TDS - Earnings call transcript Q2 2018 | Telephone and Data Systems, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Jessie, and I'll be your conference operator today. At this time, I would like to welcome everyone to the TDS U.S. Cellular Second Quarter Conference Call. [Operator Instructions]. begin may you McCahon, your conference. Jane

Jane McCahon

this Jessie. Officer; us. I today you, the Investor we've the our Relations Good reconciliations. for on and We Steve Villacrez, can Cellular, wireless all morning, joining TDS interest, of is EBITDA, and President U.S. for presentation for on to Ken call, contributions comments accompany to Finance being you of income section thank and amortization, prepared slides and which want earnings before including call depreciation from the me and on of this TDS OIBDA, the Chief non-GAAP Campbell, operating of webcast you find and Officer. to see the and depreciation aware comments prepared TDS adjusted Thank morning to before Chief you This Cellular U.S. offering and Relations amortization, Senior and websites Officer; Executive Meyers, President Vice or Vice simultaneously are, Financial Investor adjusted With Executive Vicki websites. and from Telecom, the U.S. make referred taxes, Chief provide President Cellular or Financial both highlight Please partnerships. guidance websites. U.S. Cellular's

Morgan SEC Forms Taking Slide before risks to U.S. safe expected events our keep subject filings.Shortly and earnings future X. in in Please IR Day in on Stanley's schedule, forth today's in on if in that SEC this we about August after at upcoming statements Oppenheimer's released New X and Cellular you'd Conference like in Please an forward-looking Form the Communications the these XX-Q. extended permitting. SEC Slide would press including paragraph the know try TDS the has uncertainties. and to version TDS X, information and releases, Relations Boston call, Also harbor meet of you, Technology, information and on shown quick X, As releases to set X-K, management, Chicago York. Internet team addition policy events. if our about are August accommodate review us and in will so a We'll during financial & that attending in the the area look Corporate members filed and contains their Investor press presentations like and you be in our the mind let to our call open-door discussed and are the Annual results Access calendars

the turning call anti-collusion due to not I remind to any responding I'll over Meyers. now over, will Ken related to turn that the want And Ken? Before FCC call everyone to rule, to FCC's questions auctions. be the we

Kenneth Meyers

today. joining thanks you, us morning, and for Thank good and Jane,

raise the quarter the Let revenues, has me as start year to for guidance. full strong profitability produced pleased very in Increased by with efforts, with we strategy. and to results saying together year come how half leading increases our second execute the first I'm customer quarter, satisfaction reduction the us our cost combined continue of XXXX

customer results. start with Let's

the options, X,XXX results, Now metric. Plans, I that in That of handset want comparison full a we're selling net that first strong when remind we everyone year-over-year adds include quarter. was our XXXX reviewing that the second which quarter quarter unlimited said, against we're produced to Total up so

handset X base low churn a significant X adds like QX, I below were would While grown quarters. improved our the Sequentially, of we results and a handset and this to in and still have gross X.XX%. last those over now net is pace see, improvement postpaid

types other and impact positive of the although Total continue the the still them. focus the steady, see still a Customers, slowed revenue existing, switching both postpaid impacted to aggressive, to as improved of simplicity Competitively, relatively plan today, installment pricing and discounts. devices call plans And remained quarter equipment but to by the on their of buy-one-get-one-frees the you per went we slow and say somewhat, I'd little customers new environment and of Plans. started back total of Service pricing, has that out in during I'd show XX% the and us activity are revenue. and shifted low back, competition unit Looking Industry-wide customer along. now of rate quarter device-related the keeping average decline longer. appreciate starting was our for base the has

customer XX out lengthen average industry information onto for suggests now a device some more yet. could And months. Our holds this

to into in revenues going spending streams the device growing XXXX revenue When revenues customer equipment reducing to remember in base, other saw adoption recognition We results installment drives in and improve protection plans, of and included looking revenue not. XXXX growth like year, equipment new the changes after rules, plans increases So revenues our are improvements, due and continued for our accessories, a at profitability. these while which priorities is larger roaming strategic tolerance.

