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Time Warner Cable Inc. (TWC)

February 27, 2013 11:45 am ET

Executives

Irene M. Esteves - Chief Financial Officer and Executive Vice President

Analysts

Benjamin Swinburne - Morgan Stanley, Research Division

Richard Greenfield - BTIG, LLC, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Okay. Good morning, everybody. My name is Ben Swinburne, Morgan Stanley's media analyst. We are pleased to have with us from Time Warner Cable, Irene Esteves. Irene is the CFO, has been CFO for about 18 months now, prior to her time at Time Warner Cable as CFO at XL Group. Irene, thanks for joining us this morning.

Irene M. Esteves

It's great to be here, thanks.

Question-and-Answer Session

Benjamin Swinburne - Morgan Stanley, Research Division

Why don't we start out at a high level on the cable business in general and then Time Warner Cable specifically, and ask if you could tell the audience about the primary drivers of growth looking out over the next couple of years.

Irene M. Esteves

Sure. I mean, where we've gotten a lot of our growth has come from business services, where we're growing at 20% plus, and that's on a bigger and bigger base. So we're now at $1.9 billion in revenue and we still expect to grow 20% next year, in the 20% to 25% range. And also in HSD, we've got a terrific HSD business that grew 8% last year and we see great growth rate for that as well and a long runway for both of those businesses. But then since you asked me about kind of a longer-term question, what don't I take this time to talk about our 2013 guidance and put that in perspective a bit. We have a very strong and stable business based on the subscription model that we all know and love, 15 million households paying us $120 a month, month in and month out. So we are confident in the long-term profitable growth of our business. We've been able to grow revenues and maintain margin within a relatively small band. But that doesn't mean every year we're going to have flat margins. So when we gave guidance for '13, we talked about 4 primary drivers of slight margin compression and we refer to it as 4 Ps. The biggest one being programming expense and I'm sure we'll talk a little bit about programming expenses. The second was pension expense, which was up 20%, given the very low interest rate that drives the expenses on a GAAP basis. Political advertising, which we had a very strong year in 2012. It's a highly profitable revenue source and that pretty much goes away in '13. And then, we had some in-sourcing cost savings, which helped offset some of the programming expense increases in the past. So we really don't have much of in '13, but certainly, this comes back to us in '14.

So as you think about those headwinds, they really hit us head on right in the first quarter, and then we expect the offsets to come throughout the year. So while we think the first quarter is going to be relatively flattish, we think the long-term guidance is still intact. We're confident in that long-term guidance. And when you get back to it, you think about that momentum that's building through 2013 that's going to carry us into '14 and beyond. It's very exciting. We think the model works, and we're very confident in that long-term profitability that you asked us about.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. And when you think about managing the business longer term and some of the challenges the business have and you mentioned a couple of them in 2013, how do you sort of navigate those over the longer term? And what do you guys doing internally at Time Warner Cable to make sure you're in the position to hit those expectations?

Irene M. Esteves

Yes, the biggest thing is building our capacity for the HSD business. We've seen capacity usage grow 40%, 50% per year. And we're forecasting over a very long time period our capital expenditure. We're looking out 5, 7 years, and we're expecting those percentage increases to go on infinitely. So we're always staying ahead of that need and keeping our network capacity with plenty of headroom for that kind of extraordinary growth. So that's important to us. And on the business services side, it really gets to how we attract and retain very high-quality talent. We've been very successful over the last few years bringing in more and more experienced sales reps. But it takes time for them to ramp up. So we hired quite a few in 2012. We expect to hire more in 2013 and that's a big part of our success formula is making sure we have that pipeline, as well as the investments that we're making in our plans in order to build out and proactively build our network for the business customer.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. I think we'll touch on probably all of those as we move through the questions. One other sort of completely different topic but important to Time Warner Cable and we are in San Francisco, so a number of Dodger fans in the audience are probably pretty low. But I'd love to get your take on the decision you've made, both with the Lakers and now with the Dodgers to get into the sports distribution business in the Los Angeles market, a big market for the company.

