ITTI(US:TDS)2025-08-11 15:02Financial Data and Key Metrics Changes - The company completed the sale of U.S. Cellular wireless business and certain spectrum assets to T-Mobile for $4.3 billion, which is expected to unlock significant shareholder value and strengthen the balance sheets of both Array and TDS [6][12][14] - Following the transaction, TDS's debt was reduced to approximately $364 million, with a plan to redeem about $1.1 billion in debt, resulting in annual interest savings of approximately $80 million and reducing the average cost of debt to just over 6% [12][14][15] - S&P raised TDS's credit rating to BBB- from BB, reflecting a strong balance sheet and growth outlook [19] Business Line Data and Key Metrics Changes - Array Digital Infrastructure now operates independently with approximately 4,400 towers and a new master license agreement with T-Mobile, which is expected to enhance revenue and profitability [7][26] - Third-party tower revenues increased by 12%, and the number of third-party colocations grew by 6% year-over-year [26][29] - TDS Telecom reported 27,000 new fiber service addresses added in the quarter, with a total of 10,300 fiber net additions, leading to a 19% growth in total fiber connections since last year [33][34] Market Data and Key Metrics Changes - The company anticipates receiving $2 billion from previously announced spectrum sales, with a portion expected later this year, subject to regulatory approvals [15][22] - The company is focused on monetizing approximately 70% of Array's total spectrum holdings, including transactions with AT&T and Verizon, which are expected to close in 2025 and 2026 [22][23] Company Strategy and Development Direction - The company aims to focus on its tower and fiber businesses, with plans to implement a regular dividend once spectrum transactions are completed [15][16] - Key strategic priorities include closing pending spectrum transactions, optimizing ground leases, and driving revenue growth through new colocations [24][25] - The company is evaluating M&A opportunities, particularly in fiber assets that synergize with existing properties [86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the tower business and the fiber program, emphasizing the importance of the new T-Mobile master license agreement [7][26] - The company expects to incur additional wind-down costs as it transitions from a wireless service provider to an independent tower company, which may impact profitability in the near term [30] - Management highlighted the competitive landscape in expansion markets as favorable, with a focus on increasing penetration rates in newly launched fiber areas [74] Other Important Information - The company plans to maintain its preferred stock as foundational capital for its fiber program and has no immediate plans to redeem them [12][14] - The company is committed to a disciplined financial policy while maintaining a conservative balance sheet [14] Q&A Session Summary Question: Update on TDS Telecom's fiber expansion plans - Management indicated that there is significant opportunity to expand the fiber footprint and will provide updates in upcoming quarters [51][52] Question: Long-term leverage stabilization for TDS Telecom - Management expects to maintain leverage below 1.5 times while evaluating opportunities for growth and capital allocation [55] Question: Access to construction resources for fiber expansion - Management remains confident in achieving the target of 150,000 new fiber service addresses for the year, with ramping construction efforts [56][58] Question: Cohort analysis for fiber market penetration - Management is working on providing cohort analysis to investors, expecting around 25-30% penetration by month 12 and 40% by year five in expansion markets [60][62] Question: Update on mobile launch and pricing strategy - The company launched TDS Mobile in select markets and is testing aggressive pricing strategies, with potential price increases after two years [82][84] Question: M&A opportunities and asset profiles - The company is focused on fiber opportunities that are synergistic with existing properties and is in the early stages of considering M&A options [86]