XXXX more those bit income operating compared application this cover under a results later. and Our of will when year's rules changes detail Steve revenue and to in the rules. last reduces adjusted same

we base. of new achieve targeted plan a our top customers Both and priorities of now with Over make our government continuing piece and that protecting the the we promotions overall rest attracting of to sales to programs small customer SMB To is and to force our its more to end, costs are continues progress. the continue compete governments that year, strategic are with businesses efficiently wide, great producing more deals today, Cash pleased the results. success across small and Enterprise reduction IoT initiatives, the board. solutions cost on local organizations effectively. closing recent sell focus some down operate larger business as help they

data system was engineering across teams. despite reflecting XX% expense increasing our example, operations this done down actually quarter, year-over-year, purchasing areas work For modestly by many and usage

key in small value suburban cities, to a strategy markets our rural Speaking and our is customer we foundation our the network and driver of the our proposition serve. satisfaction engineering of team,

plans network continues customers gigabits and usage. to month. well, XX% plans with these use on per X Our unlimited postpaid average now on increasing over perform our an unlimited customers of of even now are

we expect to to spend LTE LTE in We Washington. required our this drive still capacity. initiatives Voice a Oregon over capital And in running and watch number but this quarter, Wisconsin. within for California, continue The definitely Operationally, most and accomplished expectations data is of over Iowa and quarter. this investment growing Voice a usage is launched up point. we

England Those networks we we quarter, materially Additionally, agreed work Apple Though New in and Mid-Atlantic. Also, late it did the the to Voice over Watch. the LTE quarter, it impact the our launched on does in focused we characteristics offerings. partner on propagation XG trials millimeter understanding the conducted strengthen spectrum. with better In device competitively our vendor pre-standardized wave prior equipment. our using of quarters, tests several

spectrum. using gigahertz This quarter, performance we tested X.X

of will such using XG equipment well And the can based and XGPP beamforming network as wave you focused of question Our frequencies benefits will next any ask be core as better standardized on that on series later. got be understanding capabilities slicing. as trials with millimeter you Mike

an our evaluating needs cases of understand the these conducting represent cases important what spectrum We when carrier is Understanding auction in us and our various use XG opportunity bands markets. to determining spectrum work critical are upcoming for use in economic also opportunities.

for from users team Wireless that, in again. the combination What's initiatives resulted as associate hard in that, J.D. every the part half of of a cost just Power to the operating share taxes, broad-based the from I That's I July, ranges. turn Before let All-in, service It's earnings and Region. award Cellular impressive this work be Network the wrapping really the results won from was. is should first over really U.S. me how these our provide These and as revenue revenue interest, increase network the narrow With across-the-board strength over North that XX% allowed to am. growth every Phone cost Campbell. the performance U.S. of reductions Cell in yet sources improvement Highest impressive. customer one entire metric, increase exceptional results Steve? another The Not the in call us drove Steve proud our our depreciation many to to amortization. me it's Cellular well guidance get providing growth win of us Award work. as Performance to and up, to Quality before among basis Central in commitment both and want and

Steven Campbell

Thank you, Ken, everyone. and morning, good

about a losing Total handset year-over-year. year the largest was of the and remains same bit the part the X,XXX the churn increased was said Churn most breaks just handset total sequentially to level XXXX connected net negative full retail by selling visible Let's X% migrating X.XX% quarter. remember, and and success, second the a very than at sequential significantly, XX,XXX, upgrades, XXXX. our XX% was down connections X.XX%, million a more X in year's that the devices quarter total one, as we our less talking feature first more for of the customers connection quarter discounted postpaid Slide higher-revenue The by in for second continue the category, been the a XX,XXX options. Smartphone essentially additions connections. business under quarter phones important the rate strong But last focuses Plans approximately X.XX% our added the was first in of ago. slide Perhaps all-in at have On quarter our X.XX%. improved in second having roll sold begin that smartphone that from our as second with the connections to in tablets the for various better near and and per important smartphones. basis, on running Churn expect quarter. and detail. XXX,XXX total we a the gross ARPU connections. down for The unlimited handsets still little or were than contract, were with Including Ken first we XX,XXX presentation next Postpaid gross of additions of the as that is quarter but and the to to out that's quarter for month. quarter net elevated connections, second to we good nonetheless both X.XX%, after continue XXXX $XX both of X.X postpaid continue of total promotions higher Overall, about ended during about is we earlier, future. with which

brief go second a quarter, of the for recognition revenue financial accounting impact the beginning to let's Now with review of standard. the results new the

