Q3 2023 United States Cellular Corp Earnings Call
Speaker 1: She's on it.
Yeah.
Please standby were about to begin.
Speaker 2: Good morning, ladies and gentlemen, and welcome to the TDS and US Cellular third quarter 2023 operating results conference call.
Good morning, ladies and gentlemen, and welcome to the Tds and U S. Cellular third quarter 2023 operating results conference call. At this time all participants are in a listen only mode and please be advised that this call is being recorded.
Speaker 2: At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded.
Speaker 2: After the speakers prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone, and if you would like to withdraw your question, simply press star one again. Now at this time, I'll turn things over to Ms. Colleen Thompson, Vice President, corporate relations. Please go ahead, ma'am.
After the Speakers' prepared remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star one on your telephone and if you would like to withdraw your question simply press Star one again not at this time I'll turn things over to MS. Colleen Thomson Vice President Corporate Relations. Please go ahead ma'am.
Speaker 3: Good morning and thank you for joining us. We want to make you all aware of the presentation we have prepared to accompany our comments this morning, which you can find on the investor relations section of the TDS and US Cellular website.
Good morning, and thank you for joining us we want to make you all aware of the presentation. We have prepared to accompany our comments. This morning, which you can find on the Investor relations sections of the Tds and U S cellular websites.
Speaker 3: With me today in offering prepared comments, are from TDS Vicki Villa Cres, Executive Vice President and Chief Financial Officer. From US Cellular, LT Theravol, President and Chief Executive Officer, Doug Chambers, Executive Vice President, Chief Financial Officer and Treasurer, and from TDS Telecom, Michelle Brookwicky. Senior Vice President and a Finance and Chief Financial Officer.
With me today and offering prepared comments are from Tds sticky Villa Kress Executive Vice President and Chief Financial Officer from U S. Cellular LTE terrible President and Chief Executive Officer, Doug Chambers, Executive Vice President and Chief Financial Officer, and Treasurer and from Tds Telecom, Michelle broke lakey senior Vice.
<unk> of finance and Chief Financial Officer.
Speaker 3: This call is being simultaneously webcast on the TDS and US Cellular Investor Relations website.
This call is being simultaneously webcast on the Tds and U S cellular investor relations websites.
Speaker 3: Please see the websites for slides referred to on this call, including non-gap reconciliation.
Please see the websites for slides referred to on this call, including non-GAAP reconciliations.
Speaker 3: We provide guidance for both adjusted operating income before depreciation and amortization or OIPDA and adjusted earnings before interest taxes, depreciation and amortization or EBITDA to highlight the contributions of US Cellular's wireless partners.
We provide guidance for both adjusted operating income before depreciation and amortization or OIBDA and adjusted earnings before interest taxes, depreciation and amortization or EBITDA to highlight the contributions of U S Cellular's wireless partnerships.
Speaker 3: TDS and US Cellular filed their SEC forms 8K, including the press releases, in our 10 cues earlier this morning.
Tds and U S cellular filed their SEC forms 8-K, including the press releases and our 10-Qs earlier this morning.
Speaker 3: As shown on slide two, the information set forth in the presentation and discussed during this call contains statements about expected future events and financial results that are forward looking and subject to risk and uncertainty.
As shown on slide two the information set forth in the presentation and discussed during this call contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties. Please.
Speaker 3: Please review the safe harbor paragraphs in our press releases and the extended version included in our SEC filing.
To review the Safe Harbor paragraphs in our press releases and the extended version included in our SEC filings.
Speaker 4: And with that, I will now turn the call over to the key bill of press. Diggy? Okay, thank you, Colleen, and good morning, everyone. Before we get into the details for the quarter, I want to reiterate that, as we announce, in connection with last quarter's earnings call, the Board of Directors of TDS and US Cellular have each decided to initiate a process to explore strategic alternatives for US Cellular.
And with that I will now turn the call over to Vicki Bill or Chris Vickie. Okay. Thank you Colin and good morning, everyone before we get into the details for the quarter I want to reiterate that as we announced in connection with last quarter's earnings call. The board of directors of Tds and U S cellular have each.
Decided to initiate a process to explore strategic alternatives for U S cellular.
Speaker 4: We are not going to comment on that process at this time, however to say that it is active and ongoing. With that, let's get into.
We are not going to comment on that process. At this time, however to say that it is active and ongoing.
With that let's get into the details for the quarter.
Speaker 4: I'm pleased that both business units delivered your over-your improvements in Adjusted EBITDA. Due to cost, optimization programs, and efforts to streamline expenses across almost every part of the enterprise.
I'm pleased that both business units delivered year over year improvements in adjusted EBITDA due to cost optimization programs and efforts to streamline expenses across almost every part of the enterprise.
Speaker 4: At the same time, we continue to make key network investments in order to take advantage of growth opportunities that can enhance our competitive position.
At the same time, we continue to make key network investments in order to take advantage of growth opportunities that can enhance our competitive positions.
Speaker 4: Year to date, through September , U.S. cellular made steady progress delivering, reducing short and long-term debt by approximately 340 million, while generating free cash flow. We also renewed the EIP facility for another two years at a very attractive rate.
Year to date through September U S. Cellular made steady progress delevering, reducing short and long term debt by approximately $340 million, while generating free cash flow. We also renewed the AIP facility for another two years at a very attractive rate.
Speaker 4: PDS was also opportunistic and entered into a 300 million secured term loan in order to fund our five-hour expansion program. And while investing back into both our businesses as a priority, the current interest rate environment and access to capital remain a challenge.
GDS was also opportunistic and entered into a 300 million unsecured term loan in order to fund our fiber expansion program and while investing back into both our businesses as a priority. The current interest rate environment and access to capital remain a challenge going forward, we will pace and assai.
Speaker 4: Going forward, we will pace in size our capital expenditures in order to remain within our funding capacity and leverage ratio thresholds. Even if it means moderating, our spend in the near term.
Our capital expenditures in order to remain within our funding capacity and leverage ratio thresholds, even if it means moderating our spend in the near term.
Speaker 4: As you can see on slide three at the end of the quarter, TDS and U.S. sailors combined have available sources of liquidity, including cash and other sources.
As you can see on slide three at the end of the quarter Tds and U S. Cellular combined have available sources of liquidity, including cash and other sources.
Speaker 4: We have long data debt extending any sizeable maturities until well into the future. This helps us to manage the balance sheet effectively by keeping short-term maturities to a minimum. While we are investing to deploy fiber in new communities and continuing our multi-year mid-band deployment. With that, I'll now turn.
We have long dated debt extending any sizeable maturities until well into the future. This helps us to manage the balance sheet effectively by keeping short term maturities to a minimum while we are investing to deploy fiber and new communities and continuing our multiyear mid <unk>.
<unk> deployment.
With that I'll now turn it over to L. T.
Speaker 5: Thanks, Vicki. Good morning, everybody. If we turn to slide five.
Thanks, Vicki and good morning, everybody, if we turn to slide five.
Speaker 5: Even with the August 4th announcement of the review of strategic alternatives for US Cellular, it's important that we remain focused on operating the business to produce the best operational and financial results possible. And I'm pleased to update you on our progress.
Even with the August 4th announcement of the review of strategic alternatives for U S. Cellular.
Important that we remain focused on operating the business to produce the best operational and financial results possible and I'm pleased to update you on our progress this morning.
Speaker 5: First and foremost, our top priority remains improving our customer trajectory, while balancing subscriber growth with financial discipline, while financial results are on track, driving subscriber growth additions remains our primary challenge amidst a very challenging competitive environment.
First and foremost our top priority remains improving our customer trajectory, while balancing subscriber growth with financial discipline, while financial results are on track driving subscriber gross additions remains our primary challenge amidst a very challenging competitive environment.
Speaker 5: Post paid ARPU with a highlight again this quarter, increasing 2%. As the team has done an excellent job in helping our customers realize the value of our premium plans and service.
Postpaid <unk> was a highlight again this quarter, increasing 2%, but the team has done an excellent job in helping our customers realize the value of our premium plans and services.
Speaker 5: And this arpeggroates was particularly impressive, given the significant number of flat rate customers that we added to the base.
And this ARPA growth was particularly impressive given the significant number of flat rate customers that we added to the base.
Speaker 5: These flat rate plans were designed to compete against the wireless offers that cable companies have been flooding the market with. And we're seeing strong adoption, almost 40% of post-paid handset gross ads and the quarter on those flat rate plans.
Is flat rate plans were designed to compete against the wireless offers the cable companies have been flooding the market with.
And we're seeing strong adoption almost 40% of postpaid handset gross adds in the quarter on those flat rate plans.
Speaker 5: We remain pleased with our flat rate plan performance, and I'll remind you that these plans deliver similar lifetime economics as our other offerings, since the cost of the device is...
We remain pleased with our flat rate plan performance and I'll remind you that these plans deliver similar lifetime economics as our other offerings.
The cost of the device is borne by the customer.
Speaker 5: Another accomplishment in the quarter was that adjusted, a wipe done, adjusted, EBITDA improved significantly, up 35% and 28% respectively over the past year.
Another accomplishment in the quarter was that adjusted OIBDA, and adjusted EBITDA improved significantly up 35% and 28% respectively over the past year.
Speaker 5: We were free cash flow positive in the quarter and for the nine months ended in 2023 and we expect to be for the full year.
We were free cash flow positive in the quarter and for the nine months ended in 2023, we expect to be for the full year.
Speaker 5: really pleased with the cost efficiency that our team has driven, particularly in that challenging competitive environment.
I'm really pleased with the cost efficiency that our team has driven particularly in that challenging competitive environment.
Speaker 5: Speaking of the competitive environment, as it relates to driving subscriber grotesque, we're being very targeted and deliver it with our promotional spend.
And speaking of the competitive environment as it relates to driving subscriber growth, we're being very targeted and deliberate with our promotional spend.
Speaker 5: pulsing campaigns from time to time based on various factors in a given market. As we head into the busy holiday selling season, you'll see us running a number of aggressive promotions designed to target new subscribers.
<unk> campaigns from time to time based on various factors in a given market and.
As we head into the busy holiday selling season, you will see us running a number of aggressive promotions designed to target new subscribers.
Speaker 5: as well as in sent upgrades for our existing customers and thus increase the percentage of customers in control.
As well as incent upgrades for our existing customers and thus increase the percentage of customers and contract.
Speaker 5: And those aggressive promotions are needed because the market for wireless customers is certainly what I would characterize as fiercely competitive.
And those aggressive promotions are needed because the market for wireless customers is certainly what I would characterize as fiercely competitive.
Speaker 5: That competition includes our traditional competitors, AT&T, Verizon, T-Mobile.
And that competition includes our traditional competitors AT&T Verizon T mobile.
