Yet Another Value Podcast - Kyler Hasson helps me bag hold $ATUS

Episode Date: September 8, 2021

Kyler Hasson, Portfolio Manager at Delta Investment Management, discusses our mutual position / bag-holding in Altice. Key topics include what bulls could be missing, the differences between Altice and Charter, and how regulation could impact cable.My tweet thread on ATUS: https://twitter.com/AndrewRangeley/status/1435228524399448065?s=20Kyler's write up: https://concentratedcompounding.substack.com/p/alticeMy write up: https://yetanothervalueblog.substack.com/p/altice-is-the-best-large-cap-stockChapters0:00 Intro1:23 ATUS overview2:25 Comping Altice today to Charter in 20184:00 What are we seeing that the stock market is missing7:55 How much weight should we put on Altice's bad quarter11:30 Does Altice management have a handle on the business?21:30 Discussing CABO's valuation versus the major cable peers23:00 How Altice's pricing, cost, and FTTH strategy differs from peers28:00 What if Altice needs to roll back prices or invest back into opex?31:00 Could Altice pull a Dell?37:55 More on Altice's FTTH strategy44:00 Talking about Altice's different parts47:45 What could break the cable thesis?56:00 Quick discussion of satellite / Starlink internet risk58:30 Cable regulatory concerns1:04:30 Kyler's closing thoughts

All right. Hello, welcome to yet another value podcast. I'm your host, Andrew Walker. And with me today, I'm excited to have my friend, Kyle Hassan. Kyler is a portfolio manager at Delta Investment Management. Kyler, how's it going? Good. Thanks for having me on. I appreciate it. Hey, thanks for being on. I know you're in Colorado on a trip. So thanks for taking time out of your trip. But let me start this podcast the way to every podcast. First, quick disclaimer for all of our listeners, nothing on this podcast is investing advice. I know for Pat Kyler and I have physicians in the stock we're going to talk about today. So everybody should just remember that. Please do your intelligence.

Nothing on here is investment advice. Second way I start every podcast is with a pitch for you, my guess. We've been swapping notes on and off back and forth for three, four years. I'm not sure. But, you know, I've always found you to be a very clear thinker. My one big piece of feedback for you is your substack is so unpopulated. You know, I got this, I got the stock that we're going to talk about. I got your write up in my inbox.

and I was so happy, and I went and looked, I don't think you'd written in over a year. So we just need more posts from you, man. But, you know, I've really enjoyed our notes over the years. I think our listeners are really going to enjoy this conversation. I'm going to have a link. You know, that out the way, let's just go to the company we're going to talk about. We're going to talk about Altis today. Tickers A TUS.

Both of us are big bulls. I'll have a link to my write-up. I'll link to your write-up in the show notes. So listeners can go read those for backgrounds. But, you know, that out the way, Kyler, what is Altis and why are we so bullish on it. Well, Altice is a cable company. And I think the good news is that cable companies have tended to work out pretty well. I actually, the first time I was introduced to Andrew's work was charter in 2018. And that one has worked out quite well. So next time I'm in New York, I own

Andrew a beer for. I appreciate that. I'm trying not to drink too much these days. I'll probably take you up on it. Yeah. Yeah. So, yeah. So, yeah. So, yeah. You know, it's, I think Charter in 2018 was, was one of those real no-brainers, you know, given all the improvements it had to make to its business. And I want to say it was at 9x EBITDA in the spring there. So that one was, was really a terrific cable business, really cheap valuation. Altis, a lot of people like less, but still cheap, I think, and hope. And we'll see.

Well, look, that's a great overview. And I'm glad you mentioned Charter because one of the things as I'm just getting my head beating in every day as Altis goes down one or two percent every day for its eternity is I keep thinking to myself. I'm like, look, this is what I felt like with Charter in 2018. Now, Charter at the time, people forget because COVID was, you know, just exponentially work. But the second half of 2018 was a brutal time for the stock market. And, you know, Charter was down every day. The stock market. market was down every day. And Charter, if I remember, they had this big drawdown, you know, 400 to 300. I think most people who I know probably got kind of interest in the mid 300. So there was this big drawdown. And I remember everyone was talking to my, talk to each other saying, what am I missing? Like I, you know, I can look at the proxy projections. Yeah, maybe they're a little behind because life happens. They're doing some investments. But I feel like I'm buying this at a 10 times, you know, two year out free cash flow multiple or something. They're going to buy back shares. It's a great business. Why is this

down every day. What am I missing? And with Altis, I, you know, I'm feeling something similar. You mentioned Charter in 2018 was nine times EBITA. That's around where Altis is going. So I want to talk about a lot of things with Altis. And it seems like you and I are going to skip the cable basics, but we can come back to them if listeners want, you want whatever. People can read our write-ups to get your write-up, especially has some great cable basics. But I guess my first question, you know, you and I, we look at Altis, nine times EBITO, we'll talk share buybacks. We'll talk everything. But just you equated charter or maybe I equated shard, but what are we missing? You know, why is this down every day? What is the stock market seeing that

you, me, and the Bulls might be missing? Or what are we seeing that the stock market might be missing? Yeah, I think that's a really good question. I think so Charter in the spring of 2018, I was I was pretty new to it at the time and I read Andrews pieces and was talking with a couple friends about it. And I think what actually started that was the video business. I think it had started decay quicker than people had thought that it would decay. And I remember talked to some investors and they said, well, you know, broadband is going to do great, but the video business is under pressure. And maybe you even did this. But I remember pretty specifically just, you know, going through their 10K and, you know, taking their video revenue and just backing out their content costs.

And so, you know, just comparing the internet gross profit versus the video gross profit. And I just made a couple pretty simple assumptions on where the OPEX went. And even if you're conservative on how much OPEX was going to video, it just wasn't very profitable even then. You know, it had some profitability, but it didn't seem to be a super important factor. And in that case, I thought it was pretty simple and easy. It was like, well, everybody doesn't like where video is going, but it's not driving much. And so that made me, you know, your write-ups, I think, really pointed out where the business could go really well.

You know, it was really like in Concast at that point. It had a lot of broadband subs to pick up. You know, there was a lot of buybacks. You know, everything, it was going to grow a lot. and you're buying a cheap price. So that's why I like that set up so much, because you could just sort of see, well, hey, this is why the stock is weak. And maybe there was, if I'm remembering, right,

there was some talk about AT&D building some fiber as well. But given the broadband runway, that one was, I think, pretty obvious. Altis here, you know, why is it cheap? I think there's a few big reasons. But the core of it, I think, is people are worried about the broadband business. You know, obviously it's sold off really hard. After last quarter, they printed a day plus zero broadband subscribers. And so, you know, at this point, I think everybody understands, well, listen, the economics are coming from the broadband business.