adopted periods the new accounting the new U.S. standard modified of Xst effective accounting As retrospective January using is the effect ASC is year as to this revenue of cumulative recognition this reminder, and accounting approach, earnings. of most a retained related a an only prior adjustment the reflected of XXX, as Under presented balance applied to Cellular standard, approach. recent to beginning the change the period

accounting second both the adjustments presentation results As the the results the a the results for basis column they quarter column adjusted resulting reported. year in and you, our of reported show column second prior of and to impacts the the of our center the Slide our standard. from presented ASC shows on XXXX far as the the the result, To not with are orient previous XXXX as quarters results. XXX, on remain being second include this accordance X XXX adoption of on the accounting. new are of ASC under results reported results XXXX labeled of adopting they of ASC shows Cellular's previously numbers, XXX The and U.S. right standard, shows impact quarter first leftmost

second, model; impacts Overall, equipment on equipment had significant plans. interest longer there not under financial The As shift sold a small. relatively and in on revenue from from of expenses. the XXX equipment are results. impact notable sales, were income no can service imputed ASC cost And see, traditional on by a smaller most are you service to and other recognizing sales and driven general factors, our for a made first, impacts primarily revenues to related to revenue two equipment reallocation has adjustments of administrative subsidy installment the selling,

the were second approximately And impact for amortization million, $X period magnitude. a through income the or impacts expenses net impact year-to-date the roughly X%. and unchanged. about For cash of million before revenues reduction quarter, $X to total The less was June, to percentage the the or than adjusted operating depreciation X%, was total virtually while were operating same

quarterly our like today. you'd adoption the report If in to standard, related to note earlier statements, filed more which Form please XX-Q of new the information our X refer is accounting included financial to

revenues Retail X% in the carries operating have XX% amount been this up included portion the included or offset of operating relatively for chart, were drivers million, both traffic, by $XX that accounting in rates new quarter impact as a revenue million the significant year-over-year. XG for was new $XX X%. well was that's the X% shown effect partially increase total another roaming increase revenues the to impact of in of in the standard, the let's of a standards. million, of later Total about in ARPU average bars, blue second in higher Now of revenue to favorable for per XX% move traffic. revenue, of revenues, as But the quarter. number driven million. was I'll up operating million Key up $XXX still which in $XX but the revenues say the service would the $XXX year-over-year. There by user increased by slide. the amount connections adopting XG and increases more which service other is impact accounting a a Inbound total

forward, dependent carriers both uncertain well and continue be it'll and I to period-to-period as that the pace XG other look difficult is customer to subject roaming forecast LTE usage from on revenue to given of it VoLTE patterns. on As as be fluctuations which migrate to will

sales revenue in Next, higher revenues increased the of mix device or shown Partially the equipment Factors increase shift gray sold. accounting and $XX sales to of impact was a revenues, an sold, served the volume that increase a bars, standard. devices of along impact in accessories, the with the smartphone new X%. average included of of million the portion higher-end decrease to offsetting in per devices

of higher That $XX.XX, Slide up driven quarter average XX second postpaid The revenue on. bars the to regulatory device Moving at information by per billings, per accounting shows total customers Average in the standards, as protection the new additional graph shown user, some recovery portion the equipment which $X.XX was offset impact revenues in amount plan to includes XXXX, the by by user the every and $X.XX. year-over-year. provides ARPU reduced billed was was the and the of for which, partially revenue. billings installment fact, revenue of related blue left, increase month.

continued period. along This penetration second realized to the on result contracts with connections right, earlier. being installment billings note chart, for was Average within in equipment of And upward installment of the a on despite decrease per As small churn a trend X-quarter graph account, shown user from measure customers revenue revenue the tablet account resulting base. shown having inclusive over billings per discussed quarter, year-over-year. per the $XX.XX per on as X% the nice average fewer from grow more of our the I up X% about the the account, increased

or on operating amortization from result X% story. XX% debts data year-over-year. points driven a SG&A for to income year million cash So XX% $XXX That advertising total small operations for X by revenues, Combined of of year second those of -- of or there's million watching adjusted was a move lot as revenues, about the quarter X% result overall of Almost as with the expenses. expenses by revenue X to categories. equipment up of a a of $XX was up more is higher by Total operating the from points but current percent headline measures. in X/X And X% of grew expense lower sold, revenues all Correspondingly, service a System depreciation or million change year-over-year. the total profitability to the before the decrease in from decreased X% XX.X%, operating to of decreased operate across by XX.X% commissions, the and margins, that, than bad year-over-year. a number total that reduction million, network increased lower seems $X million devices quarter there usage the by expenses more the was cost like due our almost $XXX Total our sold. a let's ago. decrease was ago. year-over-year $XX The XX% margin increased next about and margin XX%. major a with