Speaker 5: but also increasing insignificant pressure from the cable companies that resell wireless. Those now compete with us in about 60% of our foot.
But also increasing and significant pressure from the cable companies that resell wireless those now compete with us in about 60% of our footprint.
Speaker 5: This year's Apple launch is a good example. You saw hyperaggressive offers in the market. It's important to note that cables combined pricing and promotional tactics for pressuring industry are...
This year the Apple launch is a good example.
Saw hyper aggressive offers in the market <unk>.
It's important to note that cable is combined pricing and promotional tactics are pressuring industry RP.
Speaker 5: These competitive dynamics result in ARP who in margin pressure, and that subsequently challenges the ability to invest in network capacity and future technology developments. This is a really important shift in dynamics for our industry.
These competitive dynamics result in RP win margin pressure now subsequently challenges the ability to invest in network capacity and future technology developments and this is a really important shift in dynamics for our industry.
Speaker 5: While I think our results show that we're striking a balance between scriber growth and financial results.
Well I think our results show that we're striking a balance between subscriber growth and financial results.
Speaker 5: As an industry, we should be focusing on the actions required to balance competitive pricing with the investment capacity required to effectively keep the US globally competitive.
An industry, we should be focusing on the actions required to balanced competitive pricing with the investment capacity required to effectively keep the U S globally competitive.
Speaker 5: Turning to growth initiatives, our third party tower revenues had a matter strong quarter. Revenues up almost 8%.
Turning to growth initiatives, our third party tower revenues had another strong quarter revenues up almost 8%.
Speaker 5: The wireless industry's moderated capital expenditures in 23, we've experienced a slowdown in new tenant and amendment activity in the second and third quarters. And I do expect that will impact tower revenue growth rates in 2024.
The wireless industry is moderated capital expenditures and 23, we've experienced a slowdown in new tenant and amendment activity in the second and third quarters.
I do expect that will impact tower revenue growth rates in 2024.
Speaker 5: That being said, we still believe we're uniquely positioned in the tower of space and I think we have a lot of opportunity to grow.
Being said, we still believe we are uniquely positioned in the tower space and I think we have a lot of opportunity to grow.
Speaker 5: Fixed wireless continues to be a bright spot for us. Fixed wireless revenues were up 35%. We finished the quarter with 106,000 cuss.
Fixed wireless continues to be a bright spot for us fixed wireless revenues were up 35%. We finished the quarter with 106000 customers.
Speaker 5: To date, the vast majority of those subscribers are running entirely on low-band spectrum. We expect strong subscriber-earth to continue with the launch of our mid-band spectrum.
To date, the vast majority of those subscribers are running entirely on low band spectrum, we expect strong subscriber growth to continue with the launch of our mid band spectrum.
Speaker 5: We're pleased that we received access to CBAN Spectrum a few months earlier than planned, and we're consequently able to further improve our 5G network experience faster than initially anticipated.
I'm pleased that we received access to C band spectrum, a few months earlier than planned.
Consequently, able to further improve our <unk> network experienced faster than initially anticipated.
Speaker 5: As mentioned earlier this year, we've been upgrading a number of sites so they can be deployed as soon as we received midband clearance.
And as mentioned earlier this year, we have been upgrading a number of sites. So they can be deployed as soon as we receive mid band clearance.
Speaker 5: So those sites are now operational. They allow us to bring faster speeds and more capacity to mobile and to our fixed wireless customers. And we're doing that earlier than we expect.
So those sites are now operational and they allow us to bring faster speeds and more capacity to mobile into our fixed wireless customers and we're doing that earlier than we expected.
Speaker 5: Our midband deployment is multi-year, like all of our deployment.
Our mid band deployment is multi year like all of our deployments.
Speaker 5: By the end of 2024, almost 50% of our data traffic will be carried on sites that are equipped with mid
By the end of 2020 for almost 50% of our data traffic will be carried on sites that are equipped with mid band.
Speaker 5: And where we've enabled midband, we're marketing a 300 megabit fixed wireless product. And that's really competitive in the market.
And where we've enabled mid band, we're marketing a 300 megabit fixed wireless product and Thats really competitive in the marketplace.
Speaker 5: And briefly, on average, our fixed wireless subscribers are using about 170 gigabits per month this year. That's significantly lower than our peers.
And briefly on average our fixed wireless subscribers are using about 170 gigabits per month. This year are significantly lower than our peers.
Speaker 5: However, I do expect that our customers usage is going to grow as they get access to the upgraded mid-vanics.
However, I do expect that our customers usage is going to grow as they get access to the upgraded midway of experience.
Speaker 5: In one of the note on Network Initiatives, we will be shutting down our CDMA network at the beginning of 2024. We will be shutting down our CDMA network at the beginning of 2024.
And one other note on network initiatives, we will be shutting down our CDMA network at the beginning of 2024.
Speaker 5: Teams done a great job migrating the base away from CDMA dependent devices. Less than 42,000 customers are left. And that's down from 386,000 just 18 months ago.
Jim has done a great job migrating the base away from CDMA dependent devices less than 42000 customers are left and that's down from 386000, just 18 months ago.
Speaker 5: We believe we're going to continue to see more customers migrate over the next several months.
We believe we're going to continue to see more customers migrate over the next several months.
Speaker 5: We intend to reform that spectrum to support our LTE network and we expect to see additional systems operation savings once that CDMA network is fully shut down in 2012.
We intend to re farm that spectrum to support our LTE network.
And we expect to see additional systems operation savings once that CDMA network is fully shut down in 2024.
Speaker 6: As always, I want to thank the team for their hard work and continued dedication. And I'll now turn the call over to Doug Chambers to provide more details on our financial results. Doug, thanks, LT. Good morning. Let's start with the review of customer results and fly.
As always I want to thank the team for all their hard work and continued dedication and I'll now turn the call over to Doug Chambers to provide more details on our financial results. Doug. Thanks, <unk>. Good morning, let's start with the review of customer results on slide six postpaid handset gross additions decreased year over year by 23.
Speaker 6: Post-paid hands-up gross additions decreased your year by 23,000, largely due to the intense competitive environment from traditional carriers and MVNOs, as well as a decline in the pool of available...
Largely due to the intense competitive environment from traditional carriers and <unk> as well as a decline in the pool of available customers.
Speaker 6: Correspondingly post-paid, hands-set net additions were down 16.
Correspondingly postpaid.
Handset net additions were down 16.
Speaker 6: Connected device growth and net additions include fixed wireless subscribers. And as LT mentioned, we continue to see great momentum in fixed wireless. With our base of customers up 57% in the prior year and up 10%.
Connected device gross and net additions include fixed wireless subscribers and as LTE mentioned, we continue to see great momentum in fixed wireless with our base of customers up 57% from the prior year and up 10% sequentially.
Speaker 6: Post-paid handset turn decreased your year and increase.
Postpaid handset churn decreased year over year and increased sequentially.
Speaker 6: Financial increase is partially due to seasonality and a decrease in our Philip S.
Sequential increase was partially due to seasonality and a decrease in our in contract customer base.
Speaker 6: Also, we have been experiencing a positive trend in post-paid hand-set churn over the past year, due in part to the aggressive device offers to new and existing customers.
Also we have been experiencing a positive trend in postpaid handset churn over the past year due in part to the aggressive device offers to new and existing customers that we maintain for mid June 2022 through February 2023.
Speaker 6: we maintain from mid-June 2022 to your February 20th.
Speaker 6: Moving to slide seven, prepaid gross additions to climb 10,000, and net prepaid additions decreased 2000.
Moving to slide seven prepaid gross additions declined 10000, and net prepaid additions decreased 2000.
Speaker 6: In terms of gross additions, the overall pool of available customers to climb year-over-year, which we believe is partially driven by competitively priced post-paid
In terms of gross additions the overall pool of available customers declined year over year, which we believe is partially driven by competitively priced postpaid offerings.
Speaker 6: Now let's turn to the financial results starting on slide eight. Total operating revenues for the third-
Now, let's turn to the financial results starting on slide eight.
Total operating revenues for the third quarter decreased 11%.
Speaker 6: In the industry, we saw a decline in upgrade rates contributing to the lower equipment.
<unk> with the industry, we saw a decline in upgrade rates contributing to the lower equipment sales.
Speaker 6: Service for our new decline 2% due to a decrease in our average retail subscriber base and roaming.
Service revenue declined 2% due to a decrease in our average retail subscriber base and roaming revenue.
Speaker 6: Inbound warming revenue declined 53% as a result of the negotiating lower rates with other care.
Inbound roaming revenue declined 53% as a result of negotiating lower rates with other carriers noted this decrease in inbound roaming revenue was almost entirely offset by a corresponding decrease in our outbound roaming expense. Despite a 58% increase in our off net data traffic.
Speaker 6: Note that this decrease in inbound roaming revenue was almost entirely offset by a corresponding decrease in our outbound roaming expense, despite a 58% increase in our off-net data trap.
Speaker 6: On the positive side, LT mentioned the increase in post-bed arms.
On the positive side LT mentioned the increase in postpaid ARPA.
Speaker 6: This increase is partially driven by increased device protection road news and favorable plan and product offering makes as resulted customer adoption of a higher value higher tier
This increase was partially driven by increased device protection revenues and favorable plan and product offering mix as a result of customer adoption of our higher value higher tier plans. We continue to see consistent growth in our highest tiers of unlimited plans and as of the end of the quarter, 46% of our postpaid handset customers.
Speaker 6: continue to seek consistent growth in our highest tiers of unlimited plans and as of the end of the quarter, 46% of our post-paid handset customers are now on these higher
Our now on these higher tier plan clients and Thats up from 38% just one year ago.
Speaker 6: clients and that's up from 38% just one year ago. Now let's turn.
Now, let's turn to tower results on slides nine and 10 as you can see the business delivered another strong quarter with 8% revenue growth, including U S. Filer sites. Our tower tenancy ratio is currently 154 upfront 146, just two years ago.
Speaker 6: As you can see, the business delivered another strong quarter with 8% revenue.
Speaker 6: Including US either side, our tower-tancy ratio is currently 1.54. Up from 1.46.
Speaker 6: We've also added a couple of additional disclosures this quarter to provide you with insight into both the geographical diversity and career composition of our tower portfolio.
We've also added a couple of additional disclosures this quarter to provide you with insight into both the geographical diversity and carrier carrier composition of our tower portfolio.
Speaker 6: As we note last quarter, our towers are well positioned, gee, grab.
As we noted last quarter, our towers are well positioned geographically with about 30% of them is that having a competing tower within a two mile radius and.
Speaker 6: with about 30% of them not having a competing tower within a two mile race.
Speaker 6: and you can see that our tower revenue is well distributed among the large wireless
And you can see that our tower revenue is well distributed among the large wireless carriers.
