Q2 2024 United States Cellular Corp Telephone and Data Systems Inc Earnings Call

John: Ladies and gentlemen, thank you for standing by. My name is John, and I will be your conference operator for today. At this time, I would like to welcome everyone to the TDS and US Cellular Second Quarter 2024 Operating Results Conference Call. All lines have been placed on mute to prevent any background noise.

Ladies and gentlemen, thank you for standing by my name is John and I'll be your conference operator for today at this time I would like to welcome everyone to the PBS and U S.

John: Please wait; the conference will begin shortly.

Second quarter operating results conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Thank you Brad Darwin again, thank you.

John: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Thank you. I would now like to turn the call over to Colleen Thompson, Vice President, Corporate Relations. Please go ahead.

I would now like to turn the call over to Colleen Thomson Vice President Corporate Relations. Please go ahead.

Colleen Thompson: 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 in the Investor Relations sections of the TDS and U.S. Cellular websites. With me today in offering prepared comments are from TDS, Vicki Villacrez, Executive Vice President and Chief Financial Officer; from US Cellular, LT Therivel, President and Chief Executive Officer; Doug Chambers, Executive Vice President, Chief Financial Officer, and Treasurer; and from TDS Telecom, Michelle Brukwicki, Senior Vice President of Finance and Chief Financial Officer.

Colleen Thomson: 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 Change: With me today and offering prepared comments are from Tds, Vicki <unk> 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 quickie senior Vice President of Finance and Chief financial.

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Colleen Thompson: This call is being simultaneously webcast on the TDS and U.S. Cellular Investor Relations websites. Please see the websites for slides referred to on this call, including non-GAAP reconciliation. We provide guidance for both Adjusted Operating Income Before Depreciation and Amortization, or OIDA, and Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization, or EBITDA, to highlight the contributions of U.S. Cellular's wireless partnership. TDS and U.S. Cellular filed their SEC Forms 8K, including the press releases and our 10Qs, earlier this morning.

This call is being simultaneously webcast on the Tds and U S cellular investor relations websites.

Please see the websites for slides referred to on this call, including non-GAAP Reconciliations 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.

S and U S cellular filed their SEC forms 8-K, including the press releases in our 10-Qs earlier this morning.

Colleen Thompson: As shown on slide 2, 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 review the Safe Harbor paragraphs in our press releases and the extended version included in our SEC filings. And with that, I will now turn the call over to Vicki Villacrez.

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 review the safe Harbor paragraphs in our press releases and the extended version included in our SEC filings.

Speaker Change: And with that I will now turn the call over to Vicki Bill or Chris Vickie, Okay. Thank you Colin and good morning, everyone.

Vicki Villacrez: Okay. Thank you, Colleen, and good morning, everyone.

Vicki Villacrez: This quarter reflects the culmination of a number of initiatives that will position the company for the future. Over the past year, there has been an incredible amount of work performed by our teams across the entire enterprise. Most notably, in late May, we announced a transaction arising from our strategic review of alternatives for U.S. cellulite. We are excited about the transaction, which is pending regulatory approval, as it would unlock value for our shareholders and provide clear benefits to our customers.

Vicki: This quarter reflects the culmination of a number of initiatives that will position the company for the future over.

Speaker Change: Over the past year, there has been an incredible amount of work performed by our teams across the entire enterprise.

Speaker Change: Most notably in late May we announced the transaction arising from our strategic review of alternatives for U S. Cellular we are excited about the transaction, which is pending regulatory approval as it would unlock value for our shareholders and provides clear benefits to our customers.

Vicki Villacrez: U.S. Cellular is retaining its nearly 4,400 owned towers, its equity partnership investments, and approximately 70% of Spectrum assets, which the company is currently working on monetizing. Also in the quarter, we announced that we entered into a definitive agreement to sell our one-neck IT solutions operation.

Speaker Change: U S. Cellular is retaining its nearly 4400 on towers, it's equity partnership investments and approximately 70% of spectrum assets, which the company is currently working on monetizing.

Vicki: So in the quarter, we announced that we entered into a definitive agreement to sell our one neck solutions operations. We expect the transaction to close later this quarter and we intend to use the proceeds to support our planned spend and Tds telecoms current fiber program.

Vicki Villacrez: We expect the transaction to close later this quarter, and we intend to use the proceeds to support our planned spend in TDS Telecom's current FIBR program. Turning to financial results, I'm very pleased that both business units delivered double-digit year-over-year improvements in Adjusted EBITDA, while making important investments in their networks in order to keep up with the pace of growth, up with our customers needs for increasing usage and Improved profitability drove increased TDS-free cash flow, ups year-over-year, and sequential, We will continue to take a measured approach to prioritizing and funding the investments in our business, while maintaining a focus on cost efficiencies across the enterprise.

Vicki: Turning to financial results I'm very pleased that both business units delivered double digit year over year improvements in adjusted EBITDA, while making important investments in their networks in order to keep up.

Vicki: With our customers' needs for increasing usage and speeds.

Vicki: Improved profitability drove increased Tds free cash flow up.

Vicki: Year over year and sequentially.

Vicki: We will continue to take a measured approach prioritizing and funding the investments in our businesses, while maintaining a focus on cost efficiencies across the enterprise.

Vicki Villacrez: Our management of the balance sheet has resulted in an improvement in leverage ratios, which are down year-over-year and sequentially. We ended the quarter in a good cash and liquidity position, and U.S. Cellular continues to generate free cash flow through adjusted EBITDA growth and prudent management of capital. They also paid down approximately $140 million in debt in the quarter. TDS Telecom is maintaining its focus on free cash flow by sizing and pacing the timing of capital expenditures commensurate with EBITDA generation.

Vicki: Our management of the balance sheet has resulted in an improvement in leverage ratios, which are down year over year and sequentially.

Vicki: We ended the quarter in a good cash and liquidity position U S. Cellular continues to generate free cash flow to adjusted EBITDA growth and prudent management of capital.

Speaker Change: They also paid down approximately $140 million in debt in the quarter Tds Telecom is maintaining its focus on free cash flow by sizing and pacing the timing of capital expenditures commensurate with EBITDA generation.

Vicki Villacrez: And at TDS Parent, we have an undrawn revolver and term-long capacity coupled with pending divestitures that puts us in place to continue supporting our fiber program as we move into the back half of the year and into 2025. I would also like to thank all of the associates for their hard work in these dynamic times. Now, I will turn it over to LT for further comments.

Speaker Change: At Tds parent, we have an undrawn revolver and term loan capacity, coupled with pending divestitures that puts us in place to continue supporting our fiber program as we move into the back half of the year and into 2025.

Speaker Change: I will also like to thank all of the associates for their hard work in these dynamic times and now I will turn it over to <unk> for further comments. Thanks.

LT Therivel: Thanks, Vicki. Good morning, everyone.

<unk>: Thanks, Vicki and good morning, everyone turning to slide five you can see our quarterly highlights.

LT Therivel: If you turn to slide five, you can see our quarterly highlights. The May announcement of our pending transaction with T-Mobile for the sale of our wireless operations is obviously a significant change to our long-term strategic direction and, as we discussed during our call in late May, will provide substantial benefits to all stakeholders. We filed an information statement on July 26, which contains details of both the transaction and the strategic alternatives review process and also unaudited historical and pro forma financial information. We have launched the regulatory approval process.

Speaker Change: The may announcement of our pending transaction with T mobile for the sale of our wireless operations is obviously, a significant change to our long term strategic direction.

Speaker Change: And as we discussed during our call in late May provide substantial benefits to all stakeholders.

Vicki: We filed an information statement on July 26.

Vicki: Which contains details of both the transaction and the strategic alternatives review process.

Vicki: And also unaudited historical and pro forma financial information we have.

Vicki: Launched the regulatory approval process and we remain optimistic that this process will have a favorable outcome.

LT Therivel: We remain optimistic that this process will have a favorable outcome. We remain convinced that the transaction with T-Mobile is the best long-term option for our customers, and they will have the long-term benefits of greater scale and a more competitive network. That said, in the near term, we remain highly focused on operating our business and delivering strong operational and financial results. And our performance this quarter is evidence that we are on track to do just that.

Vicki: We remain convinced that the transaction with T. Mobile is the best long term option for our customers.

Vicki: They will have the long term benefits of greater scale and a more competitive network.

Vicki: That said in the near term, we remain highly focused on operating our business and delivering strong operational and financial results.

Vicki: And our performance. This quarter is evidence that we are on track for doing just that.

LT Therivel: We also announced that we'll be seeking to monetize the remaining 70% of our spectrum that T-Mobile will not be purchasing, and this is an additional opportunity to unlock significant value. That process is active and ongoing, and given the nature of that process, we don't expect to have updates until it is concluded.

Vicki: We also announced that we'll be seeking to monetize the remaining 70% of our spectrum to T mobile will not be purchasing and this is an additional opportunity to unlock significant value.

Vicki: And our process is active and ongoing given the nature of that process. We don't expect to have updates until it is concluded.

LT Therivel: In conjunction with entering into the transaction with T-Mobile, we're now reporting our results of operations in two segments, wireless and tower. This new segment reporting provides perspective on the wireless operations that we expect to convey to T-Mobile upon the close of the transaction pending regulatory approval, and the Tower Operation will add an anchor tenant for at least 15 years under the new MLA. You provided historical segment results in a Form 8-K that we filed on July 16.

Vicki: In conjunction with entering into the transaction with T. Mobile, we're now reporting our results of operations in two segments wireless and towers.

Vicki: In this new segment reporting provides perspective on the wireless operations that we expect to convey to T. Mobile upon close of the transaction pending regulatory approval.

Vicki: And the tower operations.

Vicki: It will add a anchor tenant for at least 15 years under the new MLA.

Vicki: We provided historical segment results in a form 8-K that we filed on July 16th we've.

LT Therivel: We've included segment results for the second quarter of 2024 in our investor presentation and in our Form 10-Q that we filed this morning. Doug will also talk a little bit more about towers during his, Let me talk a little bit about the quarterly results. Total net ads, including postpaid and prepaid, improved 15,000 year over year, from a 36,000 net loss in 2023 to a 21,000 net loss in 2024, and sequentially, total net ads improved by 36,000.

Vicki: We have included segment results for the second quarter of 2024, and our Investor presentation and in our Form 10-Q that we filed this morning Doug.

Vicki: Doug will also talk a little bit more about towers during his section.

Doug: Let me talk a little bit about the quarterly results.

