TDS - Earnings call transcript Q1 2019 | Telephone and Data Systems, Inc.

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Operator

Good morning. My name is Adam, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the TDS and U.S. Cellular First Quarter 2019 Earnings Call. [Operator Instructions]. you. Thank may you your begin McCahon, conference. Jane

Jane McCahon

Adam, joining us. you, and good for thanks and everyone, morning, Thank

As we of our a documents after you all close little to posted notice, the digest. the released more our time IR give section to our to yesterday and website you results of

Investor both or Chief found OIBDA, Vice know on before the Executive Finance non-GAAP Officer; Ken me call, taxes, Meyers, contributions Vice Financial and see helpful. of websites. amortization, including Chief Please for today adjusted President depreciation Cellular's from and amortization, We and Telecom, earnings So partnerships. let Senior on highlight adjusted the being depreciation U.S. Officer. EBITDA, those guidance that are, webcast Cellular, provide us offering simultaneously operating Steve and and This this TDS U.S. Executive or Campbell, wireless Officer; reconciliations. and Cellular if you income TDS Villacrez, for Relations from interest, before With slides prepared and comments Financial and and is Chief websites referred President call U.S. Vicki to of President to

TDS SEC its information during As financial to about after review in addition paragraph U.S. X, in yesterday press Forms filings. our harbor our Slide filed risks uncertainties. safe the and to and are and forward-looking SEC discussed XX-Q. in in their the press that forth our Please results releases the shown future and including Forms version Cellular releases presentation events close, this the X-K SEC extended on the statements contains the call set expected and and subject

and to that longer X, modified been we income side on as the we'll statement. base, penetration of $X since balance XXX selling grossed excuse using no no Also, of by are APA, equipment no no is being led up and new installment about are we XX% XXXX the to be billion retrospective find the a On postpaid APU XXXX, plans and to ASC longer up impact accounting we providing leases those. we adopted that standard have with the This the sheet meaningful me, now accounting house, for -- method. longer January

continue will ARPU to provide We ARPA. and

turning over, And that to remind to any do effect, and are Ken anti-collusion are in call to now FCC Before the it turn auctions. unable I want I'll over everyone to Meyers. still the questions respond we rules to related Ken?

Kenneth Meyers

quarter pleased your above income I'd are but better shortfall minimal see; revenues a like equipment than levels at than industry all and bottom bit Jane. expected, operating last the our and interest Thanks, -- with for known better generally how targets. are amortization, Steve is revenues depreciation the bit. lower impact. before I'm not today. a cash the these out. in on go morning, and Service adjusted and Good of in Overall, as consistent that has activity thanks and first will has detail flow, Subscriber actually turned line with still year, to trends,

the Finally, on quarters network one in are a our from albeit plans build of less modernization are we standpoint. target, network busy

they impacted to vital team I'm Thank team. and access our services you, had winter were of communities Speaking job have needed. proud by to flooding ensure the has done most and the very of the storms customers wireless network, when late

our for at to set continues looking priorities the base our top growing strengthening priority. we the Now and back be year, customer

Unlimited at roaming base initiatives through unique our Payback. Plans offerings experiences, value roll continue through continuing aimed to strengthen improving LTE voiceover to our out We their and like with

no which growth in user. recent further need per average success, our remains low, we to of revenue the evidence look and churn, than As

tends quarter as we did base, customer the quarter, more of better need reality. and first adds, -- a first but be in our the to plans gross last growth. terms a to In our terms bit drive that built slower of we In are growing and net of reflecting seasonally little most quarter, seasonally know, than you year

but grow to targeting handset are churning subscribers of for effect show continue We the to to connected penny expect we year, tablets off. the devices

Total highlights Our us prepaid quarter, a that of helping our the stronger Plans cost also gaps be is for complexity. lower in of importance which suppliers year-over-year year and some And user, the of to value like end sales year our a especially to by of time from success full in device product increasing products. phones customers expect service should the the has the is Roaming Both one contributed the reflecting I with the Service at revenue protection, such, as second line success continues both understand now services, of reduction a suffered loss focused point expectations. and the and organization revenue, for device behind the issues our and deliver. per third line the efforts, cost and product, remains And of priced these of of growth of in of average current quarter. the in revenues. in half the especially

systems as X%. usage actually expense Just despite was operation example, XX%, X data increasing down

the million imperatives savings company's X cash results in strategic X% or flow; income $XX increase increase on identify focus before operating cost operating adjusted across depreciation again, amortization. the and a financial with to The and strong and almost continue on a company. $XX produce these quarter, for service We in million first revenues opportunities work

