ITTI(US:TDS)2024-11-01 19:42Financial Data and Key Metrics Changes - The company reported a 2% decline in service revenues, driven by a decrease in the average subscriber base, partially offset by an increase in postpaid ARPU [32] - Adjusted operating income before depreciation and amortization improved by 1%, while adjusted EBITDA increased by 3% [33] - Free cash flow for the year-to-date through September 30th was $331 million, a $94 million increase over the prior year [37] Business Line Data and Key Metrics Changes - UScellular improved retail net losses by 20,000 subscribers year-over-year, with postpaid handset net losses improving by 10,000 year-over-year due to reduced churn [21][23] - TDS Telecom achieved a 2% increase in total operating revenue and a 21% increase in adjusted EBITDA for the quarter, driven by fiber broadband strategy [41] - The company added 2,700 residential broadband net adds in the quarter, contributing to a 4% growth in residential broadband connections year-over-year [45] Market Data and Key Metrics Changes - The overall pool of available subscribers in the industry decreased year-over-year, but the company's share of growth ads increased, allowing it to maintain flat postpaid handset growth ads [23] - The company reported a 5% increase in average residential revenue per connection, primarily due to price increases [51] - The company experienced net broadband losses in cable markets, primarily due to competition from LECs upgrading and fiber overbuilders [49] Company Strategy and Development Direction - The company is focused on monetizing spectrum assets, with agreements to sell certain portions of retained licenses for over $1 billion [17] - The company plans to continue investing in its 5G network, with future investments predominantly dedicated to deploying mid-band spectrum [26] - The company is optimistic about its fiber broadband strategy, targeting 1.2 million marketable fiber service addresses and aiming for 60% of total service addresses to be served by fiber [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term benefits of the T-Mobile transaction, which is expected to close in mid-2025 [15] - The company acknowledged the impact of recent hurricanes and fires on operations but noted recovery efforts [14] - Management highlighted the importance of maintaining reasonable leverage and sufficient liquidity to support operational objectives and strategic goals [11] Other Important Information - The company announced the departure of CFO Michelle Brukwicki, with Kris Bothfeld stepping into the role [12][13] - The company is experiencing a slowdown in new tenant and amendment activity in its Tower business due to moderated capital expenditures in the industry [35] Q&A Session All Questions and Answers Question: Clarification on T-Mobile and Verizon Spectrum Sale - The spectrum sale transactions are net of expected NOLs and interest carry forwards, which is why TDS cash taxes are estimated to be lower [56] Question: Thoughts on Spectrum Sale Proceeds - The focus is on closing transactions, with potential uses for proceeds including paying down debt and advancing fiber deployment programs [62] Question: AI's Impact on Wireless Operations - AI is expected to improve operational efficiency, particularly in customer care, but its impact on consumer behavior is still uncertain [66] Question: Update on ILEC and Cable Divestitures - The divestitures mentioned are consistent with previous disclosures, including small Virginia ILECs and Texas cable properties [69] Question: Future of Tower Portfolio - The company is focused on improving co-location rates and sees potential for growth in its Tower business despite current industry challenges [72] Question: Wireless Partnerships and Monetization - The company is satisfied with current partnerships, which generate attractive cash flow, and is open to monetizing them if a good opportunity arises [94]