Speaker Change: Total net adds including postpaid improved prepaid improved 15000 year over year from 36000 net loss in 2023 to 21000 net loss in 2024 and.

Vicki: Sequentially total net adds improved by 36000.

LT Therivel: Since the beginning of the year, we've made a number of promotional changes designed to improve our subscriber trajectory while remaining financially prudent, and I believe these changes have been a significant driver of our sequential improvement in subscriber results in the second quarter and why we'll keep working to further improve post-paid handset results. We were encouraged by the sequential improvement compared to the prior two quarters. We also continue to deliver solid year-over-year postpaid ARPU growth of 2%. In addition, fixed wireless continues on a strong growth trajectory as our subscribers grew to 134,000. And that's a 40% increase from the prior year. The competitive environment remains intense.

Speaker Change: Since the beginning of the year, we've made a number of promotional changes designed to improve our subscriber trajectory while remaining financially prudent.

Vicki: And I believe these changes have been a significant driver of our sequential improvement in subscriber results in the second quarter.

Vicki: While we will keep working to further improve postpaid handset results were.

Vicki: We're encouraged by the sequential improvement compared to the prior two quarters.

Vicki: We also continued to deliver solid year over year postpaid ARPA growth of 2%.

Vicki: In addition, fixed wireless continues on a strong growth trajectory as our subscribers grew to 134000 and Thats, a 40% increase from the prior year.

Vicki: The competitive environment remains intense.

LT Therivel: Carrier promotions remain very aggressive, and cable wireless remains a formidable competitor. Cable benefits from its ability to bundle broadband and mobility. You'll hear Michelle talk about TDS Telecom's progress in this area during her section. Cable wireless also has an economic advantage because it can offload a significantly greater amount of its traffic to Wi-Fi, and we're seeing cable offering customers buy one line, get one line free, and also free mobile lines as a retention offer for subscribers rolling off the ACP program.

Vicki: Gary your promotions remain very aggressive in cable wireless remains a formidable competitor.

Vicki: Cable benefits from their ability to bundle broadband and mobility and Youll hear Michelle talk about Tds telecoms progress in this area during her section.

Vicki: Cable wireless also has an economic advantage because they can offload a significantly greater amount of air traffic to Wi Fi and we're seeing cable offering customers buy one line get one line free and also a free mobile lines as a retention offer for subscribers rolling off the ECP program.

LT Therivel: And this is all in the broader context of the total pool of available subscribers declining 9% in the quarter. Given those challenges, although we do remain net at negative, I'm pleased with our sequential improvement in subscriber results, as well as our ARPA. Customer retention remains a key focus for us, and both postpaid and handset and prepaid churn improved year over year. Postpaid handset sharing improved by four basis points as we've been rewarding our existing customers with us days, us days, or pulsed periods, where existing customers are eligible for attractive upgrades.

Vicki: And this is all in the broader context of the total pool of available subscribers declining 9% in the quarter.

Speaker Change: Given those challenges, although we do remain net adds negative I am pleased with our sequential improvement in subscriber results as well as our <unk> expansion.

Speaker Change: Customer retention remains a key focus for us in both postpaid and handset in prepaid churn improved year over year.

Vicki: Postpaid handset churn improved four basis points as we've been rewarding our existing customers with us days stays where post periods for existing customers, who are eligible for attractive upgrade promotion.

LT Therivel: In addition, prepaid churn improved by almost 60%. We improve distribution. We continue to deliver a great product, compelling pricing, and enhanced digital engagement for our prepaid customers. The result of these efforts drove positive net ads in our prepaid business for the second quarter. While our exposure to ACP was relatively minimal, about 19,000 customers, we've worked with those customers to provide them with special offers to ensure they are able to stay. Our multi-year cost efficiency program continues to drive positive expense momentum and has enabled us to successfully deliver improved adjusted OIDA, up 14% in the quarter. During the quarter, expenses were down in all major categories, which is impressive considering network costs are increasing with the 5G rollout.

Vicki: In addition, prepaid churn improved by almost 60 basis points as we improved distribution and we continue to deliver a great product compelling pricing and enhanced digital engagement are prepaid customers and the result of these efforts drove positive net adds in our prepaid business in the second quarter.

Vicki: While our exposure to ACP was relatively minimal about 19000 customers. We've worked with those customers to provide them with special offers to ensure they are able to stay connected.

Vicki: Our multi year cost efficiency program continues to drive positive expense momentum.

Vicki: And has enabled us to successfully deliver improved adjusted OIBDA up 14% in the quarter.

Vicki: And during the quarter expenses were down in all major categories, which is impressive considering network costs are increasing with the <unk> rollout. Although this has mitigated with the decommissioning of the CDMA network. The team is doing an outstanding job managing expenses.

Doug Chambers: Although this is mitigated with the decommissioning of the CDMA network, the team is doing an outstanding job of managing expenses. And speaking of our 5G rollout, our mid-band deployment remains on track. By the end of 2024, we expect to have mid-band on cell sites that handle almost 50% of our data traffic. And this is in addition to having 80% of our data traffic already being handled by sites that have been upgraded to low-band files.

Vicki: And speaking of our five <unk> rollout our mid band deployment remains on track by.

Vicki: By the end of 2024, we expect to have mid band on cell sites that handle almost 50% of our data traffic.

Vicki: And this is in addition to having 80% of our data traffic already being handled by sites that have been upgraded to low band <unk>.

Doug Chambers: And this mid-band is a powerful enhancement to our network, which will allow us to further deliver the speeds and the capacity that our customers need for both mobility and fixed wire. Overall, I'm really pleased with the subscriber momentum we've seen in the second quarter, and we continue to deliver strong financial results. 2024 has been a year of unprecedented change for the organization, and I want to recognize that with all of these changes, the team has remained focused on our customers and kept them connected to what matters most. I continue to be extremely proud of our team and their commitment to our mission. And I'll now turn the call over to Doug.

Vicki: And this mid band as a powerful enhancement to our network, which will allow us to further deliver the speeds and the capacity that our customers need for both mobility and fixed wireless.

Vicki: Overall, I'm really pleased with subscriber momentum we've seen in the second quarter and we continue to deliver strong financial results.

Vicki: 2024 has been a year of unprecedented change for the organization and I want to recognize with all of these changes. The team has remained focused on our customers and keeping them connected to what matters most.

Vicki: To be extremely proud of our team and their commitment to our mission.

Vicki: I will now turn the call over to Doug.

Doug Chambers: Thanks, LT, good morning. Let's review the financial results starting on slide 9. Although service revenue declined 2% as a result of a decrease in the average subscriber base, partially offset by higher post-paid ARPU, as LT mentioned, adjusted OIDA increased 14% as we continue to reduce cash expenses. System Operations Expense decreased 5% as Cost Optimization Actions, including the shutdown of our CDMA network in the first quarter of 2024, more than offset increases that resulted from our ongoing mid-band 5G deployment.

Doug: Thanks, <unk> good morning, Let's review the financial results starting on slide nine although service revenue declined 2% as a result of a decrease in the average subscriber base, partially offset by higher postpaid ARPA as LTE mentioned adjusted OIBDA increased 14% as we continue to be.

Speaker Change: Juice cash expenses.

Vicki: System operations expense decreased 5% as cost optimization actions.

Speaker Change: The shutdown of our CDMA network in the first quarter of 2024 more than offset increases that resulted from our ongoing mid band deployment.

Doug Chambers: Further, selling general and administrative expenses decreased 5%, excluding the impact of $13 million of strategic alternatives expenses included in this expense category in the second quarter of 2024 decreased 9% due to decreases in sales related expenses, bad debts expense, as well as decreases across various other general and administrative categories due to cost optimization initiatives.

Vicki: Further selling general and administrative expenses decreased 5% and excluding the impact of $13 million of strategic alternatives expenses included in this expense category in the second quarter of 2024 decreased 9% due to decreases in sales related expenses bad debt.

Vicki: <unk> expense as well as decreases across various other general and administrative categories due to cost optimization initiatives.

Doug Chambers: Slides 10 and 11 present the separate results for the Wireless and Towers segments. Intercompany revenues in the Towers segment represent rental revenue assessed to the U.S. cellular wireless segment. These rental payments are assessed on a month-to-month basis, and accordingly, there is no straight-line accounting impact related to these rental payments.

Speaker Change: Slides 10, and 11 presents a separate results for the wireless and towers segments.

Speaker Change: Intercompany revenues and the towers segment represents rentals assessed to the U S cellular wireless segment.

Speaker Change: These rentals are assessed on a month to month basis and accordingly. Accordingly, there is no straight line accounting impacts related to these rentals.

Doug Chambers: These rental costs are also reflected in system operations expense of the wireless segment. The intracompany rental rate reflects an estimated market rate based on the volume of tower rent. Tower's revenue from third parties increased 1% in the second quarter as new co-location growth slowed relative to recent years and was also impacted by defections, including sprint-related defections. As we have discussed on prior calls, the wireless industry has moderated capital expenditures beginning in 2023, and we experienced a corresponding slowdown in new tenant and amendment activity, which is impacting tower revenue growth rates in 2024.

Speaker Change: These rentals are also reflected in system operations expense of the wireless segment.

Speaker Change: The intercompany rental rate reflects an estimated market rate based on the volume of tower rentals.

Speaker Change: Tower's revenue from third parties increased 1% in the second quarter as new Colocation growth has slowed relative to recent years and was also impacted by detections, including sprint related infections.

Speaker Change: As we have discussed on prior calls the wireless industry has moderated capital expenditures beginning in 2023, and we experienced a corresponding slowdown in new tenant and amendment activity, which is impacting tower revenue growth rates in 2024.

Doug Chambers: Again, we remain bullish on the long-term outlook for our towers business. Although near-term activity has slowed, the long-term capacity needs of the industry will require further densification, which can drive demand for towers. The tenancy rate of our portfolio of towers is still below the industry average, and the towers are uniquely positioned geographically, so we believe we have a lot of opportunity tomorrow.

Speaker Change: Again, we remain bullish on the long term outlook for our towers business, although near term activity has slowed the long term capacity needs of the industry will require further densification.

Speaker Change: And that can drive demand for towers.

Speaker Change: The tendency rate of our portfolio of towers is still below the industry average and the towers are uniquely positioned geographically. So we believe we have a lot of opportunity to grow.