Speaker 6: Next, let's turn to our quarterly operating performance shown in slide a lot.
Next let's turn to our quarterly operating performance shown on slide 11 for this discussion I will refer to adjusted operating income before depreciation and amortization as adjusted operating income.
Speaker 6: In this discussion, I will refer to adjusted operating income before depreciation and anlatization as adjusted operating income."
As I noted total operating revenues declined 11%, however, with lower device sales lower promotional cost lower bad debt expense and a steadfast focus on controlling costs cash expenses decreased and has declined more than offset the decline in revenue.
Speaker 6: However, with lower device sales, lower promotional costs, lower bed debt expense, and a steadfast focus on controlling costs, cash expenses decreased, and this decline more than offset the decline in revenue.
Speaker 6: Some operations expense to flying 6% You primarily to the previously mentioned decrease in off net roaming expenses.
System operations expense declined 6% due primarily to the previously mentioned decrease in off net roaming expense.
Speaker 6: In 2024, we will begin to realize net savings associated with the shutdown of our CDM network that LT previously mentioned. Awesome.
In 2024, we will begin to realize net savings associated with the shutdown of our CDMA network to LTE previously mentioned.
Offset partially by decommissioning costs.
Speaker 6: Starting in 2025, we expect annual run rate savings of approximately 30 million related to the CDMA shut.
Starting in 2025, we expect annual run rate savings of approximately $30 million related to the CDMA shutdown. These expected savings will help mitigate expense increases associated with our ongoing <unk> mid band deployment.
Speaker 6: These expected savings will help mitigate expense increases associated with our ongoing 5G midband.
Speaker 6: Whilst an equipment or equipment sales less cost of equipment sold, decreased 25 million as a result of lower device sales and promotion.
Loss on equipment or equipment sales less cost of equipment sold decreased $25 million as a result of lower device sales and promotional costs.
Speaker 6: As previously mentioned, we ran into Grasas, New and Existing Promotion for the entire duration.
As previously mentioned, we ran an aggressive new and existing promotions for the entire duration of the third quarter of 2022 and did not execute this level of promotional intensity in 2023.
Speaker 6: third quarter of 2022 and did not execute this level of promotional intent.
Speaker 6: Selling general and administrative expenses decreased 10%, driven primarily by decreases in bad debts.
Selling general and administrative expenses decreased 10% driven primarily by decreases in bad debts expense and the favorable impact from the reduction in workforce that was executed in the second quarter of 2023.
Speaker 6: and the favorable impact from the reduction of workforce that was executed in the second quarter of 2020.
Speaker 6: As we indicated last quarter, we estimate fully year run rate savings related to the reduction in workforce, more approximately 45 million, which we expect to fully re-
As we indicated last quarter, we estimate full year run rate savings related to the reduction in workforce of approximately $45 million, which we expect to fully realize in 2024.
Speaker 6: Rapid up the slide, adjusted operating income increased 35% in adjusted ebola, which incorporates the earnings from our equity method investments, along with interest in dividend income increased 20%.
Wrapping up the slides adjusted operating income increased 35% adjusted EBITDA, which incorporates the earnings from our equity method investments along with interest and dividend income increased 28%. Both of these amounts have been adjusted to exclude the $3 million of expenses incurred in the third quarter related to a strategic.
Speaker 6: Both of these months have been adjusted to exclude the 3 million of expenses incurred in the third quarter related to a strategic alternative.
Alternatives review.
Speaker 6: Capital expenditures decreased 18% manager driven by the timing of expenditures in 2023 relative to the prior.
Capital expenditures decreased 18%, mainly driven by the timing of expenditures in 2023 relative to the prior year.
Speaker 6: Free cash flow was 237 million, the nine months ended September 30th, 2023, and we expect healthy, positive free cash flow for the full year.
Free cash flow was 237 million for the nine months ended September 32023, and we expect healthy positive free cash flow for the full year 2023, as we continued to invest in our multiyear <unk> mid band deployment, while prudently managing our free cash flow.
Speaker 6: to invest in our multi-year 5G mid-band deployment while brutally managing our free-
Speaker 6: And as shown in slide 12, service revenue and capital expenditure guidance remains.
As shown on slide 12 service revenue and capital expenditure guidance remains unchanged. Further we have retained the mid points of our adjusted operating income and adjusted EBIT guidance and tightened the ranges of these measures reflecting reduced uncertainty given we are in the later stages of the year.
Speaker 6: Further, we are retaining the midpoints of our adjusted operating income and adjusted even the guide.
Speaker 6: Tighten the ranges of these measures reflecting reduced uncertainty given we are in the beta stages of the year. I will now turn the call.
I will now turn the call over to Michelle Berrey quickie shops.
Speaker 3: Thank you, Doug, and good morning, everyone. Turning to slide 14, I'll share third quarter highlights for TDS Telecom. Our team delivered 61,000 fiber service addresses in the quarter, our highest quarter to date, bringing our year to date total to 127,000 at the end of September .
Thank you, Doug and good morning, everyone turning to slide 14, I'll share third quarter highlights for Tds Telecom our team delivered 61000 fiber service addresses in the quarter, our highest quarter to date, bringing our year to date total to 127000 at the end of September.
Speaker 3: Given where we are in the year and the strong momentum we've had, we are raising our 2023 goal to 200,000 fiber service addresses up from 175,000.
Given where we are in the year and the strong momentum. We've had we are raising our 2023 goal to 200 fiber service addresses up.
From 175000.
Speaker 3: Another important milestone for our fiber program is that we expect all of our expansion markets will be launched by the end of 2023. These markets are primarily in Wisconsin and the Pacific Northwest. And a few of our recently announced markets are Mizzula, Butte, Helena, and Great Falls, Montana, Twin Falls and Caldwell, Idaho, and Fondelac and Shabuigan, Wisconsin.
Another important milestone for our fiber program is that we expect all of our expansion markets will be launched by the end of 2023.
These markets are primarily in Wisconsin in the Pacific Northwest and a few of our recently announced markets. Our Missoula Butte Helena in Great Falls, Montana Twin falls in Caldwell, Idaho and fund a lack in Sheboygan, Wisconsin.
Speaker 3: Another important highlight this quarter is that TDS telecom elected to participate in the Federal Enhanced ACAM program in 24 states. This program will provide us with revenue support through 2038 in return for us delivering increased speeds of 100 megabits down in 20 up to about 270,000 locations.
Another important highlight this quarter is that Tds telecom elected to participate in the federal enhanced ATM program in 24 states.
This program will provide us with revenue support through 2038 in return for us delivering increased speeds of 100 megabits down in 'twenty up to about 270000 locations.
Speaker 7: As a reminder, the existing ACAM program provided $82 million a year through 2028. The new program increases the revenue amount to approximately 90 million per year, beginning in 2024 and extends through 2038. Therefore, we expect to receive a total of about 1.3 billion of EACAM revenue support over the next 15 years.
As a reminder, the existing ATM program provided $82 million a year through 2028.
The new program increases the revenue amount to approximately $90 million per year, beginning in 2024 and extends through 2038.
Therefore, we expect to receive a total of about $1 3 billion of EAA Cam revenue support over the next 15 years we.
Speaker 7: We anticipate this program will help to accelerate the delivery of higher speed broadband to various rural high-cost areas that we serve. This is a fantastic outcome for TDS Telecom and our customers.
We anticipate this program will help to accelerate the delivery of higher speed broadband to various rural high cost areas that we serve this is a fantastic outcome for Tds telecom and to our customers.
Speaker 7: Now let's jump into our quarterly results, starting on slide 15. As you just heard with our successful Fiber Service Address results, we have increased our Fiber Service Address goal to 200,000 this year. We are really proud that we have developed a strong competency in managing builds and navigating challenges.
Now, let's jump into our quarterly results starting on slide 15, as you just heard with our successful fiber service address results. We have increased our fiber service address goal to 200000. This year, we're really proud that we have developed a strong competency in managing builds and navigating challenges.
Speaker 7: Longer term, you can see where we are in our scorecard. We are targeting 1.2 million marketable fiber service addresses by 2026. We ended the quarter with 709,000, so we're making good progress.
Longer term you can see where we are in our scorecard, we're targeting $1 2 million marketable fiber service addresses by 2026, we ended the quarter with 709000, so we're making good progress.
Speaker 7: We are also targeting 60% of our total service addresses to be served by Fiber by 2026. We ended the quarter with 44%.
We are also targeting 60% of our total service addresses to be served by fiber by 2026, we ended the quarter with 44%.
Speaker 7: This reflects progress in growing fiber through our expansion markets, as well as fibrying up our incumbent markets.
This reflects progress in growing fiber through our expansion markets as well as fiber ing up our incumbent markets.
Speaker 7: Specifically, by 2026, we plan to serve half of our I-Lec addresses with fiber. At the end of the quarter, 40% of our I-Lec was fibered up.
Specifically by 2026, we plan to serve half of our ILEC addresses with fiber at the end of the quarter, 40% of our ILEC with fiber.
Speaker 7: And finally, we are expecting to offer speeds of 1 gig or higher to at least 80% of our footprint by 2026. We finished the quarter with 69% at gig speeds.
And finally, we are expecting to offer speeds of one gig or higher to at least 80% of our footprint by 2026, we finished the quarter with 69% at gig speeds.
Speaker 7: We continue to believe these long-term targets are achievable, although our address delivery numbers may fluctuate from year to year depending on a number of factors, our 2026 goals remain front and center throughout the organization.
We continue to believe these long term targets are achievable, although our address delivery numbers may fluctuate from year to year, depending on a number of factors our 2026 goals remain front and center throughout the organization.
Speaker 7: And we are pleased with the results of our fiber builds to date. We continue to achieve the broadband penetrations that are projected in our business case.
And we are pleased with the results of our fiber builds to date, we continue to achieve the broadband penetrations that are projected in our business cases.
Speaker 7: On slide 16, you can see that we are growing our footprint with an 11% double digit growth in total service addresses year over year.
On slide 16, you can see that we are growing our footprint with an 11% double digit growth in total service addresses year over year.
Speaker 7: Shown on the graph on the right, we see increasing demand for higher broadband speeds, with 75% of our customers taking 100 megabits per second or greater, up from 69% a year ago.
Shown on the graph on the right, we see increasing demand for higher broadband speeds with 75% of our customers, taking 100, megabits per second or greater up from 69% a year ago.
Speaker 7: We continue to increase the availability of gig plus speeds and we're now even offering eight gig speeds in certain markets.
We continue to increase the availability of gig plus speeds and we are now even offering eight gig speeds in certain markets custom.
Speaker 7: Customer take rates of these speeds are growing with 14% of our customer base on one gig or higher at the end of the quarter.
Customer take rates of these speeds are growing with 14% of our customer base on one gig or higher at the end of the quarter.