So, you know, I think it's, you know, they called out some move churn and maybe that's reasonable. But I think everyone at this point is looking, you know, mostly at broadband subs for the cable business. And so if you print weakness, you know, I think you're going to have some trouble in your stock. I think one interesting thing, maybe Andrew tell me what you think about this, but, you know, a couple quarters ago, I want to say Charter was plus 240,000 broadband subs. Maybe that number's not exactly right, but it was a decent bit lower than what everybody was expecting. and I think the stock was a little weak and the analysts were kind of pissed on the call and they just got on the call and said,

listen, it's a business, it's a big business, but some quarters will be a little better on broadband sums and some will be a little bit worse. It's really nothing to go crazy about. And sure enough, the next quarter is a little higher. So to me,

it seems like there really normal variation in the business. And when you're starting off from a level of not a huge, huge amount of growth, which we can talk about later, you know, you might get a plus year every once in a while, and that might smooth the market. Well, look, you beat me to it because that is one of the things, you know, the stock is down 20% since Q2 earnings or something, 15, 20%, I don't know. And one of the things I always struggle with as investor is, hey, you know, how much are

you going to base off one quarter? Like, aren't you buying these businesses with the long term outlook? And I 100% agree with you, you know, Charter came on and said, hey, you guys had 270, 270 subs is our estimate. We came in at 240, but when you talk about, you know, we've got 20 million broadband subs, you're actually talking basis points in terms of increased ads or increased turn or something. And, you know, it's kind of random. So I do get that, but I do want to zoom in on Altis's Q2 for a second because it raised two questions to me. The first is, and of course, my dog only discovers squeaky toys during podcasts, if anybody hears that.

My first question on Altis is, look, they're coming in with the zero sub, right? Which is fine. One of the things they said was last year, we were big beneficiaries. You know, we don't have a lot of New York City stuff. We've got a lot of Long Island stuff, a lot of Jersey stuff. People were going out in New York City and into the suburbs and we benefited hugely. And one of the things they said was a lot of this churn is people who moved into their jersey second house are moving back into New York City or something. So I kind of get that.

But at the same time, Charter, Comcast, every other broadband player, I know, not even Charter and Comcast, you know, you go look at AT&T's fiber, Verizon's fiber. All these guys are saying, this is the best broadband ads, not quite as good as COVID, but we are our business on fire, we're doing net ads, and then there's Altis, which is doing a zero, right? So you kind of look at the two and you say, what's unique about Altis? Why is Altis so far behind their peers and this? So I'll turn that over to you, and then I have a follow-up on that. Yeah, I mean, the first thing is their network is a lot smaller.

So I think you should expect some more variability, just because, you know, a charter at Comcast, you know, it's almost like they're across half America. So, you know, there shouldn't be a lot of variation across the national trend. You know, Altis is, you know, tri-state area. They've got, you know, some, and there's SunLink Network. They've got a few things, you know, across the states. So, yeah, maybe that's right. But like, you know, again, you know, I think if they put plus, you know, 10,000 subs or something or plus 20 people would have been like, oh, that makes sense.

But, you know, it's not a lot of households. Like, it's 10,000 households isn't a ton. You know, when you give a similar number for charter, you know, they have, what is it, almost six times the passings. So it is smaller. They do have, you know, some more. isolated networks, you know, even across Suddenlink. So I just, yes, is there a story that, you know, Verizon's Fios number looked pretty good

at the same time that Altees's broadband number didn't look quite so good? Is that a worry? Yeah, absolutely. I think it would be silly to not worry about a lot of things. But, you know, like you said, you know, if you're going to own this business for a long time, I'm not too worried about one quarter. And I think that's also where, you know, their overbilled, Altis's fiber at the home across their optimum footprint, I think makes a lot of sense so they can better compete against Verizon. But yes, there are real worries.

I'm not going to try to say there aren't. It's just you shouldn't be super surprised when you have a smaller business that prints a slightly weak quarter. I don't think. You should watch it, but I'm not going to dump my stock on it. Well, let me come to the second place. And I think this is actually a bigger concern for Altis that the Q2 revealed, right? I am worried that management doesn't have a handle on the business. So I'll relate it to Q2 and then I'll relate it to one more thing and turn it over to, you know.

If I look at Altis, I called it a quesotic, exotic quest. You know, in late 2020, they went on this exotic quest to buy Atlantic broadband, which is part of Kojiko. It was this really complicated deal. Cochico is a controlled Canadian company. most of their assets up in Canada. Altis was going to partner with Rogers to buy Kojiko. Then they take out the U.S. assets. Roger would get the Canadian assets. It was controlled. Altis's approach from the beginning, you know, my understanding was they kind of pissed the family off because they maybe lowballed that first bid. And it was just quixotic.

So they go on that quest, fails. They go to plan B. They buy back a ton of shares. I mean, they do a tender offer at 36 in December to buy back 20, 25. percent of their shares or something. I can't remember. I think they bought back a third of their shares in 2020, which you and I, we love, right? We love buybacks, leverage share buyback in the cable model. But you look at that and then you say, okay, they buy it back at 36 in 2020. They report Q4 numbers and they say, we're going to grow in 2021. Things are going great. They report Q1 numbers. They're still saying things are going great. That's around late April. And then they go to a conference in May and the share price kind of hits a wall because in May they say, oh, things might be softened a little bit in the old

band tied, and they report Q2 numbers and the stock barfs, and you know, here you and I are at 28. And I get, I don't want to judge a management team on short-term share price, but, you know, they bought back a ton of shares in 36 after this weird quest to buy Atlantic broadband that was ill-fated, bought back a ton of 36, very aggressively. And then the business falls off a cliff a couple months later. And you look at that and you say, does this management team have any control or visibility on the company? You know, everyone else is doing great and they're not. And then my second, just to back that up, I look back a couple years and I say, you know, in 2017 or 2018, Charter and Comcast start rolling out this MB&O mobile model, which is basically to simplify, we take Verizon's network. We call it Comcast or Charter Mobile, but it's all over Verizon's network, right?

And there's more to it, but that's really it. Altis says, Charter and Comcast are idiots. The way they're rolling out, they're going to burn money on the marketing. They're going to burn money. We've got this, you know, we're doing it with Sprint, but we've got a lot more. control, and because we've got a lot more control, we're going to run this with a lot lower costs. Our model's going to be profitable for day one. We're going to grow faster. And they basically, I think there was a quote where they said, if Tom Rutledge, Charter CEO,

wants to see how mobile is done, he can call me up and I'll walk him through all the math or something. Well, here we are three years later. Altis pauses all their mobile things. They're basically relaunching with the Charter Comcast style model. They're ground zero for their mobile model. Charter and Comcasts are the fastest growing mobile players in the nation, despite only covering, you know, a third of the nation. So I just look at those two things and I say, does management have a handle on this business? So I talked a lot. I'm going to flip it over to you. Yeah. Good questions. First one, you know, I think they did that big tender after they sold half their enterprise business. And I think one thing, in this hark's back, your question is like,

why is the stock performed so poorly? I guess I didn't fully answer that. I think there's, there's a few things. So one, and just for the record, I own more Charter than I own Altice. So I'll talk about it for a few minutes and everybody just know I own it. You know, I think Charter like got some flack for buying back. Well, not I think. They have gotten some flack for buying back stock portally and they bought back a bunch of like 400 a few years ago after the Masa rumors were going on.

