Q2 2019 Earnings Call
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Good morning, guys, the United States cellular earnings call.
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Keith.
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Our meeting our hardware delivery needs. We have started the tower work required to support the new antennas and co ex lines at the cell sites and we are making good progress upgrading the key components of the network core.
By the way you can't have a fiveg offering without a device and we are working very hard with our major handset partners to ensure we have fiveg devices to go with our Fiveg commercial launches.
Now I will turn the call over to Steve Campbell Steve.
Thank you, Mike and good morning, everyone.
I want to talk first about postpaid handset connections shown on slide eight.
Postpaid handset gross additions for the second quarter the 102000.
Down from 111000, a year ago.
Ken talked about the factors influencing these results in his comments earlier.
Postpaid handset net additions for the second quarter were negative 11000.
Down from 5000 last year.
Driven by the decline in gross additions and slightly higher churn.
On a sequential basis handset gross and net additions were both about the same.
We continue to have existing handset customers upgrading from feature phones to smartphones.
Including the upgrades total smartphone connections increased by 10000 during the second quarter.
And by 104000 over the course of the past year.
That helps to drive more service revenue given that ARPU for a smartphone.
It was about $22 more than ARPU for a feature.
Next I want to comment on the postpaid churn rate shown on slide nine.
Postpaid handset churn depicted by the Blue bars were 0.97% for the second quarter 2019.
With only small variations compared to the year earlier and sequential quarter results in fact.
Handset churn has been right at or below 1% for several consecutive quarters.
Which is indicative of high customer satisfaction.
Total postpaid churn combining handsets and connected devices.
Also has been consistently show low over the period shown.
It was 1.23% for the second quarter.
And has been trending down slightly for the past couple of quarters.
Now, let's turn to the financial results.
Total operating revenues for the second quarter were $973 million.
Essentially flat year over year.
Retail service revenues increased by 2% year over year.
The $662 million.
The increase was due largely to higher average revenue per user.
Which I'll cover in more detail on the next slide.
Inbound roaming revenue was $44 million and that was an increase of 13% year over year.
Driven by higher data volumes.
Equipment sales revenues decreased by $17 million or about 7% year over year.
This was driven by a decrease in the number of devices sold.
The impact of reduced volume was partly offset by an increase in the average revenue per device sold.
We're continuing to see that customers are holding on to their devices for increasingly longer periods driving the number of device transactions lower.
Just as we said last quarter equipment sales have continued to fall short of our expectations coming into the year.
The causing us to again adjust our thinking.
About full year revenues.
Now a few more comments about postpaid revenue shown on slide 11.
The average revenue per user or connection was $45.90 for the second quarter.
Up a dollar and 16 cents or 3% year over year.
That increase was driven by several factors, including a shift in device mix to smartphones.
Increased device protection revenue.
And the shift in service plan mix to the higher price plans.
32% of our postpaid connections are now on unlimited plans.
Versus 20% a year ago.
Partly offsetting these increases was a decrease in universal support fund revenues, resulting from the Fccs December 2018, rolling that revenues from text and multimedia messaging services are no longer assessable under the universal support from.
As a result, this year U.S cellular stopped charging customers and is no longer paying the FCC usfour fees on these revenue streams.
Because of the change also affected general and administrative expense by a like amount.
It is neutral to earnings.
Looking through the change ARPU on a comparable basis increased by a dollar and 49 cents year over year.
Versus the reported increase on a dollar and 16 cents a pretty strong results.
On a per account basis average revenue grew by just under 1% year over year.
And excluding the USGIF impact I just mentioned.
ARPU would have grown by 1.5% year over year.
Let's move next to our profitability measures first I want to comment on adjusted operating income before depreciation amortization and accretion and gains and losses.
To keep things simple I'll refer to this measure as adjusted operating income.
As shown at the bottom of the slide adjusted operating income was $212 million.
Up 4% from a year ago.
Correspondingly the margin as a percent of total operating revenues increased by about a percentage point from 21% to 22%.
For those watching service revenue margins the current quarter number was 28%.
Consistent with the prior year.
