GCI Liberty, Inc.

Okay. Thank you, Beth.

And thank you for joining us today. I am Pete Pounds, the Company’s Chief Financial Officer.

Ron Duncan, our President and CEO is 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.

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 888-296-6945 with an access code of 7461.

In addition to the conference call, you may 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 next 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 fourth quarter continued the trend of solid operational and financial numbers for the year and this has allowed us to attain record performances in a number of areas. For EBITDA we achieved 323 million for the year that’s an increase of $56 million or 21% over 2013.

On a year-over-year basis quarterly we attained $71 million of EBITDA in the fourth quarter that’s an increase of 3 million over the fourth quarter 2013. Both the annual and fourth quarter numbers represent record performance.

With respect to our consumer high speed data customers we finished the year with 119,100 customers that’s an increase of 3,800 customers for the year with 2,100 of those coming in the fourth quarter. This also represents a new record for GCI.

On the wireless front we increased our subscribers by 8,100 lines for the year and 2,700 for the quarter. You may recall that Verizon entered the retail market in Alaska September of 2014.

AWN transaction, on December 4 of last year we announced that we were acquiring ACS's one-third ownership stake in AWN and their wireless customers for approximately $300 million. The numbers are still preliminary but it appears that there were approximately 87,000 subscribers in good standing as of the February 2, 2015 closing.

While this is meaningfully fewer customers than were reported by ACS on September 30 of 2014, the financial impact is expected to be minimal based on a combination of low ARPU, reduced phone subsidy requirements and the estimated $4.4 million purchase price reduction related to subscriber attrition. You may recall that we mentioned three primary reasons for the transaction.

First, GCI is now the 100% owner of AWN and we can now make decisions based solely on what is best for GCI and our customers. Second, GCI now has substantially increased scale in our retail wireless business.

And third, this generates a material increase in our levered free cash flows as we replaced 45 million to 50 million a year in preference payments to ACS with approximately [$15 million] in additional interest payments on the acquisition debt. I am also pleased with the simplicity that this brings to our capital structure.

It will now be fairly straight forward to determine our EBITDA and our debt going forward. As for the customer transition a tip of the hat to the operational teams at both ACS and GCI that are working diligently to make sure that our customers are taken care of and transitioned with excellence.

We have the option of continuing to outsource customer service to ACS for the next five months but we anticipate being able to transition over to GCI customer service well in advance of that. On to the wireless segment.

For the quarter the wireless segment posted revenues of $62 million representing a slight decline over 2013 and a seasonal decline of $15 million sequentially. Roaming and backhaul revenues for the quarter were 23 million which represented a $2 million decline over the fourth quarter of 2013 and a $15 million over the seasonally strong third quarter.

Adjusted EBITDA for the wireless segment was 33 million down 1 million or 3% on a year-over-year basis and the seasonally lower roaming lead to a sequential decline in EBITDA of $14 million. On an operational level AWN has continued to roll out LTE in the urban core of Alaska and has expanded 3G data service to over a dozen rural communities, including Bethel, Kotzebue, and Nome.

This is tangible progress in GCI's commitment to provide fast, reliable wireless services throughout Alaska. We have the fastest LTE service and the largest wireless network in the state and we continue to invest in that network.

Wireline segment, the wireline segment revenue for the quarter was 167 million that compares with 156 million in the fourth quarter of 2013 and 164 million in the third quarter of 2014. This growth was seen in wireless, data and video for both the year-over-year and sequential comparisons, as expected voice revenues continue to be challenged.

Wireline adjusted EBITDA was 38 million for the quarter and that compares with 46 million in the third quarter of 2014 and 34 million in the fourth quarter of 2013. The sequential decline is due to the seasonal uptick in SG&A.

Traditional culprits such as healthcare costs and increased promotional activities were again driving factors. However we also had costs that were associated with the AWN transaction.

Turning now to specific customer groups within the wireline segment. Consumer revenues of 76 million were up $7 million on a year-over-year basis and 4 million sequentially.

These increases were attributable to growth in wireless, data and video products. And the subscriber metrics for consumer were excellent.

Cable modem subscribers were up 2,100 for the quarter and ARPU increased by $2.81 to $83.01. A good portion of the improvement comes from the success of our March to a Gig program which has also served to improve churn.

Video subscribers were also up 500 for the quarter reversing prior trends. As the success is driven in part by the popularity of the TiVo and GCI GO products which have expanded substantially over the past several quarters.