Speaker 7: Our broadband investments are driving positive results, including a 10% increase in total residential broadband revenue.
Our broadband investments are driving positive results, including a 10% increase in total residential broadband revenue.
Speaker 7: As shown on slide 17, we experienced a 5% increase year over year in total broadband residential connection.
As shown on slide 17, we experienced a 5% increase year over year and total broadband residential connections.
Speaker 7: average residential revenue per connection was up 3% due to price increases in product mix partially off that by promotion
Average residential revenue per connection was up 3% due to price increases and product mix, partially offset by promotions.
Speaker 7: As shown in the chart on the right, we had another quarter of 4% growth in residential revenues with expansion market residential revenues increasing to 20 million in the quarter. This aligns with our expectation of steady revenue growth following the timing of service address delivery as penetration ramps in these new markets.
As shown in the chart on the right we had another quarter of 4% growth in residential revenues with expansion market residential revenues increasing to $20 million in the quarter.
This aligns with our expectation of steady revenue growth following the timing of service address delivery as penetration ramps in these new markets.
Speaker 7: Residential wireline incumbent and cable revenues were flat. As a decline in video in voice connections was offset by price increases in growth and broadband connections.
Residential wireline incumbent in cable revenues were flat as the decline in video and voice connections was offset by price increases and growth in broadband connections.
Speaker 7: Our wireline incumbent, which includes our ILEC market, is facing increasing competitive pressures. We consider capital prioritization and expected economic returns as we respond to competition and select ILEC markets with fiber builds.
Our wireline incumbent which includes our ILEC markets is facing increasing competitive pressures.
We consider capital prioritization and expected economic returns as we respond to competition in select ILEC markets with fiber builds.
Speaker 7: The EACAM program will provide funding to help us defend these markets.
The ATM program will provide funding to help us define these markets.
Speaker 7: As expected, commercial revenues decrease 12% in the quarter, primarily driven by lower CLC connect.
As expected commercial revenues decreased 12% in the quarter, primarily driven by lower CLEC connections.
Speaker 7: And lastly, wholesale revenues decrease 3% for the quarter, primarily due to lower special access revenue.
And lastly, wholesale revenues decreased 3% for the quarter, primarily due to lower special access revenue.
Speaker 7: On slide 18, you can see our quarterly performance. Operating revenues were flat in the quarter as the growth and residential revenues was offset by the decline in commercial and wholesale.
On Slide 18, you can see our quarterly performance operating revenues were flat in the quarter as the growth in residential revenues was offset by the decline in commercial and wholesale.
Speaker 7: Cash expenses decrease modestly in the quarter. This decrease is a result of our intense focus on cost deficiencies in discipline spending.
Cash expenses decreased modestly in the quarter. This decrease is a result of our intense focus on cost efficiencies and disciplined spending.
Speaker 7: As a reminder, the expense results shown here include the cost to initially launch our fiber markets, which are incurred upfront and prior to generating revenues.
As a reminder, the expense results shown here include the cost to initially launch our fiber markets, which are incurred upfront and prior to generating revenues.
Speaker 7: Adjusted EBITDA was up 3% in the quarter as a result of the decrease in cash expenses.
Adjusted EBITDA was up 3% in the quarter as a result of the decrease in cash expenses.
Speaker 7: Capital expenditures of $172 million were up modestly from the prior year due to our investments in fiber. Keep in mind that these investments support our multi-year strategy and our goal of increasing free cash flow and return on capital over the long run. Slide 19.
Capital expenditures of $172 million were up modestly from the prior year due to our investments in fiber.
Keep in mind that these investments support our multiyear strategy and our goal of increasing free cash flow and return on capital over the long run.
Slide 19 shows our 2023 guidance.
Speaker 7: We are keeping our revenue guidance range unchanged from last quarter. Although we expect to be towards the low end of our range of 1.03 to 1.06 billion.
We are keeping our revenue guidance range unchanged from last quarter, although we expect to be towards the low end of our range of 1.03 to one <unk> billion.
Speaker 7: Even though we are expecting to deliver more fiber addresses than originally planned this year, the majority will be launched in late 2023, and it will take time for penetrations and revenues to build.
Even though we are expecting to deliver more fiber addresses than originally planned. This year. The majority will be launched in late 2023, and it will take time for penetrations in revenues to build.
Speaker 7: Adjusted EBITDA is expected to remain between 270 and 300 million in 2023.
Adjusted EBITDA is expected to remain between $270 million and $300 million in 2023.
Speaker 7: As we look forward, we are still on track to have our expansion communities launch this year. This means we can begin serving customers and generating revenues.
As we look forward, we are still on track to have our expansion community has launched this year. This means we can begin serving customers and generating revenues.
Speaker 7: Starting next year and over the next several years, we expect our broad penetrations, revenues, and adjusted EBITDA to grow.
Starting next year and over the next several years, we expect our broadband penetrations revenues and adjusted EBITDA to grow.
Speaker 7: Moving on to CapEx. Consistent with our Optic and Expected Fiber Service Address Delivery and our investments to establish internal construction crews, we are now expecting capital expenditures for this year to be approximately 550 million.
Moving onto Capex consistent with our uptick in expected fiber service address delivery and our investments to establish internal construction crews. We are now expecting capital expenditures for this year to be approximately $550 million.
Speaker 7: Is Vicki mentioned earlier? Going forward, we will continue to size and pace the timing of our capital expenditures to be commensurate with our financial capacity.
As Vicki mentioned earlier going forward, we will continue to size and pace the timing of our capital expenditures to be commensurate with our financial capacity.
Speaker 7: Due to the pull forward of service addresses and corresponding higher CAPEX in 2023, next year we plan to slow our spending and focus on driving broadband penetration and revenues in our new fiber market.
Due to the pull forward of service addresses and corresponding higher Capex in 2023 next year, we plan to slow our spending and focus on driving broadband penetration and revenues and our new fiber markets.
Speaker 7: Service addresses in 2024 will likely be closer to what we delivered in 2022.
Service addresses in 2024 will likely be closer to what we delivered in 2022.
Speaker 7: In summary, we remain on track to achieve our 2026 fiber program goals, recognizing the number of service addresses may fluctuate from year to year. We will give more specific guidance for 2024 during our year-end call. However, we wanted to provide directional insight on next year's fiber program in the context of our expected address and cat-x results for 2023.
In summary, we remain on track to achieve our 2026 fiber program goals recognizing the number of service addresses may fluctuate from year to year.
We will give more specific guidance for 2024 during our year end call. However, we wanted to provide directional insight on next year's fiber program in the context of our expected addressing capex results for 2023.
Speaker 7: In closing, I want to acknowledge all of the TDS Telecom Associates. It is taking a tremendous amount of engagement and adaptability to execute on our strategy, and I want to thank the entire organization for pulling together to make that happen. I'll now turn the cl-
In closing I want to acknowledge all of the Tds Telecom associates. It is taking a tremendous amount of engagement and adaptability to execute on our strategy and I want to thank the entire organization for pulling together to make that happen.
I'll now turn the call back over to Colleen.
Speaker 3: Okay, we will now open up the call to questions. As a reminder, our focus today is on the quarter and we will not be taking questions on the strategic alternatives review for U.S. Cellular. Operator Rear-
Okay. We will now open up the call to questions. As a reminder, our focus today is on a quarter and we will not be taking questions on the strategic alternatives review for U S. Cellular.
Operator, we are ready for the first question.
Speaker 2: Thank you, Ms. Thompson. Just a reminder, ladies and gentlemen, any questions this morning, please press star one. And if you find your question has already been addressed, you can remove yourself from the queue by pressing star one again. We'll go first this morning to Rick Prentice at Raymond James.
Thank you MS. Thompson, just a reminder, ladies and gentlemen, any questions. This morning. Please press star one and as your final question has already been addressed you can remove yourself from the queue by pressing star. One again, we will go first this morning to Ric Prentiss at Raymond James.
Thanks, Good morning, everybody.
Good morning, Rick.
Speaker 2: First question, thanks for the extra color on the Tower Revenue Distribution Pipe Chart.
Okay.
First question. Thanks for the extra color on the tower revenue distribution Pie chart.
Speaker 8: you have a chance to think through of the two mobile 29 percent I think it shows how much is Sprint or potential Sprint chair that that might be out there LTN if you mentioned that you expect the industry cat-bex low-down will affect the 24 hour leasing revenue but just also worry about kind of a chair and effect. Yeah good boy.
Have you had a chance to think through of the T mobile, 29% I think it shows.
How much is split or potential sprint churn that might be out there in LTE I think you mentioned that you expect.
History of Capex slowdown.
24 hour leasing revenue, but just also wondering about kind of a churn effect.
Yeah, Good morning, Brett.
We don't.
Speaker 6: The spring Timo disconnects. A lot of that activity occurred in the fourth quarter of last year and the first quarter of this year. We've had about 100 cumulative lease terminations as a result of the merger. That slowed way down in the second and third quarter. So we think we're through most of it. So the short answer is we don't think there's a lot left with respect to additional terminations.
The sprint T Mo.
<unk> a lot of that activity occurred in the fourth quarter of last year and the first quarter of this year. We've had about 100 cumulative lease terminations as a result of the merger.
<unk> way down in the second and third quarter. So we think we're through most of it. So the short answer is.
We don't think Theres, a lot left with respect to.
Additional terminations.
Speaker 6: And you can see sequentially our tendency rate went down a little bit because of that exact...
Great and you can see sequentially, our tenancy, great went down a little bit because of that exact reason.
Speaker 8: Okay, that's what I was wondering. Okay. And then on fixed wireless, obviously you've got the CBAN now earlier than originally planned. To help us understand where you think the addressable market is.
Okay, that's what I thought okay.
And then fixed wireless obviously, you've got the C band now earlier than originally planned can you help us understand where you think the addressable market is.
Speaker 8: as households to the fixed wireless product. How many houses do you cover now? How many households would you like to cover over the next couple of years, just so we can come to the size of our facility?
As far as households for the fixed wireless product how many houses do cover now.
<unk> would you like to cover over the next couple of years, just so we can kind of size that opportunity.
Yeah.
Speaker 5: Yeah sure, Rick. So, the, let me talk a little bit about the dynamics there. I mean, the first dynamic is...
Yeah sure so the.
I mean, let me talk a little bit about the dynamics there I mean, the first dynamic is I mentioned it in the prepared remarks.
Speaker 5: I mentioned it in the prepared remarks, but as we turn on our midband spectrum, that allows us to both provide better speed experience to our customers. It also allows us to handle more capacity. One of the things I pay a lot of attention to is, do we need to stop selling anywhere because of the impact?
As we turn on our mid band spectrum that allows us to both provide.
Better speed experience to our customers.
It also allows us to handle more capacity.
