TDS - Earnings call transcript Q2 2022 | Telephone and Data Systems, Inc.

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Operator

Good morning. My name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the TDS and U.S. Cellular Second Quarter 2022 Operating Results Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank President, Vice Thompson, Corporate Colleen Relations.

begin. may You

Colleen Thompson

Finance referred We non-GAAP U.S. Relations Cellular webcast Officer. is This President to Chief and income of operating LT morning to of Executive the have the on Investor slides including Therivel With prepared amortization Officer for comments morning, all to TDS and or President want from for are Financial Vice this Villacrez OIBDA me and or before find call Cellular President interest Vice can and amortization make reconciliations. aware Senior comments offering their websites U.S. and on on the prepared TDS of provide being U.S. Vicki and guidance for both Officer; the which adjusted see website. Please we websites. you presentation Relations TDS Good the Vice you X-K and and TDS you Michelle and Telecom, Officer; to today U.S. simultaneously Forms and the thank press partnerships. our earnings Executive TDS' including sections and XX-Qs adjusted SEC yesterday. highlight joining wireless Cellular, President depreciation Chief Investor of our Executive this EBITDA from Doug Financial taxes the accompany Chief from us. Brukwicki, Treasurer; contributions Chambers, We and Financial filed Cellular before and Chief releases U.S. and Cellular's depreciation call

included about you're that forward-looking the in risks please uncertainties. now during video SEC and forth us. policy set speaking out and and subject in in if paragraphs financial door in this review results on presentation are shown releases As And an information always our events version door interested be reach or policy, the Please Harbor extended call our filings. so statements can contains future open as our two, discussed to open and Safe the and press expected phone slide the with

Before anti-collusion questions to call auction I rules want do Vicki? to turning not any turn will to spectrum everyone Villacrez. the to FCC's to now XXX, auctions. over to the call that we respond over, related due will I related remind Vicki the

Vicki Villacrez

supply Thank This you, TDS Okay. a continuing and into both good that new Starting meet and of the their number financial units future enhance you of of pressures are positioned back see returns. networks inflationary deployment is businesses advantage take and markets multiyear everyone. revenues to Colleen executing are fiber well and our includes actions Both business and this expect number strategic investing into effectively a XG in commitments U.S. Cellular slide managing with growth morning on and and is opportunities mitigating competitive of growing to Telecom modernization position. addresses. network can the drive year. its are to service through and their priority three, expanding chain to growth

our of balance to significant needs and both cash through to of sheet businesses large pleased strength maturities be the continue relatively the balances. support We with investment long-dated

at I a modest the also currently repurchased against of we highlight both well are Our manage quarter us want increases the that sheet interest rate companies. during we positions balance to that seeing. amount strength stock to

over the year $XX $XX buybacks now Cellular a U.S. in million million spent to and this at turn $XX million call stock respectively. I'll nearly LT. have As we result And and TDS

LT Therivel

mission. five shown people of and on that most. places support strategic everybody. keep as the some Thanks U.S. to Vicki. Good always can morning priorities matters And see Cellular, our customers you connected slide that mission to At has been that the

drive to six, increase growth slide to and developed revenue strategies we've return see Turning you capital. can on the

Let the to first me quarter. postpaid going with back and I'm you take to start

some noticeably subscriber to during we the series I second And trials And of was trials, quarter call, earnings and and areas June specific result this for And first late of promotion our was a those churn new that customers. regional launched and that's and that for pressure tests quarter. a new detailed add-a-line. opportunities of as where existing that during led As phone identified free to any we in improve. and we anyone saw

expense results to downstream. able we're to believe expense drive And manageable. that that it while challenges when the upgrade churn of little subscriber earlier But number ongoing of thanks year subscriber We've trials maintain a profitability results. for that on structure activity enables and promotion seen impact the add-a-line to And Now, coupled outlook our quarter this believe with improved in with we address we're we launched because in we results. and increase even way we this year of result subscriber a the in significant pressure half offer second the second had our will the we meaningfully the so the structure timing this it's pleased activity far, early, those ran of positive with expect to that but that we identified us promotions. in year. we is And in believe discipline with the that aggressive offer will upgrade

guidance, In Doug all of to discuss presentation. which be in fact our we're maintaining further the going will later

these from customers help We but existing ads, announced also but on times switching. go us tough reason churn early pricing specifically not we for XXXX. also actions they raise the at still our different XX% of have wouldn't improve our caring will the offense. And This quarter. when efforts, guarantee of that nearly least allow it's other taken differentiates in us is new showed site our prices several for seeing we carriers the economic end in marketing to plans us on we through that we're rate only to during commitment believe actions Overall,

the X% highly and year-over-year grew the industry of ARPU quarter. results represents I'm headwind and environment. quite And by so promotional the the despite that increases highest the one overall, a that's of encouraged Postpaid with far this financial in in quarter

also expense maintain organization, make still year-over-year. guidance. seen of and flow across discipline in growth We've I while our halfway promotions positive has cash launch through the mentioned growth to adds the investing in We investments aggressive business, of in operating seeing number to some up wireless the areas maintaining areas us to key we're which allowed continues areas. year, a Fixed and grow. momentum XX% gross continue those

produced of XXXX co-locators. to or due double-digit simplifies we us call build streamlining across this XX% of up we wave additional processes, revenue strong quickly. to number continue great job XX% in also our Tower done distribution tenants early launch can Expansion the helps what mid-band us that Importantly, an principally and quarter space to more our a late we team so XXXX expand footprint has we more sales towers product product growth, muscle plan fixed offer I and footprint, increase on now that Tower provides our in another spectrum of also has entire wireless this and unlimited in clears. millimeter when that's on get the it but opportunities as XG in that operations.