Doug Chambers: Further, the pending transaction with T-Mobile, which is subject to regulatory approval, and their commitment to lease 2,015 incremental towers for an initial term of 15 years, is expected to create a long-term foundation for third-party tower revenue. I would like to make a few comments on the future outlook of our tower business. As LT mentioned, we filed a Form 8K on July 16 that contains an exhibit with historical financial information on our towers segment, as well as an exhibit with an investor presentation to provide perspective on how our current towers segment operating results are expected to change after the close of the pending transaction to Seller Wireless Operations 2T Mobile, which is subject to regulatory approval.

Speaker Change: Further the pending transaction with T mobile, which is subject to regulatory approval and their commitment to these 2015 incremental towers for an initial term of 15 years is expected to create a long term foundation for third party tower revenues.

Speaker Change: I would like to make a few comments on the future outlook of our towers business as.

Speaker Change: As <unk> mentioned, we filed a form 8-K on July 16 that contains an exhibit with historical financial information on our towers segment as well as an exhibit with an investor presentation to provide perspective on how our current towers segment operating results are expected to change after the close of the pending transaction to sell our wireless.

Speaker Change: Patients to T mobile, which is subject to subject to regulatory approval.

Doug Chambers: Post-transaction close, significant changes to our tower's operations include the loss of intercompany tower revenue from U.S. Cellular and the addition of incremental tower revenue from T-Mobile resulting from the master license agreement that is part of the transaction. As a result, we expect longer-term adjusted OIDA margins for the tower segment, that is, three to five years post-transaction close, to be in excess of 50 percent. The expected margin excludes non-recurring expenses such as decommissioning costs.

Speaker Change: Post transaction close significant changes to our towers operations include the loss of intercompany tower revenue from U S. Cellular and the addition of incremental tower revenue from T mobile, resulting from the Master license agreement that is part of the transaction.

Speaker Change: As a result, we expect longer term adjusted OIBDA margins for the tower segment that is three to five years post transaction close to be in excess of 50%.

Speaker Change: The expected margin excludes nonrecurring expenses, such as decommissioning costs.

Doug Chambers: Post-transaction close financial projections include critical estimates and assumptions that can be found in the July 16th investor presentation. Changes in these estimates and assumptions, including future events, could impact these financial projections. Further, we have not determined the long-term strategy for our tower operations post-transaction close, so these financial projections are subject to change as that strategy and related operating decisions are further developed. Briefly on free cash flow, as Vicki mentioned, U.S. Cellular delivered strong free cash flow of $226 million in the first six months of 2024 through adjusted OEB growth and prudent management of both capital expenditures and working capital.

Speaker Change: Post transaction close financial projections include critical estimates and assumptions that can be found in the July 16th Investor presentation.

Speaker Change: Changes in these estimates and assumptions include future events could impact these financial projections.

Speaker Change: Further we have not determined the long term strategy for our tower operations post transaction close. So these financial projections of subsequent subject to change that strategy and related operating decisions are further developed.

Speaker Change: Briefly on free cash flow as Vicki mentioned U S player delivered strong free cash flow in the first six months of 2024 of 226 million to adjusted OIBDA growth and prudent management of both capital expenditures and working capital.

Doug Chambers: Our 2024 financial guidance on slide 12 remains unchanged from the guidance we issued in February of this year, as we remain on track to deliver on our financial plan. As a reminder, as mentioned last quarter, we expect capital expenditures for the full year 2024 to trend toward the lower end of our guidance range and be less than 2023 capital expenditures. I will now turn the call over to Michelle Brukwicki.

Speaker Change: Our 2024 financial guidance on Slide 12 remains unchanged from the guidance we issued in February of this year as we remain on track to deliver on our financial plan.

Speaker Change: As a reminder, as mentioned last quarter, we expect capital expenditures for the full year 2024 to trend towards the lower end of our guidance range and be less in 2023 capital expenditures.

Speaker Change: I'll now turn the call over to Michelle for equity shelf.

Michelle Brukwicki: Thank you Doug and good morning everyone. Let's turn to slide 14. I am happy to report that our broadband strategy delivered nice top and bottom line growth again this quarter. Some highlights include a 4% increase in operating revenues, a 5% increase in residential broadband connections, a 5% increase in residential ARPU, and due to our disciplined expense management, a 32% increase in adjusted EBITDA in the quarter. In addition to delivering strong financial results, we are continuing to grow our footprint.

Michelle: Thank you Doug and good morning, everyone, Let's turn to slide 14, I am happy to report that our broadband strategy delivered nice top and bottom line growth again this quarter.

Michelle: Some highlights include.

Michelle: <unk>, 4% increase in operating revenues.

Speaker Change: 5% increase in residential broadband connections.

Michelle: A 5% increase in residential our pool and due to our disciplined expense management, a 32% increase in adjusted EBITDA in the quarter.

Michelle Brukwicki: Expanding service addresses by 10% year-over-year, including 27,000 new marketable fiber addresses in the second quarter. We are making good progress towards our 2024 goal of 125,000 marketable fiber addresses. We're also making progress on adding wireless to our bundle. During the second quarter, we announced that we are officially entering the MVNO market through the established NCTC partnership.

Speaker Change: In addition to delivering strong financial results, we are continuing to grow our footprint.

Speaker Change: Banding service addresses 10% year over year, including 27000, new marketable fiber addresses in the second quarter, we are making good progress towards our 2024 goal of 125000 marketable fiber addresses.

Speaker Change: We're also making progress on adding wireless to our bundle during the second quarter, we announced that we are officially entering the <unk> market to the established and CTC partnerships.

Michelle Brukwicki: Our product will be called TDS Mobile, and we plan to begin offering it later this year. We believe that adding mobile to our product portfolio will be complementary to our broadband offering, and it will enable us to offer a full suite of competitive products and services to our customers. Initially, TDS Mobile will be offered exclusively to broadband customers in select areas, but over time, we plan to offer it in all of our markets, expansion, incumbent, and cable.

Speaker Change: Our product will be called Tds mobile and we plan to begin offering. It later this year.

Speaker Change: We believe that adding mobile to our product portfolio will be complementary to our broadband offering and it will enable us to offer a full suite of competitive products and services to our customers.

Speaker Change: Initially Tds mobile will be offered exclusively for broadband customers in select areas, but over time, we plan to offer it in all of our markets expansion incumbent and cable.

Michelle Brukwicki: We will provide pricing and device information closer to market launch. Moving to slide 15, you can see where we are on our longer-term scorecard. We are targeting 1.2 million marketable fiber service addresses, and we ended the quarter with 854,000.

Speaker Change: We will provide pricing and device information closer to market launch.

Speaker Change: Moving to slide 15, you can see where we are on our longer term scorecard.

Speaker Change: We are targeting $1 2 million marketable fiber service addresses we ended the quarter with 854000.

Michelle Brukwicki: This reflects progress in growing fiber through our expansion markets, as well as fibering up our incumbent markets. We're also targeting 60% of our total service addresses to be served by fiber. We ended the quarter with 49%.

Speaker Change: This reflects progress in growing fiber to our expansion markets as well as fiber ing up our incumbent markets.

Speaker Change: We're also targeting 60% of our total service addresses to be served by fiber we ended the quarter with 49% and our ILEC, 44% of our addresses are fibered up.

Michelle Brukwicki: In our ILAC, 44% of our addresses are fibered out. And finally, we are expecting to offer speeds of 1 gigabit or higher to at least 80% of our footprint. We finished the quarter with 73% at gigabit speeds.

Speaker Change: And finally, we are expecting to offer speeds of one gig or higher to at least 80% of our footprint. We finished the quarter with 73% of gig speeds.

Michelle Brukwicki: On slide 16, you can see that we are growing our footprint with a 10% increase in total service addresses year over year. As shown on the right side of the slide, we see increased demand for higher broadband speeds, with 79% of our customers taking 100 megabits per second or greater, up from 74% a year ago. We continue to increase the availability of gigabit plus speeds, and customer take rates of these speeds are growing, with 19% of our customer base on one gig or higher at the end of the quarter.

Speaker Change: On slide 16, you can see that we're growing our footprint with a 10% increase in total service addresses year over year.

Speaker Change: As shown on the right side of the slide we see increased demand for higher broadband speeds with 79% of our customers, taking 100, megabits per second or greater up from 74% a year ago.

Speaker Change: We continue to increase the availability of gig plus speeds and customer take rates of these speeds are growing with 19% of our customer based on one gig or higher at the end of the quarter.

Michelle Brukwicki: Turning to slide 17, you can see that we had 2,100 residential broadband net ads in the quarter, which contributed to 5% growth in residential broadband connections year over year. As we deliver new fiber service addresses, our teams are marketing and selling into those addresses. This quarter, we delivered 7,400 residential broadband net ads in our expansion markets. While this is consistent with recent results, NetApp did come in slower than our expectations this quarter. We have plans in place aimed at ramping up our broadband sales over the coming quarters, and we remain focused on achieving our penetration targets. Overall, the fundamentals of our fiber program are strong.

Speaker Change: Turning to slide 17, you can see that we had 2100 residential broadband net adds in the quarter, which contributed to 5% growth in residential broadband connections year over year.

Speaker Change: As we deliver new fiber service addresses our teams, our marketing and selling into those addresses.

Speaker Change: This quarter, we delivered 7400 residential broadband net adds in our expansion markets.

Speaker Change: While this is consistent with recent results that adds did come in slower than our expectations. This quarter. We have plans in place aimed at ramping our broadband sales over the coming quarters, and we remain focused on achieving our penetration targets.

Speaker Change: Overall, the fundamentals of our fiber program. Our strong these markets are contributing to revenue and adjusted EBITDA growth. Our expansion markets are more cost effective than our business case as expected and we're seeing that fiber markets are the most efficient networks to run.

Michelle Brukwicki: These markets are contributing to revenue and adjusted EBITDA growth. Our expansion markets are more cost-effective than our business cases expected, and we're seeing that fiber markets are the most efficient networks to run. Now, a few more comments on that ad.

Speaker Change: Now a few more comments on net adds.

Michelle Brukwicki: We had two discrete events this quarter that impacted this metric. First, one of our cable markets in Rio Doso, New Mexico, was devastated by wildfires, damaging customer homes, businesses, and plant equipment. Service was disrupted to thousands of customers in that area, and our teams have been working very hard to get customers back online as soon as possible. As of the end of June, we had approximately 1,000 broadband connection losses related to the fire. We now have re-established broadband services to over 90% of the community and are aggressively winning to win those customers back or to win those customers back. Second, the ACP program ended during the quarter.