One of the things I pay a lot of attention to is do we do we need to stop selling anywhere because of the impact that fixed wireless subs are putting onto the mobile network.
Speaker 5: that fixed wireless subs are putting on to the mobile network. And thus far, we've been able to restrict any stop cells to a truly very, very small number of towers. And so the impact on the mobile network has been manageable thus far.
Thus far we've been able to restrict any stop sells to a truly very very small number of towers and so.
The impact on the mobile network has been manageable, thus far and.
Speaker 5: And we expect that to continue because we are going to be targeted in how we roll out mid-band. Part of the rationale for which towers we choose to put mid-band on is the demands placed on it by fixed wireless. And so at a high level, if you look at the growth rate that we've experienced in the past, over the last let's call it 1824 months.
And we expect that to continue because we are going to be targeted in how we rollout in mid band.
Part of the.
Rationale for which towers, we choose to put mid band on the demands placed on it by fixed wireless and so.
At a high level, if you look at the growth rate that we've experienced in the past over the last let's call. It 18 24 months.
Speaker 5: I expect that growth rate to continue. The final full potential of that product.
I expect that growth rate to continue.
The final full potential of that product.
Speaker 5: It's a little bit difficult to predict. You have to think through both how the product plays competitive.
Little bit difficult to predict you have to think through both the how the how the product place competitively.
Speaker 5: And certainly for if I just look at how well it matches up again.
And certainly for for if I, just look at how well it matches up against cable products and upgraded fiber footprint and so on.
Speaker 5: cable product, enough created fiber footprint and so on.
Speaker 5: I could see that product growing to 400,000 or more houses.
I could see that product growing two to 400000 or more households, the challenge, though will come as those households come onboard as they start using mid band spectrum.
Speaker 5: The challenge though will come as those households come on board as they start using mid-man spectrum. Obviously the usage for household increases as well. And so you have to scale that back a little bit based on demands on mobile capacity.
Obviously, the usage per household increases as well and so you have to scale that back a little bit based on demands on mobile capacity.
Speaker 5: I don't know what that looks like yet because we're in the very early days of rolling that product out. Thus far we're very bullish. We haven't had to, like I said, shut down any sites or stop selling on any sites. But I think probably 400,000 is the absolute top of the addressable market range, simply because you're going to have to dial it back based on capacity.
Don't know what that looks like yet because we're in the very early days of rolling that product out. Thus far we're very bullish we haven't had to like I said shutdown any any sites are stopped selling on any sites.
But I think probably 400000 is the absolute top of.
The addressable market range simply because you got to dial it back based on capacity needs hopefully that answers your question.
Speaker 8: It's a theoretical question, I'll try to slip that in there. When you think about the difference between olipodine and evita, large parts of the minority interest.
It does and final one it's a theoretical question, which I was looking at in there.
When you think about the difference between <unk> and EBITDA large part is the minority interest.
Speaker 8: You guys receive dividends from those minority interests. So if you think about one of the strategic alternatives might be to do something with the minority interest, how should we think about theoretically, why sell something where you get a dividend? Is there some tax-efficient means? Would you consider stock? Just trying to think through the logics of that minority interest line item of what might be interesting to do in life.
You guys received dividends from those minority interest. So if you think about what are the strategic alternatives might be to do something with the minority interest how should we think about theoretically.
Why sell something where you would get a dividend.
Is there some tax efficient means would you consider stock just trying to think through the logic of that minority interest line item.
What might be.
Interesting to do and why.
Speaker 9: Yeah, so the, I mean, the, as you mentioned, I mean, we do see
Yes, so I mean as.
As you mentioned I mean, we do see healthy.
Speaker 5: Healthy cash load distributions from those partnerships were happy with how those partnerships operate, how those partnerships interact and influence the strategic assessment I'm not going to comment.
Healthy cash flow distributions from those partnerships, we're happy with how those partnerships operate.
How those partnerships interact and influence the strategic assessment I'm not going to comment on today.
Speaker 8: One thing that maybe is safe young is would stock the considerations and sort of tasks if the things were looked at is currently thinking about tax efficiency methods.
Okay.
One thing that maybe is safety is wood wood stock consideration set of tasks.
If these were looked at as currently when you think about tax efficiency methods.
Speaker 4: Yeah, yeah, Rick, we're not going to comment on on any questions that relate, you know, in that area. So we're just not going to comment on any outcome implications. We're not we're not even going to speculate today. But thank you. I can't believe I got to try it.
Yes, Rick.
We're not going to comment on on any questions that relate.
In that area so.
Not going to comment on any outcome implications.
We're not we're not even going to speculate today, but thank you.
We got to China.
Speaker 3: Thank you. Yeah, thanks Rick. Operator next question.
Yes, Thanks, Rick Operator next question.
Speaker 2: Thank you. We're going to now to Phil Tufrick at J. B. Morgan.
Thank you we'll go next now to Phil Cusick at Jpmorgan.
Speaker 10: So you said no outcome or implications, but it's any you can say about timing in terms of where we are and when we might use.
So you said no outcome or implications, but is there anything you can say about timing in terms of where we are and when we might hear something yes. Thanks Phil.
Speaker 4: Yeah, thanks Phil. Thanks for the question both to both of you. It is an opportunity for us to reiterate our comments. You know.
Thanks for the question both to both of you. It is an opportunity for for us to reiterate our comments.
You know our announcement on August 4th we are focused on all strategic options.
Speaker 4: Our announcement on August 4th, we are focused on all strategic options, you know, that are in the best interest of the company and its shareholders. And this process is active and ongoing. That's all I can comment on right now. And I'm not going to comment on the timing or speculated of the timing.
That are in the best interest of the company and its shareholders.
And this process is active and ongoing that's all I can comment on right now and I'm not going to comment on the timing.
Or speculate on the timing either.
Speaker 10: Thank you. I feel as worth a shot. Okay. So, you know, LT, you're pretty clearly pairing back on mobile spending, accepting the slower growth as it comes with that. You know, is it makes us pull back further on sales and marketing?
Sure it's worth a shot okay. So.
LTE, you pretty clearly paring back on mobile spending.
The slower growth that Chris as it come with us because it makes sense to pull back further on sales and marketing.
Speaker 10: especially in a quarter where the noise volume will be high from here to save you and more when you give them a strategic review. Also, are you pairing back on CAPEX as well near-term because of the review as well?
Especially in a quarter where the.
Noise volume will be higher from here.
Save save even more money given us Mr. Cedric review and also are you paring back on Capex as well near term because of the review as well.
Speaker 5: So what we try to do is we think about balancing our promotional spend is matching the volume of that spend to the available volume in the market.
So what we try to do as we think about balancing our promotional spend is matching right the volume of that spend to the available volume in the marketplace.
Speaker 5: Fourth quarter right because of holiday is when we see most level certainly
Fourth quarter right because the holiday is when we see most.
The highest level certainly a switching activity and.
Speaker 5: and we need to match that available switching activity with as much of all you as we can put in the marketplace. So I'm not adjusting our promotional spend or our capital spend based on any potential outcomes of this strategic review. What we're doing is we're adjusting that spend based on what we see as dynamics in the marketplace. In the third quarter.
And we need to match that available switching activity with as much volume as we can put in the marketplace and so.
I am not adjusting our promotional spend or our capital spend based on any potential outcomes of the strategic review.
We are doing is we're adjusting that spend based on what we see as the dynamics in the marketplace in the third quarter.
Speaker 5: We saw an opportunity to pull back a little bit in terms of spending and you see that in our strong financial performance.
We saw an opportunity to pull back a little bit in terms of spending and you see that in our strong financial performance.
Speaker 5: We see there's going to be an opportunity in the fourth quarter, particularly on the upgrade side, to ramp up our volumes. And so we plan on aggressively pursuing those.
When we see there is going to be an opportunity in the fourth quarter, particularly on the upgrade side to ramp up our volumes and so we plan on aggressively pursuing this.
Speaker 5: The first capital goes, the capital moves have really been driven by two factors. The first factor is we're very comfortable with the results of our 5G modernization program.
And as far as capital goes.
The capital moves have really been driven by two factors. The first factor is we're very comfortable with.
With the results of our <unk> modernization program.
Speaker 5: We now have 5G active on sites that carry 80% of our traffic and Mike and team have done a really nice job of rolling that out. So what we're able to do is we're able to slow our capital spending associated with 5G.
We now have five.
Active on sites to carry 80% of our traffic and Mike and team have done a really nice job of rolling that out.
And so what we're able to do is we're able to slow our capital spending associated with five G.
Speaker 5: While at the same time, we're replacing some of that spending with midband. We mentioned it on the call. We got early access to that CBAN spectrum.
While at the same time, we're replacing some of that spending with misfit. We mentioned it on the call. We got early access to that to that C band spectrum.
Speaker 5: where we roll that out, we see really strong mobile performance and it helps us sell a better fixed wireless product. And so much of that slowdown in CAPEX that's associated with 5G is being replaced by acceleration of midband. And the net of it is what you see in our, both in our numbers for this year
Where we roll that out we see really strong mobile performance and it helps us sell a better fixed wireless product and so <unk>.
Much of that slowdown in Capex, that's associated with <unk> is being replaced by acceleration of mid band and the net of it is what you see in our both in our numbers for this year and thinking about next year are fairly similar capital capital spend as well.
Speaker 5: So, so cat-backs and promotional
So capex and promotional approach really driven by marketplace dynamics not being influenced by the strategic assessment.
Speaker 5: Approach really driven by marketplace dynamics not being influenced by the strategic
Speaker 10: Okay, thank you. And then one from Michelle if I can, can you dig more into the competition in the I-Leg markets? Is that cable footprint expansion you're alluding to or maybe fixed wireless? I'm a little surprised that ACM funding can be used to descend yourself against cable incursion, is that what's going on?
Okay. Thank you and then one for Michele if I can.
Can you dig more into the competition in the ILEC markets is that cable footprint expansion youre alluding to or maybe fixed wireless.
Hello comprises a cam funding can be used to defend yourself against cable incursion is that what's going on.
Speaker 7: Hi Phil, thanks a lot for the question. Yeah, so in our ILEC, we are facing a little bit more of a competitive pressure than we had in prior years. And it's not primarily coming from fixed wireless. Cable's always a tough competitor for us, but it's starting to be some of the smaller fiber overbuilders are starting to come into some of our ILEC markets. Part of the power core.
Hi, Phil Thanks, a lot for the question yeah. So in our ILEC, we are facing a little bit more of a competitive pressure than we had in prior years and.
It's not primarily coming from fixed wireless.
Cable is always a tough.
Competitor for us, but it's starting to be some of the smaller fiber overbuild <unk> are starting to come into some of our ILEC markets and so.