Irene M. Esteves

Sure, let me talk about the Lakers deal and how we think about it and I'll take a moment to step back. It's really a make versus buy for us. What -- in building shareholder value, we think we're doing that by getting long-term access to must-have programming at a reasonable cost, at a net cost lower than the alternative, which is to buy it from a third party. So for us, looking at the buy option as we have before, it was accelerating costs. This is a way for us to buy the raw materials directly. So we're buying raw materials, the media rights ourselves, taking ownership of it, building the network ourselves and then selling that to others, to our affiliates. So we're getting -- we have this long-term agreement. So we have a set price and then we have the revenues coming in from others so then we're looking at that net cost to us, divide it by the subscribers that are getting this service -- our own subscribers getting the service, and get an effective rate per sub. If that rate is below what the third party would have charged us, well then we're better off, our shareholders are better off. And in fact, that's what we've done with the Lakers and that's what we're expecting to do with the Dodgers next year. So we're really taking out that profit margin of the third party, taking it in to ourselves and offsetting that cost, which brings in a lower net cost to us.

Benjamin Swinburne - Morgan Stanley, Research Division

We actually had a third party on Monday present in James Murdoch [ph]. And ironically enough, he said that having these contract rights feels very long term is a big part of why they're -- they can be attractive. Is that part of why you guys agreed on...

Irene M. Esteves

That is, that is. We've got a fixed price for that time period. We know exactly what we'll be paying each year over that time period and as market rates increase and what we'll charge others will increase.

Benjamin Swinburne - Morgan Stanley, Research Division

Got it, okay. One other kind of big, high-level question more on the company and the organization. There's been a lot of restructuring at Time Warner Cable over the years. I think going back to the Adelphia merger, and a lot of different divisions and you kind of moved that together. What's that process been like? And what are sort of the benefits you are seeing and expect to see to the company?

Irene M. Esteves

Yes, it's been a process of over at least 5 years of moving from 40-plus individual presidents running small markets to 6 regions to 2 regions and now we've announced 1 Time Warner Cable, where there'll be 1 residential business and 1 business services business headed by senior leaders reporting in to the top of the house, as well as the media business, which has been independent. So those 3 business heads. And we think there's -- the primary objective is better effectiveness. So we're looking at improving our results by focusing people, getting clearer objectives, clear responsibility and accountability. We also expect there's going to be efficiencies that come out of this, but our primary objective was on the effectiveness side. And things like technical operation, which is all under one roof, we expect we're going to get product enhancements out sooner. We'll be able to upgrade our network on a more efficient basis. Our marketing and sales group, now all under 1 leader, we'll make sure that we've got accountability and people who are closer to the customer, what the customer needs are, as well as what's happening with competitive set and that we can take action when we see changes on the competitive landscape across the business.

Benjamin Swinburne - Morgan Stanley, Research Division

Do you have any expectations around the timing of when you see those benefits? Are those happening in '13 or is it a longer period of time?

Irene M. Esteves

It's happening throughout '13. You'll probably see some restructuring charges in relationship to those savings. But it's early to tell just how much that will be.

Benjamin Swinburne - Morgan Stanley, Research Division

Okay, great. Let's dive in a little bit more into the 2013 outlook. Maybe we start on the revenue front. When you look at your 2013 guidance, can you just talk about your expectations for top line. I know you mentioned a couple of the issues relative to last year, but help us put that into context.

Irene M. Esteves

Yes. What we said was we're going to be very consistent with our growth in 2012. So on the total organic revenue growth, we said we'd be between 3% and 4%, which is we were 3.5% in 2012, so right in line. And within that, business services will grow 20% to 25% and we were right in the middle of that in 2012, so very consistent growth. Even with the headwinds we have, we're still looking at good growth in 2013.

Benjamin Swinburne - Morgan Stanley, Research Division

Okay. Let's talk about commercial, which is actually the first thing you mentioned when you talked about your growth opportunities and something we heard from Michael [indiscernible] a lot about yesterday in their business. 20% to 25% growth given the base of the business is pretty impressive, but can you put into context of the market share and addressable markets and the kind of the businesses you guys are going after?

