All right, welcome back from lunch, everybody. Hope everyone's doing well. Thanks for coming to the TMT Plus Consumer Conference here at Raymond James. I'm Ric Prentiss, Head of Telecom Services Research, including today, Brent Penter, Associate Analyst, is here with me as well. To us, got asked this question at lunch by somebody: What does TMT mean? And to us, it means T for Towers and Digital Infrastructure. It means Media, and then Telecom and Satellite Services. And so we've got a tower company here. We've got a telecom carrier here, a wireless carrier here. So really happy TDS Telecom, Jim Butman could be here, CEO, and from US Cellular, Laurent Therivel. Thanks for joining us, guys. Thanks for having us, Ric. Thanks for having us, Ric. I think I want to start with US Cellular, and then we'll come over to TDS Telecom. You guys have been busy. It's been a busy year. Decades without being busy from that standpoint, but been a lot busier. I think first question I want to hit, and we'll get it, both of you guys, convergence. How do you feel about it? Is it real? Is it something you think about? On one hand, you got AT&T crowing about it, and you got T-Mobile saying, "Heh, this kind of happens anyway." But US Cellular, and then we'll go to TDS Telecom. What's your thought on convergence? Real or not real? Beneficial or not beneficial? Important, not important? Yeah, well, I think it is real. I think it's something that's coming. It's inevitable, right? And really, from a wireless perspective, you've got the cable companies getting into the wireless game. They've got their broadband play. They can offload a lot of the traffic onto their own network. So it's a very low-cost structure outside of the 10% to 20% of the traffic that they need on the wireless network side. And so I think it's something that's real. I think consumers are interested in the bundling and the packaging of the systems or the price points and the price plans. And so there's some attractiveness to there. And you've seen it on the wireless side in that they're gaining market share. The Comcast, the Charters of the world, are getting 10% to 20% of the share of gross adds. Their market penetration's going up 4%, 5%, plus percent. And I think you'll see that double in the next five-plus years. And so I think it is a real trend and something that we're following and watching. Right. Yeah, I think it's real, Ric, but I think there's a little confusion. Is it real convergence? In the early stages, I think it's much more of a bundle price game, right? Discounting? Discounting, really, it is, let's be fair, right? I think, though, over time, the wireline companies have the advantage of Wi-Fi offload, right? So then it starts to become real convergence. I mean, Wi-Fi offload now, I mean, it's 90%, 90% plus% without doing much. Then if you activate dual SSID and you start doing other things, I think you can really move that number even more. So then I think it becomes more convergence. I always think of convergence as things integrated, working together, some real economic value or some value proposition. I think it's still today much more of a price game. Yep, yep. Back on the USM side, implications for the deal, right? We've got a new administration coming in. What are you thinking about the T-Mobile side of the deal and the spectrum sides with Verizon and AT&T? Yeah, so I'll start with the T-Mobile side of the deal. I think everything we're seeing is on track, right? The upcoming change in administration, we don't think, is going to cause any delays or problems. All indications, everything's moving forward and moving along at the pace that we kind of anticipated, and so we're happy with where it's going. We're happy with what we're hearing and what we're seeing, and we're still targeting a mid-2025 close. Obviously, the spectrum transactions with Verizon and AT&T are contingent on getting that T-Mobile deal done, so they'll fall directly after that, but we're not seeing any concerns there either. Okay, so you've sold wireless operations and a piece of spectrum to T-Mobile, a piece of spectrum to Verizon, a piece of spectrum to AT&T. There's some spectrum left. People look out there and go, "Well, who other buyers are there?" Talk a little bit about potential people that might be interested. Yeah, so Ric, you nailed it. So with the sale to T-Mobile, we're selling the wireless operations, 30% of our spectrum. The deal with Verizon, we're selling the 850 spectrum and AT&T, the 3.45 and I think the 700B and C blocks. So ultimately, what we're left with is C-band and some millimeter wave spectrum. On the C-band spectrum, it's got an ecosystem that's developed, right? And so we think it's great spectrum. It's going to be in demand. It's usable today. And we've got runway with that. The build-out requirements for us are 2029 or 2031, depending on which route we would anticipate going. So we have