in the Q4 of 2020, partly offset by COVID impacts When compared to the Q4 of 2019, advertising revenue increased by 3.3%, primarily due to our growth in advanced advertising Partly offset by lower local ad revenue, particularly automotive. If you exclude automotive, 4th quarter advertising revenue grew by 13.3% over the Q4 of 2019. Mobile revenue totaled $632,000,000 with $266,000,000 of that revenue being device revenue. Other revenue declined by 6.2% year over year, driven by lower levels of CPE sold to customers. In total, Consolidated 4th quarter revenue was up 4.7% year over year.

Speaker 3

And when excluding advertising, which benefited from political revenue Operating expenses and EBITDA on Slide 9. In Q4, total operating expenses grew by $203,000,000 or 2 Looking at the full year 2022, we expect programming costs per video customer to grow in the mid single digit percentage Regulatory connectivity and produced content grew by 11.3%, The Lakers cost growth was primarily driven by the delayed start of the NBA season in 2020, which Marketing expenses grew by 4.3% year over year. Mobile expenses totaled $724,000,000 and were and a one time corporate cost in the prior year period. Adjusted EBITDA grew by 7.7% year over year in Turning to net income on Slide 10, we generated $1,600,000,000 of net income attributable to Charter shareholders in the 4th quarter versus $1,200,000,000 last year. The year over year increase was driven by higher adjusted EBITDA.

Speaker 3

Turning to Slide 11, Capital expenditures totaled $2,100,000,000 in the 4th quarter, in line with last year's 4th quarter spend, although the components Scalable infrastructure spend declined by $45,000,000 given a stabilized level of network traffic growth and investments made earlier this year. We spent $127,000,000 on mobile related CapEx, which is mostly accounted for in And was driven by investments in back office systems and mobile store build outs. For the full year 20 As we look to the full year 2022, we expect cable capital expenditures, excluding capital expenditures associated with our rural construction to be between $7,100,000,000 $7,300,000,000 We hope to spend about $1,000,000,000 in 2022 on Our next question comes from the line of David. Please go ahead. Our first question comes from the line of David.

Speaker 3

Please go ahead. Our first question comes from the line of David. Please go ahead. Our first question comes from the line of David. Please go ahead.

Speaker 3

Our first question comes from the line of David. Our first question comes from the line of David. Our first question comes from the line of David. Our first question comes from Other subsidized rural construction projects such as ARPA related builds and spend associated with extending our plant to rural homes adjacent to our subsidized builds that our network does not reach today. We may not reach that targeted spend given a number of factors, including pull permitting that could increase 2022 capital spending for our rural construction initiative.

Speaker 3

Given the variables, our Actual rural construction initiative spending may differ meaningfully from our target. As Tom mentioned, the expansion of our footprint into rural areas will help us drive additional customer And we view our rural construction initiative as similar to or equivalent to acquiring a rural cable operator. We plan to begin disclosing additional operating information associated with our rural construction initiative in 2022. Turning to mobile, we expect our full year 2022 mobile capital expenditures to be about $100,000,000 less than our full year 2021 mobile Capital spend will consist primarily of back office system spend, the start of our CBRS small cell construction and some additional store We will continue to update you on our capital spending expectations as the year progresses. And as always, if we find new As Slide 12 shows, we generated nearly $2,300,000,000 of consolidated free cash flow this quarter, an increase of about 2 Our current run rate annualized cash interest pro form a for financing activity completed in January is 4 As of the end of the 4th quarter, our ratio of net debt to last 12 months adjusted EBITDA was 4.39 times.

Speaker 3

We intend to stay at or just below the high end of our 4 to 4.5 times target leverage range. During the quarter, we repurchased 7,600,000 Charter shares in Charter Holdings common units totaling about $5,300,000,000 at an average price of $702 per For the full year 2021, we purchased 25,300,000 shares at an average price of $6.83 per share for total spend of $17,300,000,000 And between September of For 2021, we have repurchased $56,800,000,000 or about 40% of Charter's We expect to become a meaningful cash taxpayer in 2022. Subject to any corporate tax rate changes for the years 2020 We expect the cash tax rate in 2022 to be in the mid to high teens range percentage range given some of our tax So we're looking forward to the rest of 2022 as we remain well positioned to succeed and grow given strong demand for our which is why we continue to aggressively build out more broadband passings and ensure that our network remains state of the art. Our well proven Operator, we're now ready for Q and A.

