TDS - Earnings call transcript Q4 2021 | Telephone and Data Systems, Inc.

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Operator

Good morning. My name is Odra, and I will be your conference operator today. At this time, I would like to welcome everyone to the TDS and UScellular Fourth Quarter Earnings Results Conference Call. [Operator Instructions] Jane McCahon, you may begin your conference.

Jane McCahon

Thank you, Odra, and good morning, everyone, and thank you for joining us today.

September, IR will function last leadership taking announced the of in we Colleen be Thompson over As May. the We've new been few for transition, assure months. next but I'll working certainly be together to involved

Colleen? So

Colleen Thompson

you being TDS Financial yesterday. X-K, both press for the interest, their depreciation and wireless before highlight including and Forms income provide Relations TDS UScellular's websites and prepared Chief and I Officer; can webcast you Please Therivel, morning, and opportunity. operating and find Butman, good President and Jim We and XX-Ks today and depreciation have Vice President We to the websites. Doug and presentation accompany Mike Vice President months, Officer; President Officer; TDS, TDS slides releases spoken on UScellular number taxes, couple and Vice Jane, all and call before the yet, and me Telecom, Executive for comments the the Investor this in to those partnerships. I LT we adjusted everyone. past of amortization adjusted see Officer. of Executive Sereda, Vice and Investor Villacrez, Chief This the is that Officer. Thanks, and Executive the for filed call, Chief from Relations With the refer make of our Chief aware met or reconciliations. on our to earnings of including Executive Finance Chief are Technology Senior guidance want Peter Financial I've or and which President to and TDS a this SEC to Chambers, of UScellular Irizarry, haven't non-GAAP contributions you sections but forward Financial of offering Vicki Officer; look From President the comments simultaneously prepared websites. Chief Executive UScellular, and to UScellular amortization morning, on from EBITDA

during on to contains results X, about forth safe and future set press discussed Please expected risks this call the our extended subject presentation included and forward-looking in the in financial version uncertainties. paragraphs our SEC and shown As the statements review and and Slide harbor information releases that are in filings. the events

In open terms on team participating X, video the conferences schedule both of conquering at dividing door James door presenting upcoming X. now as March And Bank our of an And will we can then and IR on XX, our policy policy. be conference. the be Slide the and always, is on phone Morgan Raymond and Stanley or March Deutsche open

speaking So I us. out if now over in turn Pete Sereda. you're the reach Pete? please with call interested will to

Peter Sereda

and me. the Thanks, since retiring prior XXXX, will May, and planning replacing Colleen, and has for led morning, In I enterprise. in financial that Villacrez December, been be and be to of strategic CFO Vicki will announced good we analysis everyone. Vicki TDS Telecom that

of bring So The look we TDS remote benefiting major Slide or past seamless. a suburban are rural, years, and primarily at and XXXX, job. our I On want wealth X, positive an on success all congratulate Telecom's this be new Vicki to been I areas fixed, education, will should out experience work. over businesses. challenge. mobile Connectivity, to . has new the of she grow. care impacting people markets migrating the whether a important highlight to health transition as her XX serve, of is cities. we for continues trends Demand this to to these broadband from very necessity and her driver

on TDS fixed available in a the a years opportunity households U.S., bringing this for mission only wireless high-speed us. ago of with to to great unserved Additionally, and markets. represents underserved founded of fiber XG offers and XX% connectivity XX was

that bill has So businesses. forefront infrastructure of both brings approach of of over lastly, And introduction our at corporate the its also for TDS values. to held the good time, opportunities citizenship the a multi-stakeholder

our about program, reinforcing of essentially of a we've communities environment. that people we the are steward serving associates as we lives As and to had, already customers in the well values as ESG expand good enhance the our striving caring as

past As flexibility strategy. we pillars financial corporate of discussed maintaining our on of the calls, is one our

market enabled Our and strong important in call. investments spectrum strong we financial expand the Telecom This program ready Jim fiber in be later also while in will as enabling fiber position will mid-band continue discuss UScellular the future, to position valuable markets to debt as program. financial purchase to in and invest our access access capital TDS growing the our to

business units illustrated their want the talk of the briefly as Slide discuss about to successes, our X. sheet transformation Before I on balance

to credit term and our have preferred of CoBank worked funding sources of an stock, XX-year increase export receivable our diversify new loan, syndicated a facility. term equipment First, loan, variety securitization we term financings including in different through loans an a types installment

lower of a raised XXXX, In our billion new in and $X.X addition, Since preferred the cost have we to the we both capital, equity goal average X.X%. of financings. at had debt beginning

our debt million reducing While in of X% to cost $X.X weighted cost carried savings. time, X.X%, $XX X.X% at a coupon that the in annual same average redeeming resulting from in and billion average

markets we have future continue our that variety of forward, to to to finance this capital debt Importantly, instruments access - that we growth. to going through continue the a believe will

that our to call have now to turn again LT. want will the an consecutive quite increased that we I I accomplishment. highlight over dividend represents This our increased dividend, rate. year XXth Finally, the we

