All right, we'll go ahead and kick off. Welcome, everybody, for day two of the TMT Plus Consumer Conference. Really glad that we rebranded it. For those that don't know, it used to be called just the Tech Conference, and then we said, "Let's make it TMT," and we now cover the M, with Brett and I picking up Disney, Warner Bros., and Discovery. And we've always had the other T, telecom, and we're glad Michelle Brukwicki can be here, CFO of TDS Telecom. We're going to talk a little bit today, and then we've got some more of our satellite companies and digital infrastructure companies later this afternoon. I appreciate you coming. Thank you for having us. Yeah. Obviously, we'll stay focused on the fiber build-out. Right. Talk to us a little bit about, you did increase your service addresses that you're going to increase this year, the numbers you're going to add, but then slow down some in 2024, and yet keep 2026. So walk us through kind of the algebra, what's happening and why, and where you're headed. Right. So TDS Telecom, we are right in the middle of executing on our, what we call our fiber program, and this is where we are investing in fiber in our existing incumbent markets and in our expansion markets, so new markets that we're going into as the fiber overbuilder. We've been doing this program for a few years, and we've really kind of ramped up, scaled up, and 2023 has been a great year for us. We've had a lot of momentum for delivering addresses in 2023. We started the year with our goal, like you said, of 175,000 addresses, but we've really had some success building, we've had good momentum, and we haven't run into too many obstacles, and so we've allowed ourselves to pull forward some addresses and keep that momentum going, grab some more addresses, and that's why in the third quarter, we raised that guidance up to 200,000 addresses, and we are on track to meet that. Correspondingly, I also increased our, our capital expectations, so we're pulling forward some capital as well. I'm expecting to spend about $550 million this year, similar to what we spent last year. But that said, we've had a couple of big years here of spending in 2022 and 2023. We are going to make sure to pace our spending with our financing capability, and we want to try to self-fund as much as we possibly can. So next year, in 2024, I did give some directional guidance when we did our earnings call, that the number of service addresses will go down a bit next year, closer to 2022 levels, which was in the 130,000 range. Just because we pulled forward this year, we'll pull some out of 2024, but also that our capital spending will be meaningfully lower next year compared to the last couple of years, which have been really, really big. And there's a couple of reasons that we're able to still deliver a nice number of service addresses next year, but do it at a lower cost. One is that in our expansion program, we're getting out to about 100 new communities, and all of those markets are going to be initially launched by the end of 2023. We've been working hard on this for the last couple of years. So all the markets are going to be initially launched by the end of this year, and that means that a lot of the upfront costs that we've had to incur to get the markets launched, whether that is OpEx or CapEx, will be behind us. And so going forward, we will still have to spend CapEx to continue the build-out of those markets. They're multi-year builds, but a lot of that spending won't recur because we've already gotten that taken care of in the last couple of years. And then there's also a couple of other reasons why CapEx will be lower next year. We can get into that, but it has to do more with our base business and our new A-CAM program, and we can get into that if you want, but that's a little different topic. Okay. And as you enter these markets, what's the prevalent existing service by others in the area? And are you seeing any other fiber builders come in? Yeah, so we spent a lot of time at the beginning of this program over the last few years doing a lot of diligence and work on market selection, and I think that has been a really important success factor for us in this. We go to what I would call, like, tier two, tier three cities, so we are not going into areas like New York or Chicago. We're going into smaller, more... They're They're urban or suburban and rural communities. That's where TDS Telecom's geographies exist. But we're going to places that are growing, and they're growing because they've got people moving there. They're growing in expanding in terms of subdivisions and new growth within the communities. And we're going to places from a competitive situation where we know that there's going to be a cable provider there, providing high-speed broadband, and there's also going to be a LEC there as well, but we're going to places where the LEC has not upgraded itself to fiber. So the market dynamics are that you've got a cable provider and a LEC providing DSL service. So as we come in as the fiber overbuilder, it's providing a nice choice for the people in those communities now, between cable and fiber, and fiber is definitely seen as an attractive, desirable product. We think it's the best long-term solution for high-speed broadband. So we're essentially competing with a cable company, and what we're seeing in terms of broadband penetrations is that when you get to about a steady state, we expect to get to about a 40% broadband penetration, and our early markets are proving that out. We are in line or beating our business case expectations, and all of our markets are in different stages