time to kind of hold it. And so we're not in a huge hurry to go and sell it, but we are looking to monetize it. And over time, we'll run another process with Spectrum, with just going through the process and selling the Spectrum we're in. We want to get those done. Once those are complete, we'll look at running another process for that Spectrum. And we think it's valuable, and we'll find a right buyer at the right time. C-band's been used a lot for fixed wireless by some of the other carriers. What's your thoughts on fixed wireless? Obviously, it depends on the timing of the closing here. Maybe it's just six months away or so. What are your thoughts on fixed wireless? And then Jim will come to your side and see how you see it as a competitive threat. Yeah, fixed wireless, we're bullish on it. We've seen great success from a fixed wireless perspective. We just topped 140,000 fixed wireless customers last quarter. That'll be a $100 million-plus revenue business for us in 2025. So nice growth, nice business from our perspective. We've seen a lot of success for it, mainly in your suburban, your rural areas, more so DSL areas. That's where we're more targeting. But we're seeing customers everywhere, even where there's fiber overlay. We're getting some customers, some traction there. The challenge on the wireless side is going to be it's an empty capacity play for us. Economics are great when we're filling up an empty pipe. Once you get to the capacity play, the economics don't necessarily work. So we're never going to be targeting 40%, 50% market share like Jim is. But we're seeing it as a nice complementary product that our customers have a need for and a want for. I think it also helps in bridging that divide in rural America. And so we're going to continue to market that and grow that product. Jim, how about from your side? Yeah, I agree. We still, on the wireline side, see it's somewhat of a niche product. I mean, to fulfill where DSL, it's also one of the advantages of it right now is very rapid delivery. You can get it right away, right? Mail it in a box. You're up and going. Wireline, we got some work to do. So it's motivating us to deliver service next day. I mean, some of our competitors are, but we've got to get there. So it's motivating us for that. So there's a little bit of some timing when I think of some of our cable markets where we've got a very high dominant penetration. People don't like that situation, and they like choice. So I think it's another choice. But I think in the long run, I think we believe fiber, our fiber networks are going to be okay. Now, we're going to use E-A CAM to bolster the weaker part of our DSL networks. So there's vulnerability there in the short run. Where are you at on the TDS Telecom side as far as having a bundle with wireless? I know you've looked at it. You've got the relationship, but. Yeah, so we will not now with things. We were going to look to utilize part of the US Cellular network, but now we will not. We're part of the NCTC, and they've developed an ecosystem or platform with Reach Mobile, which is a mobile enabler, which gets you up to service quickly, does the activations, does all the customer care needs for our customers, and they're utilizing a 5G national network. We've already launched that product now. There's really good receptivity to it, but we're making sure we're working with our peer companies, any glitches and fixes and what they've learned early on, so I feel like we're just a fast follower right after some of the larger companies, but we're bullish on it. Charter and Comcast have had great success. They're a competitor of ours. We have to have that product in our quiver. You mentioned same-day response time for some of yours. It seems like some of the penetration rates first year have been a little slower and pointed to, I think on the earnings call a little bit to door-to-door sales, maybe not having them there. Walk us through a little bit about what happened there and how you're addressing that, because there is pent-up demand, it feels like. Absolutely. Absolutely. This is something that's very solvable, and we're solving it, and we're seeing nice trends already. Here's what happened to us. We like to have our own door-to-door agents, and we like to have our own culture. We do the same thing with our builds. We're doing more and more of our own builds because we like to foster our own culture. What we found is you have to augment that with contractors. Everybody else is. I've talked to my peer companies. Everybody would like to have their own associates doing this. You just can't find them. And there's firms out there that are specializing in this, doing this well. So we now have four firms hired. We're training them up, and we're seeing early good results. So Ric, we are very confident this is solvable. We just kept trying to push on different compensation mechanisms to try