Operator

And your first question is from Doug Mitchelson with Credit Suisse.

Speaker 4

Thanks so much. I guess, two questions. First, any update on momentum in the broadband marketplace and how you feel the market is trending in terms of The competitive environment versus the market related slowdown that you guys have been highlighting. And then secondly, just sort of structurally as you sit back and Think about your wireless strategy, obviously, a lot of success in the Q4. And Tom, you talked about wireless a lot in your prepared remarks.

Speaker 4

I think there's sort of 2 dynamics That your big wireless competitors would know, one is owners economics across wireless and wireline for 2 of your competitors. And then Secondly, how do you manage wireless customers when it's time for them to get a new phone when the wireless companies are waiving a free new iPhone under their noses? Thank you so much.

Speaker 5

Hey, Doug, this is Chris. We anticipated your question and I have a few thoughts, but just put it in perspective. So we added over 1,200,000 Internet And over the last 2 years, we've added nearly $3,500,000 And the rate of market activity in Net additions growth, it's not been consistent through the pandemic with early on our 60 day offers, keep Americans connected, resulting payment plans and more recently subsidy plans. And And we have the lowest market churn rate of all types that any of us have seen in cable. So that Lower market churn has resulted in lower selling opportunities, which Jessica mentioned, with lower connects and as a share gainer that results in lower net Our financial results, they actually demonstrate fully that lower transaction volume.

Speaker 5

So clearly, there was a pull forward of demand 2020 due to the pandemic, but the lower customer activity environment we saw throughout 2021, including the 4th quarter is being driven by a number That includes lower household move rates and housing completion rates, and it includes lower voluntary churn everywhere we operate And much lower non pay churn given the amount of subsidy programs that have been and remain available. And so those lower Churn rates across each type of churn, they've been uniformly lower relative to 2019 and even compared Q4 of 2020 across every region and every competitive footprint. So as a result, our sales and Connect activity have also been muted by similar results last year and our expectation is that we'll have a steady return to more normal transaction volume and selling opportunities as Sure. 2022 progresses and we get further into the year.

Speaker 2

And Doug, with regard to wireless I think that our pricing structure and the monthly recurring fee And we're getting some traction with that. And of course, that's combined too with our superior broadband product and The continued investment we make in our broadband product in terms of its capabilities and how we make the wireless product work with But it's true that replacement phones are being given away in the marketing strategies Our competitors and we haven't done that. And I think customers will have They're currently making the evaluation that we have a good product and they're buying our product. But I think it's really our challenge is to make sure that the customer's perception Value is appropriate and that's our marketing and branding strategy. But if we need To change our competitive posture, we can.

Speaker 2

I don't see I think that what we're doing right now is the best strategy for us, but it doesn't preclude us from future strategies. But the fundamental value proposition that we're providing is superior service, A fully packaged communication service everywhere we operate, which none of our competitors do, and making that a better value and driving customer relationships by having better Products and services, and the deeper we penetrate, the lower our costs. And the lower our costs, the better the value

Speaker 1

Question, please.

Operator

Your next question is from Jonathan Chaplin with New Street Research.

Speaker 6

Thanks. Two questions. First, Tom, the 27% of the total connectivity market today, Taking a sort of a very long term view, if we look at the market in its end state, what do you think your fair share of that Total revenue opportunity is. And what are the margins for an integrated infrastructure And then looking more near term, there's been a lot of investor concern recently around The impact to future ARPU from some of the competitive entry that we've seen from fiber and a bit more so from fixed wireless broadband. Can you give us just an insight into what you're seeing around pricing dynamics in new fiber build markets?

Speaker 6

And then how you think about Verizon offering a $30 product over wireless? Thank you.

Speaker 2

Well, my point of showing the 27% share was that We have a lot of runway and that there's a huge opportunity for us to grow our business both Horizontally and vertically. And what I mean by horizontally and vertically is, I think we can have more customers that's horizontal. And I think We can have higher revenue because we have more product being sold even though those unit prices Are going to be lower in the future than they are today. What does a converged network look like in The future, I think, we continue to enhance the experience on the mobile device where it's Used the most first and continue to enhance that value by Using our superior Wi Fi network and the new Wi Fi 6E spectrum Available to us and our ability to provide better managed Wi Fi services through technological change Along with the use of other spectrum like CBRS to, in a smart, capitally efficient way, And by doing that, you get a very virtuous product development cycle in that you get better and better services Available at lower and lower costs. And so I think we can do that by using our network And using the tools available to us both in unlicensed and licensed spectrum and the technology management tools that we can connected to our network.