recessionary IoT This our months, for segment partners. environment, in of in think stakeholders' our over a of minds. and first macroeconomic this XX the about key our is us BXB XX that's And on also addition custom environment. concerned concerned on we've segment. the helping revenue many growth of and customers our also will which macro achieved the affect our Briefly, signing that a to government strong I business networking about I factors want that a the in I'm in two economy past to both are to risk and We foundation comment signed milestone I'm deals. build both by and emerging inflation private the

to deliver positioned our However, Many to set I continues results. economic long pricing strong contracts cost these our challenging conditions. vendor optimization believe of manage program with in we're term are and well

sector just changing. managed has broader traditionally I that environments well, challenging Additionally, economic don't see our very

highly I'm the on encouraged in by with So to still our momentum I'm We're growth financial need improve summarize, but areas, results. focused pleased our we subscriber to postpaid this. results.

that we striking between subscriber right improve initiatives the balance that a while number and outcomes. will have of also We underway outcomes financial believe trajectory,

I'll Doug, to turn to going detail. more bit take a call in results the who's So Doug? over financial you now through the

Doug Chambers

Good morning. LT. Thanks,

were Let's by offset will start churn, X,XXX, seven. by supply gross with increase part discuss driven by tablet on sales, slide connected by additions. down I results due an constraints. largely X,XXX, declined in gross additions review the We by in of device in a aggression additions gross saw Postpaid customer increase driven moment. lower additions and watch global fixed to and XX,XXX, in additions was lower net This additions partially Postpaid due handset decreased continued competitive a environment. which wireless in to gross an handset

As LT customers fixed had prior have up year. mentioned and of another this we strong quarter from XX,XXX previously, we with XX% wireless, the base a now product, in

devices competition. flat postpaid for Involuntary churn increased churn also aggressive handset to increased pre-pandemic churn, the total driven increased handset the prior to switching churn quarter continued churn rate churn as increase of and year, industry-wide from slide turn The as let's connected defections churn in as postpaid. in non-paid activity Postpaid essentially the result increased drove postpaid on Next, norms. year-over-year. rate Postpaid shown was a X. by the voluntary higher

decreased retail Both nine. competitor to were net including declines due Prepaid national slide to presence competitive channel. an gross in admissions environment continued increased X,XXX and in prepaid the of XX,XXX. Moving brands the declined additions aggression

our higher to volume. due X% Inbound to carriers, lower X% average are improved on of X% the financial prior rate of course I turn let's the increased benefits user, second operating revenues declined driver roaming slide tower primarily discuss on a terms revenues. service other Other by revenues in moment. Retail The rental with decrease which to due results, renegotiations were per and largest data roaming the higher revenue will revenues year. which expense. due to service up also quarter Now rates Total starting this XX% revenue for from a XX.

revenues by sales by sold activity. due equipment promotional average to price Finally, in smartphone unit per X% increase increased higher new partially sales, an offset of

on customers handset these provide in plans. with highest plan ARPU to per These primarily product increase Average mix partially revenue to account average favorable were XX. and in and an by year-over-year. were the costs. to and our offering user focused to of revenues. are an X% Currently and two our promotional unlimited increases in are The and surcharges plans driven device in improve increase grow cost by continuing of up further our value increase of XX% and offset Turning X% we and customers slide protection percentage per enhanced this revenue recovery were tiers

can rate. you on see continue rental As as to by an increase earlier, we by and steady XX LT tower see driven in slide in growth tower mentioned revenues, tenancy our

quarter overall shown Our XX. are slide the on for financial results

will refer adjusted For this amortization to adjusted discussion operating before operating as I income. accretion depreciation income and and

cost operating of disciplined in equipment year-over-year. are how X% expense. As highly I LT mentioned to through increased operations optimization decrease cash decreased environment. X%. total decreased relatively which, expense commented reflected program impact our a well our Total this and primarily earlier, system in the roaming due expense sold, inflationary That by cost X% of revenues is expenses, managing excluding we

of year-over-year, driven in a write-offs write-offs devices our non-paid unit bad related driving data new by increased an down higher due per general to by as in equipment cost increase to and X%, Cost sales. defections, to While expenses increase increase XX%. higher Selling average as X%, in expense, was shift increased driven of higher-priced well debt account. usage smartphone off-net an increased per largely sold our administrative cost an

of investments, levels in are the negatively to impacting bad device bad guidance Adjusted experienced factors, as operating increase is lack method and pre-pandemic X% equity earnings remainder that relative equity in and relative debt year our of by certain of in our and the EBITDA, increased method driven to along year. XXXX includes continues for operating by decreased income, government XXXX. prior investments expenditures driven increased trending incorporates the businesses. expense largely network have Generally, to due interest the expenditures income other mainly to expectation our payment Our behavior XXXX of dividend cost that of in underlying from higher increased, XXXX debt expense X% timing XXXX. expenses prior relative to stimulus, decreases adjusted the earnings which the Capital with from we customer closer level among to inflation, in

full the XX. Turning for guidance I cover our to year slide will XXXX.