Turning to the network.

customer on driver fronts. investing performance network are to many is satisfaction, continue key We believe our a of we and that

data and to of base of customer end plans. At XX% the our increased of Plans unlimited we're postpaid on the amount March, investing on usage on our was Total First, meet network. XX%

to drive investment capital expect We usage increased to for data continue capacity.

network executing we program, on track voiceover commercial and our we roll our modernization this ready now are to the will XG to third, enable LTE New capacity. on England later mid-Atlantic network we out And our Second, to markets We launches which making year. will are and are first as increased for such provide XG benefits, our in also investments believe XXXX. speed

Our first XG megahertz with Northern last, business, to future that XXX year. and our are and this the we our the spectrum. footprint Wisconsin expectation using to our mid- grow in expanding will markets edging And Sioux into we augment spectrum that high-band later will City be out and with

so projects As implemented the will in the ramp million you quarter, to network concurrent expect And spend our to in can engineers the a of important year. $XXX see, XXXX, first second up half are very managing all are with be these our even spending organization. projects throughout the number of many that we of

that, with Campbell. call Steve? the me let Now turn over Steve to

Steven Campbell

connections. everyone. Thank you, good by Ken, morning, and begin talking about my postpaid comments I'll

year-over-year, X and higher in was basis. the activity gross X.X ended our first additions increase postpaid represented a partly net gross for to we'd connected on We next additions more handsets additions slightly quarter XXX,XXX quarter primary of of not mentioned first like. the Postpaid higher The XX% year-over-year were as negative and losses additions were XX,XXX, modest so base. shown earlier, quarter additions quarter prior the in a detail. which by at from for first net albeit, offset total presentation, go resulted a of of XXXX with devices postpaid were handset Gross year. promotions disconnects both As are the let's drove compared offered level handset increase and postpaid the on improvement Postpaid Ken that both the of year-over-year. that in to total gross year-over-year. aggressive XXXX the XXX,XXX, bit our in retail focus, improving handsets X% gross respectively, Slide up The million connections,

the phones increased low on have to a That various just connections depicted with sold X%, during elevated XXXX. given the was to fairly as phone. quarter XXXX, service a we've year-over-year tablets Churn churn, the smartphone by discounted that at ARPU fairly continue as XX,XXX gross heavily and flat next again, X.XX% running feature out and level, $XX sequentially. than shown Total was upgrading contract. of to churn, achieved, and has first devices combining connection growth bars, of helps Handset for more upgrades, the over revenue chart. from flat drive postpaid churn for still of both the total consistently year-over-year Along the Including been that We quarter first quarter promotions additions handset was devices is with in postpaid about connected handsets roll smartphones. blue a XXXX, customers more past first both feature for continue to X.XX% smartphone in by for sequentially. for of connected the

the green year-over-year. minute. of largely on devices due an roaming revenue, portion $XX device user, driven That year-over-year the customers higher year-over-year. of were million total year-over-year higher of an of number to driven higher which number Total increased to the let's revenues, revenue the by for revenues in longer impact I'll was The million. portion This the upgrade sales by Retail to operating XX% of revenues, of their volume. lower. was results. per about is bars, average that cover the service reflects a million. blue Equipment periods, portion the sold. million, a turn by for increase $XXX $XX or increased of finding in per revenue Now the devices Inbound increasingly offset by X% average by X% decrease $XXX was or up gray included driving in the X% price partly the first was We're increase average selling million holding increase sold. $X the in bars, transactions which quarter are the financial bars, The separately to

year, sales revenue, the about and a minute coming X. to is In first for below Slide to user year for our per thinking year-over-year. quarter, actually The revenues. full just average our I $X.XX expectations were discuss a bit was postpaid I'll fact, want into equipment revenues revenue as go or X.X% up $XX.XX later, impacts on back which the

the under unlimited drag universal that assessable the plans, In shift mix December to One fund. of in the to and was higher-priced a of both device XXXX, revenues. no factor a year-over-year in support factors customers a longer plans. device on factors the revenues Other comparisons universal protection MMS higher the service FCC that in the increase and fund ARPU are smartphones was included continuing support and decrease was revenue. sequential migration text messaging the One in ruled major especially

pay As expense, these stopped account the U.S. excluding On And just X% have would change, basis, have it year-over-year. average revenue increased X.X% grown will customers impact this earnings. a year-over-year. the also change and ARPU would G&A year-over-year. a by Cellular longer fees on it by to lower in grew so X.X% charging I USF by neutral was per discussed, resulted FCC Absent result, This no U.S. revenues.