Laurent Therivel

our for pleased in to team we If it Pete. progress the X, can was with I'm all Thanks, in accomplished of Slide XXXX. really and XXXX much turn foundational

the that as to cover several government operational three plans includes We over that Doug We've and a something That's fixed as renewed future goals includes first but us guidance to prepaid that distribution has and foundation a pricing as results a our next and financial and year, mix. specialization constructs, the and adds work year, and team well generate build return replicate. for of strategic we segmentation areas year competitors well actions, provide as promotions, I'm media a want of business with focus our led on revenue range government our can't continue thoughts focus new capital The foundational to going some strategy. partners, new and to lets in the the wireless. business, expanded business, well internal developed few these the as the position and sales side see management. XXXX, to and meaningful new our business life to channels, the on momentum laid on prepaid, they and positive initial us for regionalization addition as test and for growth should new we laying And cycle optimize years. growth. Last encouraging of of wide the and approach positive the highlights that priorities. tactical Last includes reach to to let distribution, of launched prepaid

results. And I enhancements, company, know as strengthened we're market for market the you position business. see let can in numerous in which our As previous that that we've the made a open tower discussed calls,

here. getting I think just we're started

the to network. Turning

our network XG important, XG sites now our deployed. that majority continue pursue traffic getting our carried is customers' to devices we're have multiyear our program XG And equally and hands. We modernization by of into deployment. The

a far, have subscribers really C-band I'm ask devices. portfolio, network this. really bit quite them even spectrum. And with development Mike expensive going the outcome. give now in though XG-capable auctions the DoD you We historically, solid our our targeted Biggest I'm pleased XX% to you were of a Mike? of spectrum So compare our XXXX Irizarry nearly smartphone detail and on mid-band on have when more was side to acquisition

Michael Irizarry

LT. Thanks, Good morning.

X. Slide to Turning

the This with We continue XG and operating have strategy. C-band spectrum as band And holdings. spectrum we to spectrum of low and spectrum millimeter majority our actions, our mid-band high-band and XX% of strong band our mid-band. bridge Mid-band substantial our our the between we'll low XXX to footprint covering in in subscribers addition DoD is advance over our the serves and with of wave acquired positions. megahertz

of an customers over continue in support XXX billion to depth $X three our incentive the our payments, prices, future spectrum paid in auction average both was slightly and mid-band acquired mid Auctions we that fixed us pop positions total, all and overall reminder, and at spectrum capacity mobile gives than As per XG in a including across In strong services have spectrum footprint. to averages. efficient and use have high, we deliver low, This XXX megahertz wave so we invested done and as bands, price with lower and required of cases. millimeter have spectrum relocation previously our megahertz XXX plenty to and aggregable outstanding services and us provides wireless

finance capital also were As earlier, mentioned Pete to of cost these the able purchases successfully we while reducing to financing. our raise

Overall, We with efforts efficiencies C-band XG begin requirements to our our our optimizing plan. be equipment ongoing and as and leveraging both key mid-band will are to will preparing radio network, for deploy climbs LT strong the on to enables discuss spectrum us mid-band that which which will will spectrum and XXXX you, efficiently. position to next. our allow network our our to Over experience cleared, turn it as tower C-band on spectrum well modernization goals, These enabling DoD LT. prior being

Laurent Therivel

turn If Mike. to Thanks, X. we Page

familiar look you, and XXXX. will build Our strategic for they our in to progress priorities XXXX on

mission the Our remains same.

Our and the people customers most that the connecting matter company places to is dedicated them. to our to

the know, lot investment a mentioned And you executing I requires that of earlier. in As we made mission spectrum investment.

Doug the pace capital network to from we plan hear out investment we spectrum that mid-band later, as and but we steady modernize maintain purchased. to going You're our a of roll

allocated that can of in our go we the just investment, IIJA. allocations the return the worked use metric will America on for plans year but billion to and are you it likely finally potential Act, help being still where $X capital, X, rural we And to For in long-term a game changer, with advantage specific Jobs have that to you that's have Infrastructure Put funds UScellular, lot This that justify Investment goals, being billion of we flowing it, should. around least particularly a our operate for key take allocated flowing not to business. set is $XX the billion to broadband. but we our return the One to at This the states in underserved, and capital the fiber, key expand a got and opportunity for we is think out, the network. about passed recently and and the through operate to context areas or on to some that that $XX of lot should next connecting on

Department results the Commerce about to avoiding allows encouraged As I to wireless fixed previous had I've well. I was of in last play trials. mentioned and our am from as encouraged that by a call, the I potentially talked millimeter symmetry calls fixed our wave wireless requirements, committed role big how in

that nearly millimeter provide the comprehensive necessary wave covers cheaper You our fixed to run over X but And focus infrastructure economics coverage, wireless. we speeds see We've wireless. build need and of tower each much businesses, provide work. on fiber to exciting benefit can sight. product at solutions, it one the denser part IIJA funding massive That's to for kilometers tower across hundreds to builds of launched use lot with to in economics individual run The towers. economics. existing homes the a funding those the gig and tower improve In improvement X We with is the the gigs. make commercially to is to of to a doesn't challenges stop locations. fixed fiber can It's the line of and XXX order

mobile mobile for profile forgot, our improve you significantly you benefit I is XG, to only case postpaid This fiber base. can't funding in know wireless to match. and the owns carriers And our to You can our will we're prepaid just broadband that also of deployment, that didn't, operator provide the an also experience extra and improve coverage towers. network but