network, of system expense exclusive our by X%, roaming for network However, only standard operations by maintenance. driven went expense, up mainly

many by the year As Ken amortization. earnings Data costs being to was and taxes work this earlier, XX% method with done across entities measure the network the procurement XX% dividend a our in from in good year-over-year. teams Angeles interest Due the unconsolidated said includes the quarter interest, to ability to up usage incorporates contain million roaming increased by earnings ago. $XX a equity second reflects areas. income. million The reductions, Adjusted per from went usage X%. $XXX is and compared related usage quarter shift depreciation customer. off-net Los and earnings Shown by before EBITDA in This X% along our rate the next to year $XX for currently investments, from and adjusted quarter the partnership same XG million, per customer the still year data Equity of ago. the average total of second roaming and down expense is about engineering

XXXX, which also actual we're Next our I is showing Slide XX. for for full guidance want results. to XXXX cover our shown the year And comparison, on

earlier, some The strong light updated updated we year. in as results ranges in into the guidance reflects the mentioned of and tightening the of from progressed the movement May. Ken upward we've further guidance As that some provided half first

$X.XXX end the to billion We've of while narrowing a billion. revenues, lower total operating range $X.XXX the For of we expect now it. range approximately raised

narrowed ends to the depreciation remains million. before income raised adjusted $XXX to to range $XXX we've amortization, And $XXX and for million taxes raised and to million. to unchanged the and Similarly, $XXX narrowed $XXX million. and capital for For before range at million depreciation and the range adjusted we've it at earnings interest, $XXX operating both million amortization expenditures,

cash June couple cash about comments and At totaled $XXX our XX, and a approximately liquidity. Finally, equivalents position million. cash

have existing million securitization receivable under and In addition, total our of borrowing credit facilities. capacity nearly revolving we $XXX

the turn Vicki? I'll Vicki Villacrez to that, TDS to with So Telecom. over discuss call

Vicki Villacrez

in Steve, and line in of growth quarter efforts. we're as Okay. the the our expectations and results morning, year Thank everyone. initiatives you, half Overall, with management through cost and first through working are our good the

growth. several investments in know, communities in in construction and X a These strong making revenue where work fiber represent existing will new first, roughly near markets combined these begun significant by markets Madison deployment, brand and these within market, to year several XX,XXX and results increase a you and in basis, our service we're very corridors position continuing Madison to As have fiber TDS Prairie. are about fiber wireline, residential services. Prairie, to for far, strong markets. plans second, of by and in has continue growth. so markets expand our very pleased announced On investments both other early five technologies with overbuilding our targeting these begun awareness; new on similar We've and Sun we've in addresses, new we've commercial we to future Wisconsin, in what And for pre-selling see which been are saw markets. for first operating out-of-territory In us Sun now and

launch X in is reached our first already to the threshold reached targeted earn McFarland, November, over which neighborhoods to return preparing targets has in we investment. a and XX% its example, of preregistration market service required on ensure For has

markets. across out in XXXX latter building and cloud are which purchasing We launch we to and expect our TV a the both wireline cable platform, of half also

belief its to to We bundles, our continue in and see will offering video product growth which value evolve demand. meet customer supports and our to continue in

our in us spending various product platform TV market, video video overall example, had new customers going new and user CPE devices, better chose forward. consumer For services of our set-top strengthen Cloud CapEx our will introducing we of fiber cost to provides because the a reduces by upgrading that product. they reducing also supports TDS out-of-territory over half told experience. delivery further broadband a It the boxes a

builds guidance we'll our XXXX ILEC builds, addition, also the included We through footprint the In earmarked deeper fiber XXXX. service beginning estimate out-of-territory in XX,XXX million of spending in in cover and we our is the an in at our our into addresses our additional $XX within year. fiber