Speaker Change: We had two discrete events this quarter that impacted this metric first one of our cable markets and Rio dos. So new Mexico was devastated by wildfires damaging customer homes businesses and plant equipment.

Speaker Change: Service was disrupted to thousands of customers in that area and our teams have been working very hard to get customers back online as soon as possible.

Speaker Change: As of the end of June we had approximately 1000 broadband connection losses related to the fire.

Speaker Change: We now have reestablished broadband services to over 90% of the community and are aggressively winning to work those customers back.

Speaker Change: When those customers back.

Michelle Brukwicki: Our team did a great job of getting these customers on other broadband plans that met their needs; of our 19,000 ACP customers, only 2,400 chose to disconnect. In addition to these two discrete events, we are experiencing increased competitive pressures across our ILEC and cable markets. This is consistent with industry trends, and specifically, there are more overbuilders in these markets. But in our ILEC, where we have upgraded our network from copper to fiber, we have been able to effectively defend and compete.

Speaker Change: Second the ACP program ended during the quarter.

Speaker Change: Our team did a great job of getting these customers on other broadband plans that met their needs of our 19000 ACP customers only 2400 chose to disconnect.

Speaker Change: In addition to these two discrete events, we are experiencing increased competitive pressures across our ILEC and cable market. This is consistent with industry trends and specifically if theres more overbuild there is in these markets.

Speaker Change: But in our ILEC, where we have upgraded our network from copper to fiber, we have been able to effectively defend and compete.

Michelle Brukwicki: With support from our Enhanced ACAM Program, we will get even more fiber into our ILEC markets over the next few years. And in our cable markets, we have a strong product capable of delivering gigabit speeds using DOCSIS 3.1. In addition, we strategically overbuild our networks with fiber in certain areas, and we put fiber in all new greenfield builds. In our cable markets, we continue to implement strategies to win and save customers in response to evolving industry competition. Also consistent with industry trends, we continue to experience video cord cutting.

Speaker Change: With support from our enhanced a Cam program, we will get even more fiber into our ILEC markets over the next few years.

Speaker Change: And in our cable markets, we have a strong product capable of delivering gig speeds using DOCSIS three one in.

Speaker Change: In addition, we strategically overbuild, our networks with fiber in certain areas and we put fiber in all new Greenfield builds.

Speaker Change: In our cable markets, we continue to implement strategies to win and save customers in response to evolving industry competition.

Speaker Change: Also consistent with industry trends, we continue to experience video cord cutting.

Michelle Brukwicki: In addition, our video attachment rate has been lower than planned, and we expect this trend to continue, which will have an impact on revenue for the full year. Now, turning to the middle graph, average residential revenue per connection increased 5%. This was due primarily to price increases. With increases in broadband connections and revenue per user, we saw 7% growth in residential revenues. Specifically, expansion markets delivered $28 million in residential revenues in the quarter, compared to $18 million a year ago. As expected, commercial revenues decreased 6% in the quarter as we continue to decommission our SELEC markets.

Speaker Change: In addition, our video attachment rate has been lower than planned and we expect this trend to continue which will have an impact on revenue for the full year.

Speaker Change: Now turning to the middle graph average residential revenue per connection increased 5%. This was due primarily to price increases.

Speaker Change: With increases in broadband connections and revenue per user we saw 7% growth in residential revenues.

Speaker Change: Specifically expansion markets delivered $28 million of residential revenues in the quarter compared to $18 million a year ago.

Speaker Change: As expected commercial revenues decreased 6% in the quarter as we continued to decommission our CLEC markets.

Speaker Change: And lastly, wholesale revenues increased 2% due to the incremental revenues, we have started to receive under the enhanced ATM program.

Michelle Brukwicki: And lastly, wholesale revenues increased 2% due to the incremental revenues we have started to receive under the enhanced ACAM program. On slide 18, you can see our quarterly performance. Operating revenues were up 4% in the quarter as the growth in residential revenues and wholesale was partially offset by the decline in commercial revenues. As our fiber connections and revenues grow, coupled with a 6% decrease in cash expenses for the quarter, we are seeing nice growth in adjusted EBITDA, up 32% in the quarter.

Speaker Change: On Slide 18, you can see our quarterly performance.

Speaker Change: Operating revenues were up 4% in the quarter as the growth in residential revenues in wholesale was partially offset by the decline in commercial revenues.

Speaker Change: As our fiber connections and revenues grow coupled with a 6% decrease in cash expenses for the quarter. We are seeing nice growth in adjusted EBITDA up 32% in the quarter.

Michelle Brukwicki: Capital expenditures were $78 million in the quarter, down 41% from last year, as planned. Slide 19 shows our 2024 guidance. As previously mentioned, video connections are expected to be lower than planned, and the ramp-up of broadband net ads has been slower.

Speaker Change: Capital expenditures were $78 million in the quarter down 41% from last year as planned.

Speaker Change: Slide 19 shows our 2020 for guidance.

Speaker Change: As previously mentioned video connections are expected to be lower than planned and the ramp up of broadband net adds has been slower. Therefore, we're now projecting revenues to be in the range of 1.05 to 1.08 billion.

Michelle Brukwicki: Therefore, we are now projecting revenues to be in the range of $1.05 to $1.08 billion. Although our revenue range is being lowered, the team has continued to exercise strong expense management. As a result, we are now raising our adjusted OIBDA and adjusted EBITDA ranges to $330 to $360 million. We are not making any changes to our capital expenditures guidance.

Speaker Change: Although our revenue range is being lowered the team has continued to exercise strong expense management.

Speaker Change: As a result, we are now raising our adjusted OIBDA and adjusted EBITDA ranges to $330 million to $360 million.

Speaker Change: We are not making any changes to our capital expenditures guidance with increased adjusted EBITDA and unchanged capital, we anticipate delivering higher free cash flow than originally expected.

Michelle Brukwicki: With increased adjusted EBITDA and unchanged capital, we anticipate delivering higher free cash flow than originally expected. As we have been doing all year and will continue for the next few years, we are balancing the priorities of both our Fiber Expansion Program and the EA-CAM Program. We are carefully planning and engineering both programs to keep them progressing at a pace to meet our build commitments while staying within our available funding. In closing, I want to thank all of the TDS Telecom Associates for their focus on our strategic priorities, including caring for our customers and communities and carefully managing our spending. I will now turn the call back over to Colleen.

Speaker Change: As we've been doing all year and will continue for the next few years, we are balancing the priorities of both our fiber expansion program and the EA Cam program, we're carefully planning and engineering both programs to keep them progressing at a pace to meet our build commitments, while staying within our available funding.

Speaker Change: In closing I want to thank all of the Tds Telecom associates for their focus on our strategic priorities, including caring for our customers and communities and carefully managing our spending.

Speaker Change: I will now turn the call back over to Colleen.

Colleen Thompson: Okay, we will now open up the call to questions. Operator, we're ready for the first question. Thank you. As a reminder, if you'd like to ask a question, please press star followed by the number one.

Colleen Thomson: Okay. We will now open up the call to questions operator, we're ready for the first question.

John: Thank you. As a reminder, if you'd like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Rick Prentiss from Raymond James. Please go ahead.

Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: Your first question comes from the line of Freak Prentiss from Raymond James. Please go ahead.

Freak Prentiss: Hi, Rick.

Speaker Change: Rick.

John: Okay, let's go to the next one. The next question comes from:

Speaker Change: Okay, Let's go to the next one.

John: The next question comes from the line of Sergey Dluzhevskiy from Gamco Investors. Please go ahead.

Speaker Change: The next question comes from the line of Sergey Youll Dejevsky from Gamco investors. Please go ahead.

Speaker Change: Good morning, guys.

Speaker Change: Good morning.

LT Therivel: A couple of questions for LT about the tower business. Maybe just the first one, a broad question. As you look at your tower portfolio pro forma for the T-Mobile transaction closing, I guess, at a high level, what are the strengths, in your opinion, of this portfolio? What are some areas of improvement? And what would be the main selling points to potential allocators as you market those towers?

Speaker Change: Couple questions for LTE.

Speaker Change: <unk>.

Speaker Change: The tower business.

Speaker Change: Maybe just the first one broad question as you look at your tower portfolio pro forma for T. Mobile transaction closing I guess at a high level what are the strengths in your opinion.

Speaker Change: All of this portfolio what are some areas of improvement and Woodford visit main selling points to potential co locators as youll markets those towers.

LT Therivel: Yeah, good morning, Sergey. Thanks for the question. The, I mean, the strengths, I think, really are evident in just the portfolio of the towers themselves. We've provided detail in the past about our tower portfolio. One, geographically diverse and geographically attractive. What do I mean by that?

Speaker Change: Yes. Good morning, Thanks for the question.

Speaker Change: I mean the strength.

Speaker Change: Inc. Really are evident in just the portfolio of the towers themselves.

Speaker Change: Provide a detail in the past about our tower portfolio one.

Speaker Change: Geographically diverse and geographically attractive what do I mean by that there's relatively few competing towers within a mile one mile and a half two miles three miles et cetera, there their towers that are geographically unique.

LT Therivel: There are relatively few competing towers within a mile, one mile and a half, two miles, three miles, etc. They're towers that are geographically unique. And over time, that will be attractive to co-locators, particularly as people have to densify their network. It's not cost effective to try to put up a new tower right next to where a tower exists today.

Speaker Change: And over time that will be attractive to co locators, particularly as people have to densify their networks.

Speaker Change: It's <unk>.

Speaker Change: Not cost effective to try to put up a new tower right next to where encounter exists today and so that geographical uniqueness.

LT Therivel: And so that geographical uniqueness, I think, is a key driver of the attractiveness of the portfolio. The opportunity is simple, which is simply to grow our co-location. One of the things that if you do the math on the margins around the portfolio, both current and forecasted in the information that we provided in the investor presentation, the expenses that underpin these towers are quite small, right? There's not a whole lot of expenses in running this tower portfolio, and so the entire driver of the delta in profitability between ourselves and some of the other larger tower players in the industry is driven by co-location.

Speaker Change: Because he is a key driver of the attractiveness of the portfolio.

Speaker Change: The opportunity is simple, which is simply to grow our colocation rates.

Speaker Change: One of the things that if you if you do the math on the margins around the portfolio, both current and forecasted in the information that we provided in the investor presentation.

Speaker Change: The expenses that underpin these towers are quite small right.

Speaker Change: There's not a whole lot of expense and running this tower portfolio.