Irene M. Esteves

Yes, absolutely. It's a lot of whitespace out there for opportunity for us. We think our real sweet spot is for companies with employees of 500 or less. And we think in our footprint, that's a $20 billion market. Our $1.9 billion today, if you take out cell tower backhaul, which we're not including in that -- the $20 billion marketplace, you're talking single digits, clearly, single-digit market share. So we see a long runway of potential growth or there. And we're building, as I said, we're building our capabilities with incremental sales force, with lots of capital spend. We're improving our product lines, we've -- Metro Ethernet now is 20% of overall revenues and that's the fastest-growing part of the business. And in that business, we deliver 1 gigabit per second speeds to our business customers already. On the direct access side, we're delivering 10 gigabits per second to those customers and that's a very strong business as well. So people talk about being able to deliver these fast services and can we do it? Well, we are doing it. Where the need is on the business side is where we're investing and we have that capability and we're delivering those high speeds. And we think that, that's a terrific growth business. We're continuing to invest in it.

Benjamin Swinburne - Morgan Stanley, Research Division

Do you see any changes in the competitive response as you guys are having so much success in the commercial space?

Irene M. Esteves

It's hand-to-hand combat out there and it continues to be, but I think we have a great product line. I think we've got a good a service in place, a good model in place and we're continuing to take share.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. Why don't we shift over to another big topic in the industry, which is programming costs. And you guys gave guidance for 10%. Per sub growth this year, which is higher than the last couple of years and the market, obviously, has reacted to that to put it mildly.

Irene M. Esteves

I think a couple of other people said it similar to that.

Benjamin Swinburne - Morgan Stanley, Research Division

Yes, exactly. I was going to ask you if this is something -- if this is sort of the business-as-usual growth, how investors and shareholders in your company should think about this pressure point over a longer period of time?

Irene M. Esteves

Yes, I think it is important to look over a longer period of time. And if we look backwards, if you look back 5, 6 years, we're looking at per sub growth of programming, it was 7%. I think in 2008, an 8%, 8%, 7% and then it dropped down to 5% last year and then up to 10%. So if you average it out, you're back to that 7%, 8%. And you will see variation year-to-year as you've seen with others, peers of ours and competitors because it has to do with when does the large contract come up for renewal and how do you negotiate those prices. It also has to do with the escalators within your existing contract and then when you add or drop networks. So it's not inconceivable that you're going to see some pretty wide variations year-to-year. We don't see it necessarily as a change in trend. It's just if you look at, if you smooth it out a little bit, you're looking at 7%, 8% pretty consistently.

Benjamin Swinburne - Morgan Stanley, Research Division

Got it. I know it's -- we're sitting here in February of '13, but when you look at the 4 Ps as you listed out some of the moving parts between this year and last year, can you give us any sense for how those play out in '14?

Irene M. Esteves

Yes. I mean, programming is the big unknown and I'll skip that one because it's too early to say anything about it. But clearly, pension expense was up a lot from '11 to '12 and again, '12 to '13 as interest rates have been slowly tracking down. I don't think anybody is forecasting interest rates to continue to go down from here. So we're not likely to have that headwind again. On the political side, of course, next year, we'll have midterm elections and we had revenues of $114 million last year, very high margin. We expect to have some of that next year. And then, as I mentioned with our in-sourcing of our phone services, which are really back-end loaded this year, we're going to have tremendous growth as we go into next year on those savings and that could be in the $100 million range. So those are specifics of what we can see for next year. And then more generally speaking, we have a number of initiatives that we're embarking on this year that we'll build throughout the year and expect to have a full year impact of those in '14 and beyond.

Benjamin Swinburne - Morgan Stanley, Research Division

I was going to ask you actually about one of those initiatives, which again we also heard from Comcast yesterday, about home security and home monitoring. What are you guys doing in that space and is that a big opportunity for the company?

Irene M. Esteves

Yes, that's a terrific new business opportunity. It layers onto our HSD business. We are currently targeting our current customers because we think those are the low-hanging fruit, but then we have the opportunity to move out to new customers. And we started rolling out last year. We're planning to finish that rollout in 2013 to the full footprint. We think that's a very exciting business. It's -- in the past, it's been thought about more narrowly as a security business and that has a limited population of folks who are interested in security. But this is a much more fun product, in that you can place cameras in places and make sure that your dogs are okay or the kids got home from school okay. And as well as the convenience of shutting off lights or turning them on right before you come home and the heating elements and the air-conditioning taking care of your home, it's a terrific convenience at a fairly low cost. So you're bringing in a much bigger market than how we -- how the industry looked at it before, which was strictly on security side.