Speaker 2

And I think that the when you think about mobility and wireless, Those two notions, somewhat from a technology point of view are converging as well. And Most wireless devices are connected to our network. And so I think we can continue To build value and build share, using the mobile marketplace as Sort of fuel for that.

Speaker 7

You want to

Speaker 5

The second question, I'll start and then others can chime in. The question was Regarding ARPU pressure in competitive markets. And Jonathan, you know that over the years, our strategy Always been about providing high quality service at an attractive price in the marketplace, 1st and foremost, so that we could grow faster, And that's always work for us. But secondly, it makes our markets less attractive from an overbuilt situation and it puts us in a different position today As we sit in our markets with very competitive prices already on the entire base, so that's how we think about Our positioning in the marketplace, it hasn't changed. We have a retail strategy and standard pricing across our entire We react competitively as needed in the marketplace, but we already have attractive prices.

Speaker 5

We have great service And we have a product combination that Tom was just talking about that our competitors can't replicate in all of our passings, which is the ability to extend that good broadband service That we have, together with an integrated mobile and converged Internet product over time, and we have the ability to upgrade our network at a faster pace In the past and I know others have always said the investment community should you take rates up that hasn't been our strategy. Their strategy It works very well in this type of marketplace as well.

Speaker 2

Yes. The only thing I would add to that is, so funded, What that all means is that we have fundamentally a lower cost structure than our Competitors and our capital investment strategy is designed to maintain that capability, Which we think ultimately gives us a better competitive posture, so we can grow and have better products working at Lower costs than can be replicated by our competitors. Anybody can spend enough capital and replicate your service, obviously, But we can do it more efficiently, which is, I think, our competitive opportunity. The other thing I would say just about the current environment is that from a competitive point of view, when we look at Churn, our move churn is down. Our nonpaid churn is down and our voluntary churn is down To historic levels, so our actual ability to operate in the environment It's pretty effective.

Speaker 5

And what Tom said is what I said as well earlier is that that's across all competitive footprints, all geographies. Jonathan, you asked this other question about fixed wireless broadband. I know you've written on it in the past and we agree with you that The utilization of scarce resources in spectrum or somebody else's densification to get a 1 out of 50 type on the utilization of your asset, which is what happens with fixed wireless broadband applications versus mobility. We agree with that. You've written about it.

Speaker 5

I know Craig wrote about it Couple of weeks ago in a pretty concise way and there wasn't anything in there that we actually disagreed with. And you've made the point Yourself previously, and we think that's right and we think that's going to become pretty evident to most everybody over time.

Speaker 1

Thanks, Jonathan.

Speaker 8

Thank you. Good morning. First, a question on the network and high splits. I think Tom you said, I think it was Tom Talked about spending some capital on that this year. I think that's inside of the 7.1 to 7.3.

Speaker 8

So just maybe you could help us with Kind of sizing that investment, either qualitatively or quantitatively and sort of how much of the footprint do you Expect to impact with that technology deployment and what it does competitively or from a product And then I just wanted to come back to wireless. I know you guys have been working hard to put the pieces in place to Be more aggressive in the marketplace. Are we there now or is there more as you look into 2022 that you're going to do on the wireless side, whether it's Billing system related or sales channel related or something else that can offer you an opportunity even further accelerate what obviously has been a pretty impressive acceleration over the

Speaker 2

Well, on the high split, I'll say this that We're deploying the technology, and I said in my prepared remarks that We can go to symmetrical speeds, gigabit speeds. We can go to multi gig down speed Downstream speeds. And as I said earlier, we're holding our own competitively as it is. And the value of the high split Is that by putting by rearchitecting the network that way, which is basically just an electronic drop in, We can quit spending money on augmentation or node At the same rate that we've been spending it. So I think the best way to think about it is that Depending on speed of construction and on a relative basis, yes, it's in the 7.1 to And the general capital intensity over a multiyear period associated with that kind of upgrade We'll maintain the kind of capital intensity that we heretofore had.