As I commented earlier total operating revenues of $973 million were essentially flat year over year.
As a result of a decrease in equipment sales revenues.
Total cash expenses were $761 million.
Down $8 million or about 1% year over year.
The primary driver was a decrease in cost of equipment sold due to a decrease in the number of devices sold.
Partially offset by higher average cost per device. So.
Excluding cost of equipment sold.
Other cash expenses increased slightly year over year by $8 million or 2% similar to the increase in service revenues.
Total system operations expense of $193 million was up 3% year over year, reflecting higher usage by customers both on our network.
And while roaming.
SGN a expenses were essentially flat year over year.
And next is adjusted EBITDA, which starts with adjusted operating income and incorporates the earnings from our equity method investments equity method investments along with interest and dividend income.
Adjusted EBITDA for the second quarter was $257 million.
Up 3% from a year ago.
Most of the improvement is due to the increase in adjusted operating income.
We also had an increase increase in interest and dividend income year over year.
Reflecting both higher interest rates and investment balances.
Adjusted operating income and adjusted EBITDA do not include depreciation amortization and accretion expense.
In connection with the network modernization and Fiveg initiatives.
That Mike discussed earlier.
We are upgrade several of the network equipment elements.
This results in the recognition of accelerated depreciation on the assets being replaced.
As shown in our press release.
Depreciation amortization and accretion expense for the first half of 2019.
He is up about 8% year over year.
And we expect that trend to continue for the remainder of the year.
Next I want to cover our guidance for the full year 2019.
First is total operating revenues.
Getting underneath that we expect service revenues for the full year to grow at about the same rate that we've seen in the first half.
Low single digits.
However, as I said earlier equipment sales revenues. So far this year have been below our expectations coming into the year.
We havent seen a lift in gross additions that we would like and our existing customers are holding their devices for increasingly longer periods. Therefore, we've reduced our expectation for equipment sales revenues for the full year.
And as a result, we currently expect total operating revenues to be in the range of $3.9 billion to $4.1 billion.
The expected reduction in equipment sales revenues will have a corresponding reduction to cost of equipment sold and thus a negligible impact.
On adjusted operating income and adjusted EBITDA.
Therefore, the guidance for those two measures is unchanged.
At 725 to 875 million.
And $900 million to $1.05 billion.
The guidance for capital expenditures also is unchanged still a range of $625 million to $725 million.
Now I'll turn the call over to Vicki Villacrez Vicki.
Okay. Thank you, Steve and good morning, everyone.
I'm pleased to report favorable results for the second quarter and for the first half for the year. This puts us in a strong position transceiver executed growth initiatives as outlined on slide 16.
We continue to benefit from the cost saving initiatives, we set in motion last year, while we sustained revenue growth.
For the second quarter, we had both top line revenue growth and expense reductions, which resulted in a 9% increase in adjusted EBITDA.
From a capital perspective, we continue to invest in our fiber deployment and rural broadband expansion project.
I'll give you a complete update on these programs in a moment after I summarize Tds telecom overall results for the quarter beginning on slide 17.
On a combined basis total revenues were up over 1% as table revenues increased 9% and wireline revenues were flat.
Also on the quarter total cash expenses decreased 2%.
Wireline cash expenses decreased 3% due to cost reduction efforts, while we held cable expense increases to just 2%.
With that reduction is a direct result of actions we implemented last year to make room for the scaling up of sales and marketing expenses. We will have later in the year with the launches of our new audit territory fiber markets.
As a result, adjusted EBITDA increased 9% to $82 million from a year ago and margins increased to 35%.
Capital expenditures increased significantly when compared to last year. However, we expect our capital spending to increase at an even greater rate through the second half of the year as it relates to our fiber deployment strategy.
Now, let's turn to our segments beginning with wireline on slide 18.
Wireline residential video connections grew 9% compared to the prior year.
On average our IP TV markets continued to achieve about 30% video penetration with some markets near 50%.
About 80% of our IP TV customers are on Triple play bundles as customers continue to find value and taking all three services given the rural nature of our geographical footprint and the bundling pricing we have in place.
In addition, churn on these bundles continues to remain very low.