Benjamin Swinburne - Morgan Stanley, Research Division

Right, got it. Okay, great. Let's shift over to another part of the 2013 outlook, which is capital spending. You guys gave guidance there. It's a little bit above last year and sort of a trend we've seen across the industry over the last 2 years, really, rising CapEx. Can you talk a little bit of where you're investing and why you think as the CFO of the company these are good return dollars?

Irene M. Esteves

Yes, this is an area that gets a lot of focus at Time Warner Cable as you can imagine. And we've been very thoughtful in our capital planning over a long period of time. And the guidance for '13 was an increase of $100 million on a base of up to $3.2 million, so a slight increase. But more than 100% of that increase is due to our business services business. And that's going up dramatically, whereas on the residential side, it's actually down slightly. So that investment we've talked about and that 20%-plus growth is what's driving that. And we're building new businesses and we're building 2 new buildings. We added 100,000 new buildings last year. We doubled the number of fiber connect. We added 1,900 cell towers to the backhaul business. So that takes capital to build that and that's where we're investing. And we're looking at a terrific ROIs on that capital spend and so I'm very comfortable with that investment for the shareholders.

Benjamin Swinburne - Morgan Stanley, Research Division

Got it. Great. Just to pick up on the -- it's interesting you said residential will be down, which takes us into the next question. I wanted to ask -- I mean, I get asked a lot about the industry and also Time Warner Cable as it moves to an all-digital platform in the residential business you can get some spectrum back on the analog front. Is that something the Time Warner Cable is focused on? And then sort of what's the right time frame for you guys?

Irene M. Esteves

Yes. Over 80% or around 80% of our customers are already getting digital. So that leaves a small part of our customer base using analog. And because we invested in switched digital years ago, we have much more capacity on our system than others that don't use switched digital to the tune of 3x per channel what MSOs who don't use this. So we've built a lot of capacity for ourselves. So we don't need to go all digital in order to deliver the capacity we need for these -- for the network to meet the demand. So we're taking a more measured approach over a 5-year time period. We're going to get there and that allows us to spread out our capital spend. We're taking analog channels in the 10 to 12 per year kind of measure, which is less disruptive to our customers and less capital-intensive. And also as Glenn has mentioned many times, he likes the idea of kind of leapfrogging MPEG and going to IP. As we switch to all digital, we're going directly to IP technology.

Benjamin Swinburne - Morgan Stanley, Research Division

I was just going to say, I think, in some markets, you already have done all digital.

Irene M. Esteves

Yes, New York and Maine.

Benjamin Swinburne - Morgan Stanley, Research Division

Right. Let's stay on the residential video side of the business. You could tell on the call that the management team is focused on improving results there. What are the steps you and the team are taking on the product and sort of efficiency marketing side to improve video trends?

Irene M. Esteves

Yes. We've done quite a bit on the video side. But as you can imagine, it's a mature market for us. We've been in the business a long time, so the real opportunity comes in retention. And when you have market shares as good as we have, a slight change in the retention rate will dramatically improve our performance on the net-subscriber basis. So we're really focused on a couple of things there. One is on managing our promotional roll-off. So with the increasing promotional activity in the marketplace, we have more and more of our customers on promotion and it's imperative that when they roll off, we're being very thoughtful about who rolls off to what, when and we're working hard on that and improving our capabilities there. And then we have retention centers that are now specializing on retaining customers. So we're training specialists to talk to customers, listen to them, find out the reasons for potentially leaving and recapturing those. And that's been another big initiative for us, and we're rolling that out throughout 2013.

Benjamin Swinburne - Morgan Stanley, Research Division

Anything on the product side you'd point to as well?

Irene M. Esteves

Yes. On the product side, as we added NFL Network, we've added Pac-12, so we're adding to our programming, as well as the actual program, as well as the rights that come with the programming. As far as on-demand content, we've really increased. TV Everywhere we've also broadened. And then we're looking at a cloud-based guide later in 2013, which has significantly improved the search capability so that our customers can find that terrific content we have on demand.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. The TV Everywhere has been a big theme across media and cable throughout the conference as you can imagine, and I'm a customer so I know a little bit about what you guys are doing on a product side. Maybe you could share for the audience sort of the tablets and apps that you've rolled out and what they deliver to customers?

