GCI Liberty, Inc.

Thank you, Gabby. And thank you for joining us today.

I am Pete Pounds, the Company’s Chief Financial Officer. Ron Duncan, our President and CEO will be on the call today, as well as our usual supporting cast.

We will all be available to participate in the question-and-answer session, which will follow my initial comments. A copy of our detailed press release can be found at our website.

This conference call is being recorded and will be available for playback for 72 hours beginning at 4 PM Eastern Time today. The playback number is 800-925-2379 with an access code of 7461.

In addition to the conference call, you can access the conference through the internet. To access the call via net conferencing, log on to our website at www.gci.com and follow the instructions.

The webcast will be available for replay for the following two weeks. Some of the statements made by GCI in this presentation are forward-looking in nature.

Actual results may differ from those projected in forward-looking statements due to a number of factors. Additional information concerning such factors can be found in GCI’s filings with the Securities and Exchange Commission.

The third quarter was an unprecedented quarter for GCI. In addition to solid core performance in the quarter, we had exceptional performance related to seasonally high roaming revenues and political advertising revenues from the U.S.

Senate campaign in Alaska. EBITDA of $93 million for the quarter was up an impressive $14 million or 18% on a year-over-year basis and $9 million or 10% on a sequential basis.

Wireless roaming and backhaul revenues totaled $38 million for the quarter, that’s up $8 million on a sequentially basis and $7 million on a year-over-year basis. This growth in wireless revenue contributed meaningfully to EBITDA.

The gains on the advertising front were more modest but still contributed meaningfully to the growth and EBITDA. As I will discuss later in the call, these extraordinary improvements in EBITDA were invested primarily in paying down debt and capital expenditures, both of which will serve us well going forward.

Third quarter revenues totaled $241 million, that’s up approximately $23 million over the third quarter of 2013 and $16 million sequentially. Roaming revenues and political advertising were the leading areas of improvement, but consumer broadband revenues also delivered strong growth.

EBITDA comparability: As I discuss the segment results, I will be making all EBITDA comparisons normalizing the phone subsidy differences between quarters which we talked about previously. Wireless segment: Wireless revenues and EBITDA was very strong.

Revenues for the quarter totaled $76 million that’s up 16% on a year-over-year basis and 10% sequentially. EBITDA was up $10 million on a year-over-year basis and $7 million on a sequential basis.

A significant portion of the growth is from roaming and backhaul. Also recall that we closed the AWN transaction on July 22nd of 2013, so we did not have an entire quarter’s worth of revenue and EBITDA on a year-over-year basis.

AWN has been building out what we expect to be the largest LTE network in the state. We’re not there yet with just over 100 LTE sites, but we’re expecting to bring on approximately 100 new LTE sites in the next two quarters.

Wireline segment: The Wireline segment posted revenues of $164 million for the quarter and that compares with $152 million in the third quarter of 2013 and $155 million sequentially. On a year-over-year basis, the $12 million revenue increase came primarily from Denali Media which we mentioned had a good quarter.

Additionally, we had a $4 million increase in consumer high-speed data. Sequentially, the $9 million increase was seen across nearly all customer and product types within the Wireline segment.

During the second quarter, I noted that there was an August ballot initiative to reverse the current tax policy which has promoted renewed investment in oil production. That ballot measure failed which gives oil producers more tax certainty.

As a result, we expected to see and we already have seen a return to growth in our time and materials business. EBITDA for the quarter was $46 million that’s a 12% increase from 2013 third quarter EBITDA of $41 million and a 4% increase sequentially from $44 million.

I’ll turn now to specific customer groups within the Wireline segment. Consumer: Consumer revenues of $72.6 million for the quarter were up $3.7 million on a year-over-year basis as well as sequentially.

The year-over-year increase is due to growth in high speed data, while the sequential increases also include growth in wireless and video. The subscriber metrics were solid.

On the high-speed data side, we had a sequential increase of 1,400 subscribers. Last year you may recall that in the third quarter we lost 800, so this represents a very significant vote of confidence from our customers in the quality of our product.

In video, we lost 400 customers, which compares positively to the 1,200 lost in the same quarter of 2013. Wireless was also a bright spot with an increase of 1,100 subscribers for the quarter.

Last year, we lost 600 subscribers in the third quarter. On September 19th Verizon entered the Alaska market with three company-owned locations, a handful of premium resellers and several big box store resellers.

The growth in subscribers during a traditionally challenging quarter with the new entrant to the market is significant. A tip of the hat to the consumer team.

During the quarter, we made further progress towards our 2015 goal of providing 1 gigabit consumer high-speed data. We increased our top speed from 200 megabits to 250 megabits.

With increasing numbers of our customers electing higher performance plans, our ARPU has increased to $80.20 for the quarter, an increase of 13% on a year-over-year basis and 5% sequentially. Business services.

