USM - Earnings call 3 2022 | United States Cellular Corporat

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Operator

Good day, and welcome to the TDS and U.S. Cellular Third Quarter 2022 Operating Results Conference Call. Please note, today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Colleen Thompson, Vice President of Corporate Relations. Ms. your begin may you conference. Thompson,

Colleen Thompson;Vice President of Corporate Relations

comments thank Executive Good Vicki Cellular Financial Therivel, from Investor want from Senior have Relations joining you TDS, websites. and our We sections Villacrez, Doug of and me for make morning, prepared find Chief you Officer; U.S. the President and Finance U.S. are: President Officer accompany Chief President we With Financial Executive Vice and prepared Vice to comments and TDS presentation all Executive Officer. us. LT from Cellular, the today and Financial Brukwicki, which offering President, TDS you Officer; Chambers, Vice of aware Chief on Telecom, morning, Chief this Michelle and the to can Treasurer; of and

This or interest, simultaneously call and to and both for call, Cellular guidance We their before TDS EBITDA, Forms filed Investor the or and referred of provide U.S. websites. the the taxes, the including including to releases and U.S. and on websites before Please depreciation on operating this income see reconciliations. slides is Relations yesterday. and webcast press XX-Qs non-GAAP adjusted being OIBDA, X-K, contributions TDS amortization, Cellular's highlight adjusted U.S. SEC depreciation Cellular our wireless amortization, partnerships. earnings for

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

in the Technology with an if now us. open-door are Entertainment Conference interested our schedule December always, can reach speaking upcoming X, out And on or in our the to we policy in now City call Vicki turn Conference are of and Raymond attending you so the York policy, phone Slide Vicki? please open on Scottsdale X. Media over and X terms be January on Communications, I door, will IR James as New video Villacrez. In

Vicki Villacrez

good everyone. are well take guidance have enter opportunities their units Okay. to competitive positioned ranges Both morning, our and positions the enhance Colleen, growth of as tightened Thanks, and quarter. advantage fourth we to business

we and free As through both cash U.S. Telecom time. term, a effectively actions are are investment and pressures so number returns over that these discuss, are with pressuring growth Cellular supply near key chain to goal address TDS flow Both and the us businesses through of inflationary cycles mitigating for improved managing risks. position in to

-- against business the us sheet seeing. our increases that positions are manage strength to Importantly, well we also currently rate interest balance our

companies. continue long-dated repurchased want in and in and both be to TDS to at short-term amount both to equity new stock also financing highlight fund financing help to markets pleased the strategy, a opportunistic of preferred during combination businesses, We expansion maturities Telecom. the which with that network modest incorporates our I our quarter, addition of we modernization at investments into

and a have at we $XX result, year, this and TDS million buybacks $XX Cellular, million $XX As spent respectively. stock in U.S. million

turn over Okay. LT. call now the And to I'll

Laurent Therivel

see time those you it's direction, postpaid subscriber efforts shortly. recently the to everybody. are launched promotional call, still saw first for overall in were of subscriber our know efforts I take quarter. churn, to designed quarter we expand seeing many back challenges these moving are But leading since can morning, right designed second promo address going new results. to some last we and If that encouraged and on improved the all-in I'm pricing early Good think to in results translate we offers promotions, results that And Vicki. while a But Thanks, number challenged. our are to we'd our of and of a subscriber those indicators number the with I'm into going the to of address

seeing as numbers Now the as continued that the macro in reflected past economy intensity this are in well in competitive shifts in our quarter. we're

that competitor bad wireless although the let macro per consistent so And with on the is to lowered We percentage carriers the we years than From default these of with we've compared each debt rate those cable substantially Doug the continue our prepandemic is greater to is the our perspective, And defaults than And year, the that briefly. the expanding are factors touch What of so the parts going more rise to through of exposure in that in past. some we're more although national and levels, service are drive remainder growth expense lower be to for XXXX. to in America. We the is required expense in another to revenue several our We our customer in range. seeing our rural still expect high we a original confident within improve time. detail. investment that returns is over into strategies me mix ago. remain into wireline of guidance place the in profitability bundled and footprint. have end average, right adds going of competitive anticipate promo see discuss

Any third existing strategies, quarter part been Free of a Phone we've new that's those customers, executing our during Anyone, XXXX, the For mouthful. As and of

rest to the launched it going promotion for of have those and we're certain aggressive So We've that. markets. offers in executing more flat call led areas. to rate improvements key pricing in We've existing new several been call. And just the

of kind about one talk those each one. by just me Let

in-contract of seeing our in compared just end X% connections And gross quarter a at to as contract XX% last that in up but it's the to significant initially we're lower now prior highest at out-of-contract increase are much in that a customers we we XX%. is And we moves first We at increase seen a because rate XXXX. since when future that percentage periods. increase. And contract to churn churn see in not continue believe upgrades. lead add-a-line expect that contract customers percentage adds in And XX% a percentage should customers. launched is than handset And postpaid this The promotion, year. of the of is those the only in the we've also from lower result, is to

customers despite has a ARPU. the really where and and promotional one We've And got actually It's plans nicely those highly nice the postpaid premium environment Team to our It's growth. the device value of of job a industry. a services ARPU discounts highest in done a highlight X% at drives year-over-year. of that's ARPU. growing are in realize that headwind helping

momentum this in to inflation, our it's We Gross debt optimization mitigate the together, in not program that that our the in also remains expand XX% products and launched the promotional XXXX of early bundle to also launch XXXX. and growth on we further strong. we're as apparent quarter. in and were fixed We've expense though late initiatives. see wireless have offers of the going remained spectrum additions face equipment a opportunities third strong, year-over-year. to product loss wireless mid-band financials Other business, we bad effects cost areas of due quarter have Fixed and increased the up helping and mobility to it's

Brief a modernization up with to number due that our XG covered XX% principally sites quality. our network, we've We've on colocators. XX% see modernized of double-digit We XG. performance currently XG POPs increase and of quarter coverage and another traffic, XX% produced customer carry modernization of progressed and plans our by have deployment the completed have that's in the POPs of our our XG, better of better and XX%, our to multiyear to the perception has program of comment revenues, the Towers And network of XX% end over of we to network XXXX. network expand total we where nicely.