Our second quarter results highlight the success of our video strategy and it's important to our customers.
Our plans with regards to cloud TV platform called TDSTV plus remain an important initiative.
While we are targeting a second quarter launch in our band cable market. We are now working towards a launch later this year and will take a phased approach for the remaining wireline and cable markets.
From a broadband perspective residential connections grew 3% and customers are continuing to choose higher speeds of up to one gig and our fiber markets.
On average 26% of all broadband customers are now taking 100 megabit speeds are greater and that's compared to 20% a year ago.
Helping to drive an increase in average residential revenue per connection in the quarter.
We also continue to make progress on our network construction under both the a cam and state broadband programs.
On the Occam front, we earmarked $30 million of Capex in 2019 to continue to extend fiber to the outermost edges of our network in order to deliver higher broadband speeds required under this program.
As a result, we are well under way to meeting our first stated obligations under the program as Weve completed 27000 of our required 64000 service addresses with broadband speeds of up to 25, Htthree, which come due at the end of next year.
We also continued to improve speed capabilities.
Two additional service addresses that are enhanced by our construction under this program.
Slide 19 provides an update on our fiber deployment strategy, both in and out of territory.
Last quarter, we announced that we launched our second new audit territory fiber market in our southern Wisconsin cluster and are pleased to announce that our market share gains while still early are tracking to our expectations.
We are in various stages of construction and expect to launch four additional markets in the southern Wisconsin cluster throughout the year.
And weve begun construction into new audit territory clusters.
Targeting 80000 total service addresses one in mid Central Wisconsin, which is comprised of eight communities.
And and around Steven's point and Wausau.
And a second one in quarterly in Idaho, which includes threed surrounding communities.
These clusters are terrific examples of the criteria, we are targeting for growth. They are underserved for broadband and have attractive demographics with potential for household growth.
As a result of our fiber.
The deployment strategy over the last several years, 27% of our wireline service addresses are served by fiber.
It is this fiber that enables our ability to provide the services our customers demand, including both high speed broadband and video.
Looking at wireline financial results on Slide 20, total revenues decreased 1% to $172 million. However, residential revenues increased 1% due to growth from the video and broadband connections as well as growth from within the broadband product mix.
Offset by a 5% decrease in residential voice connections.
Wholesale revenues increased 5% due to additional ACAM funding.
During the second quarter, the FCC authorized the payment of revised support under an order for Tds telecom to receive an additional 4 million per year.
The support includes additional speed requirements and importantly extends the term of full annual funding of 82 million by two years through 2028 as a result, we recorded $2 million of additional eight cam support during the quarter.
Commercial revenues decreased 8%, primarily driven by lower fuel connection as we continue to execute on a strategy to maximize cash flow from these markets, which are coming under renewed pressure from de regulation.
Wireline cash expenses decreased 3% due to lower employee related expenses remember in the second quarter of 2018 reads reported $2 million of severance expense.
Associated with our cost savings initiatives.
We also continue to continue to see the reduced cost of providing service for our declining legacy products offset by higher programming fees associated with our video offerings.
As a result of the decrease expenses.
Wireline adjusted EBITDA increased 4% to $62 million.
Moving to cable on slide 21 cable total revenues increased as customers continue to value our broadband services.
Total cable connections grew 5% to 339000.
Driven by an 8% increase in total broadband connections.
As a result broadband penetration increased 300 basis points to 44% compared to the prior year.
On slide 22, total cable revenues increased 9% to $62 million driven primarily by growth in residential connections.
Our focus on broadband growth has led to a 2% increase in average residential revenue per connection.
Cash expenses increased 2% due primarily to higher programming content costs and circuit expenses.
As a result cable adjusted EBITDA increased 29% to $20 million in the quarter.
In addition, EBITDA margin increased to 33% from 28%.
On slide 23, we have provided our 2019 guidance, which is on change from the guidance we shared at the beginning of the year.
We expect our revenue trends to continue but anticipate expense growth in the second half of the year as we continue to launch our new fiber markets.