to hire more, and we finally had to say uncle and say we got to limit ourselves there and augment. It's good to know what you're good at and what you're not good at. Right. But we're seeing the latest trends. We're seeing higher productivity on a per salesperson basis. So we're confident we're moving in the right direction. Good. Back on USM, you guys have some minority interests as well. Verizon LA, New York One and Two, I think, are still over there. Some AT&T-related ones. Walk us through your thought process there as another asset that could be reviewed. Appetite to monetize, ability to monetize. It feels the buyers are interested. Yeah, so the minority partnerships, they generate about $150 million in cash a year. And so we're happy at this point holding on to them for a couple of reasons. One is we have ample liquidity. We're free cash flow positive. We don't have liquidation needs or a strategic reason to divest them. Now, with that being said, if the right offer came along, we would entertain it. We're not actively out there shopping them at this point in time because, as I said, we're happy getting the cash distributions. But on the flip side, if the right opportunity came along, we would definitely consider it. Yeah, yeah. So it feels like some spectrum still in the bank, minority interest, still checks are coming in. Wireless business hopefully closes and gets sold. Does USM become, in essence, a tower company? Or are you looking to monetize the towers too? Yeah, no, our goal right now is to run the tower business, and you come out of this with the tower business and the partnerships. We do look to monetize the remaining spectrum, right, so likely that'll be gone at some point. It will be left with just the towers and the partnership business. We're bullish on both. As I mentioned, on the partnerships, it's a good cash generation for us. It's a future asset that helps with liquidity in the future. The tower business, we think it's got a lot of runway to it. We've got 4,400 towers today. We've got a lot of capacity on those towers. 30% of the towers we own don't have another tower within a two-mile radius of them, and so we think over time we can actively continue to build that and grow the tower revenue stream over the next several years. Yeah. You know, I've been pushing a long time on that one. You got your way. Yeah. Yeah, yeah. The godfather of tower knows the grandfather of towers, I guess. Appreciate the reporting. Glad to have that. More work to go. I've talked to Doug too about straight-line accounting is something we need to get to and amortization of prepaid rent, all the accounting. I'm an engineer MBA. I'm not a CPA. So there's stuff that happened to go through. Are you guys looking at making your tower segment more in line with how kind of tower companies report then? Yeah, I think. That's kind of a phase two. Yeah, you'll see continue to evolve, right? I mean, obviously, at your request, have given more insights into our tower reporting. We'll continue on. Can we do another wish? Is it Christmas time? There you go. But as the deal closes, right now we're focused on getting the deals closed and completed. And once those are done and you're left with the remainder, I mean, our reporting is going to have to evolve, and we'll evolve to where it needs to go. Any early analysis, not to say it would put you on the path, but any early analysis of could US Cellular as a tower company with minority interest assets, Spectrum assets, could it become a REIT? Have you done anything to look at is there enough clean REIT income? Is there enough clean REIT assets? Yeah, it's something that needs to be evaluated. And we've started looking at that. And as we get to the tower company coming out, we're going to look at structuring it that's the most beneficial way and generate the best returns. And that's an option of something that we need to do some more work on and to evaluate that. But if that's the right structure, that's something we would consider. I think Ted and the Carlson family have been sometimes framed as wanting to be tax efficient. Certainly, REIT structures are usually a good structure if you can pass all the rules, if you can get through this stuff. Okay. Back on the TDS Telecom side, shooting for that 1.2 million by 2026. Walk us through the process to get there. What are the hurdles to make sure you achieve it? It feels like a race that you want to go plant the flag in the right places. But walk us through where you at today. I think you updated on the call kind of where you think you're still going to hit by end of 2024. But what do you have to do to get to that kind of level? Yeah, Ric, we're very confident that we're going to get there and beyond, okay? And then the timing is looking good. So yeah, we'll hit this year. We're confident we're going to hit our 125,000 fiber service addresses that we said, right? We announced