XX won in a auction XXX, licenses fill in successfully we and addition, helped us gaps at some that attractive price. In mid-band really wireless

again U.S. the years January look to Xavier to to experience, Xavier's over of want Cellular also its XXXX. Board, significant effective With XX we his Cellular highlight contributions. is benefit appointing U.S. from will and really once Williams telecommunications X, experience, the refreshing Board Board I forward that

We about have. to and want culture results, completed underscore comment once at that the associates again, U.S. with our we survey, the amazing recently culture a satisfaction annual Cellular. I end associate and the high the

season. summarize, we to while like we optimistic subscriber we've in so seen the have pleased especially of holiday ARPU our I'm the growth as And areas with and underway, and And challenges, I'm into towers. strategy wireless busy growth fixed postpaid the the initiatives right we head trajectory right have

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

Douglas Chambers

LT. morning. Thanks, Good

as increased XX,XXX by net on Slide results X,XXX, a start Postpaid gross mentioned moment. LT review increased handset I previously. a by in driven increase Postpaid Let's customer which activity, by down were driven additions of churn, will with discuss X. in handset add-a-line an additions

first However, compared in to net ongoing drove promotions gross our quarter second additions. both and improvements and the

increased defections, decreased to discuss fixed X,XXX slide. higher primarily by while gross on by additions by next driven X,XXX, additions, Connected device additions wireless the net will which due I

now momentum the have our the customers prior and XX% prior we of up and XX% wireless, with fixed this with quarter. product, pleased from in a very are year base we Overall, from XX,XXX

Voluntary year also from Postpaid postpaid as prepandemic agency increased churn connected churn business churn has turn activated customers certain the combining many on prior of a and aggressive handset customers of norms. Slide switching to the nonpay and in funding with of disconnecting Let's involuntary. X. conjunction to pandemic to and as fairly between increased government increased churn increased shown the Total originally activity increased and were Involuntary and evenly handsets competition. which that rate industry-wide churn, ended. handset devices, due subsequently connected during and increased frequency voluntary higher churn postpaid devices, result the government

the X,XXX. additions were Slide to and plans for July, which prepaid XX. Both due sequential competitive additions Moving launched gross first new certain declines positive to for net continued net additions, is we've driving the time Postpaid in in were XXXX. in in QX In decreased which improvement and prepaid pricing declined aggression response, both gross environment. in XX,XXX

to X% Retail starting combined turn XXXX. third connections, the user were to postpaid service per results, on year. regulatory quarter with increased from prior revenue in of financial by the revenues Total offset decrease the for the a revenues average timing flat related adjustment that fee discrete let's relatively increased billings average XX. higher recognition Now Slide the revenue of as was in operating

activity promotional of declined XX% Inbound revenue due volume other has XX% is the XX% of carriers, roaming primarily also rates. largest in renegotiations of drove revenue sales which our roaming by due decrease as impact increased driver rate the in increase The handset result to of strong the that expense. this a upgrades. increase lower decreasing terms to with Equipment an

by At pleased quarter, and in increase Slide customers These seen are driven surcharges protection in the promotional XX. we've by increase in our increase, this very mentioned our the increases along user, unlimited of offset growth revenues. in ARPA, offering this cost an and strong per and LT an primarily partially highest to in favorable costs. consistent handset of was plan of Turning product area. the XX% tiers end are in the with recovery average X increase increase revenue mix, the increase that an were the plans, and we device on with

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

income adjusted I debt adjusted operating will refer in as expense. XX%, amortization discussion, driven equipment declined before operating by and in depreciation operating bad to this For income. increases Adjusted income loss and

existing LT promotion ran churn This footprint. throughout reduce customer and promotion existing we from and over ultimately ARPU customers, is service a designed quarter the As and of majority earlier, revenue to new in time. our our reward our increased volumes commented increase third

was As drove third this $XX rate a near of in a in upgrade on the previously and the driver the primary in term, equipment. million increase discussed, high promotion quarter loss

incentives. our a write-off $XX as Further, result higher-priced bad expense customers prepandemic to debts average attributable has increased levels increased devices, of partially as the rate churn to involuntary promotional selecting million and has returned

payment throughout bad pandemic, government the the reminder, impacts result behavior consumer was continuing year. rates, in expense a unusually resulted in XXXX of the of which savings prior as payments and debts low customer As a strong high stimulus including

and higher year $XX the We expect plan the continue equipment to expect than expense quarter loss promotion, churn we at bad fourth expense and bad existing and on new remain our to prior debts in debts as we debts involuntary mentioned and ongoing levels million expenses follow year-over-year. and current continue expense, equipment to optimization program, deliver cost environment, cash decreased other results. continues and excluding to bad prepandemic this trends. our sold Despite to cost LT of inflationary our