You are right. I'll just add. It was 400 after their share price spiked a little bit because there's rumors Verizon and soft make by them. And I do remember because it raised an eyebrow, John Malone at their investor day after all that and Charter Share Price had sunk back to 300 and they just bought a bunch at 400. John Malone accused Tom Rutledge. I believe the quote was he put his hand into the cookie jar by getting aggressive with share buybacks when the stock price was spiked. So sorry to interrupt, but please continue. Yeah, no, this is good. I like to be interviewed by somebody that knows more about cable than I do because it should help the conversation. So, you know, they did this big chunk at 36. You know, to be fair, they sold the enterprise business at what was it? Was it $14 or $15? $14 or 15 and they kept 50% of it. So yeah, they had cash to burn on their balance sheet, agreed, but they could have come out and done a lot of share repurchases over time or something. They clearly thought 36, this is a really attractive price. This might be our one bite at the apple to go that aggressively at it. Right. And so I think what's tough is, you know, you can look at the math at Altis and say, hey, you know what? Where does the stock go if this

business works? You know, if they're growing EBITDA, I'm in single digits. And you might say like, you know, I don't know, 11x EBITA, I don't know if it would ever go there. But if you did, the stock price would be, you know, very, very high. I think what's tough in these levered equity models, you know, where, say, more than half the enterprise value is debt is a stock can whip around really fast. And, you know, should they have tendered at 36? Maybe not. But it's not like if Berkshire ran up to $3.50 next week and,

profit was like, you know what, I'm a buyback 5% of the float. I would give them a little more leeway just because, you know, the leverage amplifies the stock moves. Would I have done that in their shoes? I'd like to say no. Maybe that's hindsight. But, but yeah, I mean, and I think, I think another interesting thing you mentioned, do they have a handle on the business? You know, they did mention, hey, Q2 is going to be weak before it happened. again, you get a little bit of volatility and like coming off all the gains they had in COVID, you know, I think it could make it harder to predict where things are going to go the next year. Cables are pretty predictable business. I wouldn't be shocked if results came in a little

weaker than they thought. I think that's pretty reasonable. You know, I think if you're trying to predict things like, hey, we had this big COVID boost and like what's going to happen next year, you know i think we've seen a lot of companies across industries struggle i mean hell consumer staples have been caught a little bit off sides and if it's hard to predict that then then i'm okay with the idea that it's hard to predict many things um so yeah do they have a handle on the business maybe not as good of one as they could um maybe maybe it's safe to say that the results will be a little more variable than you would think. You know, again, it is a little smaller.

And it is hard to predict where the stock goes. You know, part of the reason I think why it has been absolutely, it's down so, so much since earnings is, well, you know, Comcast and Charter both had really good quarters on the internet side. And, you know, Comcast, what's their mobile margin now? Was it 20% consolidated or 12, sorry, 12 consolidated EBITDA margins, which might be close to 20% service margins? I'll take your word on it. I have to go trust.

My model generally checks Comcast trailing numbers and then adds back so I'm not ducking them. But you are right. They definitely hit probability in Q2, yeah. Yeah, so I believe they're consolidated mobile margin was 12%. So if you assume their device margins are flattish, it's like. like if they're getting close to 20% service margins and they've got a lot of customer acquisition costs in there, you know, I believe once they hit, once they stop growing so much, you know, I think their margins are going to be much higher than that.

And so I think you have a lot of cable investors who are saying, well, listen, Charter and Comcast are shooting the lights out. Back to your question on the mobile business. Yeah, I think it's sort of clear that Charter and Comcasts have had the right strategy for a long time. Who cares about losing some money up front? You're going to have these huge benefits on the churn side. You know, I'm an Expedited Mobile customer. It's going to make the product a lot stickier.

You know, it's just you have all these downstream really positive things. And if we ever do get some, you know, mobile fixed competition from the telco players, I think it helps them commute there as well. So it's a really big deal, in my opinion. And I think Comcast and Charter have done a great job. And I think it's going to be really profitable down the line. And so that's one of the, I think that's one of the other minds is on Altis is like, well, hey, they haven't done a great job here.

Hopefully they can catch up. But, you know, I think having a good mobile business is going to really improve the broadband business and also be profitable in some right. And so I think I just, I think you have a bunch of investors saying, well, hey, I can own Charter and they're going to grow broadband subs, you know, for a long time. I'd argue maybe they're getting a little bit too excited about that. But that's besides the point. And so I think if you say, well, hey, Charter and Comcasts are pretty safe and you're going

to get, say, low double legit IRRs and you can own it through Liberty broadband and maybe hit 15-ish, well, you know, how cheap do I have to buy Altis if it's not growing broadband man subs at all. You know, one thing, so anyone who follows this cable space, Kate knows cable one, the ticker is Cabo. And, you know, this was a company. They're a small, more rural cable company. They spun off from Graham Holdings in, I don't know, 2012, 2013. And when they spun off, they were the first one I remember. They put out a deck that said, video is meaningless to cable. We are going to crush our video subs because all that matters is broadband. And it was controversial at the time, but anyone can go look at the chart. It's worked out

great. But now they trade at, I'm going to make real round numbers here, 20 times EBDA. And Charter, Comcast, Altis, Altee, they all trade around 10. You know, Charter and Comcast is probably round 12, Altis, round nine. And everyone who I know looks at Cabo and says, okay, the business is great, but Charter and Comcast are better businesses. Why does Cabo trade it 20 times EBDA? And the answer I've heard that I think makes sense is if you're a mid-cap or small-cap investor, Charter, Altis, Comcast, they're outside of your universe. So you can't even consider them. You can buy Cabo. And yeah, you have to pay a premium for it, but it's in your universe. And maybe it's the best and safest thing in your universe. So you say, okay, I wish you could buy Charter, but I'll go buy Cabo instead, right? And similarly, I could see a scenario where you say, hey, yeah, I can go buy Altis for nine times EBDA, but I can buy Charter. And yeah, they're less levered. They're not going to get as good a returns, but I don't have to deal with all these, all the headaches that you and I are talking about, right? Charter's firing on all cylinders. So why not just go buy Charter? So maybe Altis is a relative value, but if you're comfortable with cable, maybe you don't care. Just go with Charter. You know, I want to build off on that management

credibility question, right? So we talked about how maybe they couldn't track you to, maybe it's unsurprised, but we talked about their mobile. But this does raise other questions for Altis, right? So the two areas where they defer from their cable peers are, is one, I think they're more aggressive on price and cost cutting, right? I think they cut costs a little deeper, and I think they are more aggressive with price. And then number two, Altis, especially in the optimum markets, is doing a fiber to the home overbuild, whereas all of their peers have said, yes, at some point in the future, we're going to go fiber to home. That's natural. But that's 10, 15, 20 years away. Right now we've got a great path with Doxis. We can upgrade everything to Doxas 4.0 very cheaply.

They'll get us about 10 gig symmetrical, right? So let's start with cost cutting and pricing. A, can you tell me how Altis defers from a charter or Comcast on their strategy? And B, can you tell me, you know, soothe my fears that they haven't cut costs too deeply, priced too aggressively, that it's going to be okay. Yeah. I think this is like almost the biggest question. So on an EBITDA per subscriber basis, and I think I'm looking at my 20, 20 numbers here, Charter is $610, Comcast is 741, and Altice is 977. So, you know, Charter runs a low price, high growth strategy, relatively low price, sorry. And so, you know, they want good prices on all their products and they really want to grow and they have a, you know, big fixed cost network.

So if they can get their penetration numbers higher, you know, and spread their costs across the network, you know, their costs will be lower. And you can hear Rutledge has talked about that for years. Yep. You know, one interesting thing, it's a very brief aside, but I think pretty relevant than talking about to Alex, science of hitting about this because he has own Comcast for a long time. And I'm just like, hey, I like the strategy. I think they're going to grow, you know, I think their penetration is going to end up higher than Comcasts. And their broadband penetration is a few hundred grips higher.