total about to margin ago. before So a operating profitability let's amortization the percentage point those a million, the up result a by Adjusted move XX% to revenues Correspondingly, our And was ago. a as next watching XX%. percent percentage X% the for a of of point was measures. current operating service quarter margins, up revenue $XXX income XX%, depreciation year from year from increased and from margin XX%

$XXX number increased increase the was million operating increased of of of million, partly or year-over-year. $XX million higher average being cash $XX per $XXX of X% equipment sold. Cost As up revenues sold. driver I offset equipment with an cost commented year-over-year, That Total earlier, a to X% sold. the devices or primary by in decrease a expenses device cost total in due were by million

up amortization. a other before Excluding incorporates earnings adjusted cost measure along the declined aggregate in method interest dividend earnings and This interest, our the taxes Shown X% EBITDA cash by from chart next for $XXX of quarter equity year million, was and equipment, on income. and ago. Adjusted actually depreciation is the investments with expenses from year-over-year. X%

and In in and the income before and in depreciation and adjusted increases in operating also increase addition earnings year-over-year. to dividend amortization, equity interest had of we income entities unconsolidated

cover guidance our full the want I to XXXX. year for Next,

bit a earlier, said far so into been year I sales coming As our this the expectations below year. revenues equipment have

additions like, would existing we We devices the gross holding are in our for haven't increasingly customers periods. that their longer lift seen and

million in sales corresponding expect We operating revenues a in $X operating full $XXX unchanged, for As $XXX to $X the million. and billion adjusted unchanged, a the revenue guidance result, year, total equipment guidance just for respectively. currently depreciation The to be income will range billion. and those sold. equipment equipment expenditures the we've $XXX The $XXX which be at capital carries our range for and of still therefore, EBITDA negligible, expectation a reduced to reduction for on impact $XXX also on operating is million impacts for revenues to total $X.X before The revenues. sales is outlook billion, measures cost reduction to of through to expected million over our and adjusted will million have of

Now the to for Vicki discussion of Telecom. I'll over Vicki? Villacrez turn the call TDS

Vicki Villacrez

Steve, our outlined reaching XX. you, the good mid-XXs. are cable strategic low we everyone. how at the pleased connections broadband and to achieve we and Thank grow Okay. and with Slide X%, Overall, started to to on continued year, in Both working which are wireline priorities, respectively, morning, penetration levels X%

synergy are TV+, completing forward. cloud continue products to which video We with platform to on expand the ability this successful close to and will our bundling be of TDS called our going the TV build

launches to scaling a market and expenses give sales wireline cash cash cable marketing in up year approach second our markets. markets. expenses summarize complete cost Total last quarter. fiber the our update declining XX. Slide overall quarter the grew a later have take Capital combined revenues, expenses you targeting net growth wireline and of We for will program slightly make X% revenues. last of result the growth the Wireline commercial reduction compared quarter, while flat. maintained when cable to rates. revenue direct beginning results helping and in well X% the residential the This in below fiber were a in the wholesale we year. offset for a in Adjusted basis, to I the with will expenses due revenues room Bend new remaining for X%, increased and I'll increased a a On on control of cable implemented as expenditures our initiatives out-of-territory X%, year grew are on moment we phased in revenues, our is X% we launch after and to decreased efforts, cable EBITDA decreased

year capital We fiber our an of to and support expect accelerating spending in increase on ILEC existing the through our and footprint. substantially to our both out basis territory investments,

wireline by result our to of over demand. is years, our XX% fiber last of a service strategy several served customers that are our It ability provide the our As this fiber. addresses services enables deployment fiber now the

prior value play some video compared markets wireline penetration, exceeding as XX%. continued X% turn to XX. About to XX% of markets our Wireline average, our segments, IPTV customers bundle three customers XX% about rural on are on find year. our our with on the And let's Now bundles to footprint and the achieve services pricing. triple all IPTV geographical of Slide grew taking with beginning a in residential given connections to the continue video nature

to churn As continues remain a result, these very low. on bundles

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

on under both We to progress construction make our and the also state A-CAM broadband continued network programs.

