Array Digital Infrastructure, Inc. Q3 FY2024 earnings call

• Acknowledged the impact of recent hurricanes and fires, thanked teams for support. - UScellular made progress monetizing spectrum not in the T-Mobile transaction, sold OneNeck IT solutions, and had spectrum license sale agreements. - UScellular saw improved subscriber momentum in postpaid and prepaid, with postpaid ARPU up 2%, and expenses down year-over-year. - TDS Telecom reached 50% of service addresses served by fiber, targeting 1.2 million marketable fiber service addresses, 60% fiber-served addresses, and 80% gig speeds coverage. - Focus on cost management and subscriber growth balance, with UScellular raising full-year profitability guidance and TDS Telecom seeing fiber broadband growth.

UScellular Wireless: Service revenues declined 2% due to average subscriber base decline, partially offset by higher postpaid ARPU. System operations expense decreased 2% due to cost optimization. Selling general and administrative expenses decreased 3%, excluding strategic alternative expenses, it decreased 5%. Adjusted operating income before depreciation and amortization improved 1%, adjusted EBITDA (incorporating equity method investments, interest, and dividend income) improved 3%. Tower revenue from third parties increased 1% but was impacted by co-location growth slowdown and defections. TDS Telecom: Operating revenues were up 2% in the quarter. Residential revenues grew 5% due to price increases and more connections. Commercial revenues decreased 4% as CLEC markets were decommissioned. Wholesale revenues decreased 3% as customers migrated to lower-cost products. Adjusted EBITDA for TDS Telecom was up 21% due to fiber growth.

• UScellular narrowed service revenue guidance to $2.95 billion to $3.0 billion and capital expenditures to the lower end of the range. Adjusted operating income before depreciation and amortization (OIBDA) guidance is $800 million to $875 million, and adjusted EBITDA guidance is $970 million to $1.045 billion. - TDS Telecom's fiber goals include targeting 1.2 million marketable fiber service addresses, 60% of service addresses served by fiber, and 80% gig speeds coverage, with progress made towards these targets.

• Forward-looking statements are subject to risks and uncertainties. - Competitive intensity from large mobile network operators and cable wireless players. - Regulatory approvals required for spectrum license transactions and the T-Mobile deal. - Impact of events like hurricanes, fires, and ACP disconnects on subscriber numbers.

Q: Probe on cash taxes impacts, T-Mobile sale, Verizon Spectrum sale, and use of proceeds A: Doug Chambers stated cash taxes are net of NOLs and interest carry forwards. TDS has more NOLs/interest carry forwards. Verizon Spectrum sale has fees and impacts gain on close. Use of proceeds for spectrum sales would be decided by UScellular Board, potentially including paying down debt, advancing fiber deployment, or returning value to shareholders.

Q: LT Therivel on Wireless side, AI impact on handsets and operations A: LT Therivel said jury out on handset AI impact; upgrade rates declined, unclear if due to lack of device differentiation or waiting for Apple's AI capabilities. AI is helping operations, like in care centers for better customer experience and efficiency.

Q: Sebastiano Petti on TDS divestitures, Tower portfolio, and MVNO A: Michelle Brukwicki said divestitures of non-strategic ILEC and cable properties are expected to close in Q4. LT Therivel discussed Tower portfolio, noting co-location rates below competitors, but bullish on long-term due to potential carrier densification. TDS is launching MVNO through NCTC with a national 5G partner.

Q: Sergey Dluzhevskiy on Tower business, Wireless partnerships, and TDS broadband A: LT Therivel discussed Tower business, focusing on carrier relationships, buying back ground leases, and preparing Tower business to stand alone post-T-Mobile deal. On Wireless partnerships, open to monetization opportunities if attractive. Michelle Brukwicki said incoming TDS residential broadband customers have higher gig service adoption (about 40%) compared to the overall base (20%), and focus on enhancing door-to-door sales force to improve broadband penetration.