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

have within that the ranges original year. we remains guidance provided all Our

for adjusted end operating the EBITDA. the we adjusted income service range However, lowering and of top are revenues,

existing subscriber adjusted XXXX. All of our ranges also these our EBITDA by operating new impacted are challenges are in promotional and making ranges the in results, debts previously. it and income with are positive negatively bad trends by but growth of expense. impacted promotion adjusted encouraged subscriber relatively We Further, and investment promotional the the we time we've higher for will levels take drive offers are discussed to our we believe

subscriber aggressive to the as are estimates. season, promotional and, taking measures objectives. are been We planning our Further, which mitigate committed activity we debts always, we reflected have bad holiday is balancing are with during in our actions staying and the those growth to course, continue these to

service decreasing adjusted both operating the by end income $XX million. of by of EBITDA we result, range by high have million $XX a guidance and the and narrowed revenues our As adjusted

For our on guidance capital our and targeted wave range in XG initial track. spectrum network maintaining investments we mid-band expenditures, are modernization, buildout as deployments preparation remain millimeter for and

now will Brukwicki, turn Michelle? the over I to call Michelle

Michelle Brukwicki

everyone. good morning, Thanks, Doug, and

our results pleased to pleased I'm high-speed broadband. quarter, grow the that report we We business quality, Telecom with our continuing for at third are are providing also by TDS and to

TDS Our markets. million year grew X% from footprint ago, across working. now a X.X Telecom serving is service strategy by addresses our its

marketable we footprint. addresses quarter, our to This XX,XXX added service fiber

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

In our fiber program Billings, XX various our and Wisconsin at began Bay, announced in expansion fiber of Montana, Green stages Wisconsin, expansion we have total, In additional offering markets, in XXX service and communities expansion development. into we communities. today, nearly

also wireline achieved markets, these In invested across market offer have In upgraded markets, we we fiber. fiber our Likewise, market are in and pleased share. very areas. have our are in superior we've speed X achieved have cable markets, incumbent deploying opportunistic gig footprint where to we that superior we share in our

funding, broadband faster and our own building our rural meet utilizing by speeds to markets A-CAM grants. addition we our obligations In drive more in to state

provide support in Tennessee. of notice deploying anticipate a program, support. in additional This years of In a an successfully extension fact, just Telecom proposed the won on broadband comment federal TDS which A-CAM extension speeds. the grant We spring, seeking FCC higher a fully issued for would X we revenue exchange

this comment process and We engaged year. and remain or have have the early the a been FCC working to with through hope year final rule next later

A-CAM the federal fiber BEAD TDS Telecom Extending take to current the communities. into funding provide and first then our would program for deeper path pursuing program fastest

some alluded let Now make me on Vicki this, and comments to macroeconomic environment. the

actions of actively challenges. are to are we well to challenges to address continue impacts strategic short and face do the positioned the our our labor in inflationary increases, timelines our longer-term delivery we with meet that supply we plans. cost ability we present the term, are As chain pressures And achieve and and stress shortages mitigating managing taking,

Slide in Year-to-date, construction marketable-fiber by the addresses, fiber. to total approximately footprint of previously we've of fiber to we turning XX% quarter. deploying quarter. our And serve expect shared, we've serve We service XXXX. XX,XXX we total achievements the We footprint with as our now highlight of completed this XX,XXX Now XX% with made XX.

grew of quarter, the addresses total service XX% X from our year objectives, third with X% up our line to increased service we of ago. a our In XX% addresses, availability growth year-over-year. speeds In gig

XX% state. a we for fully broadband our trends penetration also steady markets, We XX% see and still anticipate penetration developed to in in consumer positive rates

our such and we we're deployed permitting so targets. planned XXX,XXX complexities, which XX,XXX-fiber year, due XX% we on a If year. deliver service address the are we've although continue putting last pressure increase trajectory, on service delivery than this address shortages far industry-wide year, slower labor service addresses some to with our current addresses as around our for will is headwinds, the pleased Now over

million As still our addresses by service although fiber fiber shift delivery of meeting strategy. is between And long-term confident we're we've service previously might address a of our goal X.X XXXX. mentioned, years, program

the XX, fortify Slide with for broadband the our expand on and fiber connections the see on a see greater, broadband On across quarter of connection can in markets. new broadband Shown greater networks customers XX% into all speeds, we growth residential our graph we taking per grew right, XX% XXX markets. X% the you second Total or demand from with year ago. megabits as up

X-gig customers. our product, certain in are and to will markets new win along important X-gig us with Our tools product defend that allow

speeds expect a offer on multi-gig higher in working are path to to beyond. additional XXXX and products even and We

offer we residential our the of on XX% new And product. total customers where areas increase a service we reliable XX% fast, has in In focus seeing revenue. are superior broadband our service, generated X-gig taking finally,

as Slide all Residential increase XX. X% and revenues legacy average the Total per residential from a changes Moving X% overall declines. to X% markets. broadband in increases drove product increased year Price prior mix revenue revenues offset increased across connection. growth

by the shown connections, delivery. chart of growth increased on service incumbent Residential wireline As increases the broadband in voice and in year-over-year and timing expansion to increased due price the in year-over-year offset following connections. market declines and video partially address cable left, revenues revenues