of development. Some have now been launched and operational for a few years. Some are newer, some just got launched this year, some are just getting launched at the end of this year. But so far, in all of our markets, wherever they are, their exact situation, they are playing out in terms of us being able to successfully compete with that cable company and basically split the market with cable. Yeah. Bundling is becoming a big thing. We picked up media. Are you guys offering anything as far as over-the-top streaming, the real word to call it nowadays? Are you guys helping people understand that they can cut the cord and maybe don't need the video offering? No, we don't go that route because we actually have a really great video solution that we provide to our customers. Mm-hmm. It's called TDS TV+. So broadband is our lead product. I mean, we are a broadband company, but we do have a full portfolio of other complementary products. Video is one of them, voice is another one, and we are about to launch a wireless product, an MVNO arrangement for us. So we have a very competitive product set with the cable companies that we go up against, and it's all things that our customers are telling us they want from a broadband provider. So for us, video is still an important element of our bundle. It still is profitable for us, and about one-third of our new broadband customers sign up for video with us as well. So that's telling us loud and clear that this is still something that customers are wanting in terms of a bundle option. As it turns out, voice, about a third of our customers also sign up for voice as well, and then we're very excited about the wireless product that's coming soon. Yeah. And coming soon on the mobile product, next year type timeframe? I hope, you know, within the next couple of months. Yeah. We've been working on this for a while now, and we're in the final stages of getting the contracts with our partners finalized and doing the integration. So, you know, we will offer this as an MVNO arrangement. We're going through the NCTC program that they put together to offer to companies like us, and so we are partnering with what I would call like a middleman, a platform software- Mm ... company, and then that will also, they've partnered with an underlying wireless carrier that will provide the actual network connectivity for us. Okay. And the benefits of that bundling together seems to be lower churn or stickiness. And how are you guys assuming- Right ... it plays out? Right. So the reason for us to do a wireless offering is really to enhance our, our broadband services and to provide one more option that customers are looking for when they sign up for broadband, that other product that they are now becoming used to being able to sign up for from their broadband company. So we are looking at wireless the same as we look at video, in that, it, it's something that will help us make sure to get and retain our broadband customers, and it is true that the more services you bundle with customers, the lower the churn is. That is still playing out. Over half of our customers take some bundle arrangement from us, and, and those churn rates are lower than if you have a standalone product only. Okay. When you think about the markets you've picked and the competitive dynamics in that market, is there also a rule of thumb about kind of what population density or how many homes per mile you want to kind of target, or where you go, "Oops, no, it's not going to make it," and then we can get into the A-CAM and other stuff after that? But just kind of as your, your base fiber entering new markets, is there kind of a rule of thumb you're using or any kind of rough cost per passing that you're looking at? Yeah, we don't have hard and fast thresholds or rules of thumb. We really look at a market holistically. The places that we're going with our expansion, they are, I would say, not the large urban areas, but tier two, tier three urban areas. So we do a lot in Wisconsin. Wisconsin is where our headquarters is, so that's kind of a home base for us. And we're in Madison, Wisconsin, and we started by expanding into fiber around the suburbs of Madison, so doing a lot of building in Dane County, Wisconsin. We've expanded that into other areas of Wisconsin, the Fox Valley area, up by Green Bay, up by Eau Claire, over near the Milwaukee area, Sheboygan area. We also are building a lot out in the Pacific Northwest, going to places like Spokane, Washington, and Coeur d'Alene, Idaho, and Billings, Montana. Cities like that that are growing in their own right, but they are sizable enough that they can provide the foundation for a nice cluster for us. Mm. And then the idea is, you get yourself established, that becomes the base of a cluster, and then as those communities grow, you grow with it, and maybe there's other smaller cities around that you then eventually pull into that cluster- Right ... and that provides another growth opportunity. When you think of that ultimate broadband penetration target of 40%, what's kind of the ramp after 1 year or 2 year, and how long does it take to get to that ultimate? Yeah, when we say 40%, we mean steady state, and that usually means about year 4 or 5. Like I said, these are multiyear builds. Mm-hmm. So depending on the size of the community, you could maybe complete the build in 3 years, maybe it does take 4 or 5. Some of the larger cities will take longer. And so steady state is on average 4-5 years, and that's the 40% or higher. I'd say within the first year, you know, we are seeing that you get to 25%-30%- Mm ... and then you just slowly- Right ... tick up after that to get to your steady state. Okay. We get the question a lot on satellite, and we now have direct-to-device maybe being done as far as into smartphones. How do you view—is there satellite competition in your existing areas, or where does satellite play in this? Yeah, so we should pivot to talking about our different market types. Right. We've been talking about the expansion markets- Right ... where we're going in as the fiber overbuilder, taking fiber. There's a cable provider there, there's another LEC. That's not so much where we're seeing the satellite. Right. But in our other markets, where we are the ILEC, or the incumbent local exchange carrier, our, what we would call our legacy or incumbent markets, those are more rural, and that is where you would see some satellite competition. That's where you see some fixed wireless competition. There, there are cable providers in those markets too, but they usually don't go all the way out to the far reaches of those markets. They're usually in, like, the city centers. So you have those types of competitors. We don't see a lot of action from the fixed wireless yet in terms of taking share from us, or satellite, but they are definitely options for customers out there when we're providing DSL. I'd say it is getting to be a little bit more competitive in our ILEC markets. Mm-hmm. There are some overbuilders that are starting to come in as well. But the good news for TDS Telecom is that we've seen this coming, and we've actually been investing in our ILEC markets for well over a decade in terms of getting ourselves upgraded to fiber and overbuilding ourselves. And so about half of our service addresses are still in our ILEC markets all across the country, and as of the end of third quarter, we were 40% fibered up in those addresses in our ILEC. And our goal is to get to at least 50% by 2026. And again, we'll talk about the E-ACAM program- Mm-hmm ... that will even help advance that goal farther. Mm-hmm. So we have been trying to defend our ILECs by doing upgrades and getting fiber as far as we can, where it makes economic sense. But there are some competitive- Yeah ... threats that are starting to nip away at those, those markets. You've talked about some of the A-CAM and E-ACAM. Simplistically, help us understand what it means for your revenues, but also your capital, kind of? Yep. So A-CAM is a program that TDS Telecom has been participating in for several years. There's an existing A-CAM program that the FCC is the administrator, and they run this program. Starting in about 2017, we are participating in the original A-CAM program, and the whole point of this program is to get broadband out to areas where it doesn't exist now or where customers are underserved by broadband. And when the original program was set up several years ago, the idea was that companies would get revenue support. We've been getting $82 million a year in revenue support, and in exchange, we had an obligation to get broadband out to 160,000 service addresses at a speed of 25 Mbps down and 3 Mbps up. At the time that that program was established, those were reasonable speeds, and that's what we've been working towards for the last few years. Now, that's becoming apparent that customers are going to need higher speeds than that to do all the things that are going to be needed. So the FCC has been working diligently on this for a couple of years now, of how can we get higher speeds out to these customers, these addresses? So they have just launched the enhanced A-CAM program, and TDS Telecom received our offer from the FCC. We just accepted it in September. And what this will mean is that now going forward, starting in 2024, we will get $90 million of support a year, so up a little bit from that $82. But this program will extend through 2038, so it will be a 15-year program of revenue support for TDS Telecom, so in total, about $1.3 billion in revenue. The old program would have ended in 2028, so this extends it well beyond what, what we had originally thought. But in exchange, we now have an obligation to build out to about 270,000 addresses, so much higher than the 160. So 270,000 addresses, and we have to take speeds of 100 megabits down and 20 megabits up. So that essentially means fiber- Mm-hmm ... getting to those addresses. So from our perspective, this is a fantastic program for TDS Telecom. It will provide support for us for an extended period of time, and this is a great win for our customers. This is going to get a lot of customers in rural America a much higher speed, essentially getting them fiber, whereas it would not have been economical to get fiber out to these addresses all on our own. Yeah. Yeah. Yep. And so you're also then taking the time to figure out the re-engineering, so that's also affecting- Right ... the capital plans as we look into. Right. So if we loop back to capital for 2024 and why we're going to be able to have a lower capital spend next year. Pretty meaningful lower. Meaningfully lower spend than what we're at this year and where we were at 2022. One of the reasons was because a lot of our upfront spending on the expansion markets is done, but another reason is because of E-ACAM. So we've been, and we'll continue through the end of this year, we will finish our obligations under the old program. But like I said, now we have many, many more addresses that we have to get to under the new program, and it's gonna be fiber-based. So we do need to take some time and do some engineering and planning for this new program. That will take 2024, essentially, to do that. So that means we won't be spending