underserved the the to economics that's great So digital helping divide we positive several the key we're And work other those prospects in to resignation and local network to do managed the carriers, significantly one We've also which communities which for improve with for the far. doing to to more our other talk advancing area, really years growth new and for economics. thus can this our towers going governments talent. and invested, levers experience about about all XXXX, before the stakeholders. to our I plan, incredibly state in strategic talk it I about execute positive It's enthusiastic to want well bridge with but market take areas, creates I'm

ahead on was in equity America's to attrition remain from going stable And Our employer That's on We're in last of emphasis on even you employers. to relatively the increased fantastic boss best it. even Cox culture at expect CBS powerful list XXX, culture view, That's to due But were also you our you'd We laugh to best telecom. ranked tune ranked. ensure country. at ahead have ahead my of to up we're weren't Horizon XXXX. I firsthand, culture year, is, of we this in a inclusion customer-focused of and undercover at that's to how place. lot And ahead to and the see year-over-year that XXX in see recognized of my of Forbes XXX, mustache. March XXX in our that investing and witness keep we're as diversity, to of place you number in can just tremendous can if outrageous others a an on encourage X, work. and XXX like to And the to T-Mobile

that expect for let's add and environment momentum pivoted detail. in particularly made many connections challenging objective customers lot areas net us to We the of XX. Now XXXX. economics bit base. not longer the for even objective one, carries in postpaid satisfied and big good the benefits area, and are of as in devices We see that A The holding same lack time, and growth the entire a industry. ever, net than But as Prepaid our to Slide business. one our competitive and the a a additions better investments turn started remains the impact year for but for management XXXX. really business postpaid for upgrades, just more I to want growth. in improvements somewhat digital underway stabilize is dynamic, promotions. that's variety I We it's a strategic in And growth, major proposition, our the cycle dilutes market share not and that life on aggressive experience. postpaid customer through cover of And in growth value device challenging to really of of last initiatives the is I a to example. was UScellular, the At was with a

getting to see our continue expect customers. leverage closer adjusting us on also to a regional approach, can go-to-market You to our community-by-community even basis our and

on this particularly area briefly networking confident We with in new Let We're distribution. and term, talk me to our the in IoT the expand and in business government private in ability groundwork long space. laid XXXX in this revenues the in sector. the the space

our significantly million share And market UScellular opportunity has of provides businesses X there part regional been we we communities operator, in a expand real operating are to over that forward. footprint As always a serve. the our estimate going

operational time. expect in substantially from portfolio, reducing our including growth of XXXX, Finally, a tower number cycle changes we continued

of a a we momentum really As result have this work, sales strong year. into heading that

few let Before share guidance. I just me hand it thoughts our on Doug, to a XXXX

see expect we're service service going roaming, continue to expanded overall We retail but to see that to affects headwinds revenue. revenue, from

necessary growth on activities, and upgrades Additionally, both in in our network ongoing investments promotional making make acquisitions. and happen. of we're I'm guidance and over continuation a that's assumes term, long bullish to and on it aggressive distribution the the

goal expansion on and long-term Our return capital. substantive remains

return our will over disposal time. lever to at be We every improve pulling

hopefully government as efforts see funding that You some on me capital some with growth, earlier. that hand mentioned the to subscribers will participation it let as to revenue by With that, the well in be financials. supported details Doug to optimization, of I meaningful coupled discipline can expect expense of cover and

Douglas Chambers

morning. Good LT. Thanks,

strong combination a with Slide on year-over-year, by start activity due handset additions switching activity. to customer with Let's results increased in gross XX. our higher of X,XXX review largely Posted promotional

prior was against sales the declined on we year-over-year, We when experienced aggressiveness connected saw year demand handsets. device driven course, additions to industry-wide hotspot of by due the the an Of promotional pandemic. this . to compared gross lower backdrop increasing XX,XXX

to quarter the were from shown connected for handsets was certain up business by X.XX% Slide voluntary was switching year-over-year XX. postpaid of connected fourth peak let's higher churn handset slightly churn Involuntary X.XX% and that in continues driven Total and devices which combining and at competition. industry-wide churn postpaid Next, primarily rate a a X.XX%, higher disconnecting on also XXXX aggressive This the the pandemic a the year as than turn handset the to quarter. activated in ago. of periods Postpaid XXXX. due was year churn, result increased government the of run and activity increased customers churn, to ago higher during devices, churn

XX. Moving driven prepaid overall to offerings year. our compared to continued of year, saw our XX,XXX compared saw year-over-year to an base increased Prepaid improve to to additions increase throughout and by Slide We year-end. the prior X,XXX to gross prepaid the by prior prepaid enhancements

turn for and let's X% increased revenues Total on $XXX the quarter fourth the year-over-year. million, billion, operating revenue average to was revenue Slide primarily XX. XX% to revenues financial year-over-year service were essentially by a will $XX Inbound million, which Now flat lower a in Retail moment. user, $X.XXX results decreasing due rates. to to due roaming per data higher volume discuss I

network. were T-Mobile contributing roaming up continuing factors volume and traffic and One year-over-year. T-Mobile's million, merger of migration decrease this the X% of the is revenues Other to $XX the Sprint data to of Sprint service

decreased part result X% increase revenues an of as a in promotional large sales equipment activity. year-over-year, Finally, in by

remain during on increases resulting XXXX equipment. promotional equipment industry. activity fourth with promotional aggressive reduces the to A revenue quarter cost portion continue the loss We sales and engage the to competitive of in of