CLEC quarter, Commercial driven the lower by X% decreased wholesale decreased primarily revenues connections, in X%. revenues and

support shared expenses and costs cash in As reflected shown marketing, to yet our such revenues. and expansion sales, X% direct as fiber future growth, cost additional not addition to is on to current estate costs. to year-over-year technicians in increased service Slide XX, include our due which support Cost real

year. the XX% in an the EBITDA in adjusted expenses cash anticipated, resulted increase prior from As of decline

deployments, we purchases. as year equipment increased our including last from in XX% accelerated increased fiber expenditures Capital investment

we've XX, our guidance. XXXX Slide provided On updated

are expectations. EBITDA adjusted with and line in revenue our Our

range to lower million lead are making be EBITDA estimate. the Capital adjusted to will manage that line end closer between expectations address chain are delivery our we purchases offset expenditures builds our times. year, Now be are million. narrowing on Delayed in we spending of equipment supply our for with and $XXX the we're by to service accelerated despite $XXX also fiber

results closing, hard final continued I and forward sharing in In all February. want look dedication their our to everyone thank I of XXXX work, our and to associates for with

call Now I Colleen. will over turn to back the

Colleen Thompson;Vice President of Corporate Relations

now are for we Erika, ready questions.

Operator

Instructions] comes of the from Raymond Prentiss [Operator line question with first Your Rick James.

Ric Prentiss

Doug, seen do LT, think where And you've questions. wireless couple headed year? start mentioned upgrades in guys as We'll the you of at were upgrades. into A in quarter? we side. the on next you they're the Where look increasing

Douglas Chambers

Yes, Rick, look our I trend similar for in quarter. upgrade would X.X%. rate in QX was the a fourth

we new and year, the As of end our the lot and mentioned, running a upgrades. promo that's driving of existing we're throughout

Ric Prentiss

porting Right. And cable of was Verizon, AT&T, to one in where of When you about to called were the bundles? ratio kind things, competition expanded losing churn things you of of if it or think also T-Mobile the out losing you Are the voluntary think side you stats? America. rural you customers the

Douglas Chambers

Yes, start carriers as -- far I in customers national respect gained you that's our just Verizon much in to on seeing very see as you're by markets also the with always from When the more the that's and as winners basis, reflects report losers by what their are say well. it reflective I'll would trends. the virtue how national and a trajectory share. But share, market and loss share of saying lost win we've headed,

Ric Prentiss

Okay.

your some markets? seeing buildout are and Verizon increasing you buildout AT&T -- into So of

Douglas Chambers

well, relative to than little increasing bit What have AT&T. a less Verizon historically. a -- that, would on we we're is I losing would -- say basis, from I

Ric Prentiss

of quick couple ones. Yes. A

who is on from fixed nice like think the tap as the you'd to industry of question, from. in you fixed side kind Sort you taking opposite of I some are in obviously, some share side? to there the there share understand see I've of do wireless And the you're some On that. the trajectory on change Who grabbing those Help gaining that services? wireless, seen starting us success wireless that others are first fixed see reports and equipment. who of side,

Laurent Therivel

It's LT.

about product and much the generally, is So selling of if product still we're seeing product. LTE-based we're on the where where success, think, that this we're you I selling, an think sales

LTE. it Some much of XG, it upgraded is of network, where but is we've our

competes satellite. And against so DSL, product generally that against

my of so we And because in generally wireless reporting expectation who from. have exact although that's them figures don't taking is that the don't see kind we we're do we way same share the the moves,

when towards be the would Next up say, cable it's [ cell will at from mix I fire year, at taking which next year, we DSL end share that companies. and now, I ]. But expect least, more mid-band, right of move primarily, to

Ric Prentiss

just be about as Okay. movement -- their last hit of we've that looking a one, thoughts coverage. in bogey the other to competitive efficiency working partnership population on the they agreements And side updated on this we Any as lot wireless you seen DISH but capital think for into look world? wireless might specifically, with

Laurent Therivel

question see before, of kind X.X the opened tower the both about to X ago, kind I've I'd business, answer for of ways. you the in seeing in players growth side. our mean, I mentioned revenue up the the from well. on benefits and other we years DISH, as it we And that. of business continue towers tower see we're years, of X side from certainly, from increased that I mean, interest,

rural and deeper doesn't duplicative sense do in partnership those in sharing long building network things America think, on, this a think like engage make X run, X perspective, XG From continue or so the economically. networks out conversations. concept I in XG of to I or we duplicative

think And so there opportunity I there. will be

but players specific continue industry, conversations with nothing that. We to have beyond report probably to in the

Colleen Thompson;Vice President of Corporate Relations

Operator, question? next

Operator

of Simon Morgan Flannery the Stanley. from with It's line

Simon Flannery

around long look will color XXXX your And of just mostly 'XX? across just LT, is that continuing us deploy does sort some fully you how it how on, Great. the you mid-band to so talked take that the about can CapEx, perhaps give versus mid-band, you footprint? more

point broader just a then And capital on allocation.

that's and side, a investment, but about think on on I the the period you the of on putting strain talking on sheet fiber is started balance side leverage. call this the wireless both

you about to do leverage and about sales of here target So about dividend, for capital be, and allocation to asset about think levels the capital pay should your CapEx raise this? what sort considering how other options

Laurent Therivel

thanks Simon, the question. for

So CTO then let the got in about And answer and add here, and specifics, me we've deployment. question I briefly specifics. have Irizarry, then on you chime of he'll I'll and let high-level me leverage, mid-band Vicki imagine some I'll Mike since color kind to a start. give thought mid-band our and ask she'll more more

through of Overall on So let the me with of balance rebalancing cost start our leverage. a substantive We question debt went sheet year. earlier this substantively. down

in I money to fund good of the position very we Yes, and spent investments lot for X.XX making. C-band that think we're a a we're spectrum, on example.