on the earnings call that we're 50% fiber for our service addresses, and 74% of them are gig speed, right? Now, we set a target of 60% fiber. We're going to go beyond that because the E-A CAM program is not factored into that. I talk about our DSL footprint, which worries me. It's like about 440,000 service addresses. E-A CAM is going to really help on that. So once we get that, you add those, we're going to see fiber service addresses climbing closer to that 80% range. I mean, in the longer term or by 2028, 2029 as we finish the E-A CAM. And our gig speeds are going to be well into the 90s%. So I mean, if I have my goal, get the funding, I want 100% fiber network other than the cable piece that is going to be fine. But we're putting fiber deeper and deeper in the cable operations also. New neighborhoods, fiber deeper to the neighborhoods. So if we ever had to and the economics made sense, we could go all fiber. I mean, AT&T made a pretty big deal at their investor day last week about just wanting to be done with copper. Put it behind us. Can we finally close the book on it? Can we, regulatory-wise? And Carr, the new FCC Chairman nominee, has been supportive of that. How should we think about what that means for TDS Telecom to be on maybe a similar path and what timeframe and what it means to margins? Yeah. So we want to get our margins up. We have a complicated business today, cable, out of territory, ILEC. We're moving to what we call a single platform in the back office on Salesforce. That's going to be a key enabler to take cost out of the business. All our products we're aligning to be same between cable, between as much as we can, cable, ILEC, out of territory. We have Andrew Carlson on board now. He reports to me, and we've set up a transformation office to take costs out of the business. We want to be. Our vision is to be a very streamlined, fiber-centric company that's easy to do business with. That's our vision, okay? So we're on that path. So we see opportunities to take cost out of the business, and we see those margins going into the low 40s. Our goal is to get them into the mid-40s. Okay. Good. Good. We were talking about our mutual friend, John Cinelli, the other day over lunch. John's got a nice deal going on...... He sure does. With MetroNet and T-Mobile. It seems like there's a lot of these partnerships that are coming about. How should we think about how TDS Telecom would play that? You talked about how you'll do a bundle internally, but convergence seems to be happening. Is there something broader that could happen with TDS Telecom? Here's a way I think. What would cost it? Yeah. So the way I think it, I don't feel we have the scale, at least today yet, to attract a big partner. That's why we're part of the NCTC. Makes sense. I'd much rather be in a coalition like that where we can get much better discounts on the next version of MVNO. We can work with our peer companies. So I just think I'm always realistic about a partnership of some sort. And so I think we're on the right path the way we're doing it. Yeah. Yeah. On the USM side, what do you think the right leverage is at US Cellular as we look forward to post-transactions? Have you done any thoughts that you could share with us as far as it was kind of high for a wireless-centric company that was subscale, kind of to your point on you want to have scale and you want to but as you will have scale as a tower company. Yeah. So you're exactly right. Our leverage ratio was high. We've been working that down on the wireless business. Post the transaction closes, I mean, you're going to have the partnerships and the tower business with no debt. And so it offers ample opportunity to lever up on some level as appropriate. And so as the strategy for the tower company is set and going up, it allows for flexibility and options. And we're going to set that up and make those decisions at that point in time. It's too early to speculate at this point. Right. But you guys are aware of the tower stuff and that it can handle because you have long-term contracts, de minimis churn. It's a natural place where lenders are like, "Hey, this is a pretty good place to lend. It's a natural asset we can utilize. On the TDS Telecom side, how should we think about leverage for you guys? And as that reflects to how much capital can you use? How much capital can you spend in any given year? Yeah, well, you know, right now we've been trying to maintain free cash flow neutral or neutral right now, right? Given where we are. More kind of like simple. Like EBITDA to CapEx. You know I'm not going to comment on what the leverage ratio is. That's much more of a question for Vicki at the enterprise level because they do our funding. But the goal is, here is what I want, what our team wants, and I think the board wants. So I think we're all aligned. But we need more capital because we have more opportunities than we can