quite as much on actual build costs next year while we're doing the engineering and planning work, so that will reduce our capital spending a bit in 2024, and then the capital will start to ramp up for E-ACAM in 2025 and beyond. The other place where we're able to pull back on some capital is in our existing base business as well, and our ILEC. Because we know that E-ACAM is coming, we are trying to be very prudent about what we're spending today so that we don't do something today that you're gonna retouch in, you know, one or two years when you come back and start doing your E-ACAM builds. You know, we're being really prudent, like, on our capacity upgrades and things like that, so that we try to use our capital as efficiently as possible. All these things coming together, that's what's allowing us to pull back on our capital next year. So if we, is there some level investors should think of as far as what's normal capital spending or capital intensity, kind of in the incumbent area? Capital spending, once you've deployed in the expansion areas, should be pretty good. You've just put in new plans, so I would expect there's not. But just trying to think through even longer-term view on capital spending and intensity and what it might be. Yeah, we haven't given any specific numbers, but you're right. Longer term, this should all rationalize, and it should lower. But in the intermediate term, based on the programs that we're investing in, our capital will remain elevated- Mm ... for a bit. It has been the last couple of years. Next year, it'll dip a bit. We're gonna be as prudent as we can with the pacing of this. Mm-hmm. Like I said, we're gonna try to self-fund as much of this as we can, but we'll still need some external financing. But we do these, these expansion programs, the market builds, they'll likely go out for another few years, and then the E-ACAM is gonna come in- Mm ... between now and 2028, probably, have elevated capital. So we will have some elevated capital here to complete these couple programs for the next few years, but we certainly are gonna make sure to pace this and do it as responsibly as we can to stay within what we feel comfortable in terms of our leverage situation. Have you all looked at secured financing on the fiber side? I know several other companies have kinda tapped that market, and if you looked at it, what kind of rates have you heard? We have looked at various alternatives for financing. So far, we have found... We have been very successful over the last couple of years. We've used preferred equity- Mm ... at a fixed rate to finance our fiber program so far. That, that was a great option for us. We're using some debt to help finance this. And going forward, though, I know that our, you know, our team, our corporate treasury team, you know, we're open to alternatives. It's got to be the right thing for the company and at the right cost, and with the right provisions. You mentioned managing leverage, too. Where do you think the right level of leverage is for the TDS Telecom side of things? Yeah, I don't know that we'd give a set number, but we certainly, there are a couple of things that we operate within. We have bank covenants that we make sure to stay within. Mm-hmm. And we also, you know, think very highly of our credit ratings, and we want to maintain our credit ratings. And so for that, we certainly stay within certain thresholds there of what the rating agencies would look for. And really, we are a pretty financially conservative company, and so we want to operate in a place where we feel comfortable as well, factoring in those couple elements. Mm-hmm. So, you know, you might not see us going to the same places that other companies go. Okay. I think you did just have a $300 million term loan. We did. What were the terms on that one, just so we can kinda gauge? What's, what's the rate? What's the amortization schedule? Do you know? I don't know that we... Colleen, do we- Yeah, no, we can- Yeah. We can follow up on that- Yeah, okay ... if you want to. Yeah. Okay. And obviously, the other side of the shop has the strategic alternative review. How is that impacting the TDS Telecom side of things? So yep, UScellular did announce in August that the UScellular board, the TDS board, collectively decided that it was time to do a review of strategic alternatives for the UScellular business. That is focused on UScellular. TDS Telecom is not part of that strategic review, so that process is ongoing. That, that's really- Right ... all we can say about that. Right, but I mean, as far as it's not affecting TDS Telecom directly then. We are still executing on our path- Right ... our strategy. Right. Right. Okay. You mentioned that as you launch, all the markets you'll be launched in by the end of this year, CapEx can come down some, OpEx can come down some. Is there a rough idea about what kind of tailwind there might be as we look into 2024 and 2025, where you don't have these upfront costs? Yes. Yep. So what we have talked about in the past is that, you know, these markets, once they get launched, it takes about three years for them to become contribution margin positive. Yeah. At some point now, all of these markets are launched. Mm-hmm. Some of them have been launched for a little bit already, and the upfront costs are done. So we do expect that we will start, as we start selling in and penetrating these markets now, the revenues will start to go up, the adjusted EBITDA will start to go up. You'll start to see these things play out in our financials. We can see them on an individual market level. Mm - that, that is playing out according to our business cases. But so far, you know, there's so many markets- Mm It's been overshadowed by the so many that are still being launched and still in the very early stages. But over time here, we will start to see the financial benefits- Okay - of these investments. Okay. I know one thing we saw, like with the tower industry early in its life cycle, they had the different cohorts. "Well, here's the towers I've had for five years, and they're performing this well, and here's the towers we've had for 10 years, and they're performing even better." Have you thought about maybe publicly coming out with a cohort analysis to say, "Here's some of our markets that have been around for many years, and here's kind of what we're seeing in penetration, ARPUs, and margins?" It's just a thought to say, you guys can see it internally- Yeah ... 