the also I it we rate a with, think very priced fairly prices. were able And rest pay attractive think, of that to for at got we I reasonably relative to auction the debt. spectrum

recently from overall with we're rating so here an sheet think, the fairly we conversations and health had agencies. by I balance believe And perspective, that reinforced shape, I was in good that

sure a investments in details. able buildout to further we're a the be the can strain sheet, doesn't way that XG particularly give I'm think but in fund I mid-band requisite more position Vicki to balance that

mid-band Let go more me detail. I'll have and talk then into Mike briefly about

to So, will we now. that be that roll is to our out mid-band Simon, strategy starting towers the

XXXX. we'll radios be -- on putting can you throughout So towers those

of end not clear However, XXXX. the that until does spectrum

us early 'XX, help that deployed will able spectrum already have And goal so towards amount that better for end lack of of substantive of 'XX in mid-band a X switch be word, a and flip is our to, areas. the a to

an The perspective, speeds, first, overall help it improved from improved will quality. us wireless

we're excited customers. get out our for wireless so And to that

high-speed able start I expect see Where of lift side on the a substantive to be marketing product. We'll really also a to Internet the equation. is

given decided have in the the exactly to haven't gig megs, of we but mid-band-enabled marketplace you trials, speeds XXX seeing can we think product that market do we're similar marketplace. the it and wave-enabled in product. see there can And at, a something in expect highly out millimeter be competitive from We we'll speeds our

switching the at -- mid-band both business. that on both that of for about and the excited so of And sides end deployment that year,

give detail expect about timeline Mike, a from we what and mid-bander. deployment the maybe can more you bit see little to when the

Michael Irizarry

XXXX, stuff it large on end Simon, so all be over will for project break the LT a and And as multiple we're and years. to design capital-intensive done with to order similar. of design, We've purchase to light This complex we've launch those sites project, gave other number very those started up. the up. we track

XXXX We about. look up we very can per sites activate wireless targeted that the strategically anywhere where experience, XXX after that talked speed also opportunity with and will pick capacity between synergize X,XXX LT year, customer fixed the to and to offload improve

So we're excited about on it meet and track to that plan.

Vicki Villacrez

Thanks, And, the Simon, here I'll just leverage. jump on in Mike.

disciplined don't of investment both as same opportunity is And I targeted think our are And important to been -- that us ratios know, And LT my time that businesses window leverage for of needs se. going position balance cycle and both a an to a about per equity. have opening TDS need you leverage, maintained a taking that sheet. of the comments, the We As because they're as is always growth in long-term conservative said, think business. and characterized that's I had preferred policy said forward. really going with that we really we with financial a at and significant through balance of everybody advantage has portion the talking long-dated debt the about

intent us. industry really mentioned, paid our businesses, sheet on that the And at, I'd reaffirmed we say they're purchases that behind we spectrum. and as business The managing is for the our spectrum type -- we now credit S&P need supportive -- really feel got our rating because and support Moody's levels our with to which that And overall. but modernization. really leverage us and of stay for making. is comfortable have balance moderate XG They're stay to of to focused that at room. we've also our our good our investments And our the providing LT we're strength increased has buildouts is fiber

of incorporate capital sustainability got long-term our the that for plans We're we've our forward. and they're within bank are investments well business, room, We've got our spending critical. these the -- It's covenants. and going

Colleen Thompson;Vice President of Corporate Relations

next Okay. the ready Operator, we're for question.

Operator

from Cusick JPMorgan. Philip

Philip Cusick

market LT, about where talk last maybe you market few the you can wireless going, years. this AT&T the was see just aggressive growing? for

is handsets giving T-Mobile as going cable hard, to away working doesn't this get Verizon but only and wider the I customers. is fighting seem share to existing footprint see I be see Now well. out. and them, to taking matching creativity, you is

why growth the through of can subscriber they going in without your understand should direction faith you help investors script, business? destroying turn the back So without profitability have that

Laurent Therivel

you go was to I'm Phil, forward disappointed. really back through me script, don't to to want my back moving it. looking I

Philip Cusick

And And the listened thing. I whole it. to I heard

Laurent Therivel

Reading again. it over

of stabilize levels high areas side really and the increased of I investing business, articulated I that and have of ago that take driving to if about the we're level efficiency. efficiency a time of of postpaid back growth I it's strategy the a and reinforced of how strategy So we in every at years these couple operating components. while try is do while business one and has a we on X step It a consumer think the that capital calls,