Speaker Change: And so the entire driver of the delta in profitability between ourselves.

Speaker Change: And some of the other larger tower players in the industry is driven by co location right and so as we increase those co location rates over time.

LT Therivel: And so as we increase those co-location rates over time, you can expect those margins to steadily increase. And that's both margins and cash flow that drops straight to the bottom line. And so that's why we're optimistic about this segment. It's both an attractive asset, and we think that we can grow those co-location rates steadily over time. That'll improve the financials. Hopefully, that answers your question.

Speaker Change: You can expect those margins to steadily increase and thats, both margins and that cash flow that drop straight to the bottom line and so.

Speaker Change: That's why we're optimistic about this segment. It's both it's both an attractive asset and we think that we can grow those co location rate steadily over time that will improve the financials.

Speaker Change: I hope that answers your question Sir.

LT Therivel: Great. And maybe another more specific question on the powers. So obviously, T-Mobile signed a new MLA to be a tenant on those incremental $2,000 [inaudible] I mean, it could differ, and you might end up with between 800 to 1,800 towers without collocators. So the question, I guess, between now and then, how would you be planning for this transition? To what degree would you be able to market those towers? And how would you balance having those towers without collocators and looking to market them versus decommissioning some?

Speaker Change: Great.

Speaker Change: And maybe another.

Speaker Change: A more specific question on the powers.

Speaker Change: So.

Speaker Change: Yes.

Speaker Change: <unk> signed a new MLA to be dependent on those incremental 2000.

Speaker Change: 15 towers, but the exact selections.

Speaker Change: A list of their exact selections one been known for some time I think you indicated until 30 months at the transaction close so depending on their selections the overlap this dollars without.

Speaker Change: Without the Phenoms.

Speaker Change: B.

Speaker Change:

Speaker Change: I mean, it could differ and you might end up.

Speaker Change: And I commented to $1800 without the <unk>. So the question I guess.

Speaker Change: Between now and then how would you be planning for this transition towards degree would you be able to market those towers and how would you balance kind of heading the stellar results.

Speaker Change: So looking to market them versus decommissioning cells.

LT Therivel: Yes, Sergey, the uncertainty around the towers that T-Mobile will be on is an interesting, it's an interesting financial equation that that creates for us, right? Because Once we know which towers they will be on, if the result of that is that the majority of towers that they're on do not have an existing co-locator, that creates more attractive long-term growth potential, but it somewhat impacts margins because you now have more towers with simply one co-locator on them.

Speaker Change: Yes, very good.

Speaker Change: So the that.

Speaker Change: You mentioned the uncertainty around the towers to T mobile will be on it's an interesting. It's an interesting financial equation that that creates for us right because.

Speaker Change: Got it.

Speaker Change: Once we know which towers day will be on.

Speaker Change: If.

Speaker Change: If what if the result of that is that the majority of towers that they are on do not have an existing co locator.

Speaker Change: It creates more attractive long term growth potential, but it is somewhat impacts margins because you now have more towers with simply one co locator on it if instead they end up on towers, where we have current co locators, meaning there is a larger majority of the towers they select <unk>.

LT Therivel: If instead they end up on towers where we have current co-locators, meaning the larger majority of the towers they select are where we currently already have a tenant, that'll create better margins, but it'll mean that we have more naked towers at the conclusion of the transaction, and so we'll have to determine what we do with those naked towers. I do not think it is a foregone conclusion that those naked towers will necessarily be decommissioned.

Speaker Change: We currently already have a tenant.

Speaker Change: That will create better margins, but it will mean that we have more naked towers at the conclusion of the completion of the transaction.

Speaker Change: So we'll have to determine what we do with those naked towers I do not think it is a foregone conclusion that those naked towers will necessarily be decommissioned.

Speaker Change: We have a lot of different things that we can do with those towers.

LT Therivel: We have a lot of different things that we can do with those towers, and we're going to work that out in the coming months and coming quarters as we get more transparency into T-Mobile. Nothing that I just talked about impacts the way that we are marketing that tower portfolio to other potential co-locators. So what we're not trying to do is guess which towers they're going to be on and, consequently, prioritize or deprioritize those towers in our market.

Speaker Change: And we're going to work that out in the coming months and coming quarters, as we get more transparency into T Mobile's plans.

Speaker Change: Nothing that I just talked about.

Speaker Change: Impacts the way that we are marketing that tower portfolio to other potential co locators. So what we're not trying to do is to gas, which towers. They are going to be on and consequently, prioritize where de prioritize those towers in our marketing efforts. It is full speed ahead in terms of marketing our entire tower.

LT Therivel: It is full speed ahead in terms of marketing our entire tower portfolio to other potential co-locators, and we have steadily improved that co-location rate over time, completely independent of the T-Mobile deal. And you can expect that to continue.

Speaker Change: Two other potential co locators, and we have steadily improved that co location right over time completely independent of the of the T. Mobile deal and you can expect that to continue and we're going to continue to try to get more co locators on our towers.

LT Therivel: We're going to continue to try to get more co-locators on our towers. This is in an environment, and we kind of mentioned this somewhat in our earnings comments. I mean, the environment right now for increased tower co-locations is a slope, right? If you look at our capital spend, our approach as a wireless business to capital spend is quite similar to the approach in terms of capital spend from other players in the industry.

Speaker Change: This is in an environment and we kind of mentioned this somewhat in our in our.

Speaker Change: In our earnings comments.

Speaker Change: I mean, the environment right now.

Speaker Change: <unk> increased our co location is the slope.

Speaker Change: If you look at our capital spend our approach as a wireless business to capital spend is quite similar to the approach in terms of capital spend from other players in the industry.

LT Therivel: People are on the back end of their mid-band rollouts, the back end of their 5G rollouts, and so overall capital is down. And that affects the ability to put new towers into place and to get new co-locators, but I firmly believe this is a temporary phenomenon. What you'll see is that capacity needs for the industry are going to continue, and nothing that I'm seeing in the industry would indicate that the demand for mobile data is going to increase. And because we don't have an active spectrum, there is, other than what we're out there marketing, there is not a whole bunch of spectrum out there to be had.

Speaker Change: People are on the back end of their mid band Rollouts at the back end of their <unk> Rollouts and so overall capital.

Speaker Change: Is down and that affects the ability to put new towers into place and to get new co locators, but I firmly believe this is a temporary phenomenon.

Speaker Change: What youll see is capacity needs for the industry.

Speaker Change: We're going to continue.

Speaker Change: Nothing that I'm seeing in the industry would indicate that the demand for mobile data is going to slow.

Speaker Change: And because we don't have in the industry. We don't have an active spectrum pipeline alright, there is other than what we're out there marketing.

Speaker Change: There is not a whole bunch of spectrum out there to be had and what that's going to cause over time is it's going to cause wireless players to have to densify in order to support those capacity needs because there isn't an obvious spectrum pipeline to support it and I expect that that densification will likely happen even.

LT Therivel: And what that's going to cause over time is it's going to cause wireless players to have to densify in order to support those capacity needs because there isn't an obvious spectrum pipeline to support it. And I expect that that densification will likely happen even before 6G and with the increased densification and the new spectrum that's going to come into play in 6G. And so in the long run, right, we're bullish about the opportunity to grow that co-location. And so that's why we're marketing those towers very aggressively out there to other co-locators. And that'll continue completely irrespective of where T-Mobile lands.

Speaker Change: Before six G and the increased Densification and new spectrum, that's going to come into play in 2000, and so in the long run we are bullish about about the opportunity to grow that co location and so thats why we are marketing those towers very aggressively out there to either co locators and that'll continue completely irrespective.

Speaker Change: Where T mobile lands in which towers dividend.

LT Therivel: Yeah, great. And I guess one question on the wireless segment. So obviously, you had an improvement in postpaid phone subscriber losses at a high level. I mean, if you could pinpoint two or three drivers of that, what are some of the initiatives that work for you in terms of those improving trends? And what are your expectations kind of for the back half of the year in terms of those things?

Speaker Change: Got it great and.

Speaker Change: Uh huh.

Speaker Change: I guess one question on.

Speaker Change: The wireless segment so obviously.

Speaker Change: You had an improvement in postpaid phone.

Speaker Change: Subscriber losses.

Speaker Change: High level I mean, if you had seen point.

Speaker Change: Two or three drivers subset what ourselves and initiatives that worked for you in terms of those improving trends.

Speaker Change: What are your expectations kind of a pull back of homes a year in terms from those initiatives.

LT Therivel: Yeah, it's a pretty simple equation. If you can improve churn and improve your gross ads, you're generally going to improve your net ads. And so we talked about us days during my commentary. Us days have been an effective method of reaching out to our existing customers, getting them back under contract. And so that's helping with churn. And we've been aggressive in the market when it comes to our post-paid offers. We have offers in the marketplace right now at a price point that's really attractive to customers.

Speaker Change: Yes, it's a pretty simple equation, if you can improve churn and improve your gross adds you're generally going to improve your net ads and so.

Speaker Change: We talked about us days during my commentary.

Speaker Change: <unk> has been an effective method of reaching out to our existing customers getting them back under contract and so thats, helping with churn.

Speaker Change: And we've been aggressive in the market when it comes to our postpaid offers we have offers in the marketplace right now and a price point, that's really attractive to customers.

LT Therivel: We've removed trade-in requirements, and we've many times removed planned mix requirements. And so those are attractive offers to customers that are helping drive improved gross ad performance just in terms of share of gross ads. Now, however, the switching pool is down.

Speaker Change: We've removed trading requirements.

Speaker Change: And we have many times removed planned mixed requirements and so.

Greg: Those those are attractive offers to customers that are helping drive improved gross add performance just in terms of share of Greg said now the switching pool is down.

LT Therivel: But notwithstanding the switching pool being down, we see our share of gross ads improving, which is an impressive accomplishment if you think about the overhang of the deal. You can expect to see us continue to be aggressive in the marketplace. We're not taking our foot off the gas pedal when it comes to investing in existing customers, so in those retention offers, bringing churn down, and you can see we continue to invest in aggressive promotional offers to get new customers.

Greg: But not notwithstanding the switching pool being down.

Greg: We see our share of gross adds improving which is an impressive accomplishment. If you think about the overhang of the deal.

Speaker Change: You can expect to see us continue to be aggressive in the marketplace, we're not taking our foot off the gas pedal when it comes to investing in existing customers, So and those retention offers bringing churn down.