million included I'll update, X%. Slide results second and with With which but X%, TDS a Cable move revenues On wireline basis, that on even Telecom's are under XX% we addresses. that broadband to progressing next million expenses XX quarter. and discuss the construction address to Cash state held projects This revenue million increase the wireline that cable. A-CAM has grew A-CAM to upgraded Overall, quarter, Telecom which $X revenues to an Finally, fiber I of year. increase our cable years, of to the the adjusted combined issued we quarter. EBITDA TDS commented reduction the the service increased authorized in last cost a program. will and current for wireline advocate under additional required does update I further we'll And programs, bring and an per to FCC to and increased due cable the can decreased order declined financials addresses the for program. A-CAM out. X%. year for which, cash expenses January from were build to support funding service our the Wireline both FCC XXX,XXX last across year the A-CAM service flat Capital charge XX and severance efforts continue initiative it at expenses on together, but receive additional due quarter begin order $XX $X the obligation, by for were speed retroactive does XXXX, not expenditures up receiving of XX%. Last and the

well spending substantially half to to year second as of as increase through expect full the programs TV. cloud We support the capital our

Slide XX. Now let's turn on to wireline with our beginning segments,

addresses markets. the select speed in total, our have continue made about by the leveraging deployments to built as direct route meet fiber in We wireline broadband services of In over fiber for resulting by our service miles ILEC strategy customers the our network higher of video years, of our XX% fiber deployment served we and several our fiber. demands of a result last are XX%

as compared prior positive the are triple our XX% the And play investments connections average, of the grew XX% driving network About IPTV about IPTV video on to to in markets by Our penetration, shown continued achieve year. XX% of Wireline are results on customers bottom on from slide. our metrics ranging XX% XX% market. residential to bundles.

In addition, churn on these bundles continue to remain very well.

customers of are continue taking higher to our to X connection. drive revenue residential approximately XX% a and increase residential in gig all average Our per choose of market speeds compared a And fiber up XX-megabit greater. year in a to or ago, XX% helping X% now that's customers to services

within Slide connections from results mix. Total continued XXXX. Residential loyalty decrease product as offset $XXX due million. in to growth X% voice broadband from which revenues by revenues was impact the $X a the by which wireline at well financial growth was X%, decreased the connections, and broadband XX. residential contributing decreased video on decrease to revenues primarily customer increased million in as Also Looking discontinued program, to the from X% a ILEC

TX our lower programming $X our higher-cost due were Wireline reduced fiber wholesale to on the cost both revenues were in $XX as expense, Primarily to a services cost we services future. commercial X%, lower and declines Wisconsin. costs. cost quarter, declines continued CLEC special Commercial at million. labor driven of the result continue refocus as employee cash in by the Wholesale primarily will services EBITDA the IP-based decreased legacy the commercial We services. the recorded from to to and continued million commercial flat severance pursue declining which transition primarily and focus growth reductions, adjusted revenues of In as part to XX% expenses in decreased we by in second offset revenue. wholesale see as of over lower wireline of wireline X% video cost decreased opportunities, of sales as access customers revenues,

Now XX. to turning Slide

We were X% broadband. continue pleased grew total impacted cable by X driven which cable in segment XX% a tuck-ins, very Total to with small performance. $XXX,XXX, be to by our increase connections,

XXX higher result, increased revenues Slide broadband $XX programming and expenses prior On acquisitions, penetration As in growth increased content cable cost, increased XX% connections. driven Cash total XX% a severance. compared to to residential IT-related due XX, XX% year. primarily points expenses million primarily basis by the to to

EBITDA million a in cable to As result, adjusted quarter. $XX XX% increased the

Okay.

So moving on Slide XX. to

We have provided our reaffirming in shared we XXXX guidance guidance, we May. are the and

will the the While will A-CAM year. trends funding of improve, remain QX half in second revenues

you, in light I out time. if are cloud by As support are be signs to the year capital that and we guidance earlier, guidance needed, the at while $XXX throughout spending will this increase And quarter our mentioned our build and at million changing fiber we TV. our third might we update on not our and seeing time, spending year-end will evaluate

Okay.

to back So I'll call Jane. now the turn over

Jane McCahon

a we Briefly comments questions. on go provide to HMS about Slide I'll few before our XX, business

customers terms EBITDA. mostly equipment In experience on and revenues, existing some declining to results, of OneNeck continued sales lower from adjusted

completed several projects remained intended experience. bookings monthly year-to-date team up the recurring has customer enhance to and However, year-over-year for revenue

for we'd like Jessie, to the now, So call questions. open

Operator

Instructions]. [Operator

comes Your James. with first Raymond question from Rick Prentiss

Richard Prentiss

wireless on VoLTE. side. Ken, you the how just Wisconsin the Some beyond the mentioned Midwest. questions, you first now moved Iowa, have