income service operating highly high-margin adjusted for expectation of continued range low focused decline revenues, service the retail roaming competitive revenue reflects a our EBITDA and guidance revenue, for remain total adjusted promotionally Our and of growth This environment. estimates single-digit unchanged. and in continued

near-term pressure. expectations to In addition, our it inflationary related also incorporates

For guidance spectrum capital and I deployments wave investments expenditures, range, our mid-band will and we build-out are network also modernization XG turn Michelle in targeted our remain over now for maintaining Michelle? initial the track. call on Brukwicki. as millimeter our to preparation

Michelle Brukwicki

morning, good everyone. and Doug, Thanks,

our product the our the and second committed year through growth returns flagship objective We results with improve provide for strategic financial in half to broadband. our and the quarter pleased investing are expectations. We are of TDS at to and primary remain first we tracking guidance to our high-speed Telecom by

growth. offerings. revenue These fiber in our are new We markets to to connection product enhance and driving existing and are our and our investments directing footprint investments expand

fiber our by quarter, increase we an Overall, we added residential revenue marketable revenues. of to footprint. addresses driven in generated XX% quarter X% growth XX,XXX this This broadband service

achieved incumbent in very pleased we our seeing market that are We strong penetrations where we have in in markets launched expansion superior fiber are we markets. invested have broadband share our and

us. the a in additional an In more incumbent program, issued our to exchange support. rural forward for comment the in process on May, in the to Telecom state provide would top broadband first SEC Program to final then drive opportunities We grants. speeds. and Extending challenges Like obligations is we meet and this extension to faster revenue utilizing take In building me A-CAM of speeds of LT, chain supply the are of by We let SEC hope seeking broadband Inflation for deploying have our on to all program mind communities. and year. current addition, we and look higher BEAD since anticipate provide deeper concerning. the comment notice federal rule a environment continue a that markets A-CAM would A-CAM extension the through years TDS with comment program fiber macroeconomic later for proposed working fully of support pursuing which the funding best

with been and have price contracts we TDS And are mitigate successfully. to increases challenges To early of our key U.S. as orders been strategic term cost these However, a we and of chain navigating have our economic managed at with prices. changed. process have long vendors needed supply be placed ensure Inflationary discipline. increases, continue to lead result, Therefore, pricing. guidance acceptable managing components not a Telecom's allotment time, fixed these Cellular, through longer conditions. And have to and plans work we like positioned well challenging improvements of combination many

we currently service as Turning service expect highlight footprint fiber addresses, the to we In this speeds the addresses shared, XX% XX,XXX serve Slide completed X-gig we've quarter, growth objectives, to deploying our our addresses, construction ago. we of achievements We approximately total XX% XX% increased quarter. We of line year from to In have by our up Year-to-date, X% a marketable fiber quarter. previously XX,XXX made grew second footprint our the serve XX. XX% And with availability fiber. in of with with total our of of XXXX. we service total year-over-year.

consumer than also to for launched continue anticipate that XX% penetration broadband penetration more steady to state. positive We in XX% we a see trends fully and markets months, still have our been XX for rates in

what in half we expectation hard XXX,XXX ramping planned our XXXX Our had of with service in addresses delivery We're of of is still the address close the to reach goal to second working service up year. midyear. for the

of of supply challenges, including localized continue as shortages. and inflation complexities we such permitting chain labor manage mentioned, contractor and a variety well previously headwinds, we a as industry-wide as variety to As

continue that million to of with by the On broad X.X have meeting of all important bills. Slide network markets. keep between are Total you might goal grew into pipeline the long-term give We our this that broadband flexibility pleased see connection XXXX. fortify of as residential a growth our address in markets. mind across we broadband and although is new connections And still confident expand to to strategy. we're can our markets us service shift service a quarter It's managing XX, fiber delivery X% fiber years, addresses in in

second our our on XXX under per also greater, customers growth megabit from Shown markets. our construction in continue to incumbent the are a in or XX% XX% we A-CAM helping track broadband on We graph ago. program drive for of up with network the demand see to on the speeds taking year greater right,

to where certain new product. service, superior our taking us Our X-gig this win areas are along our are of and tools important that with we offer markets, customers. allow defend product new in X-gig XX% product seeing will X-gig we customers In