GCI wireless subscribers have also been increasing with 2,700 net adds in the past quarter. This growth is particularly noteworthy given that it comes on the fields of Verizon's retail entry into the Alaska market this last September.

Business services. Business services had revenues of $58 million plus a $2 million gain on a year-over-year basis and $1 million decline on a sequential basis.

The year-over-year gains from the addition of the Denali Media were mostly offset by declines in voice. Managed broadband.

Managed broadband revenues for the quarter were 32 million which were relatively flat compared to the prior quarter but up $2 million from the fourth quarter of 2013 revenues which were 30 million. This increase year-over-year is a continuation of the success of the TERRA project in serving the needs of healthcare and education customers in rural Alaska.

The TERRA microwave system has now been extended as far north as Kotzebue while the TERRA-Yukon system now extends to Galena from the east. Capital expenditures, for the year our core cash capital expenditures totaled 164 million slightly under our guidance of approximately 170 million.

Liquidity, we ended the quarter with $50 million in cash on the balance sheet and $88 million in availability on our line of credit. With total current maturities of $9 million we have more than adequate liquidity.

Please bear with me as I walk through what I believe would be the last of the challenging leverage calculations. Our net debt was approximately 1.1 billion at year-end which given our minimal cash on hand approximates gross debt.

To this I added the $300 million purchase price for AWN which was borrowed to obtain pro-forma debt of 1.4 million or billion. Given our EBITDA of 323 million this leaves our pro-forma leverage at 4.33 times.

The following is a recap of our financial transactions after year-end. First, we amended our $390 million senior credit facility to allow for a new Term Loan B financing.

Second we closed on our $275 million Term Loan B financing which has a seven year term and is priced at LIBOR plus 375 and has a 1% LIBOR floor. Third at the parent company we issued a $75 million note to Searchlight Capital, the $75 million note is unsecured and is structurally subordinate to all GCI debt.

It bears a 7.5% annual coupon and has an 8 year term. Attached to the notes are stock appreciation rights based on 3 million shares with a strike price of $13 per share.

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

We've met all of our guidance for the year. EBITDA of 323 million was at the high end of the guidance of 315 million to 325 million.

Revenues of 910 million was above our guidance of 880 million to 900 million. We have the following guidance for 2015.

Revenues will be in the range of 920 million to 970 million, adjusted EBITDA will be in the range of 310 million to 335 million which excludes one-time costs of approximately 30 million for the transition of former ACS wireless customers to GCI. Core cash capital expenditures will be approximately $170 million of which approximately 45 million on wireless network projects and approximately 85 million will be on other network and infrastructure projects.

In conclusion 2014 was a great year and it was capped with a great quarter. We are all working hard at completing the AWN transition in all respects.

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

Question-and-answer would be great.

There are a couple of big ones. First of all if you could just give us an assessment of the competitive environment with Verizon Wireless and what the kind of current trends and outlook is both for roaming and backhaul with Verizon.

Secondly given the crash in energy prices I wanted an understanding of how any impacts on the Alaskan economy are impacting your business and outlook?

Okay. We'll try both of those, this is Ron Duncan.

Verizon competitive outlook in the retail market I think we've been surprised that the entry has not been as bigger as we were anticipating. There were a lot of advertisements and a lot of hype but the actual number of ports that we have seen out to Verizon has been relatively limited much lower than I would have anticipated and it doesn't look like there is a tidal wave of ships at least from our network to the Verizon network.

On the roaming front, roaming in general I expect to be flat to slightly down this year. Some of that will depend on what actually happens with Verizon retail market share because Verizon retail market share does increase their roaming bill as their retail customers wander on to the GCI network and whether or not that's issuance to offset the downward trends from the expansion of their network really will depend on how much retail share they gain during the course of the year and we don't have a good handle right now on how that's going to play out but I would expect slightly down but possibly flat for overall roaming revenues for us for this year.

Alaska economy I think we will see very limited if any impact this year from the oil price situation. The result that impact of oil is attenuated both by the large savings accounts that the state has which will cushion it's requirement to engage in drastic budget cuts and by the timeline that the oil companies have in their investment horizon, the stuff that will be built this summer really was design we committed very much in the last two years.

And I think what we will see this year will be very slight -- the state has made some significant efforts to turn the capital budget but there is still a large amount of unexpended state government capital spending in the pipeline we would probably see some impacts to the retail economy in Alaska, I suspect limited but some impacts next year oil prices persist where they are and the longer oil prices stay in the $50 range the more likely it is that we will see increasing impacts on the retail economy in Alaska. But I really expect those to be attenuated by the large amount of cash that the state government has in its current savings accounts and hopefully by some moderate cuts to the state budget to expend that runway.