Speaker 7: We have been very focused on our ILX for the last decade. We've been building fiber in our ILX and so we've got 40% of our ILX fibered up right now. We have goals to continue that and that's a really great
We have been very focused on our ILEC for the last decade, we've been building fiber in our ILEC and so we've got 40% of our ILEC fibered up right now we have goals to continue that and that's a really great way to defend and compete in those markets and we do see that the EAA Cam pro.
Speaker 7: way to defend and compete in those markets.
Speaker 7: And we do see that the EACAM program, once we get those builds going, those are gonna be fiber-build.
Graham once we get those builds going those are going to be fiber builds and that will also be a way that helps us defend those ILEC markets from.
Speaker 7: And that will also be a way that helps us defend those I-LF markets from...
Speaker 7: you know, those fiber overbuilders from, you know, potentially coming any farther or entering in the first place.
Those those fiber overbuild us from potentially coming any farther or entering in the first place.
Okay. Thank you.
Thanks, Bill next question.
Speaker 2: Thank you. We go next now to Simon Flannery at Morgan Stanley .
Thank you well go next now to Simon Flannery at Morgan Stanley.
Speaker 11: Great, thank you very much. Good morning. LT just following on on the FWA. Good results continue there. Could just give us a little bit on, you know, the profile of these customers where they're coming from. Is this in kind of more suburbia you're seeing in more rural areas? What's the kind of the...
Great. Thank you very much good morning.
LTE just following on on the FW way.
Good results continue there could you just give us a little bit on the.
The profile of these customers, where they're coming from is this in kind of more suburbia or are you seeing in more rural areas.
The kind of the.
Speaker 11: The sweet spot here for that customer base and then just coming back to the point you were making about the competitiveness in wireless Cables being aggressive for some time. I mean they're lads of sort of leveled out here for a few quarters You know, were you saying something new was it more players in your markets or what was the Delta here in the last few months that you were kind of I'm trying to highlight
The sweet spot here for that customer base, and then just coming back to the point you were making about the competitiveness in.
In wireless.
<unk> been aggressive for some time I might add some sort of leveled out here for a few quarters.
Are you seeing something new was it more players in your markets or what was the delta here in the last few months that you were kind of I'm trying to highlight and then maybe just one last one on the fiber side. The slower build so you are going to concentrate more youre builds next year on in or out of region.
Speaker 11: and then maybe just one last one on the fiber side. The slower build, so you're gonna concentrate more your builds next year on in or out of region on the fiber side.
Fiber side.
Speaker 5: Thanks, Simon and Kudos to you for not trying to slip in a strategic assessment question. We appreciate it. Hi, Kev. I know. It was appreciate it. Yeah, let me start with, let me start with fixed wireless. The
Thanks, Simon and kudos to you for not trying to slip in a strategic assessment question. We appreciate it.
Hey, Bob.
Yes, it was.
Appreciate it.
Yes, let me start with let me start with fixed wireless.
Speaker 5: Interestingly enough, we actually see a fairly decent blend of cuss.
Interestingly enough, we actually see a fairly decent blend of customers. So I mean, I'll remind again this is a low band product almost exclusively been selling on thus far which would lead you to believe that it would it would skew heavily rural.
Speaker 5: So, I mean, I'll remind again, right, this is a low-band product, almost exclusively, we've been selling on this far, which would lead you to believe that it would skew heavily rural.
Speaker 5: right where where the the primary competition is satellite or DSL and interestingly enough I mean we've seen a we've seen a really good blend of customers which would indicate we if there's no switching information out there so we don't know it's like they're switching a number over
Right, where where the the primary competition is satellite or DSL and interestingly enough I mean, we've seen a we've seen a really good blend of customers which would indicate.
There is no switching information out there. So we don't know its like Youre switching a number over so we don't know exactly who they are coming from or if they're necessarily adding.
Speaker 5: So we don't know exactly who they're coming from or if they're necessarily adding, you know, maybe a backup connection. So we don't know where they're coming from. But the geographical mix would indicate that we're caking from cable, and we're primarily, and in many cases, we're even taking where cable has upgraded their plan.
Maybe maybe a backup.
Connection so we don't know where they're coming from but the geographical mix would indicate that we're taking from cable and we're primarily and in many cases, where even taking where cable is upgraded their plant.
Speaker 5: And so that's also what gives me a lot of optimism about the mid-band fixed wireless as we roll out that 300 meg product. It isn't purely just a speed game. There's a there's a simplicity of installation. There's a positive customer experience associated with this product.
And so Thats also what gives me a lot of optimism about about the mid band fixed wireless as we rollout that 300 Meg product.
It isn't purely just a speed game there is simplicity of installation.
Positive customer experience associated with this product our churn continues to go down on the product trends, we continue to see really good churn performance.
Speaker 5: Our churn continues to go down on the product, or we continue to see a really good churn performing.
Speaker 5: And so it isn't just a rural oriented product as frankly I had initially assumed it might be. We're seeing really good performance even in places where cable is quite active. The one place I can tell you where we have not-
And so it isn't just a just a rural oriented product is frankly I had initially assumed it might be.
We're seeing really good performance, even in places where cable is quite active.
The one place I can tell you where we have not seen.
Speaker 5: significant progress is places where you've got fiber. Right, so if you've got a dense fiber build, the economics of the product, it's pretty difficult to compete against those, against the physics that fiber provides. We see a really robust.
Significant progress has places where you've got fiber alright, so if you've got if you've got a dense fiber build.
The economics of the product to its pretty difficult to compete against those against against the physics that fiber provider, we see a really robust plan.
Speaker 5: Let me switch to the cable, your question about cable, what's different?
Let me switch to the cable your question about cable what's different.
Speaker 9: really two things are different for us. The first is you've seen just a steady expansion of their foot.
Really two things are different for us.
The first is you've seen just a steady expansion of their footprint.
Speaker 5: So early on, U.S. cellular was a bit insulated from cable competition, because they started in larger cities, and so our competitors saw a larger competitive impact from cable than we did. I think a few quarters ago, I mentioned that we saw cable competition in 50% of our footprint as of today. It's 60%.
So early on U S cellular was a bit insulated from cable competition.
Because they started in larger cities and so our competitors saw a larger competitive impact from cable than we did.
A few quarters ago, I mentioned that we saw cable competition and 50% of our footprint as of today, it's 60% of our footprint.
Speaker 5: And so we've simply seen an expansion of that cable competition. The other dynamic that I expect is...
And so so we've simply seen an expansion of that cable competition <unk>.
The other dynamic that I expect to see that I would just highlight is <unk>.
Speaker 5: Up until now, we've had larger, the large cable companies providing an MV&O and providing that wireless service. And I expect to we'll see smaller cable players do that. I expect to see smaller cable players roll out a wireless service, and that will create a little bit of increased competition.
Up until now we've had larger the large cable companies, providing providing an <unk> in providing that wireless service and I expect that we'll see smaller cable players do that.
I expect to see smaller cable players rollout of wireless service.
And that will create a little bit of increased competition.
Speaker 5: And the final dynamic that I think is kind of interesting is that we're seeing a larger amount of the cable players start to subsidize device.
And the final dynamic that I think is kind of interesting is that we're seeing.
A larger amount of.
The cable players start to subsidize devices.
Speaker 5: I think that's going to be a really interesting dynamic to track because in the early days it's quite easy to offer wireless service and see really positive net ad performance because one, you obviously don't have to deal with churn dynamics of customers.
I think that's going to be really interesting dynamic to track because in the early days, it's quite easy to offer wireless service and see really positive net add performance because one you obviously don't have to deal with churn dynamics of customers.
Speaker 5: rolling off of your service and two, you can cherry pick in the sense that you can take customers, you maybe aren't ready to upgrade their device and that's who you offer service to. And I think that's what cable's done. Now I believe that that business is mature enough inside some of the larger cable players that they're having to deal with customers who now want to upgrade their...
<unk> off of your service and two.
You can cherry pick in the sense that you can take customers, who maybe aren't ready to upgrade their device and that's who you offer service too and I think thats what <unk> done.
Now I believe that that business is mature enough inside some of the larger cable players that they are having to deal with customers, who now want to upgrade their device and where they don't provide some form of subsidy.
Speaker 5: and where they don't provide some form of subsidy, they'll start to have to deal with churn dynamics. And so I think that that subsidy, and we saw that on the iPhone launch, by the way, the subsidies that cable is providing is a third dynamic that I'm tracking pretty carefully. For the third question, Michelle.
They will start to have to deal with churn dynamics and so I think that that subsidy and we saw that in the iPhone launch by the way.
The the subsidies that cable and is providing us a third dynamic that I'm tracking pretty carefully for.
For the third question, Michelle I'll hand, it to you.
Okay. Yeah. Thank you yeah, Thanks, Alethia and thanks for the question Simon.
Speaker 7: Yeah, thank you. Yeah, thanks, LT. And thanks for the question, Simon.
Speaker 7: So you asked about next year whether we're going to prioritize fiber inner out of region and I can tell you the short answer is it's going to be prioritized on out of region. But let me give you a little bit more context as to why that's our focus.
So you asked about next year, whether we're going to prioritize fiber in our out of region and I can tell you. The short answer is it's going to be prioritized on out of region, but let me give you a little bit more context as to why that's our focus.
Speaker 7: You know, so as I mentioned in 2023, given our momentum, we have allowed ourselves to spend more this year and to deliver more addresses.
So as I mentioned in 2023, given our momentum we have allowed ourselves to spend more this year and to deliver more addresses.
Speaker 7: in 2023 and then we can start selling into those addresses. But next year we do plan to slow our spending and we do expect addresses to come in lower and we expect CAPEX to be lower next year than it has been in the 2022 and 2023 level.
In 2023, and then we can start selling into those addresses but next year, we do plan to slow our spending and we do expect addresses to come in lower and we expect capex to be lower next year than it has been in the 2022 and 2023 levels and we're able to do that by by prioritizing.
Speaker 7: and we're able to do that by prioritizing our spending for a number of reasons. So one of...
Our spending.
And for a number of reasons so one of the reasons.
Speaker 7: is because of the EACAM program. In 2023, we're going to wrap up our...
Is because of the a cam program in 2023, we're going to wrap up our existing ATM obligations and milestones and spending and then we're going to pivot and shift our focus to planning and engineering and getting contractors lined up so that we can start delivering the higher speeds and do.
Speaker 7: existing ACAM obligations and milestones and spending. And then we're going to pivot and shift our focus to planning and engineering and getting contractors lined up.
Speaker 7: so that we can start delivering the higher speeds and doing those builds.
During those builds too.
Speaker 7: to more addresses that are now going to be in that program starting in 2024. So there's going to be a period where we're not spending quite as much on a camel we're doing that spending and then that will ramp up more significantly at the end of 2024 and going into 2025.