Our second operating revenue, in cost residential broadband focus X% growth implemented subscribers. reliable on recovery fast XX% by X% quarter across largely generated driven increased total revenues, an On in broadband increased revenues all total which residential increase includes has fee which a XX Slide year-over-year, service the markets. in for

partially decline the decreased revenues lower As X% due by offset decreased delivery. primarily revenues residential average chart product in of increase in revenue grew offset increased a Commercial on to service incumbent Residential increases wireline overall increase in shown and in by wholesale per and connections the connections. price voice broadband increase Price changes and connections. an X%. broadband in X% connections mix driven drove quarter, in the video a connection. CLEC also connections, decline and year-over-year, growth a revenues timing expansion residential price year-over-year cable to increases the X% video due a following Likewise, market in revenue and by address increased left, revenues X%

the as on results Now shown the XX. Slide let quarter, me financial sum for combined up

fiber and residential is Capital average to from and growth, And as increase declines in not a the deployment from increase last increased due mentioned, our which X% result, EBITDA on business. adjusted we we increased year reflected year XX% from broadband year-over-year subscribers expansion, our exceeded focus to just current future prior in continue increases yet to As expenditures X%. revenue as legacy support an in growth. declined our the revenues. increased Cash in fiber broadband and revenues as per investment expenses X% experienced our connection, we growth

XX. Slide to Moving

shared. We from what we previously have presented guidance, is which unchanged

progress we as We I of expect year ramp the their second capital in the to guidance the the expenditures to end for expect new year success of and deployment within to and the all markets, dedication to in expenses our Telecom. up continue fiber we half thank of TDS want on to our range. associates

with Our And look are in of the updating a product results positive forward to quarter. hard work. that, quarterly your I you third

the Colleen. Now, back I'll over turn to call

Colleen Thompson

Chris, Michelle. Thanks, questions. for now we ready are

Operator

Thank Prentiss today with first [Operator from Instructions] Raymond is you. James. Rick Our question

line Your is open.

Rick Prentiss

Thanks. everyone. Good morning,

Vicki Villacrez

Rick. Hey,

LT Therivel

Thank you.

Rick Prentiss

a much pool? to increases aggressive postpaid the have Does calls. your Hey. there take? apologize, there level adds? any phone we switcher positive get smartphone? And can understand price offers? feature but Is then on larger moving to how you room environment, path it's Busy churn? And ability thought I on back LT, competitive positive day bit phone earnings, of of back a what postpaid a more to with probe adds? think Does does I Just take help the it so local couple take that to deeper. talked there phone lowering Does do to ARPU obviously understand, you coming? is also it us Help been the us little it take

LT Therivel

the I question. guess on next cheating yes yes, Thanks to yes, and and move yes to Rick. say just it's

is the near do in we the here color. that's the I biggest churn going saw So, offer our give it's the adds? do. Do it net I path step address -- quarter. to I improvement. we've that's the launched I postpaid that is specifically going list. to bit term to pressure When to price you we at consumer everything I'll see a positive a see first take Yes, And think voluntary a majority more you try churn and I that. designed in But -- take? in is of to look What general, where

the of at past of are we -- of larger seen out percentage contract. customers we've than out-of-contract things as And rate is, customers saw of the a over churn larger One that in-contract substantially we couple years higher customers. a and

how it offer was we And And that is so, with one specifically we back We goal the really way contract. seeing the think issue do and put customers is results. forward. get we're that addressed that good into

upgrades voluntary seeing seeing up adds we're to the defections ratio So, gross substantively. improve We're substantively. of

that increase the and of on positive on way get other and adds you're were performance and we're add-a-line we the light The addresses growth offer equation add-a-line add-a-line the net going so opportunity seeing side this to specifically to substantively.

I dive, and What seeing don't And of then is and on continuation But the some second execution takes we see into steady improvement to has so, we're throughout it momentum right? reduction think time. churn churn translate half offer that see this the immediately you churn of to the year. that expect

third quarter So, start see in the from to benefit we see more benefit hopefully quarter. in the we'll should this and fourth some

Second see see thing to the improvement the you business. to have growth have you in is of areas that

us rolls adds. up for BXB net adds connected so, a net device postpaid count up that high-speed Internet we into into as And rolls

momentum that the that product XX%, almost product very adds LTE. XXXXX me. up we're about optimistic so what so, excuse Internet, that customers on I'm sorry - to continue and subs on up far. adds have -- up on gross high-speed that's seeing seeing And to purely XX% from Net we we're We're

product growth that And on we so, Internet that quarter, have just that LTE. in on the majority of fired of a millimeter we vast up couple we I the mean the is, carry that but seeing second wave in we're high-speed low-band cities

a we That's contribute XXXX still spectrum we're the finally, end at would momentum fire bit of And by and back results. seeing will I COVID-related business that the more disconnects. we wave when on as of argue our little mid-band millimeter substantively early equation. being We're good held XXXX much the so BXB. expand to And seeing side up

during during away. So, the up have some that disconnect COVID, subsidies received that fired subsidies. hotspot government were gone pandemic EDU the Those programs thank

provider things subsidy of switching because the receive our anymore just they which latter. track the proposition BXB they don't in with much there's problem another customers them means a we One disconnect to our really value is, more and closely it's or a

a think things it's all contribute momentum. that combination really of I will those so, And to