XXXX. quarter by in fourth loss and In less pandemic and activity specifically promotional of the XXXX was equipment of the addition, to aggressive switching impact lower mitigated relative activity

As Watson of slightly million equipment combined offset increased $XX compared on by in prior a a result profitability loss as these factors, reduction change operating This to impact increased in costs other of year. equipment, however, the year-over-year. was the

expect persist We guidance retention impact. the XXXX environment, to reflects our the including for corresponding and aggressive financial throughout XXXX, offers, promotional

basis, Now user On postpaid revenue XX. The X% shown and increases average the also These about in for year-over-year. revenue Average revenue fourth costs. X% protection a were per an comments an per $XX.XX few up year-over-year. quarter, favorable on or was account grew connection Slide more driven and increase in offset promotional device revenues. increase increases offering plan a mix by product were primarily partially by

you XX, we revenues. rental As tower in Slide growth revenues Fourth can on rental by seen quarter tower increased have see steady X%.

We are assets. focus applications strategic revenues we'll growing from momentum these colocation and power in positive on seeing continue to

Moving keep comment want accretion I to amortization XX, as and to on simple, adjusted To Slide adjusted operating income. things I'll and gains before income to and losses. this measure refer operating depreciation,

As adjusted $XXX shown the an year-over-year. on was increase slide, of million, operating X% income

and commented essentially increased and operations method X% interest of data lower system decreased roaming billion, in lower mix decreases which with from million, along was primarily increase decrease of cost $XXX an unit sold in with revenues of sold incorporates were units EBITDA, year-over-year. by voice site an lower the dividend year-over-year. and general $XXX resulting a earlier, to of from by combined rates expenses. Total usage, legal decreased increase Adjusted Selling, X% Total operating higher expenses and administrative due sold equity X% driven sales. driven and higher total smartphone flat. expenses income, a expense $X.XXX cell advertising investments, equipment X% our cash As earnings per average by lower were Cost a million, maintenance. expense largely I X%, driven

retail increase in our sales. were Slide Now to let's where due an full results. billion, year equipment was by and increase show revenues Also turn increase per revenues. service increase user rental tower operating a decrease higher $X.X expenses. decrease primarily financial Total to cash general increase in partially and to to year-over-year. were driven average miscellaneous in X% were expenses X%. revenues revenues. This This were $X.X and a we equipment of the revenue contributing XX Total higher sold, a an due by These of increases in in increase service is selling, revenues an roaming offset offset administrative other cost an billion, by partially

equipment million, the in due adjusted of to income cash and of X% $XX EBITDA is equipment, competitive XXXX. cost from $XXX X%. in result which both promotional we and Excluding and experienced throughout the operating sold, loss that decreased an environment declined million $XX increase expenses million highly primarily which Adjusted increased to

for assumes throughout guidance our Next, full in the that XXXX XXXX. experienced aggressive I want cover Again, the persist year will to promotional guidance XXXX. environment our we

continued $X.X $X.XXX in service We operating to $XXX environment; of to decline $XXX areas for income; billion $X.X costs, guidance This the promotional approximately our growth $XXX and promotional continue of in we adjusted single-digit service growth high-margin aggressive expect XG to roaming ranges revenue; our in including retail continued elevated other billion anticipated billion given equipment reflects cash adjusted revenues; million business. of the in as revenue; levels estimates growth expenses on in and low million in invest million and EBITDA. loss of modest to

For $XXX capital to $XXX the of the in million. is range expenditures, estimate million

and network program track. on remains Our modernization multiyear XG

targeted continue auctions and our spectrum we and in investments wave XXX making build-out begin XXXX acquired mid-band also We deploy XXX. will millimeter the in to

also a Butman. category. the have will We now breakdown of expenditures by turn Jim? major Jim to I capital provided over call

James Butman

pleased future. I've to markets our been more about I'm that is preferred you, never in share to our TDS everyone. Telecom's Doug. Good the broadband Thank morning, underway. become provider transformation optimistic well

today are strong a on of position in years executing started to we ago. due five a growth We number initiatives

networks of competitors. new revenues, fiber exceeded up turned potential marketable time XXXX, for It's in to XX,XXX XXX,XXX. In nearly total fiber Telecom's quickly these bringing history. broadband to connections stay the in addresses, connect TDS billion to and XXX,XXX and in $X front critical first operating In service customers fiber fact, we addresses surpassed build we we

footprint the markets further. continuing active expand most identified to in will have even plagues plant and our new markets an attractive We of that pipeline

We copper a and continued brought networks federal to state most labor by on broadband hybrid broadband programs. and in address upgrading to to grant to by We've work environment. with the the opportunities the markets our adapt and funding our transform rural shortages. challenges We've needs and our workforce A-CAM continued pandemic moved

have In attractive strategies on us extra and diversity, to emphasis our keep placed objectives to promote addition, we throughout equity employer. an inclusion organization

Our associates our resource. are powerful most

Moving to Slide XX.

through new have costs pillars, robust we pillar, second, continued five reduce fiber through invest legacy strategic We are market our and scale in our growing expansions. our third we fiber continuously enabling are revenue operations First, through increased per expansions; penetrations transformation: are and we growing our revenue customer and growth automating to In initiatives. connection, our streamlining

fourth investing experience continuously is the improvements. do, customer the everything keeping in of pillar at customer center Our we