Greg: And you can see us continue to invest in aggressive promotional offers to get new customers and so that's going to be full speed ahead for us for the rest of the year.

LT Therivel: And so that's going to be full speed ahead for us for the rest of the year. I think you can probably, what you're seeing in the marketplace right now, I don't think we're going to be backing off of that for the rest of the year, and so I'm cautiously optimistic that we can continue this momentum that we have right now. Obviously, we operate in, we mentioned this, right, a highly competitive sector. I do not expect our competition will be standing still, and so we're going to have to adjust accordingly. But yeah, I'm pleased with what we've been able to drive, both on retention and recruitment.

Speaker Change: I think you can probably what youre, what youre seeing in the marketplace right now I don't think we're going to be backing off of that for the rest of the year and so I'm cautiously optimistic that we can continue this.

Speaker Change: This momentum that we have right now.

Speaker Change: Obviously, we operate in we mentioned this right we operate in a highly competitive sector I do not expect our competition will be standing still and so we're going to have to adjust accordingly.

Speaker Change: What we've been able to drive both on retention and on process.

Michelle Brukwicki: Great, thank you. And my last question is for... So, we're seeing wireless and wireline companies partnering with infrastructure funds or private equity to do fiber deployments, potentially at a more rapid rate than they would be able to do on their own, and keeping those builds on their balance sheets. I was just wondering if you could share your thoughts on such opportunities, to what degree those structures are relevant to you, how attractive they are to you and your markets, and what are some of the factors that might lead you to lean into those structures over time.

Speaker Change: Great. Thank you and my last question is for.

Michelle: Michelle Tds telecom side so.

Michelle: We're seeing a wireless and wireline companies partnering with infrastructure funds or private equity to do fiber deployments potentially at the more trades.

Speaker Change: They would be able to do on their own and keeping those builds old balance sheets.

Speaker Change: I was just wondering if you could share your thoughts on perhaps opportunity is to what degree those structure, so irrelevant to U haul a threat.

Speaker Change: To you in your markets and whether some of the factors that might lead you to land in Brazil structure. So all the time.

Michelle Brukwicki: Hi Sergey, thanks for the question. I'll comment briefly, and then Vicki may want to add in as well. You know, over the years, as we've developed our FIBER program strategy, we have considered lots of different financing alternatives that can help us advance our strategy. And, you know, so we have been open to various structures, and we've evaluated, you know, a variety of things. And, you know, where we've landed is that we've had some really good success with some preferred equity issuances over the last couple years.

Speaker Change: Hi, Sir Thanks for the question I'll comment briefly and then the key may want to add in as well.

Speaker Change: Over the years as we've developed our fiber program strategy, we have considered lots of different financing alternatives.

Speaker Change: It can help us advance our strategy.

Speaker Change: And so we have been open to various structures and we've evaluated.

Speaker Change: A variety of things really.

Michelle Brukwicki: And right now, you know, we've been funding this primarily through debt. But, you know, we continue to be open to different types of structures. And, you know, whatever would be best for the enterprise, I think we would be, you know, we would consider, you know, various alternatives, but it has to be the right thing for the whole enterprise. So, Vicki, do you want to comment at all?

Speaker Change: And where we've landed is that we've had some really good success with some preferred equity issuances over the last couple of years and right now we've been funding thats primarily through debt.

Michelle: But we continue to be open to different types of structures and whatever.

Speaker Change: Or whatever would be best for the enterprise I think we would be.

Michelle: We would consider.

Viki: Various alternatives, but it has to be the right thing for the whole enterprise. So viki do you want to comment at all yet.

Vicki Villacrez: Good morning, Sergey. You know, right now, we are very focused on the deals that we have in front of us, the transaction with T-Mobile and U.S. Cellular Wireless Business, as well as the transactions at the TDS level. And that is where our focus is right now, including monetizing the remaining spectrum that was not included in the T-Mobile transaction. So that's where our focus is from. We're really pleased with where we are at with our leverage at the end of the second quarter.

Viki: Good morning Sergey.

Sergey: Right now we are.

Speaker Change: We are very focused on the deals that we have in front of us the transaction with T mobile and U S cellular wireless business as well as the transactions at the Tds level and that is where our focus is at right now, including monetizing the remaining spectrum.

Sergey: That was not included in the T mobile.

Sergey: Transaction so.

Sergey: That's where our focus is at from we're really pleased with where we are at with our leverage at the end of the second quarter.

Sergey: Improved leverage both at the U S cellular and the Tds consolidated level.

Vicki Villacrez: We've improved leverage both at the U.S. Cellular and the TDS consolidated level. And as you heard in my prepared comments, we are in a good position from a liquidity standpoint to fund our fiber program as we go forward the remainder of the year and into 2025. And so that's where our focus is. Very pleased overall with the strong growth that we reported in the quarter. TDS Telcom had strong top line as well as bottom line growth, and that really is driven by the investments we've already made. So the company's just very focused on Broadband penetration penetrating into new households that we've enabled with our capital investments over the last few years.

Sergey: As you heard in my prepared comments. We are we are in a good position from a liquidity standpoint to fund our fiber program as we go forward the.

Sergey: The remaining of the year and into 2025, and so thats why our focus is at.

Sergey: Im very pleased overall with the strong growth that we reported in the quarter.

Speaker Change: D S telecom had strong topline as well as bottom line.

Speaker Change: Growth and that really is <unk>.

Sergey: <unk> from the investments we've already made so the company just very focused on.

Sergey: Broadband penetration penetrating into the new households that we've enabled with our capital investments over that over the last year.

John: Thanks, Sergey. Thanks. Next question, please.

Sergey: Thanks.

Sergey: Thanks next question please.

John: The next question comes from the line of Rick Prentiss from Raymond James. Please go ahead.

Sergey: The next question comes from the line of Rick Prentiss from Raymond James. Please go ahead.

Rick Prentiss: Thanks. Sorry, I had the double secret mute on. Can you hear me now?

Rick Prentiss: Hey, sorry, I had double secret mute on can you hear me now.

LT Therivel: Hey Rick, yeah.

Rick Prentiss: Hi, Eric Hi, Eric.

Rick Prentiss: Okay, good, thanks. Hey, yeah, so first question, I'll follow up on Sergey's, you know, obviously a lot of discussion about convergence fixed with mobile, maybe from both LT's side, Michelle's side, and maybe even Vicki's side. How are you viewing convergence as kind of theoretical and then specific to your operating system?

Eric: Okay. Thanks.

Speaker Change: Yes. So first question I'll follow up on sorry, guys, obviously, a lot of discussion.

Sergey: About convergence fixed with mobile.

Speaker Change: Maybe from both LTE Si Michel side, and maybe Vicky side, how are you all viewing convergence kind of theoretical and then specific to your operating units.

LT Therivel: Eric, I'll start, maybe I'll hand it to Michelle afterwards, because my threat is her opportunity, right? So the, the, as I view convergence, it is clearly a trend in the marketplace. You see, from the success that cable wireless has had in the market, in terms of growing share, right there, their market share for cable wireless is still significantly below their share of gross assets. And we are an industry where market share generally reaches equilibrium at whatever your SOGA is. And so there's still a lot of room for them to grow. And, you know, why is that? I mean, convergence is a word that, you know, means different things to different people.

Sergey: Eric I'll start maybe I'll hand, it to Michelle afterwards, because.

Vicky: My threat as her opportunity right. So the.

Vicky: As I view convergence.

Sergey: There is clearly a trend in the marketplace you see it from.

Speaker Change: The success that cable wireless has had in the market in terms of growing share.

Speaker Change: Alright, there their market share for cable wireless is still significantly below their share of gross adds and we are an industry where market share generally reaches equilibrium at whatever your secure so guys.

Sergey: And so there's still a lot of room for them to grow.

Speaker Change: And why is that.

Speaker Change: Convergence is a word that means different things to different people, maybe I'll simplify it and just talk about fixed wireless bundling.

LT Therivel: Maybe I'll simplify it and just talk about fixed wireless bundling. If you're able to use the profit stream from one product to help subsidize another and it can help you churn, well, then, you know, that's a good equation. And that's something that, you know, you see not just the large cable players doing, but the small cable cable players doing it. And so, as we forecast forward where cable is going to be in our footprint, we see an expanded presence of cable wireless in our footprint, and that's not necessarily because of the expansion of the big guys.

Speaker Change: If you're if you are able to use the the.

Speaker Change: The profit stream from one product to help subsidize another and it can help you return.

Speaker Change: We will then.

Sergey: That's a good equation.

Sergey: And Thats something that you.

Sergey: You see not just the large cable players doing but the small cable cable players doing in so.

Speaker Change: As we forecast forward, where cable is going to be in our footprint.

Sergey: We see an expanded presence of cable wireless and our footprint and that's not necessarily because of the expansion of the big guys. It's because we think that the smaller cable players Tds telecom included.

LT Therivel: It's because we think that the smaller cable players, TDS Telecom included, will start to offer a wireless offering in order to help bring churn down and in order to either differentiate their wireline offering or just keep pace with the big guys. And you also see that in the strategies pursued by the larger wireless players. I'm speculating here because, obviously, I don't know why cable players or why AT&T or why T-Mobile or anyone else does what they do.

Speaker Change: Start to offer a wireless a wireless offering in order to help bring churn down in order to either differentiate their wireline offering or just keep pace with the big guys.

Sergey: And you also see that in the strategies pursued by the larger wireless players.

Speaker Change: Speculating here, because obviously I don't know why.

Sergey: Cable players are why AT&T or T mobile or anyone else does what they do.

LT Therivel: But if my speculation, if I look at my speculation, and you say, okay, well, T-Mobile is out there expanding its fiber footprint. AT&T has been very public about their desire to expand the fiber footprint. Why is that?

Speaker Change: But if my speculation if I look at my speculation and you say, okay, well T mobiles out there expanding fiber footprint AT&T has been very public about their desire to extend our fiber footprint.

LT Therivel: Well, it's because of the power of these bundled offerings and these converged offerings. And so this is something that our scale makes it challenging for us to do. There are opportunities for wireline players. [inaudible] Wireless players do MVNOs, and there is not a commensurate wholesale approach to wireline. I don't have access to a nationwide wireline wholesale offer.

Speaker Change: Why is that well, it's because of the power of these bundled offerings in these converged offerings and so.

Speaker Change: This is something that our scale makes it challenging for us to do.

Speaker Change: There are opportunities for wireline players to provide wireless services because there is a wholesale wireless offering wireless players do and be announced.