fix. We want to go faster. We want to go faster, right, and the opportunity is not going to be around forever. It's a race. It's a race, so we feel good about the flags we've got planted, 100 communities, and then we see a fair amount of where we've planted our flags in the Pacific Northwest and Wisconsin, a lot of edge-out opportunities there where we think there'll still be runway there, and then, of course, there's going to be consolidation of smaller players, so we're hoping that that's another opportunity for us, so yeah, we want more capital. Theoretical question. Do you see a day where cable wants to have owner economics in wireless? So here's the way I look at it. I think they will get owner economics through how they build their networks. They're just not going to be the same way. I mean, I think they're going to get a lot of owner economics with, like I said earlier, dual SSIDs. They get deep penetrations in neighborhoods. And I'm not an engineer like you are, but the engineers have ways of small cell on their poles on the network. So I think they have a path to keep improving the economics. From your side, you guys might have looked at that as you were considering your strategic alternatives, and any personal views on does cable want to have wireless owner economics at some point? For me, the question would be, do they need to, right? If they need the wireless piece is 10%-20% of their usage. And so it's expensive. It's capital intensive. You got to have the spectrum. You got to have the network and everything else in place. As long as they've got the terms in place for that last 10%-20%, I don't know if they necessarily need to. I think that's a good point, Brent, and you know the other side of it is there's good, at least there was never good competition for MVNOs, right? We ran up that hill and down that hill so many times, and we never liked the economics. Now, at least there's true competition between the carriers to offer a more attractive MVNO. As long as, to Brent's point, as long as it's there, you don't have to, but I do think they're going to just like we're looking, we're going to do it out in Bend, Oregon because we got the density. We are going to leverage the dual SSID, and we are going to also do an outdoor Wi-Fi community to continue to be the provider of choice there, so I think there's ways, like I say, to improve the economics. One of the other hot topics, we had an Iridium here today from the satellite side. We have Globalstar here tomorrow. Direct-to-device, the thought of putting satellite connectivity into your smartphone. Views on that as kind of a how important is that? Where is it appropriate? Yeah. Well, I think it's appropriate in rural America. That's where you're seeing it. And I think that's where it makes sense, and that's where it'll get utilized is more in those rural parts of the country. In your urban areas, you're still going to have capacity and density issues and everything else. And so I think it plays a place in the ecosystem. And that's what you're seeing is evolving right now. You're adding that satellite feature in there to help to make sure you've got connectivity everywhere. And it's going to help to reach the areas where it's not economical to build towers. Yeah. I mean, our philosophy had been it's calculus of population density and GDP per capita. When you look globally, fiber is the best technology. It is. But even with government funding, sometimes it falls apart that I just can't build it that rural. That's right. Wireless, terrestrial wireless can go deeper. Yeah. It's much more capital efficient way of putting a tower. And then you have, do I have more customers as opposed to I have to build it and hope they come on a fiber build? But then eventually, terrestrial wireless falls apart and says, I can't earn a return if the population density is so low there also. Right. Agree. Yeah. There's some people that pitch things on the direct-to-device side of satellite could go places and replace terrestrial wireless. I just have a hard time getting there with the bits, the cost to produce that, the delay with space. But just I'm always asking the question because I want to make sure I'm not locking my eyes closed when I shouldn't. No, I agree with you. I think it's complementary, and you're going to see them work in conjunction. I don't see it's an either/or. I agree with that. Okay. Any strategies? I guess probably you've already made your bed as far as what you want to do with the T-Mobile transaction. But any thought on spectrum or anything else with direct-to-device, how you would be involved in it? No, it's something we're watching closely. And if it's where we're at, we're looking at selling the wireless operations. If for some reason we don't, it's something we would look at and consider. We're watching it. We're looking at it. But it's not anything we're going to be a leader