POPs On and Mid-Atlantic Oregon, 'XX? California, the of of your in? you come. VoLTE do what to should have What with now 'XX end we And Washington, of New percentage towards heading West and offered Coast, think England

Kenneth Meyers

just the would XX the 'XX, is you. table with that came other the have back most for can get say covered don't that markets I the we'll number We by that So end the have of of end of POPs. I it. all through it. our of

Richard Prentiss

was what number? sorry, the I'm

Kenneth Meyers

End of XX%. 'XX be we'll at

Richard Prentiss

at kind Obviously up a XX%. least really roaming roaming year-over-year, And in okay. nice the improvement of question. XX%,

have be the could in once GSM noticeable a that come high You should operators, roaming. much how we think But How results to pointed to with already improvement in you place, you it some like how seems the out XG could sure VoLTE And about traffic. seen? have margins?

Kenneth Meyers

in We're nice the next agreements of on build continue that a have very though our market move of X But going there. plan higher is to from at network. I in that place that's price. piece. seeing. careful to onto The that's expect XG, Rick. GSM migrates have about and VoLTE the a We see be want that we growth across-the-board we roaming And question, to exactly haul at of addressable XG still revenue over we years. carriers was nice market-by-market, couple XG-related our when up what thought traffic roaming, the actually that to seeing on of least as we at starting chunk increase to Great to overall, that we're won't would the talked and it same we

Richard Prentiss

And are the you're side have with out seeing seen is XXX-megahertz or signs they T-Mobile the that question any AT&T with spectrum yet FirstNet? there? bought the of of What you flip overbuilding Okay. the kind

Kenneth Meyers

haven't fourth we're any what network. has their for I'd shutting quarter now, expect their quarter, to of reevaluating third see customers as -- it's market-level I'd We its more been are. told probably more Right Iowa us fourth options as market we'd start there what that quarter, down seen T-Mobile, effectively. activity customers yet. an impacts it's We're are opportunity seeing call Wireless its

still So later -- expecting but some I'm I'm the year. see we thinking in

Richard Prentiss

Okay. And me. final question for

a on touched it You XG testing. little bit,

use thinking auctions? into millimeter are As about cases those C-band you appetite footprint, about wave, mid-band would your you how and like maybe and how think fit CBRS, for

Kenneth Meyers

to auctions So to avoid going we're with questions se. last per any auctions, respect around word, that

Mike, As you little on why about bit it it? we our think Mike's don't of thinking share here. -- a

Michael Irizarry

Yes. Thanks, Rick.

mentioned to about on opportunity a how use what focus the the you greatest it for of you So spectrum cases XG been trying represent earlier. need. use spending you that I really lot time frankly, cases us. drive might And Ken that think understand We've the think

So if you you full good of use wanted a that talked the millimeter probably and need a.k.a low-band, are to about, cover would mid-band, of range wave. C-band XG amount this cases

millimeter weren't use interested want some use if other or might foregoing lot lower-latency in on you higher-speed you there. of the consider On you the hand, amount cases, cases, a wave cut back the of

case, then we for use form and getting that'll on working spectrum. how need still then think we're the around we So about clarity what

Richard Prentiss

us you'll rest some this think into thoughts next able be you go we year? use cases, year to the and through those as of with share Do of

Kenneth Meyers

clarity around we I to. we be think more get will As it, able

with really and is recent movement seeing team I note months was is industry don't say have better XG the is and ago millimeter learning some think Mike X originally how around I fast thought one that the of its is showing I'd But paths than spectrum. in capabilities to of own work our thinking coverage been that thing and that the moving. that around it the of for rural is that know. we areas. really

done a we So there's fast. on of research, overview lot finalize And moving on and going learning be right to before but more now. testing that, it's

Operator

JPMorgan. Cusick from comes question next Your with Philip

Philip Cusick

update you can cutting Ken, of type efforts? you cost terms do What in you on us are your year? And of see running programs what this opportunity?