And he's just like, okay, well, that's great. But Comcast has been growing it very close to the same rate as Charter on the broadband side for the past couple of years. And so, like, what's the point? And I think it's sort of fair. Comcast is growing perfectly well. and their profitability, you know, per subscriber and per passing is higher. And so Charter sort of will have to catch up to that.

And I think they will. Maybe that's a longer discussion. But I think it at least does show that it's not completely obvious that in cable is just, oh, your prices are lower and you grow faster and you have higher penetration. Because there's some weird competitive dynamics. But, you know, charter prices a little bit lower. Altis said, we're going to charge, I mean, do you think it would be disingenuous to say as much as they can? I don't think it's as much as they, it's a great.

I don't think it's as much they can. But yes, I do hear you there. Yeah, they charge higher prices. And they went in really quick and cut lots of costs. You know, a charter's other thing is they insured. their customer service, you know, functions, and they say, well, hey, that's, that's led to much less calls. And it really lowers the cost and lowers the churn and makes the customers happier. So, like, it makes sense. Altice is known for, and I think I've been the write-up, you know,

very high costs and very poor customer service. But my, uh, Rangely's main office is in New Canaan and Optimum is out of New Canaan. And when I put my write-up on Altis, my, you know, I wasn't just getting feedback from readers. I was getting feedback from the people in my office. They were like, look, I agree with you that we have optimum. We cannot switch because the only other option is DSL, but you cannot believe how bad the customer service is. Like, it is, it is unbelievable. It takes cable bad customer service to a whole new level. Right. So, so, so these are, these are kind of the risks is, is okay, it's really cheap on current cash flow. And it is. Um, but you know, there's also a lot of leverage and if they've really run out of pricing power

and if they've cut all the costs they can and they start to lose some subs, like anybody's who's dealt with levered capital structures before, you know, you've got dollars start to go down and, you know, the equity is screwed. Let me push back on that because I want to come to Altis Europe because they're, I think they cut costs too deeply and that blew up. But, you know, I've tried to think about this. And there's a, bunch of different forms and we'll come into them in some ways, but just from a cable company perspective, right? Let's say they raise, they raise prices too high, put in quote, right? What you would see is you would see elevated churn and you would, you would see elevated churn,

particularly markets where they're competitive with fibrits to home, right? And if they cut customer service too much, you'd see elevated churn, which maybe we're already seen based on the zero broadband we talked about. But at the same time, I look at it and say, all right, well, I'm buying it nine times EBDA right now. I'm buying it cheaper per home pass or subscriber, whatever metrics you want to do, then charter is trading it over there. Right. So wouldn't you get a reset opportunity, right? Like you'd come and say, all right, well, we're charging 80 for internet and charter's charging 60. 80's too high right now. We'll reprise it to 75 or EBITO will go down 4%. But we're at nine times EBDA. So, you know, we do that that solves all our churn problems

in a year. Why don't we go to 10 or 11 over time? Do you understand what I'm saying? Does that make sense? Yeah. I mean, my guess, given the margins, listen, if they had to invest more in customer service and take prices down, I don't think it would be great. I think the financials wouldn't look the best. That being said, and you put it in your write-up, like, listen, you know, cable assets, you know, don't get sold for nine times even now.

It's like, you know, 11, 12, 13, 15, whatever it is. I think there's a scenario there where they say, hey, you know what, like maybe this needs to be a private company for a couple years, but there's a scenario where the EBDAs down a little bit. Somebody buys it out. But like, you know, if the current multiple is under nine, you know, maybe in a buyout scenario, it's worth, you know, whatever. They pay you 11 or 12 or something. I could see it working out. Okay. I think it would be a tough transition. If you're going to hold it for five years or more, then I think that's, pretty reasonable. I guess all I was trying to say, you know, spreadsheet math, if you have a

levered equity and everybody expects that the EBITDA dollars are going to go down over time, those companies end up trading very, very cheap. You know, maybe, I mean, what, like Liberty Global or Lilac, you know, seven times EBDA or something. So I think like if people are saying, hey, I'd rather own charter, Altees is a little scary. I think what they're sort of saying is you know, if bad things start to happen, and I wouldn't compare a U.S. cable system to an international one, but if bad things start to happen, I think I can see my downside on equity is pretty high. And I think that's the fear I've gotten from talking to some people, plenty of people that own charter and don't want to touch Altis. And I think it's just something that you have to be able to

think through and address if you're going to own it. And I feel comfortable about it for a couple reasons I'm sure we'll talk about. But let me go to a scenario you just talked about, because this is one of my bigger concerns, and this is probably a little further in the conversation than I meant to, but you mentioned, hey, they reach a point, and they say, we cut costs too deeply, we need to take pricing down. This is a levered company. We think this would be better in a, this is generally better, a reset like this in a private model, which I 100% disagree with, but that is a, that is a thesis that gets put out there, right? Especially by management teams, trying to to do buyouts of their companies, yeah. I guess my worry is, if you think back to 2012,

2014 timeframe, Michael Dell took Dell private. And he said, hey, I shopped this fully. I did a process. And a judge actually agreed with him in the appraisal. But one thing that came out with the benefit of hindsight was he knew he was getting ready to take a private. So he started this global price war and drove the profits to, you know, all PC manufacturers down to zero, took lots of share and then once it went private he stopped the price war profits went up and he made a fortune right so i guess this can get us into people are very very scared of altese's controlling shareholders but one scenario i've heard floated down which i i try i heard floated around which i try to shoot down but i i can't fully is if you're altise why not do exactly what you just said right come out to the

market and say hey we screwed up we need to put more money into uh we need to put more money into customer customer service. We have to take our pricing down. EBITA is going to be down 10% next year. Stock goes down. And then you come out and you say, you know, based on our stock price, this would be better to you as a private company. You know, stock goes from 27 to 20. We'll take everyone out at 25. You pay a big premium there. But some shareholders who bought that big dip are happy. But you and me are not happy. Most shareholders now are not happy. So, you know, I know that's a hypothetical, but it's one that I keep coming back to. So I'll just flip it over to you. Yeah. And so one thing, I like,

Like, you know, in any position I own, you know, I think me and Andrew could just talk for 10 minutes and say, well, hey, listen, you know, it's a cable company, cable companies are great, EBDA is up 5% a year. They can buy back all the stock and your IRAs 30. Like, you know, that'll be a simple conversation. We could have it. And that's what I'm hoping for, actually. Yeah, maybe a few minutes. But, you know, I think, I think what is really important is just what are all the things can go wrong. And I think one really interesting thing I hear. and I've noticed I've fallen victim to this as well is there's some company and I have some worries about it and I just try to say okay I'm not going to buy it because I'm worried but like I think it's important to actually like actually try to put numbers on what I'm worried about because yes this is a very real worry and so you know I think somebody somebody asked me the other day I was talking with kind of a new friend and we're talking about

sudden link and he's like well shoot isn't this isn't this a great cable business shouldn't it be worth like what charters worth and one of my next questions is on sudden link why what's the difference between sudden link and cable one if you did a split out of sudden link what sudden link seems to have a lot of relevant multiples but please continue right yeah and so he's like well you know why don't why don't they disclose the financials and i was like okay what i mean what do you think drahi's endgame this year. Do you think Draghi's end game is to push the price as high as he can right now, you know, so that he can buy back stock from other people at a relatively high price. And then in seven years instead of five, he owns 85 or 90 percent. And then he's going to buy it from

someone at a still elevated price. Like, I don't think that's what he wants. You know, with Charter, you know, Rutledge gets paid if his stock goes up. So you can kind of figure out what they're going to try to do. With that lens, like, yeah, I think you just keep them together. You don't really know how well a sudden link's doing. And if it's worth, you know, some big EBITDA multiple, like maybe a few investors can figure it out. But I think, I think all this stuff is a real risk because I do not think Drahi just is like, oh, you know, I need my stock at 50. He owns half of it. They're buying in a lot of stock at a pretty depressed multiple. And I think one thing is, if you're buying, you know, if Alteist was at 12x Ibada, I think your draw he risk is really, really high.