So near-term it's not an urgency, the government needs to do some things to deal with it long-term, you got to tell me what the projection for the price of oil is before I can tell you how concerned we are.

And then wondering I guess for Pete or you but what was the cash flow in the quarter?

Anna we don't disclose that specifically but if you look through the 10-K that's coming out this afternoon you can calculate that out.

A question for Pete on the guidance, I just want to make sure I understand how to normalize the guidance you gave when comparing it to 2014 actual reported given that you had AWN in there where you would have had just proportionate ownership in AWN for '14 but I am assuming that the guidance includes pro-forma adjusted for AWN, how should we be looking at that to normalize the comparison?

So Anthony we consolidated all of AWN into our financials in 2013 and 2014 and will continue to do that in 2015. So when you look at our overall EBITDA numbers for those years it would include not just our two-thirds stake in AWN in '13, '14 and the start of '15 but a 100%.

So the 323 million of EBITDA for 2014 includes all of the EBITDA and that is comparable with the 310 million to 335 million of EBITDA that our guidance is for 2015. The caveat to the 310 to the 335 is that it is before roughly $30 million of transition expenses to transition the customers over to GCI's network.

Yes, and if we can maybe take it one step further than that obviously you are going to do away with preference payments as a part of this transaction. Could you remind us just what you are saving there on the preference payment elimination that you are saving in comparison to the prior years by consolidating up the part of AWN that you don't own?

Yes so it's really it's a non-EBITDA impacting but what we had was a stream of payments that for the first two years of the agreement ACS would get the first $50 million of free cash flow of which there was more than $50 million free cash flow, so they got their full payment from July 23 of 2013 through February 2 roughly there in for preference payments. That $45 million in the last two years will go away as will the remainder of the first two years at 50 million that will just go to zero, so we will save 45 million to 50 million a year there in its place, we'll put about 50 million of interest expense.

So our levered free cash flow will go up by about $30 million simply on the transaction itself.

So if I could follow-up just on what was mentioned on Verizon. I think at the time Verizon announced its ambitions for wireless the view was one of the real limitations they had in the state was spectrum depths certainly relative to you or relative to AT&T.

And the AWS [three] auction recently concluded and they didn't pick up they certainly didn't run away with the spectrum in Alaska. I guess wonder if how that auction turned out, sort of changes your view on what the competitive landscape can look like going forward especially since it looks like designated entities associated with this picked up a fairly material chunk of spectrum in the state and still haven't necessary articulated their plans on what they might do with that.

I don’t think at the current point spectrum constraints are really impacting any of the Alaska providers. The size and the geography of the market lead us to be a spectrum rich environment when you consider what the various companies have and the lack of -- relative lack of density in the population.

Alaska wireless service is really more an issue of coverage then there is a capacity and the challenges to people entering the market up here are much less related to the availability of spectrum that they are at the footprint of the network the difficulties of backhaul and the costs of building low density network over a broader spectrum. So I don’t think anything we’ve seen in the auctions really changes our assessment.

I expect we’ll see gradual, continued build out of footprint by Verizon overtime, although we’re not sensing any great urgency on their part at this point to do that, and as I said earlier I think the roaming environment is stable to slightly down for us.

And then, any early views I guess on -- I guess it was the North Start wireless entity that did buy a more meaningful chunk, they bought some linking and I think they won all of G-block licenses that were up for auction.

I think that’s a great question for Charlie [indiscernible] on his call.

Hi. Thanks for taking my question.

Just want to touch on the wireless sub decline, what the decline organically if you kind of exclude the sort of non-pay subs that you guys audited out were GCI and/or ACS subs down on an organic basis.

Yes, Michael. What we’ll comment on in our first quarter call is the subs that we acquired really everything that's happened before closing is something that you can certainly bring up on ACS call.

But we’re not providing particular detail other that what I’d already noted that a lot of them were very, very low ARPU subs and so it’s not particularly harmful from the financial perspective.

Okay, got it. And then just a follow up question, TERRA project spending on that, is that complete now or there is still more spending in 2015 on that?

Yes, we’re still continuing to spend, there is going to be several more years of spend on that. Ultimately we’ve talked about ringing that network.

The part that we have left to ring it is a very, very sparsely populated area with very, very challenging to rain. So that’s going to be a multiyear project.