Two more addresses that are now going to be in that program. Starting in 2024, So theres going to be a period, where we're not spending quite as much on a cam while we're doing that spending and then that will ramp up more significantly at the end of 2024 and going into 2025.
Speaker 7: But because of that EACAM program, that also is going to allow us to not spend as much in our base business because we know that that EACAM funding is coming and will help fortify those markets through that program. So we're able to back off a little bit on some of our incumbent spending of cat-backs and in builds next year.
But because of that ATM program.
That also is going to allow us to not spend as much.
And our base business, because we know that that <unk> funding is coming and will help fortify those markets through that program. So we're able to back off a little bit on some of our incumbent.
<unk> spending of Capex and builds next year.
Speaker 12: sort of waiting for that EACAM funding to be able, it's not necessarily that we're waiting for the funding, but waiting for that EACAM work to begin, to be able to really start, you know, giving a lot more attention into those ILEC markets. So that's why we're able to then focus and prioritize a little bit more on our, out of territory, our expansion market regions next year. So hopefully that helps. Yeah, helpful. Thank you. Okay.
Sort of waiting for that that <unk> funding to be able.
It's not necessarily that we're waiting for the funding by waiting for that work.
Work to begin to be able to really start.
Giving a lot more attention into those ILEC markets. So that's why we're able to then focus in and prioritize a little bit more on our out of territory our expansion market regions next year.
So hopefully that helps.
Thank you.
Okay next question.
Thank you well go next to Michael Rollins at Citi.
Speaker 13: Thanks and good morning. Just a couple of follow-ups. First on the waterline side.
Thanks, and good morning, just a couple of follow ups first on the wireline side.
Speaker 13: As curious as you look at the goals for 2026
Just curious as you look at the goals for 2026.
Speaker 13: Can you give us an update in terms of the total spend to get to those goals? Whether it's on a gross basis of just capital and death.
Can you give us an update in terms of the total spend to get to those goals, whether it's on a gross basis. So just capital investment needed to get to that point or on a net basis. So what's the net funding need for the businesses over the next few years.
Speaker 13: to get to that point or on a net basis. So what the net funding need for the businesses over the next few years.
And then on.
On the wireless business.
You commented a little bit earlier on the churn dynamics and <unk>.
Speaker 13: I'm going to put a little bit earlier on the churn dynamics.
Speaker 13: You know, curious when you look at your chair and verses maybe where some of the national carriers are, is this the obvious opportunity to try to push that down 20, 30, 40 basis?
I'm curious when you look at your churn versus maybe where some of the national carriers are.
Is this the obvious opportunity to try to push that down 2030 40 basis points.
Speaker 13: and improve the total subscriber post-paid phone trajectory.
And improve the total subscriber postpaid phones.
<unk> trajectory for the business.
Speaker 7: Hi Mike, this is Michelle. I'll start and then let LT jump in. So in terms of cyber funding and our 2026 goals, I'm not going to give guidance or specific numbers beyond 2023 right now, but I can give you some context.
Hi, Mike This is Michel I'll start and then let let LTE jump in.
So in terms of fiber funding in our 2026 goals.
Im going to give guidance or specific numbers beyond 2023, right now, but I can give you some some context.
Speaker 7: We do still believe that those 2026 goals are achievable. We still have a plan in place to get to those 2026 goals. It will take additional CAPX versus where telecom had historically been. You've seen the elevated CAPX in 2022, 2023. But what I can tell you is that for 2024, directionally, I can tell you anyhow, that CAPX is going to be lower next year.
We do still believe that those 2026 goals are achievable, we still have a plan in place to get to those 2026 goals it will take.
Additional capex versus where telecom had historically been <unk> seen the elevated capex in 2022 2023, but what I can tell you is that for 2024 Directionally I can tell you anyhow that capex is going to be lower next year.
Speaker 7: And that's for a couple of reasons I just you mentioned about ACAM. We're going to be spending a little bit less on that as we get our planning going for the new program.
And that's for a couple of reasons I just mentioned about ATM, we're going to be spending a little bit less on that as we get our planning going for the new program.
Speaker 7: And in our incumbent, in our table markets, we are being very prudent with CAPACs. We are identifying anything that can be reduced or deferred, especially knowing that that EACAM program work is coming and can address some of the needs that we have in our IELAC market.
And then our incumbent and in our cable markets.
We're being very prudent with Capex, we are identifying anything that can be reduced or deferred, especially knowing that that EA Cam program work is coming.
<unk> can address some of the needs that we that we have in our ILEC markets.
Speaker 7: And then third, another reason that CapEx will be lower next year is on our expansion markets, you've seen very elevated CapEx the last couple years. But a lot of that has been to get that upfront spending in in order to get those markets long.
And then third another reason that Capex will be lower next year is.
On our expansion markets <unk> seen very elevated capex. The last couple of years, but a lot of that has been to get that upfront spending in in order to get those markets launched and by the time, we get done with this year all of those markets will be launched which means that that upfront spending will largely be behind us and thats things like getting the hub.
Speaker 7: And by the time we get done with this year, all those markets will be launched, which means that that upfront spending will largely be behind us. And that's things like getting the hub size, cabinets, plays, transport routes, things like that.
<unk> cabinets plays transport Ralph things like that so going forward, we're going to be able to deliver addresses at an incrementally lower cost than what we've had in the last couple of years. So that's also going to be able to bring our capex down slightly next year, not slightly but just bring it down commensurate with addresses that we're expecting.
Speaker 7: So going forward, we're going to be able to deliver addresses at an incrementally lower cost than what we've had in the last couple years. So that's also going to be able to bring our CAPEX down slightly next year or not slightly, but just bring it down, comment your it with the addresses that we're expecting to deliver next year.
Turning to deliver next year.
Speaker 7: So we've been really disciplined with cat-backs, op-backs.
So we've been really disciplined with Capex opex, we're focusing on growing our EBITDA and managing our capex. So that we can self fund this fiber program as much as possible.
Speaker 7: focusing on growing our EBITDA and managing our CAPEX so that we can self fund this fiber program as much as possible.
Speaker 7: And that's really important to us as we manage within our leverage that we're comfortable with and considering capital markets today in the high cost of capital. So, you know, CapEx will continue to be elevated, but just know that our focus is to try to drive profitability and manage CapEx, such that we're able to sell fund as much as we possibly can.
And that's really important to us as we manage within our leverage that we're comfortable with and in considering capital markets today and the high cost of capital So.
Capex will will continue to be elevated but just know that our our focus is to try to to drive profitability and manage capex such that we're able to self fund as much as we possibly can.
Speaker 5: And Mike, let me tackle the churn question. I mean, the simple answer to your question is yes.
And Mike let me tackle the churn question.
The simple answer to your question is yes.
Speaker 5: But you probably want a little bit more color than just yes. So talking briefly about churn, I mean what you've identified is the opportunity, which is how do we drive that, continue to drive that churn number down. But we do see that as the biggest opportunity to improve our net ad.
But you probably want a little bit more color than just yes. So.
Talking briefly about churn I mean, what you've identified is the opportunity which is how do we drive that continue to drive that churn number down, but we do see that as the biggest opportunity to improve our net add performance.
Speaker 5: Doug mentioned in his prepared comments about the positive trend that we've seen in post-paid handset churn over the past year. And the thing that's driving that is the aggressive offers that we had in the marketplace around new and existing. New and existing basically means, we're gonna provide a tract of upgrade off.
Doug mentioned in his prepared comments about the positive trend that we've seen in postpaid handset churn over the past year and the thing Thats driving that is the aggressive offers that we had in the marketplace around new and existing new and existing basically means hey, we're going to we're going to provide attractive upgrade.
Speaker 5: a lot of customers adopt those and that's helped us with year-over-year change.
Offers we saw a lot of customers adopt those and that's helped us with with year over year churn.
Speaker 5: We plan on doing something very similar through the holiday period. So we're focused very carefully on upgrades, improving our in contract rate. It's something, it's spend that we see that we see as
We plan on doing something very similar through the holiday period. So we're focused very carefully on upgrades.
Proving our in contract rate.
Its something its spend that we'd see that we see as efficient.
Speaker 5: So the money that you spend on those upgrade offers is not cheap, right? It's an aggressive offer you have to put in the marketplace, but it works and the reason it works is he a customer is in contract and in contract customer is churned at a much lower rate. So yes, we do see that as the biggest opportunity in front of us in the next couple of months.
So the money that you spend on those upgrade offers not cheap right.
It's an aggressive offer you have to put in the marketplace, but it works and the reason it works with customers and contract and <unk> contract customers churn at a much lower rate. So yes, we do see that as the biggest opportunity in front of us in the next couple of months.
Thank you.
Okay next question.
Speaker 2: Thank you, we would like to add some out to Sergey Dugeski at Debelly Fund.
Thank you as well that can have to Sergey <unk> at Gabelli funds.
Speaker 14: Good morning. Thank you for taking the questions.
Good morning.
Thank you for taking the questions.
Good morning.
Speaker 14: My first question is for LT on the tower business. Could you talk a little bit more about the progress that you're making in increasing the number of?
My first question is for LTE.
On the tower business.
Could you talk a little bit more about the progress that you're making and increasing the number of co locators, but more broadly I guess, if you could talk a little bit about that.
Speaker 14: collocators, but more broadly, I guess if you could talk a little bit about the medium term strategy for the tower business. What has been working well so far, which you still need to improve in order to gain a much larger scale and have a more pronounced revenue growth in the business.
Medium term strategy for the tower business.
Been working well so far what you still need to improve in order to gain a much larger scale and have a more pronounced revenue growth in those businesses.
Speaker 5: Hi, Sergey. I mean, the improvement in co-location, I mean, the numbers on the slide, right, we're up 2% year over year, but I mean, to speak a little bit more about that, the growth itself in terms of new tenants and in terms of amendments on existing towers has slowed.
Hi, Sergey.
The improvement in co location I mean, the numbers on the slide right were up 2% year over year, but I mean to speak a little bit more about that.
The the growth itself in terms of new tenants and in terms of amendments on existing towers has slowed.
Speaker 5: But we think that slowed because of, let's call it macro industry dynamics, not because of anything that we are or aren't doing well in terms of more.
But we think that slowed because of let's call it macro industry dynamics not because of anything that we are or aren't doing well.
In terms of marketing the towers.
Speaker 5: We've mentioned it, we've slowed our capital spend. If you look at our competitors and their announcements, they're doing the same thing. And we're seeing the impact of that as we see new amendments and new co-locators in the tower business. By the way, that's entirely consistent with our tower competitors as well. They're seeing and reporting exactly the same thing.
We've mentioned it we've slowed our we've slowed our capital spend if you look at our competitors and their announcements there doing the same thing and we're seeing the impact of that as.