the $XX front, CapEx the A-CAM with X,XXX eligible earmarked continue extend the XX edges of order this we enabled network to speeds under with end addresses speeds the to the of first of broadband service to deliver our up year. goal On end fiber X At to higher the XX,XXX program. to reaching outermost eligible required service broadband we in of quarter, addresses the of by million

to XX,XXX broadband more which that obligations we our we under our meeting underway well the FCC's to at projects of markets, upgrading York and are in grant to end With where program, nearing programs, come state in next completion on are seek additional due first service respect the the are states We areas. year. New opportunities broadband addresses we continue underserved several have stated

megabit or speeds TDS awarded above to As grant speeds expand at XXX service locations. recently in was an example, Telecom a X,XXX as Tennessee to broadband

extending As years the the and an XXXX, funding expect $X the we through which A-CAM program, to accepted quarter. of begin authorized annual will full to receiving we of X an million of revenue, update which program, the and in support year-end, entire now incremental from add FCC second

base result, an fiber our $X million deployment of support additional receive territory. on revenue XXXX, $XX update and Slide amount. a million plus we As of an will XX in in strategy, both transitional of out provides

our are are very market. out-off-territory We just to announce pleased initial in sales and our market, to experience we've that second results launched our fiber first similar

We are of total markets in other attractive in and clusters mid-Central in stages XX,XXX new Wisconsin. and areas service X Wisconsin various Southern this cluster our well expect to targeting Wisconsin in as additional X as year outside addresses construction launch

Looking $XXX X% X% growth from due product financial within million due due adjusted lower offset wholesale higher video partially decreased Wireline revenues Total revenues, results decreased million. revenues. primarily decreased EBITDA programming decreased employee-related connections, broadband connections and expenses to residential Primarily in in revenues X% a services. declines Residential the in as of a declines at as revenues mix, and wireline from decrease primarily decreased lower by as and X% CAF commercial the video on access wireline connection. quarter. X% voice result to is X% expenses XX. well Commercial wholesale in broadband providing by increased by reduced of X% legacy to This CLEC to to fees. $XX offset and driven revenues Slide growth the cost continued

to Slide XX. Turning

early January. the performance that quarter led very despite stations fact on a We dispute in that happy with continue be the programming a to to had segment cable we first our major in blackout

by will programming to cable connections. broadband X% Total blackout for customers. a grew driven total outcome, is X% While connections increase ensure desired not to affordable in XXX,XXX its a rigorously TDS negotiate our

result, points a increased in On connections. broadband XX% penetration compared residential revenues the to to million $XX by driven XXX total year. XX, increased prior cable growth As to Slide basis X%

broadband and in focus circuit expenses. Our expenses connection. on to average increased costs Cash growth to content higher due primarily X% X% has increase a residential revenue led per programming

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

important our we in is EBITDA very and to of demonstrate points. a Half TDS costs addition, customers attract margin customers a increase cord commitment of in despite These so. in chose market video broadband in base, XXX saw offering. video our maintain video our had us said our first both increasing ability content they I'd of our to trends In surveyed platform both and like customer tell our to industry and and wireline results reiterate, meaningful our strategy the basis because to out-of-territory entertainment cutting. addition a to superior cable we

attachment video Our out-of-territory experience a churn. robust our far product fiber Without broadband, is rate with markets we exceeding XX%. in to would video so bundle higher

all-in-one an value solution. customers provided in convenience guidance, of February. guidance Our entertainment is from unchanged Slide which On we've the our the XX, shared XXXX we

As mentioned pie a the year I we throughout the and various of our capital employees support are our fiber slide, with spending to start updating the breaking providing that, initiatives. earlier, as second on I the year buildouts. to chart to increase now on the thank look shown And our forward expenditure great will the capital like to And all quarter. you would for out

Jane. turn back the I'll to over call Now

Jane McCahon

ready Adam, we're questions. for

Operator

from first question Simon Flannery. comes Instructions]. your And [Operator

Simon Flannery

onetimers about control the great of what where are Can business a rate any a equity So do next are on you there for few objectives? the And cost we just is you or in that the then keep color XX% level initiatives good in any the the and on quarters? pretty Can in think Ken, some year? flat about how for nice the were talk color specific sort you this really year-over-year? up income, achieving wireless.