Finally, engaged, resilient entire retain invest make and in the highly dedicated our sure our workforce. of and our talent. foundation We is business top attract we to people

Slide to XX. Moving

the which that points relationships demonstrate business. transformation happening some require partners. have set plant goals vendor more build scale us team, data up with our our within quickly, more for and flags I Let specific will the bold share me to

next As service addresses we approximately and fiber of of with we speeds. being X.X to gig faster about addresses or XX% execute those five our strategy XX% capable years, million over the reach plan

ungraded With from expansion significantly to support broadband as several tailwinds our we providing broadband and support underlying opportunities broadband federal earlier, most state to rural mentioned broadband products for to America. reduce improve increased There's copper, our to and strong trends services we for have our strategy. intend Pete rural to see customers. high-quality, to we continue will bipartisan programs, As affordable

Our strategy is working.

strategy, next five identify in addresses have faster up with positioning broadband the we business our On describe I'll to of for years. are more million, and networks, in $X.X triple program For the that we the next over ramped we to years fiber fiber our over new past opportunities. several five our years, detail. increasing XX, our target aspirations investing growth Slide service plan the We total as

the heightened urgency participation other this of attractiveness of increased by of opportunity sense given a Our overbuilders. and has level

X.X outpace economic in of address to broader we Specifically, to continue XXXX, service rest our manage supply permitting and face labor delivery and the with contractor Along chain, to the expect we by industry, complexities industry, including delays. XXXX actively challenges affecting Xx.

our accelerating increase speed are our schedules. to we market, deployment example, For to

We are partners. our with our adding are vendors we strategic more flexibility, increase and strengthening markets to and our relationships

expansion favorable high not We for a household areas that We and do customers competition, environment such to competitive speeds. have growth markets. on have areas have a the have selecting focus adopt that have fiber rigorous as broadband with process for potential propensity

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for Finally, our we look create field we and resources. can leverage so the network ability to larger clusters, market

and we state, achieve penetration For XX% the a markets. broadband in expect markets the between we have selected, rates XX% to steady making us leader our in

with opportunities far for pleased is even expansion penetration and are so and our more fiber expansion. assumptions, case supporting further results we date the Our experience business to see

call Telecom. tremendous to CFO to turn of acknowledge Before her I the over TDS serving efforts I as want Vicki,

TDS Sereda I enterprise. the successful teams over welcome to Vicki forward it will Vice excel at now President Planning CFO served be Vicki. TDS Michelle confident she will also in turn Telecom, as TDS to leading Vicki earlier, of Brukwicki, who contributions driving previously new and has announced Strategic we Michelle's And will CFO replacing and position. extend to Vicki a Telecom. I Pete and As will Financial Analysis warm at finance I the her be transformation TDS her of look been a to instrumental we am in as of replacing want across TDS. as

Vicki Villacrez

strategy, I'm said, for with TDS continuing some Telecom's closely last Michelle the have of new I also XX continued role past years, success very I'm and With that CFO and served morning, looking working quarter. the TDS years my been begin good I Telecom's and operational forward the transformation. . as at proud you, her TDS. highlighting accomplishments to to Telecom's want Thank welcome forward Jim, on our over Michelle. I've to me TDS for to several everyone. let look in by

offset are total of Moving XX. broadband total as addresses XX% key penetration voice and our to broadband partially in to footprint. customers and and it existing offering important X% X markets, Despite continues remain connection in Slide by a to growth and bundling connections service speeds part to decrease due broadband our losses, grew to strategy, and gig We churn. video Total reduce helps residential to the our connections. year-over-year our increase a our of video new now X% increased

product per in on residential X% revenue mix the connection. the value and average increases a overall, higher right, increase chart Looking at price drove

you the the Moving fortify grew broadband all on new see across fiber we markets. and to as quarter connections Slide Total connection into to with can network residential continue telecom Broadband XX, in X% our expand growth markets.

network on in the growth are drive our market. in construction track program helping incumbent to under A-CAM We also our

all broadband broadband offset X% decreased increased XX, decreased partially XX% in new markets. increase superior revenues total X% In along Our in this quarter taking gig product, X% customers offer total gig CLEC win strong X has our of tools we us XX% focus important fast, markets, increased our certain revenues to are X on by reliable generated seeing where on product. year-over-year, connections, a The defend new X%. service, with X revenues are lower to Wholesale residential gig Slide X% and product service broadband we the a growth, in across customers. in residential areas allow revenue. revenues driven On increase now by connections. to Commercial

to expansions increased broadband sum from as results increased the in quarter supporting for Slide XX. X% business. exceeded as the as in million, growth X% experienced year, marketing, spending but to combined growth. due into for new to quarter the increases XX, costs market our both in year for costs new for EBITDA on reflected the expenses On shown legacy investment the and Future and is growth fiber our me the investment revenues. as guidance in sales, costs technicians Cash to well $XX due future addition full decreased Adjusted financial necessary the X% and and include fiber increased increased year which we expansion markets. in new and in yet real in the XXXX. provided XX% support the quarter subscribers Let planned expenditures X% on Slide not direct X% to market for for year for Total revenues X% spending our for we the to Capital and to due deployment. related current service such our year shared quarter as increased declines the quarter estate markets, X% the up

we support over Our several guidance to the in fiber program foundational next are the factors investments years. expansion the making

fiber our $X.XX total residential billion. We marketable many of telecom key of in our line are how is by driven of A improvements reflects our markets, can to $X.XX we assumption across in legacy This parts continued top declines offsetting billion addresses business. of goal service revenue growth forecasting guidance revenues the our all deliver. in

include XXX,XXX plans address Our of approximately service delivery fiber addresses.