As we see new amendments and new co locators in the tower business by the way that's entirely consistent with our tower competitors as well are seeing in reporting exactly the same thing.
Speaker 5: midterm we remain optimistic and the reason for that optimism is there's there's several the first let me just start from a macro industry demand perspective
Mid term, we remain optimistic and the reason for that optimism is there are several.
First let me just start from a macro industry demand perspective.
<unk>.
Speaker 5: The FCC does not have spectrum authority right now. By the way, I think that's a travesty. But nonetheless, there's no spectrum auctions on the horizon.
The FCC does not have spectrum authority right now by the way I think thats a travesty.
But nonetheless, there is no spectrum auctions on the horizon.
Speaker 5: And even though we haven't seen the spectrum plan from the NTIA, there's no obvious near-term mid-band spectrum that they're talking about releasing, notwithstanding, my best efforts to try to convince the mother was, what does that mean? It means that as we get into 6G, the way that you're going to be able to support the increased demand from wireless customers, whether it's consumer, whether it's enterprise, is going to be with a denser grid. You either have to put more spectrum on the existing grid. We don't currently have a road.
And even though we haven't seen the spectrum plan from the NTIA.
There is no obvious near term mid band spectrum that they're talking about releasing notwithstanding my best efforts to try to convince them otherwise what does that mean it means that as we get into six Chi. The way that you are going to be able to support the increased demand from wireless customers, whether it's consumer whether it's enterprise is going to be with a denser grid.
You either have to put more spectrum on the existing grid. We don't currently have a roadmap towards that.
Speaker 5: And so with wireless companies are going to support that need, they're going to have to dance with by their
And so with wireless companies are going to support that need theyre going to have to densify their grid and a denser grid in the long run is good for the tower business and is particularly good for our towers and.
Speaker 5: And a denser grid in the long run is good for a tower business and it's particularly good for our
Speaker 5: And the reason I say it's particularly good for our tower businesses is that I think that our towers are particularly differentiated in terms of their proximity to other competitive towers. Doug mentioned in his prepared remarks.
And the reason I say, it's particularly good for our tower business is that I think that our towers are particularly differentiated in terms of their proximity to other competitive towers, Doug mentioned in his in his.
Prepared remarks.
Speaker 5: 30% of our tower portfolio doesn't have another tower within two miles.
30% of our tower portfolio doesn't.
It doesn't have another tower within two miles.
Speaker 5: And what that means is as we move towards 6G and as the needs of the network get towards higher and higher bandwidth, those towers are going to be particularly differentiated.
And what that means is as we move towards <unk> and as the needs of the network get towards higher and higher bandwidth those towers are going to be particularly differentiate it.
Speaker 5: And so you couple that with the fact that our existing co-location rate is already significantly below our competitors. I view that as only upside.
So you couple that with the fact that our existing co location rate is already significantly below our competitors I view that as only upside.
Speaker 5: Couple that with wireless companies are gonna have to densify in our tower portfolio is really well positioned to support that densification.
Couple that with wireless companies are going to have to densify in our tower portfolio is really well positioned to support that densification.
Speaker 5: That's why we remain really optimistic about the long-term growth in this segment. And while I say segment, it's not formally a segment. The long-term growth in this portion of the business and notwithstanding some of the kind of more near-term slowdowns that we're seeing as folks pull back on Capitol. Hopefully that-
That's why we remain really optimistic about the long term growth in this segment.
And while I say segment not formally a segment the long term growth in this portion of the business.
And notwithstanding some of the kind of more near term slowdowns that we're seeing as folks pull back on capital hopefully that gives you a sense about how we're thinking about.
Speaker 14: Yeah, thank you. And my second question is, both for LT and Michelle. So I think earlier this year, management of both companies talked about kind of stepping up.
Thank you.
And my second question is both for LTE.
Michelle.
So I think earlier this year management of both company has talked about kind of stepping up collaboration efforts, including.
Speaker 14: collaboration efforts, including an environment, no relationship, pre-selling each other products, potential applying for government funding together. So I was wondering, we're close to the end of the year, where you are in this collaboration process and looking into 2024, I guess.
No relationship selling each other's products potentially by applying for government funding together. So I was wondering.
We're close to the animals, a year, where you are in this collaboration process and looking into 2024 I guess.
Speaker 14: What degree does it make sense to apply for beat funding or other government funding together or roll out fiber services in some of...
To what degree does it makes sense to apply for funding or other government funding together or rollout fiber services in silos.
Speaker 14: U.S. federal markets, if it makes sense to explore possibilities for the bundle of
U S cellular markets.
If it makes sense to explore possibilities for the bundled offering.
Speaker 14: And any other thoughts you have, one kind of broader collaboration.
As opposed to you have one kind of broader collaborations.
Speaker 5: So Sergei, I'll let Michelle talk about MVNO and how she and TDS are thinking about that in terms of collaboration opportunities you keyed on two of them. I think we continue to explore opportunities where we can co-sell.
So Sergey I'll, let Michele talk about <unk>, and how <unk> and Tds or thinking about that.
In terms of collaboration opportunities you keyed on two of them I think we continue to explore opportunities where we can co sell with.
Speaker 5: We have multiple pilots running where our footprints overlap. It's a relatively small overlap as far as, you know, US Cellular's overall footprint, but where we do, we continue to see if there's opportunities for us to market and sell and serve TDS's wireline products for tickets.
We have multiple pilots running where our footprint overlap.
A relatively small overlap as far as U S. Cellular's overall footprint, but where we do we continue to see if there's opportunities for us to market and sell and serve Tds is.
Wireline products, particularly fiber.
Speaker 5: You keep on bead. I think that could be a really interesting opportunity, but we have to wait and see how the states are going to define the bid parameters. Let me just explain what I mean. It's not clear to me if states are going to create a set geography.
You keyed on deed.
Think that could be a really interesting opportunity.
But we have to wait and see how the states are going to define the bid parameters and let me just explain what I mean.
It's not clear to me if states are going to create a.
Our set geography, and then put that so let's call. It one quarter at a state or a 10th of a state or a county and Theyre going to say.
Speaker 5: and then put that, so let's call it, you know, one quarter of a state or a tenth of a state or a county. And they're gonna say,
Speaker 5: Please bid on this geography and what it would cost to connect all the homes in that geography un and underserved with whatever the best technology is.
Please bid on this geography, and what it would cost to connect all the homes in that geography, and underserved with whatever the best technology is that you have.
Speaker 5: If that's the way states should choose to approach it, I think fiber companies of any sort, including TDS, are going to have to partner with wireless players because there's almost certainly going to be homes in that geography, but it's not cost effective, and it's not time effective to connect with fiber.
That's the way states choose to approach it.
I think fiber companies of any sort, including Tds are going to have to partner with wireless players because there is almost certainly going to be homes in that geography, but it's not cost effective and it's not kind effective to connect with fiber Butte.
Speaker 5: Beautiful thing about this is obviously we already have an existing solid partnership and solid connections with TDS So we think will be particularly well positioned
Beautiful thing about this is obviously, we already have an existing solid partnership and solid connections with Tds. So we think we'll be particularly well positioned.
Speaker 9: to bid for those areas where states choose that approach. But there's a different approach they could take.
To bid for those areas, where states choose that approach, but it is a different approach they could take.
Speaker 5: The second approach they could take is instead, they could define a geography and they could say, okay, fiber players.
The second approach they could take us instead, they could they could define a geography and they can say okay.
Fiber players.
Speaker 5: Please bid for whichever connections, whichever homes you think you can connect in this area with fiber.
<unk> bid for whichever connections whichever homes, you think you can connect in this area with fiber.
Speaker 5: And then they could come back with a second round and say, okay, whether it's wireless players, fixed wireless with.
And then they could come back with a second round and say, okay, whether it's wireless players fixed wireless swift.
Speaker 5: I don't think satellites, particularly going to play very well, but they might try to. Can you now, what would it take for you to-
I don't think satellites, particularly going to play very well, but they might try to.
Can you know.
What would it take for you to cover the rest of those homes.
Speaker 5: In that situation, there wouldn't be as much opportunity to bid.
And that situation wouldn't see as much opportunity to bid jointly.
I personally think based on my conversations with state officials, there and we're going to be leaning more towards the former approach.
Would lead for some really good collaboration opportunities, but its little bit early to tell we're still only seeing the first the first state plans start to trickle out we're going to have to see more before we can really define the full potential of what that partnership might look like.
I'll, let Michele talk is whatever she'd like to about the <unk> options at telecom.
Yeah. Thanks, Thanks LTE.
Yes, so far and D&O.
Our currently making great progress on getting an <unk> product launched for Tds Telecom, it's going to be called Tds mobile or in the final stages of contract negotiations and integrations with our partners.
Speaker 7: We are an NCTC member and so we have chosen to participate in the NCTC MVNO program and sign up with the partners that they have selected to support that program.
And TTC member and so we have chosen to participate in the N CTC <unk> program and sign up with the partners that they have selected to support that program. However, we will also be working with U S. Cellular.
Speaker 7: However, we will also be working with U.S. Cellular. As we've mentioned in the past.
As we've mentioned in the past U S. Cellular does overlap with Tds telecoms footprint and about 40% of our geographies could be served by U S cellular and where that overlap happens, we do expect <unk> to be our partner to offer Tds mobile where that does not overlap than we will.
Speaker 7: U.S. cellular does overlap with TDS telecom's footprint and about 40% of our geographies could be served by U.S. cellular and where that overlap happens, we do expect U.S. cellular to be our partner to offer TDS mobile.
Speaker 7: where that does not overlap, then we will have to leverage a different wireless carrier and that's the partner that NCTC has chosen. So we're very excited about this new TDS mobile product. We're getting very close and we expect to have it launched here within in the next few months.
Have to leverage a different wireless carrier and that's that's the partner that Ntt's. He has chosen so we're very excited about this new Tds mobile product, we're getting very close and we expect to have it launched here within in the next few months.
Got it thank you.
Okay.
Speaker 3: Thank you, Ms. Thompson. I'll turn things back to you for new closing comments at this time. Okay. Thanks, everyone, for your time today. Have a good weekend.
Thank you Ms Thompson, and I will turn things back to you for any closing comments at this time. Okay. Thanks, everyone for your time today and have a good weekend.
Speaker 2: Thank you, Ms. Thompson. Ladies and gentlemen, does include the TDS and US cellular 30-quarter 2023 operating results call that could thank you all so much for joining us and wish you all a great day. Goodbye.
Thank you Ms Thompson, ladies and gentlemen, it does conclude the Tds and U S. Cellular third quarter 2023 operating results call, we'd like to thank you all so much for joining us and wish you all a great day Goodbye.
Speaker 15: Please wait, the conference will begin shortly.
Please wait the conference will begin shortly.
Okay.
Thank you.
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