As I mentioned earlier, our capital spending will increase throughout the year to support fiber build outs and I'll continue to update you on our progress and capital spending as it relates to these investments.
And in closing I'd like to thank all of our employees for their continued efforts to evolve our business and look forward to updating you on our progress in the third quarter now I'll turn the call back to James.
Thanks, Vicki and Aaron we are ready to take questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q and a roster.
Your first question comes from the line of Ric Prentiss from Raymond James Your line is open.
Thanks, Good morning.
Correct.
Hey couple of questions.
Ken You mentioned, obviously youre happy with the gross add level, what you want to see.
As you look at the promotions and other things you're putting in place for second half 19.
Is the anticipation you'd like to get back up to.
Prior year levels or do you want to just kind of close the gap a little bit where do you think you could get to given also the new entrant activity that you mentioned.
Well.
As we stated at the beginning of the year one of our key objectives for the year is to both.
Strengthen and grow our customer base.
So my objective for the year, just to strengthen and grow the base.
And I'm not moving off of that at this point in time the.
New entrant activity and also some bundling that we saw.
In some of our larger markets.
And what you're seeing is a low price 0.12 line attractiveness and we're starting to see some of that come back to steel boy leave for price come back for for networks.
No. It's early on both counts so it's something that we're watching.
But.
So as much as it was a slow traffic if I think about all the flooding, we saw Nebraska, Iowa, Northern Illinois, Wisconsin and that had a lot of our farming areas.
Pretty hard this year and so we just saw lower than and then.
Anticipated and certainly lower than historic levels of store traffic.
So now that we're one month into the third quarter have you seen some of that improve as the as the waters receded and people are getting back to normal trends.
Well circle, all normal trends one of the things that the Americas farmland is dealing with his people within plant right there on.
ER on subsidies, we aren't seen on some of the retail numbers I'm seeing out of some of the higher when Nebraska stones aren't real vibrant at this point.
Okay and the second one I know you another head as you and I've had the discussion on towers for.
Five years 10 years 15 years, I know, we've talked about for a long time.
You mentioned, there's still strategic critical for your network strategy put that you would also consider them as a source of liquidity, if we need for cash.
Was there what would be examples of what would.
Be a cash financing the that would sort of trigger something on the tower side.
So as I look forward right now.
And given.
Our expectations around.
Auctions and everything else I don't know that I can see a great big one there.
No head.
Had attractive spectrum been made available in any of the deals that are going on that that you know a lot of mid band, but good my attention and we've now got gosh windows. When we went to see the mid mid options now.
But the fact the matter is that right now as the team is out.
Doing this modernization projects, we're all over those towers and with new antennas and.
Moving them up and down.
The top is.
Mike had mentioned.
And not having to pay a fee every time, you do that or not having to increase your risk to that.
Manifest itself in some of the.
Lower costs are lower rate of increased costs, we've seen on the network side. So we know their valuable no. We appreciate the fact, there but right now they remain really valuable in a different way to our business.
Great makes sense.
And then for Vicki on the on the Tds Telecom side, obviously, a good start to the year the a cam catch up.
Into two helped.
As far as maintaining guidance, where it looks like you're headed to the high end or above the high end, but it sounds like we should also factor in the the build cost on the expense side is that the way we should be thinking about Tds telecom.
Yes, that's right.
From a revenue perspective, I think you couldn't you can expect similar trends that we saw in the first half.
As contributions from our newest FIRA markets will come much later in the year.
With with those launches.
And as I as I had indicated we're going to have higher cash expenses as we launch our new fiber markets associated with our door to door sales ramp up.
Marketing and advertising expenses and commissions that go with that.
And so we've got our next couple of new on term tertiary markets launching in August so.
Right now, we're really pleased with the first half of the year.
We expect to be well within our guidance for adjusted EBITDA and we're running to the upper end of that range right now.
That makes sense and then the benefit of those costs, probably start showing up as you start ramping sales in 2020 them towards the tablet regimen will include that in our guidance for next year.
Great. Thanks for the taking the questions.
Thanks.
Your next question comes from the line of Philip Cusick with JP Morgan Your line is open.
Hey, guys I have to.