that to EBITDA similar Given cadence seasonality to million Jim in our in delivery throughout approach increase adjusted our to address financial factors address year, should EBITDA be steadily expansion impact due plans service $XXX in market is to that XXXX first in slowly between of in primarily and $XXX will conservative expected Adjusted just quarter million challenges. is discussed. $XXX reminder in million our last year. This heightened guidance quarterly delays compared building XXXX. we A to the delivery, starting experience the fiber shortfalls the service construction potential

between that, and XX% million our with forward TDS to in be areas is XX% $XXX XXXX, increases the fiber to it's the million million and front-end CFO to compared Capital expenditures cost allocated expansion to market reductions of expect Telecom's new to $XXX role costs future. directly nearly say as I capital to to like my made in of growth my in been than in We to to you I'd pleasure serve the investment. drive shift in provider. With spending preferred our are going more look broadband broadband into $XXX updating strategy outpace in XXXX in other business. loaded expected be

Now turn call the I'll to Colleen. back

Colleen Thompson

are Operator, for questions. we ready now

make has morning. Instructions] opportunity We're sure we're first an . for on that each we a want this Given little time, the short to question. [Operator ready analyst Okay.

Operator

first question Instructions] Raymond take at from Prentiss our [Operator We'll Ric James.

Richard Prentiss

fixed about at from is. to for What's that access just copper the and study the Help think timing wireless the help of the of schedule might environment addressable what's what a but the DSL, about the both on you on the patient return government Are LT, What's is do you taking the capital, kind view how second cable? competitive we've been kind side with opportunity talked from going deploying lot there? UScellular that you side? TDS market? And it opportunity is understand out you what's question of us First question, stimulus kind who network think the a

Laurent Therivel

lot a tower of and without very way as initially wave. this then will subsidies give Ric, end in the and serve with mid-band. which government DoD at which X- XXXX, be well that without between, it, infrastructure time, and think the with those a hundred a of a of would is size as will we to it clears, I businesses at businesses well the opportunity serve to X-mile couple on, rhythm bring we'll of Ric, now, that as optimal as let's the homes over as a be those don't The Right the within that has to XXXX the from millimeter homes size businesses - of a firm C-band able market call And radius. we have infrastructure more be is year subsidies, you. end once certainly

It's because little reason America. $X get subsidize back frankly, I'll fixed a got if out call tell they're it, significantly I on is, make spoken What really By that be But my the better we've a just keep enough They with rolling I is a subscribers, thing the I let's Well, and broadband probably to that envelope. cost cost tower beautiful profitable the IIJA. is it I opportunities way, you constituents. I've is, America hundred for the can that's $XXX,XXX for tower can attractive to we've their profitable XG to if opportunity then the attractive is And the to area. their access couple I million make will real think of you a about, with so where, home a and it can we wasn't even think they but new of high, in the serve then then by make that subscribers. dip if opportunity bit get can busy. in tower tower experience. us before, been to of the what also a double if put rural the then that take I able governors $XXX,XXX. - to and fixed or basis that with as is wireless colocation a of make a the have an my viewing with customers. better it tower also opportunity XG rural definition, because tower mobile And is tower the wireless

service So streams of in off service steadily dollar. doing there's couple infrastructure that so live We're subsidies. got infrastructure in really fixed the revenue market out that individual states. gradually. three of We're wireless a rolling without We've

meaningful some those of think dollars. gradual really to our will You make expansion I put infrastructure advantage so can we difference there, to kind can that's and it the expect in that on financials of but steroids, take a thing going see

I summer. is In to may Commerce, have has My going take little said probably the longer have terms of think. to to Department out people the FCC they bit expectation a maps of they're in timing, according than said think the going that's fall. Actually,

is my planning later a for with year. money them probably the They And good efforts. to states expectation help have this of chunk maps have so access immediately to use we'll to

my the we'll XXXX. is flowing to start expectation states And see in that grants so meaningful from

XXXX think, those terms a the of growth foundational taking the be really level. hitting building will of XXXX business and I dollars, in be So will year in advantage order

Richard Prentiss

And when has is, doesn't who is who market [indiscernible]. you not somebody seeing who Is proton. Who somebody have the really think I'm it broadband? broadband, it of target you addressable are copper

Laurent Therivel

Yes.

seeing up. down. So we're north also XXX marketing XXX at We're of

it's think copper, a plant. experience. we upgrade pretty So DSL nonupgraded Certainly, cable terrific

a and experience. gig We're we somewhat are stuff. think think good you but we into get is play to fiber. where plant a I there commensurate bit upgraded cable trickier, still we this become good play little provide can starts think per it doesn't dollars when the is can I at Where customer pretty

call necessarily has term, where in it so the And either let's good economic or think the been IIJA, calculation. with a near that's don't be will fiber I

there. it so And I see don't being compelling a option

flow exactly up go market dollars have dollars to kind our of and where how how . How is fiber many we size to those to and versus those go Well, dollars of to that? those of alternate is that in start technology. how states? see that's what wait Now many