Sergey: And.

Sergey: There is not a commensurate wholesale approach to wireline.

Sergey: Don't have access to nationwide wireline wholesale offers and so it's very difficult for us to match those bundled offers.

LT Therivel: And so it's very difficult for us to match those bundled off. But do I think that every single customer in the U.S. wants a bundled offer? No, I do not.

Sergey: Do I think that every single customer in the U S. Once a bundled offer no I do not.

LT Therivel: And so I think that there is some kind of a threshold out there for this market, but it's a threshold that still has a lot of room to grow. And so we do view it as a threat to our business. We've been very transparent about that in our earnings calls in the last quarters and years, frankly. And so, yeah, it's something we keep a very close eye on. We think we can compete effectively with it from an aggressive price point perspective and a high-quality network perspective and so on, but it's definitely a competitive threat. And my threat is Michelle's opportunity. And so, Michelle, maybe you can talk a little bit about how TDS is looking.

Sergey: So I think that there is some kind of a threshold out there for this market, but it's a threshold that still have a lot of room to grow.

Sergey: So we do view it as a threat to our business we've been very transparent about that in our earnings calls in the last quarters and years frankly.

Sergey: And so it's something we keep a very close eye on but we think we compete we think we can compete effectively with it from a aggressive price point perspective, and a high quality network perspective, and so on.

Sergey: But it's definitely a competitive edge.

Michel: And my threat as Michel has opportunity and so Michelle maybe you can talk a little bit about how how Tds is looking at it.

Michelle Brukwicki: Thanks, LT, and thanks for the question, Rick. Actually, what LT said, I wholeheartedly agree with.

Michelle: Yes, thanks to LTE and thanks for the question, Rick actually what <unk> said I wholeheartedly agree with.

Michelle Brukwicki: So from a PBS Telecom perspective, we are very excited to be getting into this space. As LT mentioned, this is a great opportunity for us. But it is important to make sure that we agree on the definition of convergence. We also see this as more of a bundling. We do not believe that you have to own both the wireline and the wireless network to make this work.

Michelle: So from a Tds telecom perspective, we are very excited to be getting into this space as LTE mentioned this is a great opportunity for us.

Speaker Change: But it is important to make sure that we level set on the definition of convergence. We also see this as more of a bundling.

Speaker Change: We do not believe that you have to own both the wireline and the wireless network to make this work, but it is more of providing attractive bundling opportunities for the segment of our customers who want to buy both services from the same provider and we've looked at the <unk> market for many.

Michelle Brukwicki: But it is more about providing attractive bundling opportunities for the segment of our customers who want to buy both services from the same provider. And we've looked at the MV&O market for many, many years. Our team has done analysis on this for a long time, and over the last couple of years, it's really started to make sense because of what LT mentioned, that this ecosystem has developed where there are now relatively easy ways for wireline companies to get into this market and be able to offer wireless through wholesale agreements.

Speaker Change: Many years our team has done analysis on this for a long time.

Speaker Change: And over the last couple of years, its really started to make sense because of what else. You mentioned is that this ecosystem has developed where there are now.

Speaker Change: Relatively easy ways for wireline companies to get into this market and be able to offer wireless through wholesale agreement and we've signed up with the NTT fee. So the national content and technology cooperatives through there.

Michelle Brukwicki: And we've signed up with the NCTC, so the National Content and Technology Cooperative, through their industry group, which established partnerships for companies like us to be able to join in and participate in a relatively straightforward way. So the ecosystem has developed, the economics have developed, and customer demand has developed over the last few years. And so we think that this is the perfect time for us to get into this market and be able to round out our product and service set in order to really meet the needs and demands of the broadband customers that we're selling to.

Sergey: And industry group, who established partnerships for companies like us to be able to join in and participate in a relatively straightforward way. So the ecosystem developed the economics developed the customer demand developed over the last few years and so we think that this is the perfect.

Sergey: Time for us to get into this market and be able to round out our product and service set in order to really meet the needs and the demands of the broadband customers that we're selling to.

LT Therivel: Yep, well said.

Speaker Change: Yes, well said.

Rick Prentiss: A couple other questions from my side. One of the other hot topics this quarter is the next generation iPhone.

Sergey: Okay.

Speaker Change: A couple of questions from my side, one of the other hot topics this quarter has.

Speaker Change: X generation iPhone, what might be an AI.

Speaker Change: Pushed maybe some opinions on his AI ready for prime time, and wireless what does it do to the.

Speaker Change: Competitive intensity switcher pool subsidies and kind of what's baked into your guidance or an overarching hey, iPhone question.

LT Therivel: Eric, I think it's I would tackle it in one of two ways. I think on the revenue side of the equation, it's too early to tell. The last Samsung device had some really attractive AI capabilities built into it. I think they're awfully cool, and I think a lot of our customers think that they're awfully cool.

Eric: Eric I think it's.

Speaker Change: I would I would tackle it in one of two ways I think on the revenue side of the equation, it's too early to tell.

Eric: The last Samsung device had some really attractive AI capabilities built into it.

Speaker Change: I think they are awfully cool I think a lot of our customers think that they are awfully cool.

LT Therivel: We haven't seen a massive change in market share, right, to Samsung with those capabilities. And so I think that's still a work in progress. And obviously, Apple has made some announcements, but we don't yet know, you know, what those capabilities are going to look like. And so we aren't projecting in our numbers any major shifts based on, you know, AI and AI capabilities in revenue. I do think that where we are starting to see some interesting opportunities is on the cost side of things. And so, you know, we're already using AI and some AI capabilities in our care centers, education on the next best offer, how to best link the various touch points of our customers across our enterprise so that we can serve them better, so we can have more effective care center interactions.

Eric: We haven't seen a massive change in market share right to Samsung with those with those capabilities.

Eric: So I think thats still a work in progress and obviously Apple has made some announcements we don't yet know what those capabilities are going to look like and so we.

Sergey: We arent projecting in our numbers any major shifts based on AI and AI capabilities on the revenue side.

Eric: I do think that where we are starting to see some interesting opportunities is on the cost side of the equation and so we're already using AI in some AI capabilities in our care centers.

Eric: Education on next best offer how.

Sergey: How do you best link the various touch points of our customers across our enterprise. So that we can serve them better. So we can have more effective care center interactions I do expect over time that those kinds of capabilities will also transition into the digital space and so being able to better serve.

LT Therivel: I do expect, over time, that those kinds of capabilities will also transition into the digital space. And so being able to better serve customers, being able to better manage costs, I do think that's where you're going to see more traction on AI in the near term. I'm very bullish on the capabilities that it provides on the device side, but I think it's too early to tell when that's actually going to show up in the

Sergey: Customers being able to better manage costs I do think thats, where youre going to see more traction on AI in the near term.

Speaker Change: I'm a long term very bullish on the capabilities that it provides on the device side, but I think it's too early to tell when that's actually going to show up in the numbers.

Rick Prentiss: Okay, last one for me is on the spectrum, obviously, several times. Vicki and everyone kind of mentioned, no, we've got more spectrum we could monetize. Kind of two-pronged questions about the spectrum.

Speaker Change: Got it last one from me is on the spectrum, obviously several times.

Sergey: Vicki and everyone's kind of mentioned that we've got more spectrum, we could monetize.

Speaker Change: Two pronged questions of the spectrum.

LT Therivel: If you were to move forward before the T-Mobile deal is approved and closed, what kind of transaction could you do with spectrum since the spectrum is kind of inherent in how your customers are being served today? And secondly, I think in the 10-Q, it mentions that you guys assessed the impairment test of the wireless spectrum of what you're selling and the wireless spectrum that you're keeping outside the T-Mobile transaction. And it came out saying that the carrying value looks like... you exceed your fair value on the balance sheet. So just wondering, is that an update based on some kind of price talk or what that means?

Speaker Change: If you were to move forward before the T. Mobile deal is approved and closed what kind of transaction could you do with the spectrum since especially as kind of inherent in how your customers are being served today and secondly, I think in the 10-Q. It mentions that you guys assessed.

Eric: <unk> test is the wireless spectrum and what youre selling in the wireless spectrum that you are keeping outside the T mobile transaction and it came out saying that the carrying value.

Eric: It looks like.

Speaker Change: You exceed your fair value on the balance sheet. So just wondering is that an update based on the kind of price talk or what that means.

LT Therivel: Yeah, Rick, I'm going to punt a little bit on most of the spectrum questions because we do have an active process going on, and so I'm going to probably stay away from some of the value-related and process-related questions. But what I can tell you is, I mean, we've specifically designed the transaction with T-Mobile to talk to ensure that it is a smooth transition for our customers. So, the reason why we did a year release of Spectrum to T-Mobile after the transaction, even the Spectrum that they're not acquiring, was so that we could make sure that our customers were properly served and it was a really good transition, and that we saw no decline and no change in network experience for our customers.

Eric: Yes, Rick I'm going to punt a little bit on most of the spectrum questions. Because we do have an active process going on and so I'm going to probably stay away from some of the.

Speaker Change: Value related and process related questions. What I can tell you is I mean, we've specifically designed the transaction with T mobile.

Eric: Talk to to ensure that it is a smooth transition for our customers.

Eric: The reason why we did a year release of spectrum to T mobile after the transaction, even though the spectrum that they're not acquiring.

Speaker Change: We can make sure that our customers were properly serve than it was a really good transition and that we saw no decline and no change in network experience for our customers one of the things we've worked on with T. Mobile is to ensure that.

LT Therivel: One of the things we've worked on with T-Mobile is to ensure that, day one, you see either no change or, ideally, a better one. We're going to be bringing more spectrum to bear on customers. And that's not just to our customers but to T-Mobile customers as well. And so that portion of the transaction has been designed to make sure that it's a smooth transition. For the go-forward spectrum, I'm going to punt on that a little bit, only because we do have an active process going on, and it's probably not appropriate for me to comment further on that.

Speaker Change: Day, one you see either no change or ideally a better experience and we're going to be bringing more spectrum to bear to customers.

Speaker Change: Thats not just to our customers with the T mobile customers as well.

Speaker Change: And so that portion of the transaction has been designed to make sure that it's a smooth transition for the go forward spectrum I'm going to punt on that a little bit only because we do have an active process going on and it's probably not appropriate for me to comment further on that.

Unknown Speaker: Unknown Speaker. Yeah, go ahead, Doug.

Speaker Change: It's another way of asking yes go ahead Doug.