To point out that its been almost 19 years of me following a record Q1 and I really enjoy it.
So.
Earlier I guess.
Two two again follow up one more time on Andre questions.
First on the on the gross outside.
You talked about more aggressive plans to drive gross adds are there are already more aggressive promotions in the market or what do you think we should look for going forward.
No. What I said is that is that I didn't talk about more aggressive plans I talked about capabilities that are coming on line and in the second half as a result of both the modernization work that we've been doing as well as other system enhancements like web enablement work.
Promotion just promoting to promote.
Isn't what's in the market these days.
So I don't know that being more aggressive in that area is the difference it's about.
On product and service as much as anything.
Okay. So and as you said I think you said some of the new entrance. It should we think of that as as T mobile sort of coming into your market or are there other.
Maybe more prepaid brands that are coming up neither what we saw particularly was more of a cable influence.
Where they already had customers you know the European customers and then they have a low.
One lying right you know.
For the fiscal 15 Bucks per gig right. So it's a 50 dollar it.
Oh, we said Thats, what we saw.
This quarter and I suppose.
No.
From reports so the Jay was just out in the market and then some of the stores seeing those same customers coming back now. So you know, we just got to kind of ride that out a little bit.
Okay, Yeah, I just look back at the the press release and you said, we have aggressive plans and strategies in place.
To attract new customers in the second half so thats not.
More aggressive pricing plans, that's just improving the business right.
Okay understood.
And then and then for Vicki can you remind us where you are in the video launched two bundled with broadband.
Our next question is going with Wisconsin companies.
Can you repeat the question, you're cutting out a little bit though.
Sorry about that where are you in the video launch process to bundled with broadband.
So so so today, we do bundled with broadband both both in our cable markets and our I like markets. We operate TV services in the second quarter. You saw we had a 9% growth in our in our video connections.
Yeah, and our I'd like markets with respect to moving to a cloud TV platform, which is going to benefit both our wireline and cable businesses.
We're excited about about this product and we're anticipating the rollout of that towards the latter half of this year and we see it as providing an even superior video entertainment experience than what we have in our in our IP TV markets today and its rich with features it's got an interface that aggregates the search across both linear channels and streaming over the top streaming applications. So where we're at right now is making sure that that product is solid and is going to offer the superior experience that we expect.
We have a good experience right now in our IP TV markets. So we just want to make sure that's even better.
Is that going to be lighter content package or is it more capabilities on the set top box and DVR things like that.
Well, we're going to let you know that the business case is really about saving C.C.P. you don't have as high of CP expenses with your cloud TV. So that's really the business case around it as well as the superior service and right now the bundling package.
Strategy, it's going to continue to be a very important strategy to us in a pricing strategy as most of our IP TV customers in fact, 80% of our IP TV customers take a triple play bundle, so very important to retaining that broadband and voice.
Understood Thanks very much.
Yep. Thank you.
Your next question comes from the line of Simon Flannery with Morgan Stanley . Your line is open.
Thanks, very much good morning, I'm, Ken just coming back to the the industry dynamics can you just give us your updated thoughts on the.
The merger between screens and Timo given the settlement with the proposed settlement with the PEO, Jay and then on the towers.
You talked about the strategic metric the towers are there. There's obviously, we've seen record more multi year highs and leasing activity, perhaps you could update us on what you're doing to to maximize the opportunity around leasing up those towers and then are there other solutions that might help sort of surface some of the value.
While still keeping control, whether that's something like Vodafone is proposing a separate subsidiary.
Sub IPO, bringing in a minority partner, how do you think about things like that to no. Obviously the multiple difference between your stock and they are.
The towers right now is at record whites. Thanks.
Hi, Good morning, Simon I'm wondering what the.
On the first one.
And I don't know, what's going on I mean.
No I thought we had a deal then we got you know.
More states jumping in the Fray now you know my my job is to keep my organization focused on our customers and the marketplace and let.
Folks in DC or wherever we're going to be below litigating those figure out where we go next.
I have no idea.
I've given up.
Oh, sorry trying to.
Yes. This one.
