Array Digital Infrastructure (AD) 2025 Conference Transcript

Summary of Array Digital Infrastructure (AD) 2025 Conference Company and Industry Overview - Companies Discussed: TDS Telecom and Array Digital Infrastructure - Industry: Telecommunications, specifically focusing on tower operations and fiber infrastructure Key Points and Arguments Array Digital Infrastructure 1. Business Transition: Array Digital Infrastructure has transitioned from being part of a wireless carrier to a standalone tower company, now owning 4,400 towers and ranking as the fifth largest tower company in the U.S. [3][4] 2. Spectrum Sales: The company is pursuing pending spectrum sales, expecting to generate $1 billion from AT&T and another $1 billion from Verizon, with confidence in regulatory approvals [5][14] 3. Colocation Growth: Revenue from colocation grew by 12% in Q2, with a significant increase in colocations from T-Mobile, which is expected to boost cash revenues by 50% [7][8][9] 4. Ground Lease Strategy: The company is focusing on acquiring land and extending leases, with plans to negotiate rent abatements for 800 to 1,800 "naked towers" post-T-Mobile integration [10][11] 5. Financial Reporting Changes: Transitioning to tower company reporting will include metrics like AFFO and adjusted EBITDA, with some nonrecurring costs expected in financial statements due to the wind-down of wireless operations [22][23] TDS Telecom 1. Fiber Expansion Goals: TDS Telecom aims to double its fiber footprint from 900,000 to 1,800,000 addresses over the next five years, having recently surpassed 1 million fiber addresses [12][13] 2. Capital Expenditure Plans: The company plans to maintain elevated capital expenditures to support fiber expansion and is committed to 150,000 addresses this year, with potential increases in future years [41][57] 3. EACAM Program: TDS has accepted the Enhanced ACAM program, extending regulatory revenues by approximately $90 million annually and bringing fiber to 300,000 addresses [45][46] 4. Market Positioning: The company views fixed wireless and satellite broadband (e.g., Starlink) as non-material threats, emphasizing the superiority of fiber technology [47][80] 5. SMB Opportunities: TDS recognizes underpenetration in the SMB segment and plans to launch more aggressive offers to improve penetration rates [82] Financial and Strategic Outlook 1. Dividend Plans: Following spectrum sales, the Board is expected to declare special dividends, with regular dividends anticipated to start in late 2026 or early 2027 [15][30] 2. Leverage and Capital Structure: The company targets a leverage ratio of 3x, providing flexibility for future growth opportunities [25][60] 3. Operational Efficiency: Both companies are focused on improving operational efficiencies and margins through transformation programs and AI integration [68][70] 4. Competitive Landscape: TDS is experiencing increased competition from overbuilders in cable markets but remains confident in its competitive positioning due to fiber investments [76][78] Additional Insights 1. Customer Behavior: No significant changes in customer payment behavior have been observed despite macroeconomic pressures, with churn rates down year-over-year [73] 2. Future Communication Plans: Both companies plan to enhance communication with investors, particularly regarding their transformation into fiber-centric operations [85][86] This summary encapsulates the key discussions and strategic directions of Array Digital Infrastructure and TDS Telecom as presented in the conference.