Operator

next go to at JPMorgan. Cusick We'll Phil

Philip Cusick

And those sort for you going losses I operating only but Vicki. one And I'm of I question, Maybe Maybe for markets. good, by that decrease. congratulations, in lay the two few being parts. on the And through expansion expansion to us this will clearly, competition. have next hit OpEx TDS continues? UScellular Do LT, your the with you follow for year? can rules. churn the TDS years on this the guidance one how outline pressured those out CapEx this you then more guess, in you. we do but The And over the is those or EBITDA and on more And estimates as revenue spectrum kind then how of ROI assume is continues? think about should new environment? you

Vicki Villacrez

our all The decline EBITDA is in due expansion. to market

out-of-territory our we're on contribution number or we margins seeing confident We returns transport, in market, got already a the fiber such the XXXX, in teams marketing of expectations. number meeting as are I've those markets, the significantly in we're highly our plans earlier program this to as and these of each hiring we're new And are successes earn the cases, fifth increasing technicians. upfront work, already in estate, our investments. communities into and seeing. attractive spending, sales, of from exceeding, come real as year field of of But our with some engineering

now we increasing that don't our anything are if in that the So But with . as that due you're want guidance. know all expansion significantly Jim, is upfront to lower reason total markets. EBITDA add And more to XXXX. going increase, cash program, Mark spending for did see the in the you to expenses I the you as of said, see majority our XXXX, increase we was and about?

James Butman

look doubling think we No, Vicki, market. market markets, is here, the great past more opportunity in we going over just away. quickly. we did the I and to great delivery. lot this I activity at it's address years, go if service what job. you and tell projecting, I window you that more okay? so best faster, got and five There's than for to we're you go the moving see mean did a a So we've would is the feel more we're the the And

the this think just we is So to seize time the opportunity.

pedal we're the or metal. So the to the put going metal to

Laurent Therivel

Phil, I'd I about those about, point couple hit of you how So when to talked I targets levers. a think to

last actually but our strong been when particularly and share first, have we consumer, look to The gross you postpaid to of at - do better, adds our in postpaid has year business quite continue QX.

launching the a affected in to we've it's really investing to new by So the personalization by upgrades been second to going We're churn upgrade promotions. the It's a driven engine churn approach dynamic and be in. is quarter. going story be

right, soon, upgrades. so I would what you'll call And see mass

the financials are side for our more And opportunity The us promotions outreach. upgrade entire game, do with so simply interesting to but to that aggressive has on the the personalization use more to targeted is postpaid in pretty the It'll do keep having challenging. market. more engine much

outreach as with so much to are promotions believe same results the do that customers We upgrade can get approach, digital the So we but at targeted upgrade better spend. them. with mass with specifically

areas, and Second business towers. prepaid, the continued investment lever, government, growth in

in on our prepaid government that platforms. growth see we you'll you momentum already a continue of have, can invested invested base. a we We've business significant revenue manageable if - the relatively in lot expense distribution. see We've If and

to bottom on that not a capabilities revenue I us. straight of on profile capital And into dollars we on get expansion. that co-locator attractive. probably I now, Every for just piece business. really it's so drive getting platforms line we business return is having those it's right distribution the think commensurate huge tower - expense necessarily tower and the growth can is to And without have mean, still to those

put on reach have . big return wild and I objectives. card tried the to capital If and comments. is those that tactical quite The plan we promotions, I upgrade make opening upgrade together, what is believe that to you all a in and clear

Operator

Simon We'll at go Stanley. next Morgan to Flannery

Simon Flannery

structure Vicki. and to the could Congrats Great. capital talk just for wishes And Pete, wonder future. we I sheet. if best about the the balance

You've talked about the investments you're making.

You've talked lower cost the about of debt.

dividend. Are and are and should sources about XG specific raised cycle? fiber the your that be there uses thinking you You to profile of? leverage we of achieve that this How you're goals and trying phones over aware

Peter Sereda

Well, purchases mid-Xs sort capital good our we've where debt-to-EBITDA. mid to stay had to stay low Xx and our increased we We're to the mid at markets. we that we we're debt-to-EBITDA and that our target leverage spectrum think made, anticipation in current the the in currently we of in ratings over maintain found the terms of of is access we very couple years - of And BB. can last

at I be our mean acceptable measured out maintaining program. a it's of we're going thread to of investing So we heavily, can sort needle at think while we investing to levels And is we're be the going this but levels - spread time. over leverage these levels.