So yes, we do have some spend there.

Thanks for taking the question. Just a few real quick ones, can you talk about the outlook in 2015 for wireless USF revenue, should that be up/down flat or are there any changes to that mechanism or spending levels.

That’s my first question. Second question, your managed broadband business has been expanded by the TERRA network has done really well.

It’s grown revenue it looks like 8% the last couple of years. Is the outlook for still strong revenue growth, there are similar revenue growth going forward or have the major opportunities in that business load since you’ve kind of grab the low hanging fruit.

Jeff, this is Tina Pidgeon. I’ll take the wireless USF question.

Right now there are really three factors that tend to keep that survey constant overall identified those factors with caveat that are subject to SEC -- So the regulatory processing can change. First on the urban side the support is under phase down except that phase down is frozen unless and until the SEC identifies a successor mechanism which it hasn’t yet done.

On the remote Alaska front which is essentially for areas with the exception of Anchorage, Fairbanks and Juneau broadly defined, that fund is capped and so basically the demand for that fund is exceeds what the cap is and because of the relatively large merchant share that GCI has under the cap because of our broad footprint that means the subscribers move around. It doesn’t have a huge effect on what each of the participants in that fund receive, so I guess I would call that subject to market share movement but relatively stable.

Then the third factor as I stated the SEC is still in the process of universal service reform but they have consistently pledged other areas of reform first in front of wireless and are still in the midst of finalizing the different factors that they would have to implement the price cap universal service changes under the Connect America funds too, so I know they have some steps in front of them to complete or fully implement that segment which tends to suggest that if they get to wireless USF it will be in the latter of the year. But it's really a little bit tough to see them doing that this year, at this point given what they have in front of them?

Okay and Jeff on the managed broadband front I think that we'll continue to see some growth there I don't expect it to be as robust as it has been in the past. I think that we've characterized it as there is no longer a Bolus of growth there and I think that's still true today.

On wireless, very good results especially with Verizon coming into the market. I wanted to better understand how you are doing it and what you are going -- last time I visited some of your stores in September I noted some customer service challenges and I know you are investing to improve the customer service experience.

So where are we in that process and if I were to walk in some of the stores today, how has that experience changed vis-à-vis several months back?

So Barry first of all you are certainly welcome to come up at any time, we'd be happy to give you a tour of our stores. I think that there is really two things that have happened that have been significant over the last year here.

First of all we've made a real concerted effort to beef up our network and we talked about growing our LTE footprint and we've talked about the significant capital dollars that we have spent in our wireless network this year. As you look at primary competitor like AT&T in the market, that's a network that has been there literally for decades and we really entered the market on a facilities basis here in 2008, so we're six or seven years into our network and we've had some real substantial improvements in our network.

That’s why we spent the money that we did in 2014 and it's having an impact. Secondly we've made a real commitment to up the number of employees that we have in our stores to make sure that we have -- our customers taken care of efficiently and effectively and so that increase in the number of customer service reps in the stores has really helped out matters there.

Okay. And then I also want to get an update on what's going on with Denali you have owned those properties for some time now.

If you could talk a little bit about some of the progress I know if you have any data on, ratings in the market. And then anything that you have done or we have on Verizon from a synergy standpoint broadcasting the news on your cell phones and things like that?

Yes I guess we don't have anything specific to lay out there for ratings at this point. I would point out that you have seen the results and our financial numbers we had $50 million spent on the Senate campaign up here in Alaska that was obviously beneficial.

We did combine the sales groups for both the cable side and the broadcast side, so that’s some synergies that we've seen there, we're real pleased with the way that the team is coming together there at Denali Media it's a really crisp news programming that they offer and we're able to use some of that programming for our channel one, so some real good news there. I can't give you great specifics on ratings at this point now Barry.

I just wanted to follow-up on the earlier regulatory revenue question with respect to CaF2 and whether you saw if there were some incremental revenue opportunities based upon how the final CaF2 proposals shook out for broadband deployment in the rural areas?

We really don't know the answer to that yet because CaF2 at this point is only affecting ACS is the only price [kept] here on this stage. And the next step in the process is to understand which of [the census blocks] they are actually eligible to receive support in.

And then of those -- what their actual election is, so whether they will accept the service obligations that go along whether there will be an auction for service in certain locations. So those are matters that are still open to at this point.

Okay. Well, thank you all very much for joining us.

We’ll be around the first week of May to discuss our first quarter 2015 results. Thank you very much.