ITTI(US:TDS)2023-11-03 19:37Financial Data and Key Metrics Changes - Total operating revenues for the third quarter decreased by 11% due to lower equipment sales and service revenue, which declined by 2% [31][3][19] - Adjusted operating income increased by 35%, while adjusted EBITDA rose by 28% [7][19] - Free cash flow was reported at $237 million for the nine months ended September 30, 2023, with expectations for positive free cash flow for the full year [8][19] Business Line Data and Key Metrics Changes - Postpaid ARPU increased by 2%, with 46% of postpaid handset customers now on higher-tier plans, up from 38% a year ago [1][17] - Fixed wireless revenues grew by 35%, with a customer base of 106,000, primarily utilizing low-band spectrum [24] - Tower business revenue grew by 8%, with a tenancy ratio of 1.54, up from 1.46 two years ago [2][23] Market Data and Key Metrics Changes - Inbound roaming revenue declined by 53%, largely offset by a corresponding decrease in outbound roaming expenses [31][32] - The competitive landscape has intensified, with cable companies now competing in 60% of the company's footprint, impacting ARPU and margins [20][21][81] Company Strategy and Development Direction - The company aims to balance subscriber growth with financial discipline, focusing on cost efficiencies and targeted promotional spending [58][19] - A multi-year strategy is in place for fiber expansion, with a goal of reaching 1.2 million marketable fiber service addresses by 2026 [138] - The company plans to slow capital expenditures in 2024 while prioritizing spending to enhance broadband penetration and revenues [15][102] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth potential in the tower business, despite near-term slowdowns due to reduced capital expenditures in the wireless industry [23][111] - The competitive environment is described as fiercely competitive, with significant pressure from cable companies affecting pricing and promotional strategies [20][21] - Management remains focused on improving customer trajectory and addressing churn dynamics as a key opportunity for growth [58][86] Other Important Information - The company expects to realize annual run-rate savings of approximately $30 million related to the shutdown of the CDMA network starting in 2025 [4][27] - The E-ACAM program is anticipated to provide $1.3 billion in revenue support over the next 15 years, aiding in the delivery of higher-speed broadband [137] Q&A Session Summary Question: What is the impact of T-Mobile and Sprint churn on tower leasing revenue? - Management believes they are through most of the churn related to the T-Mobile and Sprint merger, with minimal additional terminations expected [46] Question: Can you provide insights on the fixed wireless addressable market? - Management indicated that the addressable market for fixed wireless is significant, with ongoing efforts to expand coverage and improve service offerings [69] Question: What is the strategy for the tower business moving forward? - The company plans to support increased demand through a denser grid, which is expected to benefit the tower business in the long run [110] Question: How is the company addressing competitive pressures in the ILEC markets? - The company is focusing on fiber builds and leveraging the E-ACAM program to defend against competition in ILEC markets [144] Question: What are the expectations for capital expenditures in the coming year? - Management expects capital expenditures to be lower in 2024 compared to 2022 and 2023, prioritizing spending based on market dynamics [102][124]