Business services revenues of $60 million for the quarter were up $6 million on a year-over-year basis and $4 million on a sequential basis. The increases were largely due to our new broadcast subsidiary Denali Media, which benefited from a strong election cycle.

Managed broadband. Managed broadband revenues for the quarter totaled $32 million, an increase of 7% over the third quarter of 2013 and 3% on a sequential basis.

This positive performance is driven by the significant investments that we have made and are continuing to make in the TERRA network. Other items of interest, Tribal Mobility Fund Phase 1.

In March you will recall that we announced the GCI 1 bid to provide 3G or 4G wireless service to some 37,000 Alaskans over 48 communities. We’ve been working with the SEC over the last couple of quarters, as they have conducted their final review process.

Last week, the SEC announced that they are ready to authorize the bids totaling $41 million. We are excited to see the improvements that this technology advance will bring to rule Alaska.

Capital expenditures. On a year-to-date basis, we invested approximately $106 million in core capital expenditures with $44 million of that occurring in the third quarter.

In order to hit our guidance of $170 million for the year, we would need to spend approximately $64 million in the fourth quarter. There is a risk that we will fall slightly below that guidance for the year on CapEx.

The major drivers of CapEx spend in 2014 continue to be wireless and HFC network enhancements. Liquidity.

We ended the quarter with $35 million in cash on the balance sheet. In addition to our cash on hand, we have approximately $136 million in availability from our line of credit.

With total current maturities of $11 million, we have more than adequate liquidity. As I mentioned previously, the quarter was an extraordinary one.

In addition to the significant capital expenditures during the quarter, we paid down approximately $66 million of debt. With trailing 12 months EBITDA of $320 million, our leverage on gross debt is 3.4 times and 3.3 times on net debt.

Our first significant principal repayments are not due until our senior credit facility matures in April of 2018. Guidance and economic prospects.

Last quarter I mentioned that we were likely to be at the high-end of our EBITDA guidance of $285 million to $305 million. With the strength of our third quarter, we are now raising our EBITDA guidance for the year to $315 million to $325 million.

Our revenue guidance is $880 million to $900 million, which we are reaffirming. In conclusion, we had a great quarter.

In addition to some nice tailwinds in the form of seasonally strong roaming and robust political advertising cycle in Alaska, we had some solid performance in many areas. We’ve used this successful quarter to invest for the future both by making significant capital investments and paying down debt.

We will now be happy to answer your questions. Gabby?

Hey it’s [Mike Allen] from SunTrust. Thanks for taking my questions.

Sure.

You covered most of them but I wanted to understand a little bit better the strong backhaul demand that you talked about in the press release. Is that growth coming from new Verizon towers primarily and is there still an opportunity to grow backhaul revenues or should we think about that as flat going forward?

Mike, we combine roaming and backhaul, basically it accomplishes the same goal, which is providing service to other carriers whether they choose to do that by actually building a cell tower and getting connectivity to their switch or whether they choose to have AWN provide roaming services. So, that’s the issue there and there will be a trade off going forward with how much the carriers choose to build out on their own, in which case we will get more backhaul revenue and how much they choose to have AWN carry the traffic in which case the roaming would be stronger.

Understood. I guess it could be both or just one or the other, is that right?

Yes, we’re not breaking that out Mike.

Okay. All right, thanks.

I appreciate it.

You bet.

Hi, thanks very much. I’ve got a couple of questions.

One, I just wanted to understand how we should think about the longevity of the roaming strength and how you guys think about it or foresee that?

We’re still struggling with how to project roaming; we’re just completing our first full year of consolidated roaming experience. It has been stronger than we expected.

We expect to see a tail off at some point as Verizon builds out, but their build out plans are uncertain at this point; we’re also trying to assess how much impact their sale in the local market to Alaska customers will have on roaming, because as you know when customers, the Verizon sells in the stores here, will not go outside the Verizon, that traffic ends up on our network and the Verizon footprint currently is pretty small. I’m confident that there will be long run revenues for roaming from both Verizon and Sprint well into the future, because Verizon simply isn’t going to be build up the network and Sprint is unlikely in the near future to build anything up here.

I’m also fairly confident that over the long-term, multiple years, roaming revenues drop, but I don’t think we’re in a good position yet to really assess how rapidly that drop will occur. The really -- in addition to the fact Verizon can reduce those revenues by building out although as Peter just discussed, if we win the backhaul business that leads to more backhaul revenue.

There is also the underlying growth in bits per phone. And even with some build out, roaming could remain constant, because the amount of data that people are putting through their phones increases over time.

And certainly right now, with the carried or slashing data prices and doubling data package sizes, average data used per phone is going up. It’s really, really difficult to forecast what the effects of build offset by increasing revenue per phone and places when build out doesn’t occur will be and how that will impact the network over time.