Irene M. Esteves

Yes. We were the first to roll out live TV on the iPad and we have over 200 channels in the home of live TV and we've just added quite a bit of on-demand content to the iPad. We also have iPhone, Android, your Macs or PCs, you can also -- or your computer, we've just announced Roku and we're working on a number of other devices. So it's one of the early strategies we have of the 4 Anys is to make sure that we had not only available on any device, but anywhere at anytime, so -- and any content. So we're building on that capability and we're real leaders in delivering that to our customers. So we're very excited about those capabilities and we're continuing to expand what we're delivering.

Benjamin Swinburne - Morgan Stanley, Research Division

Terrific. You mentioned before managing promotional roll-offs, I was curious, if you'd characterize the promotional intensity in the market right now versus the last year or so. And does it vary much by geography within the footprint?

Irene M. Esteves

Yes. We don't see a big variation by geography except for where we compete with various folks, and we're reading the same things you are and everybody else about the public statements about that promotional intensity decreasing. But we're not seeing it just as competitive out there. And if you think about the promotional prices in the marketplace, that really drives people to price shop and that just increases the transactions and the turmoil in the industry, which increases everyone's cost and reduces everyone's profitability. So this is a real conundrum for the entire industry is how do we each build on our retention rather than build on the promotional side in order to keep our customers and become more profitable.

Benjamin Swinburne - Morgan Stanley, Research Division

Terrific. I know one question that -- I think one question that might be asked from the audience would be about Google Fiber. I realized it's a pretty small overlap for you guys. But given they are a competitor to you in a small market for the company, can you just talk about that product and what you guys are seeing in Kansas City?

Irene M. Esteves

Yes. I mean, as we mentioned, we're already delivering 1 gigabit, 10 gigabits per second to our business customers. So we certainly have the capability of doing it and we do it where there's demand, where there's a need for it. In the case of what Google is doing in Kansas City for consumers, we just don't see the demand. I mean, we have services available there of a 100 -- 50 up to 100 and we have a very small fraction of our customer base who opt for that. So we're in the business of delivering what consumers want. And to stay a little bit ahead of what we think they will want. So we just don't see the need of delivering that to consumers. Now if Google finds the magic pill and finds applications that require that and develops the need for it, well, terrific. And then we will build our product base in order to deliver that. But in the sense of Kansas City, we have got as far as their passings and what they say in the public statements about -- and public filings about where they're going, and we lay that up against our map. We're talking about 100,000 HSD customers, 100,000 video customers. So it's not really a big overlap for us.

Benjamin Swinburne - Morgan Stanley, Research Division

Got it. Let's stay on the broadband product, which is a great story in cable. You look at the net add share for the industry versus telco, it's 100% roughly.

Irene M. Esteves

Multiple.

Benjamin Swinburne - Morgan Stanley, Research Division

Yes, give or take. You guys went ahead with a pricing decision on broadband last year. Now that we're in a few months in, can you update us on how you think that was implemented and the customer reaction and sort of the benefit or impact to the business?

Irene M. Esteves

Yes. I think on HSD, we've got great opportunity for both volumes and price, as well as improving mix. And we're constantly, as I said, building for that future need, and we're seeing that customers more and more are using it, are valuing that service. It's more a part of their everyday business. At home, they're carrying around the device or sitting down and enjoying entertainment. And what we have found is with increase, as customers use it more, value it more, we can then price it more. And we think that's a terrific dynamic for the market for quite a bit of time. Now as far as our modem price increase, we did see some net adds decline in the fourth quarter. But we think that has more to do with -- and clearly has something to do with the modem fee and the price increase. But probably more driving that is the amount of promotional roll-off we had in the fourth quarter from the year ago was really, really driving that.

Benjamin Swinburne - Morgan Stanley, Research Division

Okay. What's driving the usage growth on broadband? And how do you take advantage of that over the long term?

Irene M. Esteves

Yes. It's -- if we look at peak volume, which is really what drives our capacity planning, 66% of that increase comes from streaming video. So think, Hulu, Netflix, YouTube and then a little bit more is from the devices as more people use mobile devices within their home, that's driving some of the HSD usage as well. So we think it's terrific. Again, the more they use it, the more they love it, the more important we become to them as a service provider. So we're continuing to watch that usage pattern and cheering them on.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. Reed [ph] was sitting in that exact seat on Monday. So he'll be happy to hear your encouragement. AT&T was also talking about upgrading their DSL plan. How do you see your products versus DSL, which I think is still the majority of the homes in the country over the next couple of years competing against each other?