Kenneth Meyers

that and they Yes, Steve the Thanks gone have so. program started through question. under something organization, and was of the -- ago X Campbell, efforts pleased I'm with of for do extraordinarily they cost the it continue years every the part we to control

through moving side, On what our the some we handsets. do the reverse to network costs in way logistics backhaul on changing all things from

So by think spend couple the organization that million the about own there of that take of been last part And out hasn't been a $XXX to years. able touched. estimates, of we been our we hasn't have over

year, have this meaningful As our we started another for off got target set we swath. large

identified been keep the we right part what now. of list do is All of yet. the areas That's haven't refreshing we

it Lee So this that where it's will I'm is work [ph] all organization. but of work not say to really we're it, and going to built the we going culture continue the into Arnett year, to something

of the something So year just end it's this goes not at that away.

Simon Flannery

to the way a or what target we about outlook? there how just Is think about think margin a -- what

Kenneth Meyers

Boy. Target margin.

seen my to But Given some the got We've about optimistic it's inching pricing growth level got the being margins. now of stabilize, different investment we've of couple what of to in anymore, able help And keep the we've pressures. with don't the upon up network, happens current with quarter. that do pricing old pretty years improving work I'm used depending been ARPU. in all any targets that pricing to right? drive last we've to strategies keep tough

on So more to work we've the got margin. do

Steve, add terms any the income, In equity color around that? you want of to

Steven Campbell

of the the of our New reported in controls. are that major aren't improvements factors asked to investments, onetimers X -- those operationally-driven, We've some from modest There any the some same about, same York cost in Simon, extent you service understand each we've the about we revenues, And earnings numbers. Los talked them, growth X. Angeles, in seen the onetimers. and including some

basis, some would in investments. the So on is lot We year going forecast say but into forward, we year year-over-year don't nothing have we'll a those we think growth -- visibility have unusual. full of some a that

Simon Flannery

dividends? it higher hopefully into And translates Great.

Steven Campbell

Absolutely.

Kenneth Meyers

Yes.

Operator

question Ric Prentiss. And your comes from next

Richard Prentiss

questions. couple A of

EIP upgrade shift the kind equipment gross equipment percent of revenues life. see around and the what in about you area? help did First Can revenue us talked on also far you and understand adds as you rates as on the longer the lower take in can side. the the Obviously, quarter

Steven Campbell

Yes.

quite quarter range about is It's point. was upgrade of EIP, this the the in X%. percent the in sell-through And Our high. at XX rate percentage

Richard Prentiss

Okay.

So probably last yes, to your X, year, longer. upgrade so them closer think that I are people keeping -- rate was

Kenneth Meyers

They across board. absolutely are, the

Steven Campbell

time XX% they're in ago. quarter-to-quarter. it longer But from it's bit of than a them is holding was general, moving year that The a target probably a

Richard Prentiss

on the with And texting postpaid helps. fee prepaid the revenue cost ARPU ARPU. color people product in bit upside as the the surprise sequential and the SMS these going on in That well days. in Talk but appreciate us competitive using a dynamics the away, side, the growth the to on little about yearly prepaid prepaid Great. what that continues industry are and really and the

Jay Ellison

it's Jay. Peter,

So we've that on see promotionally similar mentioned, in our some working doing we're family some. And churn addition on there. as I'll as unlimited our things doing on continued cards those our We're we with, to We're and that. really, teams introduced strategy lot seeing front, so along distribution behaviors been test-and-learns seen we've what I with the point focus for prepaid put and incremental that call -- We're prepaid we revolution increasing or a some therefore seeing products at of prepaid or topping of up evolution plans right -- seeing of longevity. we rate. say relative significant sale, area, have focus the capabilities focus additional better on we customers. in But the is lines, channel

a of put of and focus we've all, 'XX. 'XX for at lot end planning all the So in

Kenneth Meyers

our low-end Ric, be is is, of the take down the ARPU much one those phones, those see say into it, make that activations, I'd of ARPU bit. things lower call but that because to to haven't Yes. we're half, in back channels. lack expecting careful actually the, And we of phones lower-end get we second as little some seen as distribution out of activations a prepaid of more

Richard Prentiss

off adds Makes for Trading sense. ARPU.

question megahertz, these Ken, different the I've had, the and the high see for days me, and coming you on for augment availability definition about? got do admit mentioned rollout, what's engineer And in old XG last and then And Okay. high. XXX band? I the with to then how mid-band you mid bands initial

Kenneth Meyers

to We'll band. that, band Well, and Mike about when about thinks let room. him but going not got I'm I've mid he talk in to answer the try low what Irizarry says he

Michael Irizarry

X.X, band about when so it's So I lot about; a XX. would so XX, think that's CBRS, stuff, wave high XX, talked be XX, C-band think the and mid-band, the spectrum then millimeter

Kenneth Meyers

about availability? I then the is question. guess, handsets And what

Michael Irizarry

Yes.