'cause you know the markets. Any thought about being able to maybe share that with the market? Pick a market here or there. Crown Castle, with their small cell business, has in the past said, "Well, here's a couple of markets," to kind of demonstrate to the outside what you know from the inside. Yeah. Yeah, so far, we haven't- Right put that in writing or in our presentations, but I've been happy to talk about it in terms of some of our early markets, of where we are. The ones that have been around that I would say are getting close to that steady state, they are exceeding 40% broadband penetration. Mm. And they did play out and turn contribution margin positive within that three-year time period. Mm-hmm. And so that's what's giving us the confidence- Mm ... to say that the business models are working. And now, as we keep going, and as more markets keep maturing, this will all become... It'll start to become clear in our financial results. Is there a way for us on the outside to kind of consider what return hurdles you're trying to meet with that kind of calculus of, "I'm going to spend this much in CapEx. I'm going to expect this much penetration. This should bring this much revenue. My contribution margin is going to become positive in year three"? What kind of return thresholds are you kind of positioning for? 'Cause we are in a higher interest rate environment, obviously. We are, and we planned for this. Mm-hmm. And so we only accepted projects, and we developed our business cases and have looked for ways to be as efficient as possible. We're aiming for low- to mid-double-digit returns on these projects. Okay. And that still is where they're staying. Mm-hmm. Um. Okay. Legacy markets, obviously some competition coming in there. The cost of debt, we'll get back to that and what the terms were and the term loan. Stock has been volatile. Is there anything from your seat at TDS Telecom that you see that you don't think the market is understanding about what TDS Telecom is contributing to TDS? Yeah. I won't comment exactly on the stock price. Right. But what I see from TDS Telecom is that, you know, we've embarked on a growth strategy, and if we think about the vision of where this company is going, we've talked about our different market types. We've talked about our ILEC markets, which are about half of our service addresses today. We've got cable markets, and we've got these new expansion markets. We are becoming a fiber broadband company with the investments that we're making. We have a path forward on the expansion markets. Those are 100% fiber. Yep. In our cable markets, we're putting fiber into those as well, and our cable markets are already DOCSIS 3.1, and so offering at least a gig speed. And in our ILEC markets, we've been investing in those. They're already at 40% fiber. They're going to go to 50%-plus fiber. We've got E-ACAM that's going to come and help support those, those markets. And the addresses that are within the E-ACAM program, you know, are not going to be eligible for BEAD funding, but we got the regulatory support through the E-ACAM program. So that's going to help really fortify those markets. And so we have a plan and a path forward for all of our different market types, and it's all geared around towards bringing the best broadband to our customers as we possibly can in those markets. We do this with, you know, a complement of other products that help bundle with that broadband, and we keep evolving that in order to meet the customers' needs. So we have a great strategy and a great future. We're right in the middle of executing on it right now, so it's going to take us a few years to keep doing the capital spending and keep getting these projects done, but that's the future vision for this company, to be this fiber broadband company that serves our customers with the absolute best products that- Service addresses don't mean necessarily just residential. There's some businesses in there as well. There's some businesses in there as well. It is. Both ... majority is residential, though. Yep. I would assume, I think I know the answer to this, but I would assume there's not a lot of demand for small cells in the area where you're deploying the fiber. No, and our company does not develop. We do not build small cells. I- Yeah. But just as people build fiber, sometimes they're like, "Oh, I'm building enterprise fiber or dark fiber or fiber to the home," and sometimes people will come back and go, "Oh, can I give you an extra revenue stream of small cells on top of it?" But your Tier 2, Tier 3 cities are really- That's right ... not really conducive to doing that. That's right. Okay, I see we've hit the zero mark. Okay. Appreciate it. Great. Thanks, everybody. Thank you. Have a good conference. Thank you for having me.