Speaker 2

With regard to wireless billing, the wireless billing opportunity is that we've Built a new billing system and it's just being deployed. It was deployed in the To some extent, at the end of the 4th quarter, but not the full Q4. And it gives us new Opportunities for selling and making the selling process easier. When we initially launched mobile, We launched it on a platform, both us and Comcast together through our JV launched a common platform that That was segregated from the traditional cable platform. And Obviously, we did well with it, but we've re architected all of that and deployed a brand new That gets us better integrated sales capabilities and better integrated billing capabilities that ultimately And so, we're optimistic that we can continue to accelerate our growth there.

Speaker 5

You asked Other developments, the deeper deployment of our advanced in home WiFi, which includes giving customers more control over their WiFi in the home, the deeper Deployment of that across our base as well as more functionality that will be applied to there. Tom mentioned as well as the mobile speed boost as well as a way to enhance the So there's a number of product development pieces that are in the pipeline that are going to continue to add value. Obviously, the CBRS test this year, which Tom also mentioned, that's a market rollout, but that's not going to be across our entire footprint just yet. So I wouldn't hang too on that just for 2022, but there's a lot of development that's in the pipeline to continue to make this product better than our competitors and

Speaker 6

Please.

Operator

Your next question is from Craig Moffett with MoffettNathanson.

Speaker 7

Hi, guys. Couple of questions staying with wireless for a minute. First, can you just talk about the wireless sale? That is, Are you primarily selling at the time that people move and they're establishing a relationship with Charter for broadband and Other services and you're selling that as a bundle? Are you selling into existing broadband subscribers?

Speaker 7

And then second, As I think about the offload that you've already achieved, can you just talk about the kind of margins that you I think you can get to in this business and how much traffic you think you'll be able to fully offload so that relative to The cellular usage for your customers might be relative to those competitors as a benchmark.

Speaker 2

Okay. In terms of moving and upgrading, We're in a low churn environment. So the yield on that segment of moves and People who are in a moment where they're more likely to be changing services is lower. We've actually had we've achieved additional sell in using mobile as part of that process. But the bulk of our mobile growth is still coming from upgrades at the moment, if you just look at net changes in broadband versus net changes And interestingly, the mix is changing too I expect that through time we'll get more pull through On the new customer creation side of it, But just when you do the math in terms of where the opportunity is to grow mobile, given our existing broadband penetration, Just mathematically, we have more upside in upgrades, But it has both effects.

Speaker 2

In terms of offload and margins, I've said previously that we could More than 30% of the offload, I think, through CBRS, we also are already offloading Enormous amounts of traffic on WiFi. And I think that we have the ability to take that up Significantly too. So I'm not going to give you a full number, but it's substantial.

Speaker 3

And I guess The piece that I would add to that is that we have margin that we're generating from our mobile So you have negative EBITDA in the mobile business, but that's driven really by customer acquisition costs and our rate of growth in the business. We're generating margin from those customers today and we can do the CBRS deployment in a very Targeted manner, so we can look at the CBRS deployment targeted on a in an ROI generating fashion, So that every radio we deploy really increases the margin and increases the value of the mobile business. So I think that that piece is important as you think about how we grow profitability in that business that we will grow profitability By adding CBRS and by growing the offload, but those customers stand alone are generating margin today.

Speaker 9

Jessica, do you think

Speaker 2

Go ahead.

Speaker 7

I was just suggesting, do you think this could be a sort of a 10% margin business long term, a 20% margin business, just Ballpark,

Speaker 6

how profitable Mike will be.

Speaker 3

I like to try. We're not going to go there on guidance For margin in the long term, but I do think that it's an important part of thinking about the growth story for EBITDA in the long term and that as we

Speaker 2

I would just say we don't have to do CBRS to make mobile

Speaker 3

Yes, agreed.

Speaker 2

And margins will improve regardless.

Speaker 1

Thanks, Greg. April, we'll take our next Question, please.

Operator

Your next question is from Bryan Kraft with Deutsche Bank.

Speaker 10

Hi, good morning. Maybe just to follow-up on Jessica, you talked about how you could be very targeted with the CBRS deployment. Just wanted to follow-up. Could you talk a bit about the coverage requirements you With the CBRS licenses, I understand the goal is to move traffic onto your network where there's high traffic density. But I guess I'm just trying Understand what you're required to do from a coverage perspective and how that might impact the breadth of the deployment.