Doug Chambers: Yeah, with respect to the spectrum carrying value, every year, well, at least every year, we're required to assess that for impairment. We do that in the fourth quarter. So we do what's called a step one accounting test and evaluate that spectrum. The fair value was greater than the carrying value. So we do have recent data on that that we use to make that assessment.

Speaker Change: Yes, with respect to the spectrum carrying value every year, while lease every year, we're required to assess that FERC Paramount we do that in the fourth quarter. So should we do what's called a step one accounting test and did evaluation thats affecting the fair value was greater than the carrying value. So we do have.

Speaker Change: Recent data on that that we used to make that assessment.

Unknown Speaker: As you know, Rick, I've... As you know, any Comments that we'd be making on this process would only be if we had a definitive agreement that was signed. So, we'll keep you updated.

Rich: As you know rich.

Speaker Change: Okay.

Rich: You know any.

Speaker Change: Any.

Rich: Comments that we'd be making on this process when would only be if we had a definitive agreement.

Speaker Change: That was signed and in place.

Eric: We will keep you updated.

Rick Prentiss: Thanks, Dennis. I think, LT, to your point, the customer experience is something that can't be damaged, and so you factor that into the T-Mobile deal. It would factor into anything that might go on with Spectrum, too. That may be a safe way of saying it.

Speaker Change: Thanks, guys. So I think.

Speaker Change: To your point the customer experience is something that can't be damaged. So you factor that into the T. Mobile deal could factor into anything that might go on with spectrum with maybe the Safeway was saying.

Speaker Change: Okay.

John: Thanks, Rick. Next question.

Rick Prentiss: Thanks, Rick next question.

John: The next question comes from the line of Jonathan Atkin from RBC. Please go ahead.

Speaker Change: The next question comes from the line of Jonathan Atkin from RBC. Please go ahead.

Jonathan Atkin: Thanks. A couple of questions about the Tower business. Unknown Speaker I wondered, when the dust settles, what would your appetite be to build a suit? And secondly, the existing portfolio, to what extent might it require augmentation capex, given that when most of these towers were built, they were meant simply for U.S. cellular as opposed to multi-tenant banks?

Jonathan Atkin: Thanks, a couple questions about the tower business.

Jonathan Atkin: I wondered about.

Jonathan Atkin: When the dust settled are you or what would be your appetite to do build to suits.

Speaker Change: And secondly.

Speaker Change: The existing portfolio.

Jonathan Atkin: Require augmentation capex.

Jonathan Atkin: Given that when most of the towers were built it was niche.

Speaker Change: Simply for U S cellular as opposed to.

Jonathan Atkin: Thanks.

LT Therivel: Hey Jonathan. Welcome. It's good to hear from you.

Jonathan: Hey, Jonathan.

Jonathan: Welcome good to hear you.

Speaker Change: So I mean in terms of build to suit.

Jonathan: Path forward for the tower business Thats different from the strategy that we've pursued.

Speaker Change: It is not currently reflected in the projections that we provided.

Jonathan: Not currently.

Jonathan: Part of the strategy. It doesn't mean, you can't change it right I mean, one of the things that we're still working through is what is the right strategy and the right long term path forward for that tower business.

LT Therivel: So I mean, in terms of building a path forward for the tower business that's different from the strategy that we've pursued, that's not currently reflected in the projections that we provided. It's not currently part of the strategy. But that doesn't mean you can't change it, right?

Jonathan: We don't know the answer to that yet and thats going to be that's going to be something that we're going to be spending time on in the coming months in the coming quarters.

LT Therivel: I mean, one of the things that we're still working through is what is the right strategy and the right long-term path forward for that tower business. We don't know the answer to that yet. That's going to be something that we're going to be spending time on in the coming months and the coming quarters. There's no bill to suit capital. There's no bill to suit revenue built into the projections today.

Jonathan: There is no there is no build to suit capital Theres no build to suit revenue built into the projections today, though.

LT Therivel: And in terms of, you know, enhanced capital. I guess I think about it a little bit differently in that when we built our towers, we didn't build those towers with the idea of only having one tenant in place; we built those towers to provide a good mobile service. What does that mean? We operate our towers in more rural areas on average. So we have pretty tall towers, all right? We have a pretty tall tower portfolio that enables us to provide broad coverage in rural America.

Jonathan: And in terms of enhanced capital.

Jonathan: So I guess.

Jonathan: Think about it a little bit differently in that.

Speaker Change: When we built our towers, we didn't build those towers with the idea of only having one tenant in place he built those towers to provide.

Speaker Change: Mobile experience what does that mean, we operate our towers in more rural areas on average so we are pretty tall towers.

Jonathan: We have we have a pretty tall tower portfolio.

Jonathan: That enables us to provide broad coverage to rural America, and that's been kind of a key part of our long term wireless proposition.

LT Therivel: And that's been kind of a key part of our long-term wireless proposition. What do tall towers enable us to do? Tall towers enable you to have space for multiple RAD centers, and so if you've got multiple RAD centers, you can add on co-locators without a whole bunch of incremental capital, in fact, without any incremental capital. And so that's also reflected in the projections that we provided as part of the investor presentation.

Speaker Change: What do you call towers enable you to do tall towers enables you to have space for multiple Rad centers and so if you've got multiple Rad centers you can add on co locators.

Jonathan: A whole bunch of incremental capital in fact without an effect without any incremental capital and so that's also reflected in the projections that we provided as part of the investor presentation.

LT Therivel: And so a different way of answering your question is, I do think we have the opportunity to add co-locators, to add revenue, to continue to grow that tower segment, and to continue to grow the margins and the cash flow from that tower segment without needing to spend a whole bunch of capital on our RAD center.

Jonathan: And so.

Speaker Change: <unk> way of answering your question is I do think we have the opportunity to add co locators.

Speaker Change: Add revenue to continue to grow with that tower segment and to continue to grow the margins and the cash flow from that tower segment without needing to spend a whole bunch of capital on our access to new markets.

LT Therivel: Good answer. Two more.

Speaker Change: Good answer.

Speaker Change: Two more.

Speaker Change: Ground lease ownership.

Speaker Change: Maybe just kind of level set us on where things stand and.

Jonathan Atkin: Ground lease, ownership, maybe just kind of level the playing field for us on where things stand and appetite for using capital, at least at some point, to extend or buy ground leases to the extent that you don't already want to control them. And then kind of back office types of activities associated with a tower company, lease administration, and so forth. Are you where you need to be, or are there improvements or enhancements that you foresee making?

Speaker Change: Appetite for using capital at least at some point too.

Speaker Change: Extended by Greg ground leases. So you said that you don't already own or control them, and then kind of back office types of.

Speaker Change: Activities associated with the tower company lease administration and so forth.

Speaker Change: Are you, where you need to be or other improvements or enhancements that you foresee making.

Speaker Change: Okay.

LT Therivel: So from a ground lease perspective, we have had a steady rhythm and a steady drumbeat of finding opportunities to take on ground leases that will continue. We don't have a dramatic shift in our strategy there. It's going to be continued.

Speaker Change: So from a ground lease perspective, we've had a steady rhythm and a steady drumbeat of finding opportunities to take on ground leases that will continue.

Speaker Change: We don't have a dramatic shift in our strategy there it's going to be continued and because of that you also don't see a dramatic shift in the financials that.

LT Therivel: And because of that, you also don't see a dramatic shift in the financials that we put forward. But it doesn't mean that we don't look for opportunities. It means we've been doing it, and we'll continue to do it as those opportunities arise. From a back-office perspective, we think we run a lean organization. We did before the separation, and we will continue to do so after the separation. That lean organization is reflected in the financials that we put forward.

Speaker Change: We put forward it doesn't mean that we don't look for the opportunities that means we've been doing it and we'll continue to do it as those opportunities arise.

Speaker Change: From a back office perspective, we think we run a lean organization, we did before the separation we will continue to do so after the separation.

Speaker Change: That lean organization as reflected in the financials that we put forward. The one thing I will highlight is you asked about work that's ongoing.

LT Therivel: The one thing I will highlight is, and you know, you asked about work that's ongoing. A number of the support functions to that tower organization are resident inside of U.S. Cellular, the wireless operating company. They're also resident inside of TDS, our parent company.

Speaker Change: <unk>.

Speaker Change: A number of the support functions to that tower organization or resident inside of U S. Cellular the wireless operating company their resident inside of Tds, Our parent company and so continuing to be able to work towards being able to stand that tower.

LT Therivel: And so continuing to be able to work towards being able to stand that tower company up independently is going to be a lot of work for us in the coming quarters, but I don't see that work adding incremental expense. It's more, let's call it, isolating it, right? So it's isolating it to the tower company as opposed to adding it incrementally to the tower company. And so that isolation, that clarification of, you know, for example, if you are doing civil engineering work on the towers, that civil engineering work currently may be being done inside of our wireless business.

Speaker Change: Company up independently is going to be a lot of work for us in the coming quarters, but I don't see that work, adding incremental expense, it's more of a let's call. It isolating it right. So it's isolating it to the tower company as opposed to as opposed to adding incrementally to the tower company and so.

Speaker Change: Isolation that clarification of.

Speaker Change: For example, if you were doing civil engineering work on the towers.

Speaker Change: Civil Engineering work currently maybe being done inside of our wireless business that would be being done to support the tower business moving forward, it's not going to add incremental expense, it's simply clarifying that expense.

LT Therivel: That would be done to support the tower business moving forward. It's not going to add incremental expense. It's simply clarifying that expense in our financial statements. And when I say clarifying, I don't see that being a big change to what we report. But it's more the operational nuts and bolts of moving that work from wireless code to tower code. Does that answer your question?

Speaker Change: <unk> in our financial statements and when I say clarifying I don't see that being a big change to what we reported.

Speaker Change: But it's more of the operational nuts and bolts of moving that work from wireless code tower co. If that answers your question.

Speaker Change: Thank you.

Speaker Change: You bet.

Colleen Thompson: And that does conclude the question and answer session. I would like to turn the floor back over to Colleen Thompson for closing remarks.

Speaker Change: And that does conclude the question and answer session I would like to turn the floor back over to Colin Thompson for closing remarks.

Colleen Thompson: Okay, thanks everyone for your time today. Please reach out to Investor Relations with any additional questions and have a good weekend.

Colin Thompson: Hey, Thanks, everyone for your time today, please reach out to Investor relations with any additional questions and have a good weekend.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

John: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Please wait the conference will begin shortly.

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