You know, what you just said, hey, you know, we're going to take our pricing down. We're going to reinvest a little bit. You know, your stocks can get smashed. And then maybe he tries to take you under. If you're buying it, shoot, I should, I don't even know what the EBDA multiple is because I was looking at it out for cash. Is it a little. A little. under nine. Yeah, it's somewhere around there. I've got my spreadsheet up. I can pull it up as we talk. Yeah, LTM, I've got it around a little under eight and a half right now. Okay, that's what I thought. So, so you're buying it at eight and a half. And so, you know, when I'm thinking of this, if Altees works out a little bit, you know, and you're right up, you're like, you know, it's worth more than 11. And I think I

agree with that. Maybe if Drahi squeezes people out, maybe he can get it for kind of cheap, maybe it truncates your upside a little bit on the multiple. And that's a risk. But like if you're buying it at eight and a half, I mean, do you think he's going to buy you out at seven and a half? I do not think that will be allowed to happen in the United States. So like I think the Drachey risk in that situation is to truncate your upside a little

bit, I don't think it's downside risk on the buyout. If he, yeah, I have thought about exactly what you just said. If he tries to kill the cash flow of the business for a little while and then to take it out, I think that is a risk. But to your point, is the buyout at 10? I don't think so. I think it would be, I don't know, I think 25 is a reasonable number. And don't I have a lot of other businesses in my portfolio where my downside's like $25, you know, like right where the stock is, like, of course. You know, I guess I'm a little more worried about the risk because you could drive EBDA down a lot by making a big investment into customer service up front.

But it's just not really the model he runs. And as you said, like if he put a buyout offer on the table at 25 or 29, you know, not legal advice, not a lawyer, but I would love to see the. breach of fiduciary suit, the appraisal cases that are brought where they say, hey, you just bought back a third of the company at 36 three months ago and just kind of show the share repurchased history and then presented against the buyout price. I mean, I think that would be a slam-drawn don't case. Let me go to another risk. So we talked about their different mobile strategy. We talked about the different pricing and customer service strategy. There's one other big place

where Altis deferers from their peers. And that's on their fibrates of the home plans. And I've thought a lot about this. And basically their fiber-to-the-home plans are, hey, our optimum network, which is kind of the northeast-centered network, that's had a lot of overbuilds by Fibers of Home, Fios, a couple others. And Alteesa said, I think I said this earlier, hey, every other cable peer is going to go, we're at Doxas 3.1 right now. They're going to go to Dox's 4.0 and then they'll go to Fiber's home. We're going to skip all that. We're just going to go fiber to the home right now. And then when we do that, you know, fiber is a better asset than cable, right?

it's cost less to maintain. It's faster. It's more symmetrical. We're going to do that right now. And then we can go into all these overbuilt markets and say, stick with us. You're getting fiber. Why would you take the hassle to switch? It's already installed. In markets that aren't overbuilt, we're going to, our costs are going to go down. More people are going to sign up because we're going this great asset. And I hear all that, but I worry that they're making the same mistake in mobile, right, where they said all of our other peers are idiots. Look at their mobile strategy versus ours. And here they're saying, all of our other peers are idiots. They're going to doxism. just going straight to fiber.

And I've also worried a little bit that they low balled the cost. And I think that's starting to come out, but that doesn't kill the thesis. So a little bit of a view. What's different about their fiber strategy? How do you feel about it? All that type of stuff. So I am a, that's a great overview of the benefits. I am of the view that the only thing that really, the main thing that could really kill the equity

from here is sort of sustained subscriber losses. You know, they have a high price strategy. Their customer service is not great. You know, their growth isn't terrific, partly as a result of that, partly as a result of this Fios competition. And I think building fiber will bring a lot of benefits. And you talked about sort of OPEX, cost of service. And I think that's a big one, you know, arguably the old network doesn't fall off until

all the customers are gone. I can't speak to exact specifics there. But if you go back to Charter, you know, their strategy has always been, let's try to make things really great for our customers because we think that's going to lead to more customers and less cost per customer, you know unless people calling in and it just has a lot of really high downstream effects and so can I give you a model of the annual benefits I think Altees is going to get from their fiber billed I can't you know I I'm not sure but um I think you know when you said you're worried that they're saying are our cable brethren are idiots in this case like at least they're investing more now.

You know, I'd be much more worried if everybody else was making some investment. And they're like, oh, we don't need to do it. Like, you know, we're fine. I really, I like that way you framed it. I hadn't thought of that. And I really like it. Like every other downside I've said with Altis has generally been them skimping on investment or saying, hey, this path everyone else is taking, we don't think we need to go

that far. We can save that money and buy back some shares, which I love share buybacks. But in this case, you're exactly right, right? Everybody else is saying, hey, we can preserve some capital and not that go that far. And it's interesting that they're saying, we're going to go that far. I really like that point. And one of Charter's things has always been, we keep prices low, which discourages overbuilders, right?

If we're pricing at $40 per month and our peers are priced at 80, well, overbuilders will look at that 80 and say we can take a lot of share and make a lot of money if we price at 60, but charters price at 40, overbuilders would have to come in at 30 and you can't make money at 30. Similarly for Altis, you go fiber to the home everywhere that's not overbuilt, and everyone else is going to say, oh, maybe we don't overbuilt because there's already fiber. We don't have a selling strategy there. Yeah, exactly. And I think, you know, the part of their network that looks most vulnerable is where they compete with Verizon Fios. And that is, I don't have an exact number of me, three million households, I think, out of their slightly more

more than $9 million. And they have good penetration and really good profitability there. And they don't grow it, you know, well, it doesn't look like they grow a ton given that competition. And so if I'm looking at LTC's equity and what I have to worry about for it to not work out is, you know, customer losses. If I'm seeing that they're investing money to try to prevent customer losses, I think that's smart. And, you know, listen, if their IRR on the fiber overbuild is 8% instead of 12, I'm actually okay with that.

And I think the second thing is it protects you against, you know, not just right now, but maybe five or 10 years down the line. I think it protects you against a little bit of tail risk. It's just you never know exactly what can happen. And if I future proof my network right now, I just. just, they're putting a big part of their network in a really advanced position. And, you know, again, if you're buying this at 12x EBDA, you're like, oh, they're putting a lot of money out. And if it's not quite NPV positive, like if you're worried, if you're buying eight and a half, it's like, well, listen, they're spending a lot of money to try to make sure that they can compete.