Laurent Therivel

the note in bunch help a goals come going one forward. we're We the on add what just will dollars. plan We a that whole kind to have which to that. in, - capital. could don't those would laid IIJA, I return of I a the funds that of that Simon, we've assumptions potential of don't lot have assumptions talked bunch about I've and current the in And get

top of Pete us I debt and tremendous actually of we're . help are our to so sheet. The a that. funded changing simply plan. our in IIJA job and the on balance And done opportunities way achieve about changing the cost in a with talked have team

Operator

Citi. next to with We'll Michael go Rollins

Michael Rollins

question. I'll also with stick one

in got for the What's it or at Just the XX% I level. mid-XXs. trying the right, to to 'XX national for guidance either or of get UScellular. in, incumbents outlook think is above slide that you've if margin looking calculating at interesting is I'm And the

And kind of so I'm the business. just look wireless you curious, as at

If opportunities on And current do temporary? to about might margins different structurally revenue improve see the period where can unpack base? meaningfully you multiyear what a be you maybe over margins versus the the the

DouglasChambers

the Yes, let the me with guidance address I'll we're longer first, address and 'XX at where term.

roaming is an revenue inbound down have in we XXXX. that, XXXX XXXX, to into significantly headwind going from So that

at next that increasing year. increases. ARPU X%, an lose to a continue that's revenue We're We into of service revenues our and high-margin rate retail really

in And really about current in our persists It's help that optimization program. the XXXX, that doing it XXXX, progress if our that great up us So really made went XXXX, change sixth we're there. promo provided We're environment through which going bit a talked We've in running the of really great is promotional up environment does. expectation, we've expenses, going could highly could cost go and focused. promotional XXXX. call, there, throughout substantially to costs On on well through a year accomplishments. a the

by fixed B&G, we're single-digit we're investing wireless, talked the about way, so percent. towers, doing we've increasing the And that, prepaid areas in we're while forth. and low expenses And all so modestly, only

times, the and on said better. slow it's where competitors of focus all, get all and it's growth needs business It's wireless government, of the call. to our talked from 'XX. fixed advantage a But to and infrastructure It's business - we've this postpaid first multiple about areas taking get that's margins really our So I funding, mean our expanding we've is capital. towers. throughout prepaid return to the it's are, path,

Our churn. needs customer LT isn't it where be distressed growth to

We adjust to that. have

customer improve to have also acquisition. We

really all it's So things. those .

Operator

to next [Sergey move We'll with CSA. Dluzhevskiy]

Unidentified Analyst

tower part A - on side guess. I two questions couple of One the business. question, of the

revenues X%, of about up were still the tenants but power only salary average number So ex X.X. your

between second Telecom your And question both in also more is maybe out bill are wireline. limited, success? objectives we as overlap that wireless I footprint funding somewhat and that your related available, infrastructure you in could on what considering your part you the additional separate color and but could metrics. my LT, USM of for specific with current if strategy a to it would XXXX? TDS infrastructure and edging by making maybe businesses pros an what other grow and So know with partnership horizon, going segment would of more around funding disclosures that new tower allow build opinion the provide UScellular providing like higher a TDS of within business are XG company, create forward. our business potential or a to And combined counts expanded profitability view and this U.S. by opportunities them what the X-year for running both are and Telecom rate And at and this a

Laurent Therivel

Sergey. Thanks,

towers. we far, profile, business. whether on So Increased towers attractive if or I and talking them if If it. growth let's towers run in seen XXX high-rent towers, improving The then expansion about that not infrastructure have co-locators can it those a reducing it's revenue our Longer towers support be towers also marketing put to and and objective I market near-term towers. goes going the we AT&T's, make think roaming we've world. putting means are going we make start in expect the those an it's was right? towers or thus expense where by moving those opportunity, that? component DISH term, and How than a and the back these to colocation the get the - I more build how in rates, place simplistic, our we big that in potential we really take to to what place, XXX to more those places our with Verizon's, been I to of exposure, in rate place accomplish think planned I being frankly, towers we that, more more So then XXX put out can aggressive right? final, to cycle it we the think, to coverage, attractive times, good doing get tower with at We've continued put putting we're faster to whether business, decreased - towers towers in success is improve continue. the of to economics can but areas, it's And opportunity wireless whether more to that it's T-Mobile's building we

is of effectiveness with of as that business the improving business just the that total going well So both we're as of volume the where scale it.

completely structured. I overlap terms the programs an think of In grant on it TDS, opportunity, depends are there's with but how absolutely

with and TDS a and the grant with and if service. a there's cover here's - if that footprint I that from absolutely state opportunities cover players. hey, it's other you want want you else, geography also to we we think And fixed those cover fiber program you grant fiber, where it I with We Telecom tremendous structured our wireless, I as, something else work will you something opportunity. work We'll to with have is and a the So that's can't cover. whatever to with want

alternative and a I'm dollars approach fiber, so another an could that. other I'm to would absolutely to to take Look, like a of partnership There's technologies going to we wireless. going amount fixed And state certain amount allocate of serving approach allocate a to say, dollars where

like much that, something together. and would not work as For bid obviously there's to opportunity we independently,

a have a wireless Telecom. like would partner we argue in provider bidding in when have huge footprint for a those fill think I can benefit have TDS in to brands by because of well. that similar a as gaps they they decide fixed fiber bid terms having And I So their we opportunity

we're absolutely together. think I more So powerful .

Operator

call turn time. There you. at to I'll Colleen, over this are no the further questions back

Colleen Thompson

weekend. for . reach today. feel Relations any questions. if Again, Investor please out to time a Okay. your Thanks, free you have Have great additional everyone, to

Operator

does conclude thank for conference. today's you that And Again, participation. your

now may You disconnect.

Telephone and Data Systems (TDS) 18 Feb 222021 Q4 Earnings call transcript