Liberty Broadband (LBRDA) Status Update summary

Strategic update and business overview

• GCI will be spun off from Liberty Broadband as an independent entity, with the distribution of shares expected in early July 2024.

• GCI is Alaska's largest telecom provider, offering a full suite of wireless, data, and voice services, with a network passing 80% of Alaskan homes and providing 2.5 Gbps speeds.

• The company has invested $4.7 billion in Alaska's telecom infrastructure, including undersea and terrestrial fiber, and is the only provider with statewide converged products.

• GCI exited the video business to focus on higher-margin data and wireless services, increasing free cash flow.

• Over 40% of revenue is supported by the Universal Service Fund (USF), which is critical for rural connectivity and currently under Supreme Court review.

Financial performance and capital allocation

• GCI generated $1 billion in revenue and a record $383 million in adjusted EBITDA over the last 12 months.

• Revenue mix has shifted toward high-margin data, while low-margin video revenue has declined.

• CapEx has historically been 15-20% of revenue, but is expected to decline after 2026 as government funding (BEAD, Infrastructure Act) supports further build-out.

• The spin-off will provide a step-up in tax basis, potentially generating $420 million in tax benefits and enhancing free cash flow.

• Leverage is targeted in the 3-3.5x range, with flexibility for accretive acquisitions or capital returns.

Competitive landscape and growth outlook

• GCI faces limited competition, with AT&T as the main wireless rival and Starlink as a relevant competitor in remote areas.

• Fiber overbuild is limited due to high costs and challenging geography; no pure-play fiber or fixed wireless competitors are present.

• The company expects stable revenues and EBITDA, with slow growth in wired data and wireless, and a focus on free cash flow as CapEx declines.

• GCI's unique expertise in Alaska's environment and deep management bench are key differentiators.

• Future growth may come from accretive acquisitions, leveraging tax and financial synergies, or returning capital to shareholders.