Finally, prices as see second that don't quarter. aggressive mean, vacuum. you and know to opportunity. is I we in we a raised an environment competitive would there. is I our It the Verizon customers, and operate out But meaningful both some them. in AT&T We committed to not

so, we into customers store in. as And And lot we're specifically launch way until of for which -- behind put by and a before didn't really price coming seeing come it advertising the the that reason television July. we referenced even a that's didn't guarantee

that the it's positive. So, business right momentum a adds I'm take to consumer as all all for to in to on cylinders. positive that net optimistic whole, lot a of what get we're is will the of going the heading executing direction. But it take

Rick Prentiss

deploying Great. And running to you once follow-up work the would deploying to start so hit it's fixed on the C-band can cleared, before their access, question ask guys that satellite the you radios start even get you're Internet able high-speed ground wireless and done? a

LT Therivel

on operationally Mike bit is yes let we're answer more a that? Simple give detail how doing I'll Rick.

Mike Irizarry

sites and the with that we're that Yes POs, working we start We're deployment the We're this FAA year. work actually also have beyond next so year creating at that power the issuing what's the of needs all identifying to they been above can ahead requirements any Rick. already identified. deployment that sure make starting designs designs,

feel to be plans to for about and So necessary. prep our we good feel and we it activate when C-band able our it's

LT Therivel

-- is able availability of goal our across to and flip rolling large clears, footprint. that a Mike's have be part to meaningful a once to out. want Yes. that spectrum mid-band spectrum The Rick we switch

Rick Prentiss

to us success and you you'd you you? targets far could market same as with that any kind Sure fixed-wireless as as with it great access. share go mid-band of like for Verizon of guys had particularly sizing that stage where far as early T-Mobile think have Are

LT Therivel

I'm behind like is, a not millimeter ready the really can I into momentum targets. still tell that we're millimeter only early in two we I'd product, because have targets again it's wave. get targeting, wave see markets don't vacuum. you days sweet share on do we to What spots before of more yet, because this we to

going the The I without denser funding there's suburban an non-denser like realize is right, denser a rural first there's fiber but it, sweet dense be or may and or to rural, call but infrastructure I oxymoron, more suburban spot rural to rural sound bit density customer economics we the and where work, have enough fiber. a room to present. the way with promise you more out not economical is the wireless of Where sweet of inch now a lot with areas you're spending think of if lot That's make do spot run concept we talking product time of right against competing footprint, That's have but to I've difficult it's IIJA not we coupled to But with fixed of a areas. talking to a than to rural fixed to with economical geographies like fiber. square of that. in lot the the every With infrastructure it's funding, my can. cover goal trying governors D.C. heck folks is being in been our wireless. very roll that sparse really an to

we've if to we never best connected funding, of before sudden rural IIJA can start we're to areas, now to funding. a connect that toward have or been DSL. that get areas do have have if all so we going connect satellite it can or best And these got really And with really,

funding uncertainty whole universe specific it up the think targets. into. come in open makes I us that about set Obviously, because a of to another for difficult to going so And it is will to how also sell that

Rick Prentiss

it. say Appreciate sense. Everyone Makes well.

LT Therivel

Thank you.

well. as You

Operator

GAMCO next question Sergey The Investors. with from Dluzhevskiy is

is line open. Your

Sergey Dluzhevskiy

on where share do morning, are first and to Good Could what else over seem implemented markets? guys. over you. for you you targeting your already types you moves prepaid. question term Thank of you're your LT, little prepaid? working bit you is could of about be medium And a strategy talk in on that What kind term? my guys prepaid what and market prepaid of you terms share in medium

LT Therivel

prepaid strategy, would break up really couple it I a The into Sergey. Thanks, different of categories.

category first distribution. The is

So business two the pivoted that have and on focused we years particularly were we ago, not time. over prepaid

– leader footprint our space. obvious one a so of is the specifically key responsible is things Walmart. within have distribution We've but The most And our plate we've expanded competitors. for a Walmart, in on prepaid driving increased the signed our of driving We as this. many

is of in the environment prepaid as Walmart driver there's growth, key that well. Walmart particularly so but serve, markets we in a others competitive the And obviously

up a shops, stores, very is Operating model gas that requires have operating than a lot one used distributors model. that places good a this signing but so we're convenience are to stations, different pawn very of different it's traditional to And prepaid at. we in get

distribution distribution prepaid But leader out are Megan we pleased driving our lot time. overnight. up distribution. building so And these an of increase how Quatrini a in there over that doesn't specific [ph] in growth happen partners with areas, is prepaid I'm our signing happens It

around piece is the Second product.