And it looks, you know, their consolidated penetration has gone, broadband penetration has gone up a little bit, you know, over the past four years. I would guess, you know, in optimum, they're at least flattish. Do you think that's fair? Yeah, yeah, I think that's fair. You know, I'll just actually go to my next question. So, Altis, you mentioned earlier, they don't disclose sudden links, break up versus optimum. They used to, they stopped, I think Q318 is the last time we had metrics.

Because the way I've tried to break suddenly, break Altis down, and I've had trouble with it is it's actually three businesses, right? There's Sudden Link, which I think has a very cable one like look. There's not a lot of penetration. It's a lot more rural, not a lot of competition, all that type of stuff. And there's optimum. And I think optimum could be broken into two businesses. You've got the part that's been overbuilt by fibers of the home.

And my understanding, my guess would be that's probably pretty flat or maybe losing a little bit of share. And then you've got the optimum pieces like the piece of new cane and I mentioned where they haven't been overbuilt. And I would think they've actually been similar to every other cable player. they've been gaining chair there. Now, the issue is this year when they're zero sobs, if you kind of do the math out, then you have to say, oh, Atma overbuilt's falling off a cliff or everything is flat,

which is a disaster for the other two. It's really tough to get to the math, but have you kind of tried to break out through those different parts and look around there? I mean, I've done a little bit of arithmetic, but I have not really been able to figure it out either. Yeah, certainly on a quarter where you're plus zero, that hurts a little. To me, I'm like, well, listen, if the, I guess I would say if the consolidated number,

and maybe this just moves us to the long case a little bit, if they're consolidated broadband numbers up a little bit, I would not be shocked if Sudden Link was and, Sudden Link and their non-overbuilt optimum footprint was growing at a decent rate, and maybe their overbuilt footprint was shrinking a little bit. I would not be shocked at all. You know, again, it's really hard to zero in on. But I think, you know, in order to do well in equity from here, and this was, you know, big part of the write-up was like, you know, you need roughly 2% EBITDA growth. And so even if they were losing a little bit of share, you know, they're over-billing themselves with fiber and their competitive position is going to be much better than it used to be.

So even if they lost a little bit, like, that's okay to me, you know, because they're going to be in a better spot. And I have to think they're going to be able to stay at least flattish going forward on, you know, in their most, in their toughest competitive area, given the fiber build. So, you know, even if that's the case, I'm sort of okay with it, given, you know, I don't need that asset to grow broadband subs by 2% a year in order to do well in this equity. So I think, but that's a big piece to me. If some other people don't seem to care about it quite as much as I do, I don't know why.

But I just, the fiber build, I think is really important. And as long as that is staying flattish, I think the equity can really, really work well. Or rather, maybe a better way to say it is, besides something crazy happening to cable as a whole, I don't think Altice, I think it would be very difficult for Altice's equity to sort of fail from here unless something bad happened where they compete with Fios. So we've talked to a lot about Altis. You just mentioned unless something crazy happens to cable as a whole. I know you and I are both very interested in the cable sector in general.

Let's put Altis aside and just talk cable in general. You know, something crazy happens to cable. You and I are going to be very, very sad investors. But, you know, Charter is trading at 12 times EBDA. We've talked about the multiples that these cable companies get taken out at. These are by strategic players, financial players, everything. They're going for double digits. People are not paying those multiples because they see, they're paying that because

they see cable, you know, being a dominant internet player, not for the next two years, for the next 15 years, for the next 20 years, probably for the next 50 years. But what is something crazy that happens to cable that just breaks all of these cable thesises? I would either say like sort of 5G home internet or regulation, that would be the two big ones. We're getting more. Tell me why. Let's, 5G.

How does 5G break the cable thesis and why, you know, I can give the rebuttal, but I'd rather hear it from you. Why is that unlikely? Not just unlikely, near, not near impossible, like it, but super awfully. Yeah. So, I mean, if you would just assume that you had another fully powered competitor all across cable's footprint, I think the results would not be great. You know, if you could just flip a switch and said, you know, everybody has access to, you know, fast internet that, you know, it costs 60 or 70 bucks a month.

that would be a problem. I think parts of Europe kind of look like that. Like there's maybe like two or three fully powered players and like the results are not good. It's just too much competition. You mentioned earlier you said Liberty Global, which is Europe telecom trades at seven or eight times EBITR or something. There are other issues there, but that's one of the reasons why, right? Like their marketplace is much, much more competitive than the U.S. market base. In Switzerland, I think, I don't know if that merger went through, but I think are there four fully powered players?

I thought the Swiss merger was four to three, but I can't claim to have followed Liberty Global quite as closely as I used to. Right. Yeah. So that's, but they did have four, which is nuts. But yeah, you know, cable sort of rests on, you know, maybe we have one competitor, you know, some fiber overbuilds that built, you know, across the weakest parts of our network, you know, some DSL that doesn't compete. very well. But if you put another one in there, you're going to lose some subscribers. More importantly, you probably lose your ability to price. So, like, the only potential thing that could, like, really impact the cable players, like, across a broad footprint would be 5G. You know, there's limited bandwidth. for these telecom players, and, you know, I think we use whatever the multiplier is for how much you use over Wi-Fi via your phone. It's like you have the number handy. It's some big multiple

of what. Oh, so if you're, if you are the average wireless user, it's five to 10% of your data goes over wireless networks while about 90% of it is going through Wi-Fi networks, which is, you know, generally your home broadband. I think that's that you're looking. for? Yeah, well, what I was saying was like the actual number of gigabytes. It's like 500 times higher or 2,000 times higher or, you know, something. So, you know, if you have a limited capacity, you don't really want to use it on something that's paying you one, you know, 500th as much per gigabyte. There's also just, you know, you can, you can read some of these calls and people are like, well, you know, you know, due to that capacity, we can only market it to like some people in an area.

And, you know, I think your customer acquisition, I think that's one of the really hard things about being an overbuilder against, like, the core of a cable company's network is people have internet and it works really well. And, you know, if your customer service is fine. You know, they're generally pretty happy with it. And they're unlikely to switch because, like, you don't want to go without internet. So I've always thought maybe that's a lender discussed, but like your customer acquisition cost can be really. high to get people to switch. And I agree with you. I think it's an underestimated part of overbuilding.

You know, even if you come in, if somebody's happy with their current setup and, you know, it's $65 a month and you come in and you say $50 a month. Well, there's a lot of sunk costs and, you know, somebody's going to have to come out to my apartment, rewire it. I'm going to have to spend a day getting my cable self-switch. I'm going to have to spend time place. Like it is a sticky product as long as it's just working and, you know, it's, $65 that powers literally your entire, $65 a month that powers literally your entire life.

The consumer surplus on that is out of this world. So I'm with you. People, people don't really think about those costs, but it is a slog. This is why the fiber to the own players, they say, look, within one year of building fiber to the home in a competitive market, we get 20% share. Within five years, we get 50%. So if you think about that, in the first year, you get everyone who hates the cable company. And then after that, it's just a door-to-door battle trying to get all these customers.

after five years you finally pull about even right yeah and that you know it's funny a couple years ago my mother's mother-in-law's house she had some she had AT&T DSL internet she had an 18T phone plan and she had like direct TV and she paid I'm gonna I'm gonna forget the exact numbers now but she paid like 65 bucks a month for the internet and they had two two phone lines they were each like eighty five dollars a month and she paid like like $130 a month for DirecTV. I was like, hey, I'm going to get you better internet. It's going to be cheaper.