Yes, the towers, yes, it's actually we've been doing a lot to drive more value there remember that Steve talked about some of the things that we've been doing well.
I think of it.
Very important.
Development is that late last year.
We actually engage with a external third party.
It was active in the space to help us.
Market.
Space on the towers with the idea of growing that.
Obviously, we're still in.
A fairly early.
Stage of that with them.
Let's call it taking over the marketing and leasing activities in the first part of this year.
But.
So far.
We're seeing good activity, we expect more growth in the future, but if you look at.
The tower revenue for the first half of the year.
Oh, the tower rents, meaning the rents that were actually collecting from lessees on those towers is up about 7% year over year.
So.
Trend wise look for that to continue and actually grow as we get more traction.
With our third party agent.
Okay.
And in terms of other structures.
So.
Hi, Simon and Pietersen rate it from Tds I'm the CFO .
Yes, we've looked at other structures that you know things besides doing a straight sale leaseback of the towers that every time you look at one of those structures you pretty much wind up with the conundrum that the more value you you try to get out of those towers. The less control you give up of the towers, which goes back to the point that Ken was making that.
You'd really want to see if you really want to have a big funding need to induce yourself to go in and do any kind of tower deal because because of the control that you do give up over the tower space.
Great. Thank you.
Thanks.
Your next question comes from the line of Sergei with Gamco investors. Your line is open.
Hi, good morning, guys.
Okay, well one of those question on the wireless side that kind of a follow up.
Sprint T mobile.
A question IZEA assumes that the merger eventually go through it makes that assumption what have you seen from T. Mobile so far in terms of the overbuilt and if the merger does go through what are your expectations over medium charm and also obviously dish is now a part of all this so what are your thoughts on dish, becoming a wireless entrant.
Oh boy.
So we continue to see some network activity with.
T mobile and in various markets, but it's as I've said in the past T. Mobile is in most of our markets already from a distribution standpoint with at least.
One of their their different brands. So no I don't think I've seen any dramatic change in.
Market level activity by them.
Over the.
Last few months, but then I also have an expected it either like my view at least is your part of the.
Our rationale they used a two I'll get this approved was oh well all the things we're going to do in Rural America.
So I haven't I haven't expect them to be doing anything until we get approval because otherwise they lose that argument right. So I think of them as just getting ready and while they're getting ready we've been very busy with our customers I think the churn rate you see shows all the work we're doing to make sure that we've got our customers are very well satisfied and we'll continue to use targeting retention activities to address concerns.
Groups that we think may be at risk the churn.
Dish.
Boy I don't know.
We're going to we're going to wait and see on that one.
On one hand.
If the Ava.
Then kind of talking about a network for a long long time and they are going to take a long time to build that out.
Yes.
The numbers historically are that.
You get your payback I knew you build your distribution or whatever in dense areas. It's tough to the other is much out of.
The less densely populated areas.
I don't have a lot of plans around dish right now.
I'd say that's.
Yes, probably more of a next year issue from what I'm seeing right now anyhow.
Great and another question on wireless so you guys talked a little bit about your fiveg strategy and where you're at today is.
Network modernization, so if it seems that at a high level Youre Fived your roadmap may look.
Similar to T. Mobile's, so you're going to be using low band or 600, and a mid band for Fiveg sourced and supplementing it was a millimeter wave.
Is that a fair assessment and also at the high level. If you could point to any major differences or similarities that you see in your approach.
Hi to the big three carriers.
The way they're doing it.
Well no I don't know, Mike put a little light on this but I would say off the top.
Similarities are there with T mobile because when we started down this path a year ago. We were in similar positions in terms of a portfolio of spectrum right with what we had was.
Low band and the and so what we were using was was below that as we now get access to millimeter or we will incorporate that into how we're thinking about it and I guess, that's probably one thing Peter talked about Mike is when we think about millimeter wave how youre thinking about using that and it's it's as much you know we aren't talking about a a street light pole type of deployment, yeah, I would say.
To build on what Ken said that our strategy is similar to T. Mobile's in that we're using low band and mid band.