once We've I that structured different to priced It You are prepaid regional and the we're my opening competitively in about to At trialing to this referencing think have thing that continued competitively. compelling same area, but has and it our price customers. where different has made prepaid. was with And have talked doing the to tweaks I have us. promotion is a be to to It product. in our time, be exactly mostly comments. levels increments I competitive postpaid, product. regions has an again, structure benefits

times. different very migrant specific they're test opportunity we specific So appealing footprint Those what have are is in opportunity price a points period very our The customers big see for us different to for for works structures workers. what in see works of specific time. the and to

out higher them they life so customer is And it. get way I us, see data-driven to to the after see piece have That at customers value final a the is and management in systems there. around lot re-up, in structure put the that, their a the and business. place, a data that We're of portion when means have in ARPU. you of And use we it expires, so eligibility is is dollar place, at that investing that. re-up compelling cycle where, to them to opportunity the a join expanding product of to think able biggest be reaching getting intelligently. benefit good to to the I highly in piece getting It's this consume I

And cycle customer well. as time so improving over I see management our life

growing that. prepaid In is the business. but more we very specifics a What envelope. lot can back you We've have been haven't we're lot I see today. around there, a still the again, target, opportunity I published we of than our tell terms of generally of

postpaid. Our about market that is half business of share in

run a room prepaid described. we mechanisms three lot I via to of those so see And on the side

Sergey Dluzhevskiy

Great. it. Got

next on what your per that in this revenues still business how years. this your to over slightly, see change performance view more a guess this the guys of to know tower compared over I of around this putting terms number of to year. probably US tower the tower. you step lumpy, per it's I tower from X.X happen In would some the But company the to And running standalone for see business, you two what about but performance as and as you're are increased business this needs Cellular expectations a deals are under segment separate the umbrella? And going tower somewhat year in in business you the characterize tower business later co-locators order a is past

LT Therivel

us Two step have things happen in a this business. see change to to for

is, our colocation continue improve to to have rate. first we The

streamlining years quarter generally and that team how co-locators. we make And Cycle it times not it a for consistently think quarter team We have easier operational us. with place ago I'm very just easier few has people in to to call put make work mechanisms variety now I pleased created were particularly structure business for quarter. after has it, a after to with for the of, are. open a improved

revenue And just this growth easier very it by work so the we with thus encouraged far seen to that us. year. we've have to make I'm

As mentioned, a lumpy, lumpy business. you is this It's right?

me. some I'm put to This for time. is in the $XXX,XXX And that to revenue investing been continued America you'll a This not going a We're tower piece It way to tower. of is XX%, rural a fleet envelope best second $XXX,XXX, lot double-digit positive long you business the we've time. in X%. rural to And America back The at accomplish You're to focused in towers. in is infrastructure long, the I'm was funding this, rural a money take We've sorry, more back for is and that been business. The good first if some do. a low we opportunity. see that, -- put costs there see growth quarters And obvious an to going quarters economical would record a see piece. That's targeting business. place on the build broken you'll long on tower, it. a to

build current have profile. tower I to think new an our some rent we towers opportunity to improve

in We towers and towers, new have to there. can rent high place put some really we build

towers exposure, the reduce roaming new coverage economic We basis general, is improve but have subsidy, the opportunity very to that place and in big do is some to put to challenging. stand-alone a opportunity to in difficult that on towers some our doing without is

metrics, is be competitors a tower. Almost wireless tower on a we triple customer there we But that businesses and comes operating new to connection, fixed Americas, We put for their reason consumers will wireless. And IIJA opportunity by states tower but and we towers improved there's third towards coverage, allows encouraged right? those adds, with improved subsidy we allows revenue NPS, then that if infrastructure And we can our the improved wireless tower, have improve to the -- that the fixed of which of the improved improved with revenue, I'm is, by churn. experience, to with infrastructure move wireless we get gross that component, our fact in some those fixed cover to putting can wireless so isn't dollars a then can before opportunity can colocation also for wireless, rural if in on a fixed attractive drive to co-locate also we're have place there dip the because also because in revenue. definition

seeing. substantively our very the And momentum still you we're encouraged the next have that's we why some can by to take level. if opportunity momentum, that another kind it. below to the that's rates start so business. is the kick of just important, so of in colocation to the And continue mentioned because bill I'm that colocation We have leaders infrastructure don't that as are it business to

grow have time, opportunity opportunity to we so that over it -- but it put that And IIJA an can overdrive. really is into

Sergey Dluzhevskiy

last my question is And Vicki, for but as Great. LT probably also for well.

and within large and portfolio have infrastructure a across a sitting investment various obviously of both guys lot Cellular are it. credit it for much getting not businesses. But of you assets US So is you

times to those could So assets wireless partnerships I the from. consolidated that one last billion asset Verizon distributions on $X cash getting we that cash communications cash put telco their received, sell Recently for you're is to you. multiple of agreed get to in stakes partnership particular, about year's wireless XX.X partnership for or distributions valuation Cellular of interest kind distributions. that group another If at US

and strategic from is assets broadly, sacrifices the value And open surface the to you financial and your without have highlight those on assets help thoughts question to engineering that what front partnerships? wireless those of of other servicing your meaningful infrastructure would be and value my value on what assets that priorities? are investment operating or types more maybe would moves you So

LT Therivel

I'm And to on questions. the question. Vicki maybe you wireless Doug talk have give then broader can Sergey's to So your Doug? partnership going perspective