And this was right when they were rolling out. Charter was rolling out. It's wireless product. And she's just like, no, no, like, you know, and she had, you know, it's like 25, you know, normal DSL speeds. They sucked. You couldn't even FaceTime because like it wasn't fast enough. She's like, no, no, no.

I don't want, I don't want you to take my internet away because like it just worked so well. I don't want faster speeds at cheaper prices. please keep it away yeah and so finally i was just i just sort of did it and you know she she has you know a good cable speed and it's 20 bucks 20 bucks a month cheaper and she has their mobile product and it's on a you know 50 bucks a month cheaper for the two of them and and got did something else with tv but so it's hard their mobile product it comes back to it's exactly what you're saying right charter and comcast they're literally advertising everywhere they go hey if you get internet from us switch your phone line you'll save seven

$80 a month, at minimum $40 a month, these type of things. And yeah, they're growing the businesses quickly. But if you thought pure economics, literally everyone in America within the next year should cancel their phone bill and switch to one of these guys, right? Anyone who's got access because it saves so much money. But that's not how the world works. It takes time. As long as it's working, you know, I'm not maximally optimizing my everyday bills every day as long as they're working for me. So it takes time. The only other thing I'd add on Overbuilder look, In one of my first write-ups, I put this out there, people have been saying wireless is going to replace your wired service. I can find you advertisements from AT&T in like 1999 that said

Rigi is going to overtake it. I always just come back to the first principle of if you've got cable or fiber, you know, literal hard infrastructure laid into someone out of house, that is always going to be the fastest and lowest cost, most reliable way to get someone internet. And I just always come back to that. And, you know, 5G, yeah, it's wireless, but it needs to be, what, within 800 feet of people's houses? As cable has said, that's basically a fiber overbuild at that point, right? You need to lay fiber to a tower 800 feet from the house and then give them equipment, pretty much a fiber overbuilds. So they know how they can meet with overbuilds. I want to move on. Let me spend one other second. There's a special risk. Every time I talk to someone,

someone who's not super knowledgeable about cable, they say, what about Starlink? What about satellite internet? Kind of along the same lines of fixed wireless. But I just want to flip a bit over to you. What would you say to those risks? Yeah. Capacity concerns aside, which are significant, I think it's, you know, Starlink is $500 up front for satellite and then it's $99 a month. So it's just not competitive. I mean, it can be competitive in places where internet does not exist. And maybe you'll have some people who like Elon Musk and want to get it just to get it, but you can't, you know, for normal Americans, I mean, we're talking about it's hard to get people to, you know,

Xfinity Mobile, even though it's a better product in mass, because it's the same thing as Verizon's network and it's a lot cheaper. You're just not going to be able to convert a whole lot of customers to your internet product when you have to put a bunch of money up front and then it costs more. And maybe the customer service is not good at all. I've also read. So I, you know, it's just it also just doesn't like doesn't make a lot of sense to me in general that that would be a better way like you said like if you have the wired connection it's going to be cheapest and fastest yeah that's it's scary because you know one of the things with cable is the way you stop with cable overbuilders is you take a ton of share and because you've got a ton of share you can

spread the fixed costs in the local network over the most people so any cable overbuilder you know yeah if they add one person they take one from you but then their fixed cost supports one person, your fixed cost support 99, you know, you worry with Starlink, well, if that can service the whole world, they can spread the fixed cost over a much bigger base. But I come back to you have to get physical, you have to get physical equipment into locations that cost money, it costs technicians, it costs time, it costs shipping. It's probably not going to be as reliable, rain, wind, all that type of stuff. And they're always going to face, there's a fiber laid to the home. That carries things at the speed of light. As data usage goes up, you need to launch more and more

satellites and I just worry about all of that. Let's see. Anything else cable in general you think we should have touched on that we didn't get to? I mean, I mentioned regulation. I mean, you know, listen. Oh, yeah. Actually, yeah. Well, where would you see regulation? Obviously, regulation impacts a lot of things, but there have been regulatory headwinds for years. And to me, they are concerning, but they are never thesis killing, especially when something's nine times even buying back a lot of shares. But what would your regulatory concerns pay? I mean, realistically, like, price caps, you know, I think, I don't have a view more than anybody else on whether, like, if they're likely to happen or not.

Are price caps legal? Could the government legislate price caps? You know, I own Transdime. I have modeled out what happens if they just take their profitability way on the defense side. Whether or not they can do that, I don't know. You know, it's more, it's more of like a, it could happen. It doesn't seem like it will, but like if we're looking for another risk factor to throw out, like, yeah, like that could be one. Are they legal? I don't know. But I, I am of the opinion that, you know, Congress can usually figure out how to do anything they set their

minds to. Again, I don't think it's a, it's a big, huge risk, but you. I'd have to brush back up on my regular, my regulatory thing, but so Congress could try, I think, though, you know, you'd have to go to the Supreme Court. I think divided government is your friend there, right? Like, I think if they can't get voting rights passed, a form of price control, which is literally going close to socialism. I don't, I don't want to say, but I think that's going to be very hard to get 60 senators to vote for over the filibuster, right? So I think that's your friend. So your worry would probably be from. the FCC, right? The FCC, especially this administration's FCC seems to be a lot more left-leaning. Some of their thesis is on Facebook and a couple of the big tech companies are not exactly what I would agree with. Though, you know, I am very sensitive to these are companies that are giving their product way for free. So we've never had to regulate companies like these. But, you know, I just think we've seen a lot of left-leaning politics. Price caps is probably a step too far. I think you'd have to change them to, they're regulated as title two now. If I remember correctly, you'd have to

change, you'd have to reclassify them, then try to do the price caps. It would take years, go to courts. If a Republican administration ever came in, then they would just overturn it in the second. So I hear you, and I definitely hear people talk about that, but when you play it out, I just find it very hard to believe that price caps are coming in. And by the way, if you get price caps, what do you have to do? You have to turn them into an electric utility. You have to turn them into a utility. And utilities trade at, you know, 25 times earning. So that's the multiple we're going to get sign me up yeah yeah that's no all all very good points uh i was i was sort of throwing something out there i think i think what you said about a utility is is real i think

the more like reasonable risk is everybody says you know what everybody in america needs internet and they need it to be affordable and you know i don't exactly know what that would look like for cable companies, I would tend to think they probably do okay. But like, you could let your mind really run. But, you know, to your point, if everybody's going to get internet, you know, arguably the cost of capital for these cable companies is in the teens.

You know, for utilities, they're, I don't know, like seven or, you know, where investors are. placing it. And so it's just like, if you're really going to legislate that everybody needs internet and you're going to sort of impact our ability to earn money, you're right. Investors will capitalize those earnings at like a very high multiple for sure. I'm not a regulatory specialist, but I do think, I think the cable companies bought themselves a lot of goodwill with not disconnecting anyone during the pandemic. I think that brought them a lot of. And they do, you know, they do have lots of internet offerings for if you are lower income, you know, you can

get offering. So I think they play that game. They've got more student playing that game is what I would say. I would say they did. I thought they did a really good job last year because it was like everyone did need internet and you know most everybody had it. I think I think that's more of like a does it look, does cable look different in 20 years or 30 years? I think I would guess that it looks pretty much the same in five or 10. If you made me say, like, does it look the same in 30? I might be like, well, I don't know. I wouldn't be surprised if it looked more utility-like.