Let one. me take by those one

balance quarters and X good first of year, we and The really up until year, stabilizing Last I first, profitability growth. a struck, believe, postpaid. this the of subscriber

quarters voluntary of X we of substantive churn. saw coming out the pandemic, increase first in The this year,

it we and that that felt aggressively. address we so to needed And address

a quarter customers of past done The really more house. of out-of-contract get can rate under we've on side half customers. can we've think at much at the of high level, you in the customers is the gotten you in-contract more aggressive what upgrade So the churning contract

customers and the of substantive a calculus upgraded, upgrades, to need that And go aggressive contract, of more growth the you've in numbers. our number getting XX% that's and in in increase driven we to get customers seen so in XX%. is, XX%

generally, is upgrades. there's those customers that's So we've The with It's and might a company, upgraded anyway, been case them strategy. we and the well, bear bull that are now is, instead, that and long-term a case in churned bull in customers comfortable that accelerated case not these have strategy. it bear a as simply in but the is we're they The that we churn. for have future, consequently, what case will a doing. strategies, these would We've term. that are have And long long-term invested contract, something

quarter. that I I for the share good churn hoped bringing with rate flat pricing, indicators, are customers and aligns very in Add thus to add think, couple up up run Where seen our progress. some more being better in down in aggressive markets, for That gross substantively. some over have substantively. said, example, of strong contract, leading we've voluntary bringing ARPU seen lower we've this improvements churn actions. time,

up think we've I so to and get with one and equation is spend is of expect piece to the to see because for it the and disappointing confident I our our strategy, stick the seen LOE in yet And churn. that we're you had it in improvement it. those to upgrades, in the is come, voluntary we haven't numbers, so this I'm going and quarter,

is, invested just strategy the postpaid, them in positive prepay seeing talked we're gross year-over-year than quickly, in but we We to right? overall tick the And okay, year-over-year. LOE, to XX% company. go adds. well. We towers, high-speed other off in finally, script, we invested while his the the Doug where, continued of invested through I improvement Digital, And prepaid, across areas BXB, X,XXX stabilize areas as -- discipline second increased growth XX% Internet, you are in in The seeing up increase in and expense We revenue. adds comments, piece growth which business. we're won't have about net of expenses those in working in

postpaid. is bring the that so a is, to way do churn perspective, down. best to you've from The highlighted stabilizing as And accurately competitive challenge,

to I in the have do We're leading indicators. the right think that. marketplace we offers those seeing

And next so I we expect going to continue to while adds. do going into improve into gross churn the fourth quarter, year, improve

fairly Cable about FirstNet Doug is back last in steady companies America. that results. it's competitive bit hasn't more a aggressively. in but our -- expanding, It's trends change get Now T-Mobile you them mentioned, into our that quarter. change intensity. aggressively decided AT&T see past. there up. get and back upgrading in we've more invest it's expand customers used with go fairly seen we've been a to are dramatic The this talked and and the intensity competitive certainly in contract, into to consistent is, you in marketing heavily rural

Philip Cusick

That's upgrades. to this at can. AT&T fair? few upgrades, of ARPU see of at One that the the when does growth down -- we've last that of next and you're sort sort that it start on in is follow-ups, a it helpful. a seen for that going pace Two Verizon to Is I year. if I this over At starting year. because years. impact ARPU to of drag anticipate We're that builds see time,

Laurent Therivel

do that. not expect We to see

to impacts credits. are those offer ARPU of in trailing So the from yes, the there ARPU form dilutive

that wanted types the this our trialed across and balance we to that However, the And regions we've did the rate the is strike of that and offer, footprint. regional I customers approaches upgrades before the the our bringing in to between we take a of also different right strategy, stack. if but majority these of you way reason aggressiveness driving back we up launched structured we number the

And people part nice you've are promotion. future up trend. a no teams is promotion in doing some and stack And up things the that like that due selling expansion ARPU offsetting really of of -- But irrespective rate small so having seen what negative in that insurance the our the ARPU moving an the promotion. moving rate job is people stack, and the is to is

forecast So in do not no, of further ARPU because we this. dilution just

expand dilution. that not we ARPU. the able Maybe In fact, be seen this going you've don't exactly year, to to think we're at rate forecast but we continue ARPU to

Philip Cusick

large have like your last address changed bad function subsidies mentioned similar years? the scoring, losing forward? you've correct, X you interpret but you're Should mean finally, then losses. that debt. a rate that And that helpful. customer? It higher That's I is to sounds a more And per offered maybe that How that's have handset going -- over you changed credit the you how of if very

Douglas Chambers

Yes.

we some done So have we always recently. strategically credit tightening --

more that. adds. We policy are We're against the potentially our credit doing the potential of at add gross of balancing always good looking

that. we so And in how do very we're surgical

and up And The write-offs is the LT during call, mentioned the about the and both I think reality prepandemic levels, in back as place. the frequency right since is we XX% levels. we're rate write-off so per of to is, prepandemic

And measures additional so making strategies have We've been and been stores, adjustments some our we've tactics anti-fraud we well. and to our changing in our been credit collections as of implementing policy.

aspect is a environment of of majority that the macro is all there the are we over this driving a -- it, So macroeconomic but increase.

Colleen Thompson;Vice President of Corporate Relations

Next question, please?

Operator

question from next comes Your Michael line of Rollins. the

Michael Rollins

questions. Two

First, where the the you narrative I a because to think past today of you've of of shed Cellular, other Do and the to the these are U.S. details, strategic tale lines LT, could the X Chicago of in try St. if for performance to back just operating think you and to front the if term? along of days in maybe parts markets the about try a over where you standing U.S. your the of to terms trend, on markets Louis be the just that's operating matching one you're back at subset unpack to of And different change then markets ideas there's longer Cellular then weren't separately, those actions where competitiveness? portfolio. -- curious, history company certain I that of a time case, some have can take that in cities different situation different if where there's strategic a urgency of some kind level talked similar of those percentage a level great. And at level, another the the would the