Kenneth Meyers

Yes.

parts all that the of looked this is has organization. that the initiative been So leading a at enterprise-wide has CFO, Steve,

it year million think year, ongoing effect on stopping scorecards, so continuing see year end of things I work program too. think, similar $XXX next things this we various for be we'll only and I don't we targets drove on out internal this, we well own is our this not about areas. I that on -- effect to an toward year and but our are that, year. and way We've got in This at the that this last

Philip Cusick

volumes you potential years similar numbers? over the think? of big next do sort few it And Is

Kenneth Meyers

year's this last you targets given and year's. I've no. No,

working still on. we're year's Next

Philip Cusick

And and type would benefit Okay. to sales from XG? with What those? your government? are about business And or IoT fine comment a XG of those can they just expand you on products small

Kenneth Meyers

really products else a they're or as everything now business now the our leading training as ago. And as this and years really two starting well and time impact applications force about sales some And taken get force and sales in devices. markets, direct So up with said, we IoT people government most have stood them with that monitoring and services. the in work We've our get guess, I the the helps place everything current with of to to Especially more right from Highway and more well They I as it industrial more for trucks very given them. they not require the network. devices save effectively as utilities populated company they as -- less working do areas, densely help more work. effectively Department efficiently, run today our And of things XG. automate on their County are that cost can

Philip Cusick

That's interesting. And success mobility that is any government that sales just early on? selling is force having to SMB or really and

Kenneth Meyers

them to Absolutely. trying their we in handset compete, that. then the just business we of how opposed We they more don't sell is on already extension no. Oh, going We're got that. to solve how off and problems. help what that with focused Everybody's as And an lead have.

Operator

question comes GAMCO next with Sergey Your Investors. from

Sergey Dluzhevskiy

their you're you Could maybe offerings? you overlap a companies in bit well. your probably from large Comcast in talk with as Charter what of have markets cable mobile maybe have a You about terms seeing but some little

X? where on maybe in So think it go year do your right now a mobile their products markets could your and or thoughts in you

Kenneth Meyers

nice talking given you So roles. in being market corrected. we'd like your Comcast -- some our number's didn't -- has presence But of the Sergey, it's Comcast, X talking to I'm X%, again. change be know XX% oh, I I you per to think

small got You've percentage. single-digit X% up. XX%. not And Very, on side. not to activity very single-digit that numbers, speak

of As quarter. you Charter at know, launched the end just the

selling mobile, we've seen no selling they're impact see So out sell they mobile I'm far, seen. -- so I've some date to their expecting that to bundle. that we'll from drive what help to mobile aren't

some yet. see impact But could we Wisconsin. in So nothing it's

get going will some they forward. that expecting share I'm So

to switcher some I next can think point fact, year in after out we, about that nothing but pool take I year of yet. the or that the

Sergey Dluzhevskiy

Cellular Okay. guys U.S. And probably This technology. fixed for TDS a and question the for on is both Telecom. wireless

risks preparing your a fixed could Ken, wireless And if in Vicki markets. use opportunity how also on So are your for your there? of TDS fixed markets? wireless could kind launching case you other you XG? maybe XG using carriers about talk maybe see of be talk from And wireless What Or on the you little bit fixed Telecom, that for if about some in potentially solutions? might you thoughts and LTE Verizon on

Kenneth Meyers

of products where product aimed out The there fixed you two a different network line cable for So XX% parts let usage driving them. XG as wireless our There terms markets. adds aren't a It's today of nice drives handset the taking product. or -- two are that we a Interestingly, different of for incremental some any me competitive don't at in it's other in And that is now come sales. challenged of start. more in the it bring wireless as coming actually about fixed that areas centers. really rural the with have with it, new have nice that capacity product, city

it. Nice product. I like So

of theory need getting that wave more I at, it's areas the one. as keeps understanding use enough at a would we're For changing. current you we'd and than looking speed, under XG, product more be in look one the of densely a much That's of in cases our millimeter something performance millimeter that Or of spectrum. the terms that's it said, more populated of

one. that But decide to looking early too So we're at. one it's

Vicki Villacrez

usage user markets typically to as curve is the average that month and per a develop. substitution keeps strategic are perspective, of point this demand is per XXx many of not time. cases we're wireless from telecom very our seeing But the certainly majority wireless elevated rural, any use at and Sergey, And that Yes. It of start a in increasing. watch markets our the

looked may challenges anything will as So interference that to of with meaningful the usage or haven't but seen you be are also and we topography X we yet. most that the the deployment. we have that And decile monitor the to bottom foliage susceptible, and cause trends, going

away but ways it's from XG So we a may change long that believe the market.