I think I put this in one of my posts. One of the things I always bet, this is a utility that isn't regulated, right? So you probably get a little more pricing power than utilities. But at some point, I see it in the debt markets. The equity hasn't reflected it yet, right? Altis always says, we can borrow at 3% and we're buying our stock after tax at 10% cash flow year olds. So debt 3% and that's, you know, probably, let's call it tax affected. Equity, 10%. That's a big divergence. One of those two is probably wrong. Altis, my bet, your bet is that

equity is on the wrong side of it. If the debt's on the wrong side of it, well, they'd probably be okay in bankruptcy. But yeah, let's see, we've covered a lot. I want to be cognizant of time. We've talked a lot about CAO. We've talked a lot about Altis. Any, you know, lingering bull case, lingering bear cases, anything you wish we had hit that we didn't get around to? Yeah, I mean, I actually don't even think we talked a lot about how Altis could work. Give me a two or three minute summary. Yeah, I mean, like, we've talked about all the risks. And the risks are the subscribers go down and they've already pushed price and they've already taken out cost.

But, you know, I think to frame it, you know, if you have a flat multiple and EBIT grows a couple percent a year, your IRA is getting close to 20. So like, you know, what do we really think Altis can do? And you mentioned Sunlink and Cable One. And they do have a lot of edgeouts to perform. So, you know, it looks, looks to me like over the next five years, like they might be able to get close to 100,000 broadband subscribers a year just on edgeouts. And they have some upgrades to do in their network.

And that is, I think would be, you know, roughly. maybe it starts out of six. It would be five or six percent growth over their settling footprint subscriber growth. And then you have, you know, all the same things. It's a cable company. You can probably push a little bit of price. Their penetration is probably going up a little bit. You know, they'll face, you know, some fiber overbuild.

But, you know, I think they can compete. They've, you know, they've competed against Verizon Fios and optimum for plenty of time. So, you know, I think it would be. be pretty conservative to assume that suddenly could grow EBITDA dollars around mid-single digits. I think if people were being honest, they might guess higher than that. And then, so you have that bucket, and then you have the optimum bucket, which is, you know, you have the FIOS overbilled in that competitive position, you know, like we talked about. Maybe they've lost a little, you know, their penetration has gone a little bit down, but

it doesn't look like a lot, and now their competitive position is getting better. So I would guess flat to better subscribers over time. And, you know, again, it's a cable company. So they should be able to get slightly higher pricing. They should have, you know, some mix shift as people demand higher speeds. That should be a benefit. You know, margins can probably creep up a little bit. So I think even dollars are growing there.

And then in optimum's footprint, you know, without a lot of fiber. competition uh that again looks like sort of normal cable company so so with all that stuff you know about dollars are growing um and so you have the draw he risk uh which is fine may you know again maybe that that caps on your upside if if he kind of squeezes out shareholders uh once he owns more of the company but you know like you wrote uh you know i i don't think he's even be able to buy it for 8x, you know, maybe 10. And so if you put all these things together and you say, well, you know, consolidated EBITDA dollars grow two, three, four, five percent. Given where the equity is trading, you just, you get really terrifically high IRAs, even on a flat multiple. So

multiple goes up, you know, that helps. And so I just, it's a cable company. A lot of cable companies are valued, you know, much more richly than Altis is. And, you know, to me, I think it should trade at a discount to a charter or Comcast because they have price to push and more margin to take in the future. But I think at a certain point, people are not paying enough attention to Altis. You said it should trade at a discount to charter or concast because chartering contest of price to push, and these guys have probably pushed prices already. So one of the things I've struggled with is do you look at them on EV to EBDA, you know, in the near term, trailing 12 months, next 12 months or whatever, do you look at them on EV to

Holmes past, you know, so you could say Altis Pass is 10 million homes. Do we value that at $5,000 per homes past, 4,000? They're valued at about 4,000, whatever, you know, which metrics do you use to look at them? Well, I think that's kind of a hard question. At the end of the day, what I sort of meant, I was like on that on that Eidopor passing number, you know, Altees is almost $500. Charters, well, in 2020 was a little under $3.50. And I simply mean that if you're looking at like EV to operating free cash flow, you know,

listen, charter should trade at a higher multiple because they will have a much easier time. getting their Yvada up because their growth will be faster. Yep. Yeah. So like, so I wouldn't say, oh, hey, Altis is 9x charers 10 by Altis. I think you have to try to discount the cash flows. I would generally think that long term, sort of your enterprise value per passing is the metric that makes the most sense. That's, that's where I've fallen in. Now, I don't have. I'm a one-man shop. I don't have the day to do it. But you want to address that for demographics, overbuilt, whatever. But that's generally what I do. And when I started getting really

interested in Altis was it always traded at a premium to charter on an Evie's Holmes past basis. And right now it trades at almost 20% discount. But when I got interested in it was, it was the share of buybacks, it was the valuation. But it's when it dropped below that. And then I could say, oh, I'm not just looking at it because anything's probably going to look cheaper if you're running much more leveraged, right? But I wasn't saying, oh, this is cheaper. a free cash flow yield because they're a lot levered. It was also on an unlevered basis. Now their EVs, the home passes below. So that's when it started being interesting. Last question, then I'll let you go. I treated it out. January 2020, Altis grants all of their senior management

PSUs that strike that don't vest unless the stock hits 50 and then 60. It was January 2020, when they originally needed to vest. I think that could get delayed by up to two years if there was a recession or a market event. I'm guessing COVID qualifies. I didn't see that in their proxy, but I'm guessing COVID probably qualified for delaying it. So let's say $50 by 2026. That's about a 15% IRA from today's share price. What are the odds they hit that $50 strike price? I will say that if it trades at eight and a half times EBITDA and they grow EBITDA dollars by 2%. And they, you know, use the proceeds to buy back stock. Then eight and a half X EBITDA on 2020, four numbers is 51. So. And that's 2024. So they're hitting it even without the market

delay. That is 2024. So, you know, I'll let people plug in their own estimates. But it's not a impossible hurdle to hit. I like how you framed that because I'm doing the math on the side over here. You know, it sounds silly. Oh, $50 share price. That's it almost 30 percent. IRA from today's prices over, you know, two and a half years, 30% is world beating returns. And by the way, they've got $60 PSUs. And by the way, like you said 50, I don't think, I don't think 50 is aggressive if if they come out and they deliver a couple quarters of broadband growth with this leverage, with their share buybacks, with their free cash flow profile, I don't think 50's crazy aggressive. I mean, I've said before, I think this could be $100 stock by

2025. But it hurts. to me every day. Anyway, Kyler, last words, any last thoughts before we wrap this up? No, I thought that was great. I think I said everything I needed. Thanks for having me on. I really appreciate it. Thanks for coming on. When you publish your next blog posts in a year, I'm going to have you back on. I'm looking forward to the follow-up.

As reminders to listeners, Kyler and I are both long. So remember, not investment advice. My write-up, Kyler's write-ups are in the show notes. You can follow up there. I'll include Kyler's Twitter handle so you guys can follow up there with questions, find out how you can manage your money, all that type of stuff. But, Kyler, thank you so much for coming on and looking forward to chatting soon. Thanks again for having me.