Irene M. Esteves

Yes. See, the DSL product, I mean, twisted pair has only so much capacity if they can ring out of that technology as compared to our fiber/coax. So as the market moves up and finds more and more reasons to value speed, we become advantaged. So we expect to continue to gain share, especially on that high-end customer, who values the higher speeds and is willing to pay for it. There may be a market for DSL for quite a long time as there are some consumers who are not concerned about speed and are happy with the DSL product. But we think in 90% of our footprint, we have the superior product and as that mix improves, we're going to get more of that high-end customer who needs the speed, is willing to pay for the speed. So we think we're in a great spot for improving dynamics in our mix.

Benjamin Swinburne - Morgan Stanley, Research Division

Terrific. Let me ask -- I'll ask one more question and then we'll see if the audience has any questions. And if you could just raise your hand and wait for the microphone to come over, that would be great. You can't not talk about capital returns with Time Warner Cable. As we go into 2013, can you lay out for us the leverage appetite for the company and how you view returning capital to your shareholders going forward?

Irene M. Esteves

Sure. I mean, the strategy that we laid out, I guess, it was laid out about 5 years ago, it really hasn't changed and it really comes from our balance sheet philosophy. We want to maintain our solid investment-grade rating and that comes to us through a keeping our leverage ratio at that 3.25% with a normal adjustment. So that's our driving force when we think about capital returns. So we take the capital that we need to drive the profitable growth that we've been talking about and to then to the extent we have excess capital, we return it to shareholders. And we announced earlier in the year, we've increased our dividends per share, 20%, this year and we are looking at -- or I think it was 17%, a little bit less. And then, our share repurchases this year, as I sit here today and think through what we're expecting, those are probably going to be $2.5 billion plus this year.

Richard Greenfield - BTIG, LLC, Research Division

In '13?

Irene M. Esteves

In '13.

Benjamin Swinburne - Morgan Stanley, Research Division

Anything else you wanted to add before we go to...

Irene M. Esteves

.

I think to summarize, I think we're really focused on a few things. We're growing business services. We're growing HSD. We're taking numerous actions to stabilize video. We're looking for efficiencies across the business. So that's really picking up momentum. We have action plans in place that we're very excited about that are going to ensure our long-term profitable growth.

Benjamin Swinburne - Morgan Stanley, Research Division

Terrific. All right. Why don't we see if we have any questions from the audience. There's one right over here in the second row. Thank you.

Unknown Analyst

It seems like the splits from -- between distribution and content, there's an unwind that went through the industry. And now it seems like a lot of moves have been made by distribution companies to create content. How does that play out? I mean as everybody is -- keeps going back to content, do you throw in more money into content in order to prevent -- absorb some of programming costs [indiscernible].

Irene M. Esteves

I was having trouble hearing you. But so -- I understand your question. You're talking about when we split off from Time Warner Inc. and separated programming delivery from...

Unknown Analyst

You did it. Cablevision did it. ViaCom, CBS did it and now...

Irene M. Esteves

Right. And now we're...

Benjamin Swinburne - Morgan Stanley, Research Division

Getting the band back together.

Irene M. Esteves

Now we're delivering our own -- making our own programming with Dodgers and Lakers and -- right, okay. So we still think it makes sense for us to be a distribution company and that's where we're focused. And the only reason we're in the programming business on those sports rights is in order to minimize the net cost to us. And if we thought we could buy sports right programming at a reasonable cost over a long period of time, we certainly would have continued to do that. But we're looking at escalating costs for this must-have programming and we need it to offset that risk somewhat, and we're doing that with the Lakers and the Dodgers deals that we have. It's strictly to reduce our costs. It's not a business set we choose to be in strategically.

Benjamin Swinburne - Morgan Stanley, Research Division

While we wait for the next -- let's go...

Irene M. Esteves

You're going to get a workout.

Benjamin Swinburne - Morgan Stanley, Research Division

Yes, seriously.