We’re trying to figure out what we want to budget for next year. I wish I had a good answer for you.

If you take a 10-year view, it’s clearly going down. Will it go away completely over 10 years?

No. Can I give you better guidance?

I’m sorry, not now. And it maybe that the best guidance only comes out of the rear view mirror.

Okay. Well, at least it made me feel better, because if my modeling is off, if you guys are struggling with it as well, then that’s good to know.

If you’ve got more knowledge, you could share that with us.

Okay. Secondly, I want to understand what debt was down in the quarter?

Yes, there is two pieces of that [Anna]. The first is some RUS debt; and we paid down, you’ll see this coming out in the Q a little bit here.

But we paid down about $25 million that relates to RUS debt in the TERRA build out. And then most of the remainder came in the form of line of credit pay down.

So that’s less of a permanent pay down there that’s available for us to drawdown should the need occur there.

Okay. And then just I wanted to understand the decision to use the cash in the quarter, projected pay down and where you are on kind of share buyback appetite?

Yes. I think look, this was an extraordinary quarter as we mentioned and we wanted to do some things that would have some real long-term benefit as far as the CapEx and the debt pay downs.

We’re as we mentioned, a little bit -- the crystal ball is not completely clear on the roaming. And so we held back a little bit on the stock buybacks.

But the theory hasn’t changed here. If the pricing and the liquidity and the market conditions are all right, we will be back in buying stock.

Okay. Thanks very much.

Thank you, Anna.

Hi, thanks. Mostly just follow-ups.

I guess on the roaming question sort of my untrained eye, it did not look like you guys were registered as eligible bidders in the AWS 3 auction. I was wondering if you could just confirm that.

And as part of that, obviously there is new spectrum that will be coming to market and spectrum is the big advantage that you have in Alaska, you have the most of it and you have it across multiple bands, which gives you flexibility in the joint venture about how you operate wireless. Can you just talk about what you think the competitive balance sort of looks like as more spectrum becomes available given that it seems like you’re not really looking to participate at least in the current auction?

Okay. I’m looking at the words to make sure that I’m allowed to tell you that you’re right that we’re not indeed registered in the auction frankly because we’re not -- that’s no longer confidential information.

You’re correct we did not enter that auction. We believe our current spectrum footprint with one or two issues around the margin that we expect we can resolve in the private aftermarket is more than sufficient for our needs in the near-term.

So, I would expect to see our investment grow into building out the spectrum we have rather than acquiring any additional amounts of spectrum. And I think that’s probably a pretty good assessment for the next couple of years.

We would like to get a little bit of stuff in the lower bandwidth area in a few places, but there is some available in the secondary market and I think we’ll be able to solve our needs there. And I don’t expect to make any material capital investments in spectrum acquisition.

And are there, I guess when you talk about the secondary market with low band, are those broadcast assets that would have some low bands spectrum availability similar to the broadcasters in the Lower 48 who have sort of given the SEC a little bit of a headache with this incentive auction?

No, it’s spectrum that was originally sold or provisioned for (inaudible) wireless that’s just [line] fellow some of which has a build out requirement which the existing owners are likely to be able to meet.

Got it, okay. And then Pete just a question on the capital structure, obviously you have the ability to refinance some higher cost debt here coming up.

Could you just sort of remind us on your views of the capital structure and how that sort of works in how you guys are thinking about CapEx and any thoughts you might have on the refinancing opportunity for the 8.125%?

I think it basically comes down to a spreadsheet exercising Anthony. We still got five years to run on our 2019 bonds which I think is really the one that you’re referring to.

I think the rest of our capital structure is in pretty good shape. We’ve got the 2021 switch are 6.75 quarters, good 6.5 year money out there; we’ve got the senior credit facility nailed down for another several years here.

But the 2019 8.125%, so a little bit out of market as far as the interest rate. Our challenge is that we would have to pay about a 4.3% call premium to call those bonds between now and next November.

And on top of that there would be some fees that would be involved that would make the cost fairly significant. And so, if the interest rates come down from where they’re at right now, we’d be happy to refinance those, but we still got five years to run.

So if they don’t, we’re certainly not obligated to run out and do anything over the next 12 months to 24 months here.

And I guess that sort of answers the follow-up question, which is would you think about using part of your secure debt capacity to take care of that which has a much lower costs, but it sounds like you’d rather preserve that.

Yes, we’re really not looking to go further into the capital structure there at this point. But in my mind, hopefully this quarter will bode well for our bond pricing, hopefully the overall margins improved and a refinancing opportunity presents itself, but there is nothing that says we have to Anthony.

Okay, great. Thank you very much.

You bet.

It looks like that might be a wrap there.

Okay. Well, thank you very much for participating.

Tom and I are around if you any follow-up questions and we’ll look forward to talking with you again here the first week of March for the year-end results. Thank you very much.