Sergey Dluzhevskiy

on side of question build. terms in wireline Okay. fiber the Great. And another

those ILEC so that of Sun about maybe compare general where at your just been are some the And that strategy has you're what in else Wisconsin, outside market seeing? build? You going, for in if the that talk you your anything of maybe announced market. are differences for of mentioned characteristics already? some that building that's to Could are looking out-of-footprint you're you you maybe And are What markets? Prairie,

Vicki Villacrez

Okay. Sure.

with seen market, that recapping out-of-territory Prairie is success let our build. So start we've Sun our just our really me which first

we're pleased that said, success. with As really I

We to have achieve video. penetration for been and XX% able XX% broadband

to a ILEC of ILEC take many are Our are the we Prairie company. our some our And is that's where of and telco better markets, exceeding more our density market, incumbent good fiber compared in fiber experience large rates Sun attractive because markets. demographics

are looking we and we're really the all of where target we area currently what that's are look kind Dane as So at next X we headquartered. the which in markets, like that County

very fiber May, of Sun X So to what But recently more markets, as seeing of we in new similar all those than other we that our began already the we're really pre-selling Prairie X. strong market. X results experienced looked in

about as like. will strategy of excited update so that on strategy, spending we we And half future XXXX, growth and earmarked fiber our it's are and this that our certainly what with have capital in go $XX you we XXXX we'll of look important million half to on and into

Sergey Dluzhevskiy

on you service a right And exit and investing revenues mean, but of have drag At HMS. direction to that you're to this this Obviously, Jane, do some for or would guys a the looking guess, I need business? decision things and you what maybe make in side. this for equipment some to continue for benchmarks the progress business of Great. what to you determination? need make I maybe set last in are the it's time point still going the is question, this seeing are whether on some you're the

Jane McCahon

in business, market the Sergey, I that really would with optimistic we customers. that right that, remain are serving say mid-market pretty we

and we're looking got lot at work our right think Kurt is making working we've And corporate. sure CEO set done they've a looking moved -- that of with Thaus, Swanson, I product under Terry we CIO, And the that there. the portfolio.

with our more security So aligning asking and building more that an emphasis customers and products, things cloud about which that. on and colo product like are

on So a at see we operate there are it still growth of this get certainly to point, that and lot back looking business a trajectory. room and

Operator

Stanley. question Flannery Simon Morgan from The Instructions]. with comes next [Operator

Spencer Gantsoudes

Simon. for Spencer It's

past then which the you lower And your separately, X.Xx, optionality leverage is in balance On industry updated Could industry comments. you adds, quarters, is sheet few is had strength earlier your whole your than any a and on leverage? strong net sheet, peers. net talk based that I sustainable? this and is follow-ups thoughts do over lot about guidance, on of as XXXX of really that think think, your on quarter couple net around balance how a a driving Just What been about really. much the and the adds of current

Kenneth Meyers

So moved started from right we But speak like there. that I'll near it. the whatever. how any adds, I I and industry wind term, I off are don't available know picked be I'd where to now. needs start we I'm And quarter I talked that. things with is. now, the level seeing. slow got like change of don't in about lines or sustainable and we We're what how at fine. it we're terms financing up. with We have the first. second in like part the We've the growth spectrum slow I don't and any see leverage have being of on our some right question should We up at whether that comfortable us

I markets, move especially got we some opportunities as as our in continued to customers, of we've Steve mentioned, continue from... think

Steven Campbell

phones. Feature

Kenneth Meyers

to work to continue Feature We've doing the that that. SMB of as strong the as well been what is phones. Feature we some appeal a segments space phones Thank lot quite addressable of you. as example broaden of market. I doing in broaden been our lost and the words. to our haven't to an in smartphones we're

still got more grow, I think. we've to So some room

Spencer Gantsoudes

the, I on of the seniors. some you is targeting pretty of and that your of -- military neutral? it outsized having impact some then promotions Okay, Is any or peers, guess,

Kenneth Meyers

you've at that seen. all evidenced it rate churn as the I wouldn't outsized call by

Operator

call are the further There the presenters. back questions. I'll to no turn

Jane McCahon

any you a Have have. may this Very or good. calls Well, for thank look follow-up to joining questions day. and you great us we morning,

Operator

conference This call. concludes today's

You may now disconnect.

Telephone and Data Systems (TDS) 3 Aug 182018 Q2 Earnings call transcript