Unknown Analyst

Irene, you talked about mobile a couple of times, can you update us on the Verizon joint venture, where we are in terms of implementing that? And thoughts around quad play? And you've got a lot of a WiFi. You have the MVNO potential. Is that something we could see? And then related to that, when does the TV Everywhere go outside the home and onto your iPads? So you can walk beyond the confines there?

Irene M. Esteves

Okay. I'll try to remember all those. The Verizon Wireless joint venture, we are both selling each other's products now. So we have couple hundred stores in our footprint of Verizon Wireless, where they're selling a number of our packages for us, and we have the capabilities of selling their wireless products along with ours. And part of this is defensive. If the industry, if our customers move to this place of expecting and wanting wireless and wire line to work seamlessly together, it makes sense for us to have this long-term partnership where we're working together to develop those products so they are seamless to the customer, and we're working on a number of those. As far as WiFi, that sits outside of the joint venture. But we are developing our WiFi business, and we think it's a very good experience for our customers and we are seeing better retention of our HSD customers that are using our WiFi. So we think that's important as well. And then there was a third part of your question. And then our TV Everywhere rights, we have expanded that. We have HBO Go. We have ESPN. We have the Viacom channels. We have the Pac-12. There's a fairly long list and we're continuing to build those rights. And part of our challenge is getting customers to understand that it's there and to really take advantage of it. And we are building that awareness and we are seeing increased usage outside the home.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. Yes? Sorry the light, it's tough to see back. There you go.

Unknown Analyst

I wanted to get some clarity on what you said about first quarter. That first quarter, I think you said first quarter EBITDA would be flat, just want to clarify that. And as you think about the balance of the year, how should we think about sort of that progression? Is it more, I guess, it would more the second halfway in the year, but can you give us some color on how you see the year progressing? And also, on the first quarter, how should we think about that revenue as it relates to the flattish EBITDA?

Irene M. Esteves

I'm sorry, the last part of your question...

Unknown Analyst

Just how the revenue growth -- we talked about guidance of 3% to 4% revenue growth, how should that -- how should we think about that progression throughout the year as well?

Irene M. Esteves

Okay. Yes, I did say that the first quarter we expect to be flattish at OIBDA and we do expect progressive throughout the year and that's not unusual in our business for those quarters, the later quarters to build. So we're looking at building both revenues and OIBDA through the rest of the year. And I also said we reiterated our guidance for the full year to be the same as what we said a month or so ago.

Benjamin Swinburne - Morgan Stanley, Research Division

There's one -- we'll go back over here.

Unknown Analyst

Can you maybe talk about the product quality of competitors on the commercial side? You said you can offer a giga service to what you've seen from competition? And how might that be impacted by the U-verse buildout? I think they said yesterday, in incremental, $1 million businesses of fiber.

Irene M. Esteves

We haven't quite figured out the AT&T language and how much of overlap that's going to be for us and how much is true growth within our footprint. But obviously, we're already competing with them successfully, against them successfully, so we'll continue to. And our -- we have very competitive products and prices throughout our segments. We're building our capabilities on these larger-sized customers. So we've announced -- we're rolling out SIP trunking, for instance, which is a phone product whereas full-featured, multiline product, which will help us to compete in those larger customers. But right now, our sweet spot is in the kind of midsized customer.

Benjamin Swinburne - Morgan Stanley, Research Division

Irene, can I ask one more before we run out of time on the regulatory front. When this administration first came in office back in '09, there was a lot of concern about a very active FCC, particularly that relates to cable. What's your perspective now on the regulatory outlook for cable in your business?

Irene M. Esteves

Yes. We have very good relationships in Washington and we continue to have dialogue and I think that's one of the most important things. And the other is to make sure that we're competing and delivering products to our consumers. So as we talked about, we're building our capabilities, both on the consumer side and the business side to stay ahead of demand. We're competing like crazy out there on all fronts. So I think there's less pressure on the regulatory side because I think there's a healthy marketplace out there, where we're delivering our services to both consumer and residential -- sorry, residential and commercial. So we don't see any near-horizon issues.

Benjamin Swinburne - Morgan Stanley, Research Division

Great. Okay, I think we're basically out of time. Irene, thank you so much.

Irene M. Esteves

Great. Thank you, Ben. I appreciate it.

Benjamin Swinburne - Morgan Stanley, Research Division

Thank you, everybody.

Irene M. Esteves

Thanks, everybody.

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