Laurent Therivel

any XX-XX Mike, profitability of obvious so profitability. delineation some There's terms of range profitability correlates Generally, line. the X geographies. -- some that to business, our a going in to or see you're in as factors. of a variability There isn't

first you will these and The of surprising. -- neither find

higher first factor the market have generally availability penetration, is we is The second have we spectrum. higher where share, of And profitability. high-quality

we a and network experience have it, of strong efficiency we where network we a better position levels so generally see of strong higher deliver on. spectrum and profitability, So because

in a range, so don't there's what's And driving I but terms certainly surprising range. that think there's of anything

a broad perspective, question. that's From really strategic a

consistent think I urgency, executing answer of that articulated urgency sense of the we strategy have sense my a terms I terms in In of in earlier. of

areas And investing terms see that. so growth, in behind we urgency absolutely in of where we have business the attractive of

want to costs a example. If on are so we in lower digital, variable serve the be out they certainly customers with for served, fashion, a going continued coming people focus And more to serve on strong are we And a Store that. the we pandemic experience. stars, of more invest ago, north the was seeing our Two now. score in of average X years digital App have way to we're X.X

example we an that's it. behind so have area where an And of urgency

really network the network-sharing being two think We Certainly, towers. that we high-speed in past. enter macro compiled high-quality not. is urgency, We you provide that, own tango. experience. into nice of up the and discussed to have own opening we strong we're we same doing want have that Internet, our same the the urgency. assets. a last We've a desperate you think factors be our There's a to thing really think takes the set more One towers, I've really spectrum when position. I partnerships. We It X is And

time, ways hastily to over although our doesn't customers capital our I'm not do and And that a our or we're find position to eager employees. so shareholders intensity to in benefit going so reduce and

that strategic rural us, however, they more particularly in the They for Another area government in clear. want America. administration And invest broadband to want been talked to is funding. invest That's a very I've has broadband. about, because infrastructure more opportunity specifically, in

mentioned briefly opportunities in that We both -- are companies, Telecom investing discussions as around USF to for the in A-CAM speak leverage discussions. TDS companies funding. in for finding so Michelle Both well. certainly here funding. her I'll And are existing

that's upcoming discussed. BEAD really But exciting being the funding opportunity is the

maps current around this later those. come the that, So discussion be some timeline probably will the There it like looks out year. around will

mentioned has FCC the challenging think I process. information a

chunk of sure funds a And in providers in we're well towards And will see expect that at where middle year, funds year those next I'm think the some you'll positioned. go of point But states. the of will from robustly I start to the to is rural fiber, telecom that. flowing optimistic I those the so -- back end engage

wireless, state Nebraska, of state million a won to where the We are example, see fixed $X towers. And we State in it positioned. also some We for to new well grants. from into grant recently

co-investing providing in So investment And U.S. we so about see with infrastructure Cellular of in do U.S. of and the talked history in we others connections states of of that. conversations, and us. areas and the more history with value benefit these investing think is where and one you The states investing those Cellular. don't, credibility,

you the our with of states way, the see Nebraska. from clarity before conversations to even variety And flow. start by before they in dollars in BEAD so grant footprint. funding that's some similar of across the have a of state that And We're the and those

intensity. as I business, so to capital that around view do another And particularly opportunity our transform

customers it's if $XXX,XXX I've you make the talked sure you're to opportunities want if it $X we take so in Well, customers towers, different towers, can want have at past do co-invest serve a don't way very have costs it's because if tower and have have much more we certain to we Michelle, attractive help have not intensity. and to know don't a them where to million and economics $XXX,XXX, And and government America. now capital Telecom because you programs, investment. $XXX,XXX to are going don't I the for are guys speak thinking as want challenging. the the offset invested in those not chime in in between density of here. Telecom's that And I more average you about And any the well. rural about but a how clumsily I'm in to

Michelle Brukwicki

of did companies. Actually, LT. the a you thanks, No, of our job both articulating great position Yes.

the in state funding federal about Telecom the TDS level. is available, the and at comments, excited at As very both level I that my mentioned is

program anticipate A-CAM could provide many, place territories. there are the that extension fiber be very for outside customers Fiber be underserved a or out rural fund program. see economical today that then to nice lot mentioned, the wireless. higher a of that about could part A-CAM unserved the customers with BEAD hope and most And And funds of those we we, even too, to We be us to and of for we enterprise. that areas. certainly opportunity this money of blend where in does might many our wireless take helping fixed go our helping also additional the speeds not are as could program fiber But LT excited fixed will and so for see funding towards in fund go A-CAM, a that everywhere and take are

Colleen Thompson;Vice President of Corporate Relations

Operator, we are ready for the next question.

Operator

Your line GAMCO next question of comes the Investors. from with Dluzhevskiy Sergey

Sergey Dluzhevskiy

it differentiated I local out first meaningful to offers and do you step now before question the and And market LT, with approach forward your take what greater quarter. how need But on is intake a has third impact on more try trialed those some in seems in a markets. those the what the so maybe like And your guess of offers you quarter? wider third customer that share? approach in rolled are is, to a local you that base question it my market you performed the

Laurent Therivel

running from time we're what our about of good markets, give gross improvements. adds, gross it existing-same-as-new it add add-a-line in a flat a break sense do it's think more I upgrade we promotional whether very an or we and you XX my across hard from we've of perspective. permutations already gave of footprint. we And it's again. offers, I me I since to we've have we a our behind perspective designed if a performance so we're from run are since where sense existing-same-as-new we're our our things But add-a-line Rick promotion. different put offers do. In an a our just trialing bit requoting attractive XX seeing different drive rehash seen math that whether rate lower-share you won't of get won't of over how offers running Sergey, a markets, -- perspective the much our about running seeing areas script, In out offers we're variety to offers, where currently ago, local I upgrade months Since regionalized

to that -- the so, is, trialed took going the previously, voluntary we performance to or need them are drive the churn. X in see months we dynamic desired the those churn In X key The it improvements to? months promotions us X, markets churn in that voluntary them