So handsets, at XG big least focus towards of XG, in the low least, And readiness NR I think this year. for devices. the the at chipset bands end for on

Kenneth Meyers

Given launch. with year get availability, really handsets anything tiny, terms for we expect what and talking handset that that to for see a all launch of we're in the our going combined about buildout we impact. plans we We're this anything doing, that have is have to a tiny, XXXX availability of in time

Richard Prentiss

obviously, to X the What handsets. on chipsets XG you've that kind into the spectrum line and infrastructure get figured as mid-band, X, the X time X X, stuff, out in And about? those the CBN see do got CBRS, far you then coming of X range first as

Kenneth Meyers

the For is that we that think our now, From right? historically. spectrum, to saying we've we're follow of I've that seen part And standpoint, puzzle availability are FCC muddiest stuff is spectrum. chipsets I think get is on going good of the hearing is spectrum this. the The got to right news moving the more is the commissioners important

coverage low base about the we year the layer of Our last strategy we had always cake is call of that where had band. wedding a view spectrum, talked what

mid-band on a nice segment and band of have need then meaningful top the you You high of that.

industry the need D.C. a lot get mid-band, at of For that and energy that I company think the in and to to spent that U.S. headway, resolved is try to on make level we really and being the

Operator

Silver. And your question comes from next Zach

Zachary Silver

rates I on and for think first we some call I The out U.S. I the XG should year? going how bit really lumpy, On rate side. higher volume mean, think there, you Cellular any but line heard I is one about impacting forward this traffic lower nice offsetting don't roaming, growth potential this the that. a that know

Steven Campbell

and you if -- had we in you digits. comments, growth the double said nice Well, first your repeated pretty we in quarter, as

the was volume-driven. XX% think that's I number quoted, and we

didn't volumes full So into that in increased say more than the frankly, modest we've we we'll that, year, for one saw Hard single the first what principal this we are coming time, to seen continue, anticipate at partners would quarter. of see but from year-over-year in growth somewhere I we forecasting but our the predict the whether year. digits.

Zachary Silver

environment the from just guys check in And competitive first with in the those on it. in to FirstNet, quarter? competition increase then Got T-Mobile, any

Kenneth Meyers

both Nothing function. competitive Verizon business, of in markets. function Chorus and most them our I any has exists AT&T's along wasn't in marketplace the are though. they with mean that's and existed. We've quarter, business increase the the Sprint, There that got of -- of both step a today a step them, are

Zachary Silver

Vicki And then it. Got Okay. for the on TDS side.

detail second this builds, up in those you you you've a what whether area second service mean, you're targeting, I in big and city Sioux XX,XXX little done market. guess, get a For with and presales from, far more markets to think characteristics out-of-market I achieve great addresses that step is new the build. the bit of Be out-of-market the the can on so the

Vicki Villacrez

Okay.

your in me question So Zach. parts, take let

related -- So The is Sioux for think I piece mean Sun thank Prairie? you city that. you

Zachary Silver

Yes, Sun Prairie.

Vicki Villacrez

So okay.

there. that out-of-territory our I think year -- shared we're been was Sun little into a Prairie just We've just And market. over and our results very I've X So pleased. market, first trial

been penetration XX%. perspective a has rates nearing from Our broadband

success and there. penetration we've video pleased with been commercial XX%, been also about has Our our

because really to opportunities. really So fiber see can we can needs that to trial the to neighborhood-by-neighborhood it like where lot we and we was our go we really and attractive scale the where our can out-of-territory which go see we demographics, deployment support we strategy, market our a growth

So mirror having out-of-territory our saw starting -- is I phases market this said market early, we announced we exactly And and of -- early in our to early same that, it market. cluster. launched our Wisconsin second install but we're in southern sale are trial the our what

a very cluster so with to it third May. launch same And in excited. We're we're follow in the going

us forward. new go with comprise a mid-Central we've growing And of and should service similar the at more XX,XXX some those From for And perspective, the -- we're take end happen we're cases really a in the other go, to in that'll that a in of share year. this expecting results up that larger so does to One year, about So are that's network you that X end results our of what construction we we'll focused business through we're and and light outside the seeing communities earmarked start to year that's towards we going have as far. are we of us, is clusters. as Wisconsin Wisconsin. and on, addresses to the clusters that

as updating go you So we forward.