Speaker 10

Thank you.

Speaker 5

Yes. So I'll take that. We do have across the regions that we acquired the Spectrum, some minimum amount of deployment across those areas. It doesn't have to be deep and it doesn't have to be expensive from a deployment standpoint. It is over a multiyear period.

Speaker 5

And so in every Market where we've acquired Spectrum, there's always going to be extremely high traffic areas and we feel really comfortable we can satisfy the deployment commitment at a pretty low cost And then go from there in terms of just picking and choosing where it makes sense either from a product capability perspective or from an This is what Jessica was saying.

Speaker 3

Yes.

Speaker 2

And when we talk about a full market deployment, we're talking about a full market deployment where it makes sense. And what that means is, we're putting these radios where traffic dictates that the radio should be and that the Amount of offload would reduce our costs sufficiently to pay back the investment in the radios Quickly. Yes. And so it's opportunistic capital, which generates a higher margin on So, mobile business.

Speaker 10

Thank you. If I could just ask one follow-up. Could you just remind us what the Dates are around those license for you to meet coverage milestones, minimal coverage milestones?

Speaker 5

Yes, it's public and so we're not I'm not hiding it. I just don't know it off top. I don't remember it off

Operator

the top

Speaker 5

of my head, but it's a multiyear outlay. Okay. But if you follow-up with Stephen, he can get you the exact dates because it is public as part of the FCC process.

Speaker 10

Okay, great. Thank you very much.

Speaker 1

Thanks, Brian. April, we'll take our next question, please.

Operator

Your next question is from Phil Cusick with JP

Speaker 11

Hi, guys. Thank you. A couple of actually one follow-up.

Speaker 7

You commented on the

Speaker 11

pace of broadband through the Q4, and I know there was I think there was a New York run off there as well. But I'm curious how you think about seasonality versus typical. Is seasonality sort of running in the business these days or is the sort of underlying engines just running more normal through the year. And then second on SMB that decelerated this quarter, maybe you can talk about Any update on efforts there as well as conversations with enterprises, what are you seeing? Thanks very much.

Speaker 3

So I'll pick On 2 of those, first, just around seasonality. I mean, certainly, our results looked different over the course of this year than you would see from a One of the things that we've been thinking about that we see a lower number of College student enrollments and so some of those markets have looked sort of different from what we would normally expect And the overall environment does appear to be sort of more impacted, as Chris mentioned, by things like COVID waves and And seeing lower activity when something like Omicron happens. We also did see some impact Some other things on the New York State side, New York had a moratorium on certain disconnects. It did drive a one time spike in Internet non pay It was about 20,000 in the quarter. So if you had backed that out, we would have been at 210,000 Rather than 190, but not a huge impact in terms of the overall net adds for the year, which we still thought were very good if they were dispersed a little less evenly.

Speaker 2

And I guess to speak to seasonality, video was very seasonal. In the fall season, you had a tremendous uptick and Q4 was big, Although, Cablevision because of the Hamptons has a sort of the opposite effect, but 4th quarter is a big issue in video. Not but as Jessica said, the college student situation has been unusual And wireless has its own cadence too, which I'm not sure we fully grasp yet, Although we have people that think they do. And whether there's an underlying broadband seasonality is hard to say. So I do think that the traditional seasonality in the business is going to be different.

Speaker 2

And Obviously, the effects of COVID have been dramatic in terms of quarter to quarter We're at to hit their lowest level in about October and they started November was better than October and December was better than November and Omicron affected us at the end of December, so it's hard to say whether that trend will continue, but my guess is it

Speaker 5

There was a second question on enterprise. I didn't catch that. Was that also tied Seasonality.

Speaker 11

And SMB. Thank you.

Speaker 1

That sounds right.

Speaker 5

In terms of seasonality there with those businesses. Enterprise has been from a retail perspective.

Speaker 11

I noticed that SMB Down sequentially. Thank you.

Speaker 5

Yes. The SMB business is doing very well. I know relative to last year, it may not look quite as much, But last year, you had an SMB surge coming out of really the lockdown side to COVID. So the year over year comparison there Less favorable, but the underlying trends that we're seeing coming out of Q4 in the S and B, despite everything that COVID has brought SMB is continuing to do well and study, despite everything that would suggest there might be Some pressure there, we're performing well in SMB. On the enterprise side, there are markets that are still coming back underperforming New York City and LA in particular.