And quarter early optimistic year. forward, trend helps forecast and next churn that But know. why fourth going that the turn you in cautiously that we're so see you explain don't into to if that voluntary we are

bear will attractive bet bull upgrading to the have so, the The future been of that able the prevail we've might case in but are been is and doing not that case, on they people are that them. and put churners, offer front upgrades an they're have we've in, our that it stick choosing across They that footprint. network. the trialed this They experience markets confidence see the have confidence in us. we And and to in the and provide, in that we expect with we customer seen to

upgrades. the instead that There's possibility done what we've accelerate is

they have And accelerated so we've meaning and would them. upgraded,

There's ARPU back asked a never explain we've have. And bring been But beautiful about rest approach the in you of around that thing And to can able is around the because guidance I'll these helps drive to for we that our we the that. that so that reason have we've we you're going regional little bit trial the ARPU conversation exact things. this variability earlier. balance was to put ARPU and of have a certainty why performance that that is year, the the

good our because it regional promotions because done teams. by helps expect that that in rest is see expand year. and ARPU. way the it really of through of of the retail that continue the a structuring can some is these we've you Some we're But of execution And trials, to

footprint. When we ubiquitous to across season, offers tend we get have the into holiday the

we consistent that whole with season as approach and for little between as back on bit we one strong And expect kind that those the we're enter see possibly into so holiday can. a strikes operating get kick next then of we with to goal information financial you and again year, a right we subscriber trials. and So balance the early works as results. The the off hit pause can to regional is into think trials

Sergey Dluzhevskiy

maybe Got a it. but permutation Maybe I'll ask actions, different a question just of around to strategic follow-up that. Mike's question

current And obviously, towers, in of guess, environment, highlight So of you I like. provide assets, invest bit wireless do additional new your with view whether turnaround capital environment how may spectrum taking competitive markets financial the that you a and value value investments is moves to and would in light or it's that you capital also could than surface longer engineering flexibility? broader and in the provide partnerships various growth strategic just

Laurent Therivel

terms from perspective, investments, we've in performance timing, the it's a growth investments I'm I I of actually the track. if -- on that and the that, made of think look growth think I at strategic So right those

I it a as we stabilizing as postpaid, think can. from competitive it's And we're challenging a out that there. to think I very trying best about navigate environment

sure I need. to want make avoid. want the the have make we capacity used that to and You financial word what engineering, the I investments financial we to that that's

did. mid-band They're stress need our I that. near restructuring that a to sheet really we give think the to corporate job purchase the see, that I horizon. finance and of team auctions us team did on immediate we balance in that going the new spectrum flexibility the nice don't term, further to the spectrum our

that balance C-band, sheet to place our think modernization that good plan I those investments on Mike make. about that. in good making a building is we articulated out to the have network And a We do need

we I engineering position execute think marketplace to financial need And continue of those us because to share And and debt. a a in the feel have to helps now that so, an helps cheap in of so continue advantage and to luckily, take way don't areas. engage the the drive do we I in strategy took that growth us environment

that have. And so I'm happy we flexibility with the

we're execute from I a good an start time the to asset strategy the and sheet think now to perspective. that balance and to it's see marketplace. benefits a in place And continue in

Sergey. question, the for thanks So

Sergey Dluzhevskiy

And what in of of that my growth, impact year? share? over in terms maybe little as last you of talk you this of And size government see terms from top made the X years? as going or objectives, quarter over and revenue you've do where the question, the far a the next And for are kind bit next the terms company last about sector could and in few progress Okay. business

Laurent Therivel

that I because last we quick networking continue more -- the be some think I on IoT momentum private side, time. the we're about of the I'll seeing Sergey, of specifics we in on the in Yes. out But talked briefly, quarter side. were

good side. see to very high that demand continue our a the trends products those At customers. from business level, through We on X we we're for have working

a worried, to and they If churning I them. devices they're are subsidies during not is devices those connected seeing porting adds a These off. gone and by negative disconnect were is were were subsidy-driven devices have them port which but those. would the have pandemic, were porting first people those competitor, The gross government driven not trend, that we subsidies them. away that happened to that They're we're and be

-- seeing side, that. to seeing you handset we're is upside -- that want postpaid want see IoT, connected growth, the stability, growth those On then areas offset networking. areas we new private want challenges we And that you have And revenue to generally, in devices. on we're the and we're where where have to those seeing of of and

We're before, into don't small been would capabilities. the invest interest we in and from invested seeing that those clients. have before into operational in enterprise we're we brought clients, So that I distribution think from being brought deals had business

of use balance comfortable enterprise back we're drag, these connected from on and disconnects XG of at of drag of cases. what because terms only the so I seeing you device we're about end if we're from pandemic, And that negative that IoT, in the think private whereas, beginning believe, negative networking some with I'm the the

perspective. remain So going for Thanks everybody. where a about optimistic I from the BXB questions, we're

Colleen Thompson;Vice President of Corporate Relations

last our was That operator. question,

Operator

in conference. for participating Thank you today's

time. at You may disconnect this

United States Cellular Corporat (UZF) 4 Nov 222022 Q3 Earnings call transcript