Operator

Dluzhevskiy. your from Instructions]. Sergey next question [Operator And comes

Sergey Dluzhevskiy

lease which for you is update party you from tower from do third question contribution clarification. I anything improve the increase a you X-part how the tower what growth is the first portfolio My going the understanding to that strategic sacrificing guys, or just going kind the And fully a for is country? or largest are Xth was were think of the company What the operational Ken, on revenues bigger operate the portfolio, us strategic in is the what perspective? the could question question forward is tower in rate? for One towers. And towers And without Xth on the quarter?

Kenneth Meyers

the question. Thanks for

of is about of There is I'll show lot being doesn't of it interest, $XX the million growth. year-over-year lot are now. revenue quarter, was lot think nicely worked and a different for growing what call, the the, But that right through. a a I deals pipeline

to go change and different from through tower been increase this everything we in further our that utilization moving project, we've and things, radios piece the way that we're in monetize going got are do talking of to about and network about marketing modernization increase up of with optimistic getting those to our because area the pipeline. resources our subject to of assets to our We've I'm the what estate. MIMO in real start we've to the tower -- augmented as -- not So tower

we core will if get are tower the network look to quality rent But of the our drive extra to bucks business. sequential our we get value We where can. they way on in

of we many said, assets. And So the one to resources value is, the walk those as of with in to maximize trying we big continue bought a I area. things the of tightrope marketing that

Sergey Dluzhevskiy

Great.

other more opportunity? side. you steps your to as on guess? you Iowa do Just color Could and And this look Another markets. Wisconsin maybe existing pursue focusing see your at in years, provide process? several you the opportunities next edge-out Northern What And your edge-out footprint? question on I after are wireless prompted this on the you what

Kenneth Meyers

the So a our to combination the a the of our leverage distribution, continue name, combined our with of systems evolution technology. desire to is edge-out

some also areas. built had these for we've cover -- of -- but today that are footprint that license part those But was our CDMA years, not for equipment spectrum. For licenses cover other

we result, a core a product as our go in given CDMA was couldn't that with voice So service.

to and we have can offer can voiceover have we LTE, in across now, spectrum data Iowa those a product we this which As moved and Wisconsin -- though, we voice and use put markets. both

those what we're out today So doing the is areas. -- we're building

meaningful end the coverage that same competitively expect work enter the right so to markets with when some At have the that markets. today's time, few by We around launched to results year. or Similarly, starting other once next year this we we're licenses the in we these at and these of late get can turn distribution on will those corner get a are look there from the we into we areas year.

Sergey Dluzhevskiy

think, recently building focused creating businesses, highspeed is I -- fund for rural agency question digital FCC is, both next My in on a opportunity announced Great. the America. contemplating rural the out broadband

also some proposal wireless you be U.S. and revenue And thoughts markets? fund whether support your going Cellular wireline initial So A-CAM the for see from this you in side. share incremental an the this this could on side, opportunity opportunities if on on beyond could

Kenneth Meyers

money So to the like for I in any allow the put what light putting trying time, I'll see opportunity, they're idea be we help enough mean, that program aren't say real go it. for there We're to -- formulate us on this it. at it rules sufficient further. on going past going because out to on for but participate. I "could" there details us side to really involved could can't we this yet absolutely table the wireless actively just is, But that be isn't an to

Vicki Villacrez

up available. certainly right Ken for sitting where could the opportunities where looking to program in underserved money to really rate well. going open we're digital divide as close to be long-term to of And be let carriers, see waiting areas. A rural But onetime return is the Sergey, adequate. details. This could But again, areas I'm needed the is edge-out adjacent into infusions aren't clearly,

Sergey Dluzhevskiy

And my is last the the Vicki question on edge-out on for out-of-footprint builds.

my Sun bit touched on question think, is the you So already market, but different. I a Prairie slightly is, little

share So could from as and maybe launched have as you over you the and you learned markets market into different the Prairie this are best for other you've could what Sun market markets on if practices build service had go year and what a adjacent states. that use you guys in in potentially