The difference perhaps between our deployment and some of the other tier ones is that the use of millimeter wave will be on macro sites much higher up on the tower, a while I think the industry will move that way ultimately other carriers have started with land lamppost heights to really serve specific use cases, so that's probably the big difference other than that I think everybody believes you need a good amount of low mid and high band spectrum to deliver a fulsome Fiveg server service.
And we're all starting off with what's called the N.S.A. core, but then eventually migrating as C Corps once its a.
A product that's still being worked on right now.
I think one of the points that Mike.
Just reinforces the strategy is about low band mid band and high band right and what the industry as well as we as a participant.
Oh really need is access to that mid band, if we're going to be able to deliver meaningful coverage in in mid sized and rural markets.
That's something the team has been working on a lot it with with regulators, helping them understand the criticality of that need.
It's something that we'll continue need to push going forward and it's something that you know the whole investment community needs can help with making people understand how important that mid band is to kind of fiveg taking hold in the U.S.
Thank you and my last question is for Vicki So you indicated that.
You have a one new markets outside of discounts and now in Idaho.
And now they're out of.
Territory fiber build so could you talk a little bit about how you think that market and why you decided to goes there how it compares to go discounts in markets and maybe a kind of a bigger picture question, how large do things just out of market fiber opportunity could be for Tds or medium term.
Sure. Okay that that's a great question, where we are we're really excited about our fiber overbuild growth strategy and we see a lot of potential as we look across the U.S., both contiguous to some of our current market and an entirely new cluster.
Areas and one of the things that we really look for is really nice.
Demographic.
Growth demographic heavily weighted with family that are going to be buying our products and services. In these bundled packages that were offering and were looking for attractive growing areas as well already in Sun Prairie. We've seen you know some really attractive growth that's happened over here over the warm climates that housing growth continues to provide us new opportunities. So as I had mentioned the second area that we are.
Focused on right now and I've already started construction in comprises that's for community centered around and including quarter Lane, Idaho and this is a very attractive demographic and has a household growth rate that exceeds the national average and so and at the same time. It's also been underserved for broadband and that's the key for US as we look at the incumbent.
Terrier in those markets they have not been investing in our network and we feel that this is an opportunity to provide services that the customers in that in those markets demand.
So.
Thank you.
Again, if you would like to ask a question Press Star then the number one on your telephone keypad. Your next question comes from the line of Jennifer Fritzsche with Wells Fargo. Your line is open.
Great. Thank you for taking the question I'm Todd I, just wanted to kind of revisit that C band or you know mid band question. It's your do you would you say that U.S. cellular and sorry, if you've taken that step but has an issue with the C band Alliance proposal 'cause it it seems like it's really only geared toward national players and I'm. Just wondering it sounds like you agree with that but I want to confirm that and then a separate question.
On T. mobile Standalone, putting aside Brent. Good does are you seeing more you know a big fear for U.S. cellular or year, and a half or so ago was that you're going to see more distribution point.
Up here from U.S. excuse me the T mobile in newer markets had that been any sort of disruptive effect, that's been meaningfully worse worrisome. Thank you.
Okay. So.
Going to the first question C band.
Any proposal that doesn't have a lot of spectrum on the table.
That doesn't have a lot of spectrum on the table quickly and isn't done in a way that is midsized and smaller carriers access to it isn't one that.
He is one of them interested in.
To the extent that you know there are ways that we can protect the interests of midsize and smaller carriers.
No. We can we can talk about it but we do you need a lot here right I mean, if we're only going to put out a couple of hundred it doesn't do the industry may do a lot for any one or two carriers, but it doesn't do anything for the industry.
So that's about I think as far as I want to go on on C band Alliance or any other thing got Oh.
On the distribution now we haven't seen a lot of.
A new distribution coming coming on line as I said, we've got you know most of the brands in most of our cities today. So it's more.
My expectation is more about you know network build out than it is just distribution.
We haven't seen much greater.
That's fair thank you.
There are no further questions at this time I turn the call back over to the presenters.
Great I just wanted to thank everybody for joining us today, let us know any follow up questions and hope to see you over the next couple of months Bye Bye.
This concludes today's conference call you may now disconnect.