Liberty Broadband, the holding company with a commanding stake in Charter Communications, is a familiar name in the investment world. Its strategy, built on the robust growth of cable broadband, is straightforward and successful. But lurking beneath the surface, concealed within the newly acquired GCI Liberty, lies a story that deserves a closer look. While most analysts are fixated on Liberty Broadband's Charter stake and the maneuvering around its ownership cap, a quieter revolution is taking place in the Alaskan telecom landscape. GCI Liberty, now fully absorbed into Liberty Broadband, is proving to be far more than a passive asset. It's a dynamic entity delivering robust growth and potentially poised for even greater things.

GCI, the Alaskan telecom giant, has quietly been racking up impressive numbers. Revenue is soaring, with a 9% increase for the full year 2020 and an eye-popping 12% in the fourth quarter. Adjusted OIBDA, a key measure of profitability, has witnessed a staggering 34% jump for the year, landing at an all-time high. This remarkable performance is partially attributed to pandemic-driven data demand, reduced bad debt, and cost-cutting measures. But GCI's success runs deeper than simply riding favorable macro trends. The company has been strategically repositioning itself, shedding its broadcast TV business and streamlining its operations to focus on its core strength: the Alaskan network.

This strategic shift is paying off handsomely, reflected in GCI's impressive cable modem subscriber additions, nearly 14,000 in the fourth quarter alone. But perhaps the most intriguing development is the rollout of Alaska's first 5G network. This puts GCI at the forefront of a technological wave in a geographically challenging and often underserved market.

Here's where the hypothesis gets interesting. What if GCI is not merely a solid performer within Liberty Broadband, but the catalyst for a new growth chapter in the holding company's story? Let's consider the numbers. GCI's debt leverage has plummeted from 5.1x in 2019 to a healthy 3.5x. Moreover, the company boasts a substantial cushion under its maximum leverage covenant of 6x, providing ample room for strategic investment.

Combine this financial strength with the strategic shift towards data and 5G, and you have a company primed for expansion. The $174 million in recent RHC payments further strengthens GCI's financial position, enabling aggressive network expansion and potentially even strategic acquisitions within the Alaskan market.

GCI Revenue and Adjusted OIBDA Growth

The chart below showcases the strong growth trajectory of GCI, highlighting its revenue and adjusted OIBDA figures.

Now let's compare this to Liberty Broadband's Charter strategy. While the steady cash flow from Charter share sales is being diligently deployed to buy back Liberty Broadband stock, this approach is essentially a value play, aiming to close the discount between the holding company and its underlying asset. GCI, on the other hand, offers the potential for organic growth and potentially even expansion through M&A, creating a new avenue for value creation within Liberty Broadband.

The takeaway is this: GCI Liberty might be the quiet giant within Liberty Broadband, offering a compelling growth story that extends beyond the familiar narrative of Charter dominance. As GCI continues to deliver stellar performance and strategically leverage its 5G advantage, it has the potential to reshape Liberty Broadband's future, transforming it from a cable-centric holding company into a diversified telecom powerhouse.

"Fun Fact: Did you know GCI is responsible for bringing the internet to over 70% of Alaskans? It's a testament to their commitment to connecting a vast and geographically challenging state."