Doug Chambers

Yeah, Sergey.

for of $XXX they nice cash obviously year So the off us investment million. in every the a partnerships flow spin neighborhood about

a they is basis. we tax low with have the challenges of One very selling those have interest

the significantly providing post-tax and that those a both the cash call low to on With other opposed insights adjusted offer giving basis. through their that and trying we and would do with as obviously the like to we It's So after-tax them pre-tax value, as attractive. and more EBITDA -- But that we're at a on the barrier basis is an here respect investments is investments on was an to on are value the to the business they're going the sort different say what's and to that past and not tax the selling earnings report to the there -- in in flow. of highlight Investments, the towers after assets the our towers. based the on very entertain of reason to the for that highlighting we've never well you as proceeds there's compelling hanging proceeds the looked investments. --

but a more explore So now. right nothing we're doing lot Certainly, time we'll over of that. planned

Vicki Villacrez

Yeah.

spectrum. We've us. make fund I'm LT for right got the paid We almost and Michelle and So spending first you our Sergey, of focused have that From to and needs sure have long-term of broader time for lot in able their for a question. thank the perspective, priority XX the that businesses days foremost first build-out. been in XG needs and now I on front build to of I'm a the And the business and is the strategies. out my XG

of we fiber window to our at a LT for that a number fund heard we talked long-term opportunity growth. Telecom, builds. TDS You've of funding another, now about are And growth have opportunities right

And so those. make is of sure to my first that to we're priority able take advantage

make leverage got Second, opportunities I'm down And want that, looking able and enough to my across sure can across I've through as that advantage enough our be the flexibility so needs that sheet fund and assets. capability to to I come road. take capacity leave we they business the balance of

clearly show our Today, providing as the double-digit more we portfolio, the revenue of becomes now, consider our reporting about separately? to double-digit are about. additional might part -- investors revenues If Would right single bigger towers. growth. talked information of we growth that we and the talked that part consider our to show meaningful You've value becomes low the low the to reporting tower more our towers LT that greater a

transaction And have I On Verizon valuable. require as that -- in have very the transaction. would And our of value we the add just what of would before consider to has all a a multiple needed need source high on is specific to you funding I a partnership very would that business a partnerships said. partnerships, are said, already I that are -- valuable very Doug to our recognize

And our entire portfolio of so future. always at in possible the looking sources and funding

Sergey Dluzhevskiy

Thank Thanks you. guys.

Colleen Thompson

the ready next we're Chris, Yeah. question. for

Operator

from is Citi. question next Michael Rollins The with

is line Your open.

Michael Rollins

Thanks taking Hi. questions. the for

towers you First And the needle-moving and discussion. then TDS. tower the from before it what expenses? even exceed has bit for direct be could question a tenant furthering other the opportunities look breakeven is revenue tower being US reporting that the on at anchor expenses, little external Cellular from gears you're possible your better? rent the of just direct allocation considering changing When tower to you or on So that

more you Just curious, if and network Thanks. think opportunities or other time? that the there's the over on an operations could ways strategically things update or managing business about sharing other

LT Therivel

Thanks, have about question Mike. and Doug talk I'll afterwards. your tower sharing I'll the tackle network

Doug Chambers

Mike. Yeah. morning, Good

a the colocation the are towers, that small. we On very from incremental incur costs direct

in is excess So margin our colocations incremental XX%. on of

the seeing revenue you're way bottom growth of cash what in operating right crews So to line and growth. flow the

important about that to really our why growth and that's we revenue revenue profitability. So is that good really feel

Michelle Brukwicki

land, follow-up point you second. for tower situation these a just maybe the direct you some of have Sorry, on In rent where costs. you that own rent costs to utility the you had of one just more land, some

incremental just you or is basis? offset rent the opportunity, this does forgetting is profitability words, the those a already In than moment a your add other that costs? the up better more breakeven third-party that costs, on If direct all business

Doug Chambers

costs is all for our products. of and our cost. Yes Remember incurred short business these wireless doesn't our being it obviously it does fixed – totally operating the Mike, offset mobility and and for answer our are

of it's all answer not level – it those a So doesn't short offsets it is no costs. where the

Michael Rollins

Perfect. just Thank I you. was curious.

LT Therivel

doing we're to tackle business. have I'll what ourselves. return the success me capital bit. expand question to of expansion to meaningful sharing. network is for we've this run, as That's let tiny metric on long in In established committed Mike, of financial the your

a investment. return. way of connecting drive is way to only do a we mission lot that investment of have a to through the of healthy and a mission We lot The if people accomplish only is

of Most And revenue, on that do return driving profitable to we've so expanding talked revenue, capital capital. return a OCF I efficiency see equation, opportunity driving far we that thus goal mechanisms side. return expanding the on improve of improving side thus have the the of about and are capital. expanding