Speaker 5

But despite that, if you take a look at the underlying retail PSU growth and revenue growth, we're on a steady march to Sequentially improving over many, many quarters now and that business is looking more healthy. And once we get back into a normal environment, There won't be that much seasonality tied to enterprise as we will continue to get better is our hope.

Speaker 1

Thanks, guys. Thanks, Phil. April, we'll take our next question please.

Operator

Your next question is from Vijay Jayant with Evercore.

Speaker 9

Hi, good morning. I just wanted to now that we're going to start seeing some Ardagh CapEx really Come through. Can you sort of remind us and actually Jessica, you mentioned it looks like as though you did another cable acquisition. Can you sort of remind us sort of what are the sort of levered or unlevered IRRs you think you can get, especially in sort of a divergent opportunity there? Obviously, it will be an impact on total company free cash, but it's probably a fantastic project.

Speaker 9

Can you just Help us think through the long term returns on that investment.

Speaker 3

Sure. So I would point out that you used the word long term and I do We think of the investment in RDOF really as a long term investment in terms of creating returns. But Based on the kind of markets that those were in and the success really that we saw in the New York State build out, we think that we can generate mid teen I'd also point out that a lot of that is already started and has to be. The spend there We'll be a little lumpy, so you have to spend money upfront to do things like go do walkouts and And figure out how to attach to the poles and design your construction and that all takes time. So what you're going to see is you'll see sort of Cash investment going in upfront, it's going to happen before we light up the passings.

Speaker 3

And the passings then also trail behind that. And that's all factored into the way we think about the IRR of the investment, but it will look different from what I think our sort of normal placing

Speaker 9

This is if I could another one on the CapEx excuse me, taxes, you talk about being meaningful taxpayer in 2022 and you still have some tax credits and Any help on how close to being a full statutory taxpayer you are likely to be in 2022?

Speaker 3

Yes. I mean, I think you can look back in the comments in the script, but it's, if you take our EBITDA and Subtract from that capital expenditures and cash interest for the year and then multiply that By a mid teens number, you get there. So you can see the Credits and the carry forward on the balance sheet, there is some of that carry forward that's still subject to limitations on our usage going forward. And so based on that, we

Speaker 1

Thanks, Vijay. April, we'll take our last question, please.

Operator

Your last question is from John Hodulik with UBS.

Speaker 7

Thanks guys. Thanks for all the detail on the rural build out. Can you give us a sense, I think you guys have been adding about 1,000,000 homes Past a year for the last few years, and does that ramp from here? If you could give us a sense on, it sounds like it may be the ramp is a little bit slower this year, but what's a Sort of run rate once you're once all the money is coming in and you're getting it out there and sort of executing on that strategy. And then a follow-up on pricing.

Speaker 7

I think you guys typically take a price increase in November December on the broadband side, and I don't believe that This year, is that something we could expect early in 2022 here or have your view on sort of slow methodical sort of price increases on the broadband side changed. Thanks.

Speaker 3

Sure. So I can start on the homes passed per year. I think the rate that we are Typically, that is around $1,000,000 a year. I think the commitment that we've made around RDOF is to build 1,000,000 additional FCC locations, a million additional passings over the course of 5 years. I think oh, 6, thanks.

Speaker 3

I think That, if you pace it, in that way that you'll be close. So the caveat that I would add to it So we do continue to bid on additional subsidized build projects. And in addition to that, we have spaces that we'll build that are the space between our networks today and where the subsidized build Projects are, or that are in rural areas that aren't part of those projects that are sort of close to what we passed today. And so In addition to those passings that we've committed under RDOF, you might see additional passings. And if we're really successful in the subsidized build space, You might see even more, but I think that's a good place to start as you think about what we'll be able to place in

Speaker 7

So just a clarification, is that all incremental to the $1,000,000 you were doing previously?

Speaker 3

It is incremental to

Speaker 11

Got it. Great.

Speaker 2

Yes. And with regard to broadband rates, our view is that It's always been that we think that our total packaged product should be able to drive The bulk of our revenue and EBITDA growth and we have tried to continue to make Our product is more valuable so that we sell more customers and our anticipation is that that's going to be our continued strategy And that we'll be able to grow our business nicely and grow our revenue nicely by combining our mobile Products with our wireline products. And so there is no rate increase in broadband planned in

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