on. Yeah. Yeah. What did you find was the toughest thing about being a wireless operator? Obviously, you've made the decision as a company all the way up from USM to the TDS corporate side. What was it, the aha moment that finally said, now's the time? Yeah. To be honest with you on that, it's the competitive environment. It continues to get more and more competitive. With the cable companies coming in and entering the space, they're taking a good share of gross adds coming in. Their market share, you've seen the numbers, they're going up. It's got room to double in the next five to 10 years as well. So it's one more operator in the space that just means that the pie is smaller for us to go out and compete against. And so it really comes down to the scale. Scale. I mean, at the end of the day, we're a capital-intensive business, whether you're that chair or this chair, and scale is important. Yeah. Absolutely. Yeah. We've looked at it. You know we do it at the board level. We've really looked at this and we go. The nice thing about the fiber business, it's more of a local scale business. The wireless business is a national scale business. And US Cellular could never be that. So fiber is a local business, but is there a certain level of scale you need to be for pricing, for purchasing fiber, for getting the software, for getting the installations, for the marketing dollar spend? Or is it really, truly just local? Or is there some level that? You know, I think you want to be a player here. You got to have some size now. Most of us, even companies that are larger than us, and I'm on the board of NCTC, it's not just content anymore. It's technology. We're doing buying together, okay? Buying fiber, all of that. So I think the cooperative bridges some of that for the smaller players. But you know, I think scale always helps, right? Especially when you get into software and back office, that's always going to be a factor. You know, I'm implementing, we're implementing Salesforce. Well, if I have another million subscribers to spread that over, it's going to be even better, right? Yeah. We hear LT talk about scale a lot. Do you feel you have scale with the tower business even post-T-Mobile transaction? And what level of towers is that scale appropriate at? Yeah. We think we've got the proper scale. We're projecting post-close three to five years, we can get to 50-plus% margins. On that front, it really comes down to tenancy ratio. So there'll probably be some decoms There'll definitely be some decoms, whether we sell it, decommission them, et cetera. We'll have some naked towers. We'll have to look at what we're going to do with. But beyond that, we're going to have capacity and want to continue to grow that tenancy ratio up. That helps improve the margins. The cost structure in and of itself, the cost per tower is not going to move. It's not going to change. We've got a little bit of. It's got a local scale. Right? Yeah. Yeah. Last one for me, putting my media hat on. We've seen Verizon make an offer of, hey, we can get you a bundle of some streaming services with our wireless subscription, both the My Verizon or the My Verizon Home product. The streaming folks are looking to reduce churn. Wireless and wireline are always looking to keep churn down. Jimmy Kimmel at the upfronts last year called it Churnobyl. I was like, why did I never think of that? Churn really is the Achilles heel of a recurring method. So any thoughts on working with the media companies to say, can we knock it off together? Not at our scale. You're not at our scale. I mean, our churn is low already. Now, I will tell you, Ric, we're looking at the next, what is the next evolution for us on video? Because 25% of our customers are taken and it's declining, right? Still important right now, but we need a strategy. So we are working. This is where NCTC comes in again. We have collective thoughts, collective trials. So until we see something, a lot of people are trying things. TDS, until we see something that's working. But we need a new strategy there. Definitely. Last question, one minute speed round. AI. That's it. AI question one. AI question. It's here. I think it's something that we've got to look at to incorporate. We're utilizing it today already in our churn modeling, in our network planning, right? I mean, we're utilizing it. It's going to continue to grow and something that, as an industry, we're going to have to continue to embrace and find ways to help it help us. Well, it's very clearly going to be impactful because just look at the investment going into it, right? So I think it's going to be both an opportunity and a threat, probably, right? But we're going to see it as an opportunity. Great. With that, I think we'll wrap it up. Appreciate everybody's time today. We'll take it to the one-on-ones and small group stuff. Jim? Thanks for having us. Yeah. Thank you, Ric. Appreciate you guys.