I that I duplicative of networks network that's get I And build XG capacity a we in can is get going to improve IIJA to beat and to can support do intelligence think infrastructure customer is not a to return it we user to talked closer that but to big our difficult one. five when means the capital. think, prior XG about I do what this think that in spend, density. and lot you closer four mostly requires horse involve denser or low or of rural meaningful really another over won't have get America. improve if and justify dead dollars to builds it lot XG, calls. opportunity it's you to think a capital about capital, the capital requires sense [ph] on If sharing further I've efficiency Network is any time. capital makes

and our to deal that like continue without about we're ability that. And necessity our financial is hit long think going return that pursuing towards network move long, the the good a in conversations a on do end. doubling so run to I I sharing and capital to to be to feel projections very

network capital. So mover have efficiency, a an on I have a big opportunity. is But continue needle we of do on capital to that And one. we return deal I think think expand to have in a terms don't sharing to like

past very there's about good quickly. with. talked opportunity move And think think We're a I calls. others I those don't good. we're for conversations. But to there. having partner things a in I've a realistic we're work that do These

Michael Rollins

the markets. carriers. you able deals been of question sensibility to maybe the already just national Historically, the or And couple of operate, which and of the be sort of wireless your with of roaming you've into on signed some some regions of how They've DISH? your of different carriers about company one with an point in much beyond commentary a opportunities you DISH. national the Have construction these rural subject deals with other tower some last to in entered can deal there And past? on IMVNO the you really any maybe elaborate the should sign

LT Therivel

Yes.

tower about the is into have that opportunity support – biggest our mentioned, MLA. DISH to optimistic our we've we're can't but we opportunity thus So about entered in I more talk that with them. specifics as I far

In a can't areas anyone, any connectivity way into agreements, good same I to some have But which opportunity think go in opportunity their work good to I we with with of work in to Mike. have we who the the a detail on beyond that DISH. specific wants operate. we expand

Michael Rollins

Thanks.

Operator

question next is Stanley. The Simon from Morgan with Flannery

line is open. Your

Simon Flannery

to one-timers to and about earnings has Help over? likely good on equity LT, about for you more understand, morning. dropped And you just Thank they're the you much that, forward that that how it promotions. good look there and will of any -- going long, just look go coming to if the driving we little there's could did or of us It been kind promotions? here? then don't accounting How the is back most take And what of the like I bit talk will amortize upfront? change is those like a from need new year-over-year. partnerships, know, a sounds to any it impact. XX% you the like having cost

LT Therivel

bit improvement promotions, fairly closely Simon voluntary the defects. the those to talked seeing about think opportunity increased We're One of, I there. we a adds terms increased add-a-line momentum upgrade right? seeing, is metric, of track the earlier of gross Yes, in revenue we're I ratio little that the momentum

And going effect on on long-term to have churn, the to we so, that that it's upgrade, on add-a-line. want I'm optimistic have

talk how can specifically, then of that promotion expenses Let answer and the your about me let well. he as Doug second are managed question

Doug Chambers

Simon. Hi, morning, good

and recognized XX% period, with is of then day recognized will cost of which is months. on So respect one, contract for about the if upfront, in promotion promotions. over the accounting is XX revenue service Think you to the the XX% about

the about think to how things that's for that spread Also adds gaining promotion. the remember, offsets from we're revenue pickups gross So revenue. of and and

moving question are all Then as The earnings, to when total on about your largest equity in about item down. was offsets, those you and cash well think those So flow. being single operating the initiated per is company partnership, this $XX Holding going of lease a with L.A. the that of January our starting about to spectrum partnership, year. that's million in -- year. Verizon share

incurring last we're wasn't that So beginning, this that year present year.

including addition operating are But across to item for kind In new bad the just of board. costs different partnerships increased that and is, items increased single quarter, that expense, charge network and lease. spectrum various that the largest debt the

Simon Flannery

Okay.

is a good rate, run this So probably it? is

Doug Chambers

Yes, will per that be is. million XX-year $XX It year.

Simon Flannery

is then contra that the XX%, months a And Okay. XX over revenue?

Doug Chambers

Yes. absolutely. Yes,

Simon Flannery

Yes.

Okay. of Great. in And strong. then one, one. service last Cost just wireless was

to more Is and there? the stuff. think You there How talked roaming should forward? come about we some that reductions and about of usage going

Doug Chambers

going sell-side cell pressure incur on Mike have about forth mean, millimeter -- our talk and have rollout, said, great made being been wave mid-band we the forward I team That we -- doing backhaul we've wins. great some when sites. area We're most XG of Yes. managing been for putting as also that. do and optimization have and there cost our that's I progress we talk more and a to our where as we And job program, so rent when the

program. it's certainly cost mitigate decrease. optimization time, would that for over to I continued wouldn't look, looking -- a we're to I look So increase going but through our

Simon Flannery

right. All you Thank

Doug Chambers

You’re welcome.

Operator

to for questions no it further closing at over have I'll Thompson, We Colleen this turn remarks. any time.

Colleen Thompson

everyone reach today. to great have any you for questions please if All time weekend. and additional right. Great. have a Thanks, Again, IR, your out

Operator

concludes this call. participating. Thank today's gentlemen, and Ladies you conference for

disconnect. now may You

Telephone and Data Systems (TDS) 5 Aug 222022 Q2 Earnings call transcript