Vicki Villacrez

within we ILEC we've footprint. existing wireline strategy our a just lot -- deployment fiber Sergey, have learned Well, from our

they neighborhoods, pent-up buried. the market sort density All at around planning, our the neighborhoods, we we've -- market. learned a attractiveness, been certain in up of these over choices. of customers Having alternative trial go demand upgrading those the factors, off that we've our in a network versus right our market. process, As markets construction, now our incumbent choices greater those learned to of the to into factors, forward. the our our certainly had you ILEC that And bat, their have pent-up repeatable we, markets up with all deployed fiber learnings telco lot have looking And said own complexities there right analysis. an through that, within aerial that And Prairie, that lot different in our was that had where market got a where know, within demand those been XX have hadn't topography they're by keeping for Sun and didn't carried

and the those learnings side, different our And learnings forward. And our challenges off take on Certainly, forward, rolled exceeding the you bat you so into have as are construction expectations. those get go our as analysis rates well. roll we

Operator

Michael And Rollins. your from final comes question

Michael Rollins

And was in first, where can LTE mentioned the VoLTE -- roaming the year. But arena? position performance this LTE the follow up, on of you on VoLTE? could little there from is dollar is customers not you think could need have VoLTE an secondly, side and VoLTE, side, wondering Difficulty] incremental opportunity briefly you is I would the talked fully other CDMA a phones you product And company if bit where the chips to when roaming then in just do in bit just be [Technical VoLTE If a about, and and talk a the of that? that where all about you

Kenneth Meyers

lost Mike, thing we're going started your seconds CDMA to go from We you we the XX have to back. of was, next chipsets. it, to about introduce when question heard

So was lost that, we it. between whatever in

Michael Rollins

VoLTE just usage anymore migration an to when asking can in where in your LTE your standalone. network sell be you the customers with VoLTE in think was position your chips I phone phones, put potentially about you you VoLTE, CDMA need you as a So could to the wouldn't

Michael Irizarry

Mike is this Mike, Irizarry.

the as So program said before, VoLTE we multiyear. is

XXXX, the completed of we're our have to now, right entire So early targeting end XXXX. by footprint

part over, migrate we terms But network have us. still a and have tail customers XXXX. to that for end to You of of of completion, first expect in XXXX,

Kenneth Meyers

it And in off handset be network because that will standpoint, to so dedicated have 'then' in we're traffic a still the turning how the to only of necessary doesn't VoLTE the chipset. be we would about of But stopped, end a that a handsets VoLTE going we to earlier CDMA of certain there. no that CDMA. we'll going had just putting we clusters, being And need you utilized from the it's matter it. a 'XX, type all spectrum possible in as perspective, be that amount is much It's everywhere a small longer all than And think mean markets on decision. that from of date be

Michael Rollins

[Indiscernible] roaming side?

Kenneth Meyers

are with On the we carriers. the little a CDMA serve always yes, VoLTE that. at an talk looked historic where bit roaming about to opportunity side? than I'll So Steve let as we've just more

Steven Campbell

Yes.

And with the currently X in the carriers. so of agreements all have we place commercial national

it's We minor in We're testing little implementation this outbound various traffic point. but very with stages bit on have some inbound, a others. of VoLTE, and at the of

Right the upside place thing I to the in think work potential there's other negligible in to important with the implementation. is agreements come. and expense. of So revenue carriers gotten But income those it's and now, very commercial some definitely towards started having having terms overall

Operator

questions this the time, further And I'll to we at turn over presenters. no so back the have call

Jane McCahon

joining follow-up again questions. us, if you like great please you know for and weekend. a any to thank We'd Have have let us

Operator

does that And today's call. conference conclude

disconnect. You may now

Jane McCahon	SVP, Corporate Relations & Corporate Secretary
Kenneth Meyers	President, CEO & Director
Steven Campbell	EVP, Finance, CFO, Treasurer & Director
Vicki Villacrez	CFO & SVP, Finance, TDS Telecommunications Corporation
Jay Ellison	EVP & COO
Michael Irizarry	EVP and CTO, Engineering & Information Services
Simon Flannery	Morgan Stanley
Richard Prentiss	Raymond James & Associates
Zachary Silver	B. Riley FBR, Inc.
Sergey Dluzhevskiy	G. Research
Michael Rollins	Citigroup

Telephone and Data Systems (TDS) 3 May 192019 Q1 Earnings call transcript