Array Digital Infrastructure, Inc. Q1 FY2025 earnings call

• Vicki Villacrez: Progress on 2025 priorities, expected mid-2025 close of T-Mobile transaction, extended near-term bank maturities and amended revolvers for financial flexibility, ongoing separation/integration work, and focus on future organization structure.
• LT Therivel: Solid operational performance despite transaction preparation, improved postpaid handset results, 6% increase in third-party tower revenue, cost optimization with flat operating expenses and declined capital expenditures, focus on 5G deployment, ongoing T-Mobile transaction interactions with regulators, and employee transition plans for those not hired by T-Mobile or remaining tower company.
• Doug Chambers: Update on net proceeds from pending transactions, expected cash obligations related to employee liabilities, tax obligations, and expectation of a special dividend from UScellular Board post-T-Mobile transaction close.
• Kris Bothfeld: TDS Telecom fiber progress with 14,000 new fiber service addresses, sales/marketing program improvements, 2025 guidance unchanged, Colorado ILEC sales generating $18 million proceeds, and progress on $100 million annual cost savings transformation program.

UScellular: First quarter 2025 free cash flow was $79 million, an $18 million increase year-over-year. Postpaid handset results improved year-over-year, and third-party tower revenue increased 6% due to new colocations and escalators on renewed leases. TDS Telecom: Delivered 14,000 new fiber service addresses, targeted 150,000 fiber addresses in 2025. Had 2,800 residential broadband net additions, with 8,300 from fiber markets. Fiber churn was 0.9%, lower than overall broadband churn. Average residential revenue per connection was up 2% year-over-year, impacted by price increases.

• UScellular is not providing 2025 financial guidance due to expected T-Mobile transaction close.
• TDS Telecom's 2025 guidance remains unchanged, targeting 150,000 new fiber addresses in 2025, with more than 80% of full-year capital expenditures dedicated to fiber.

• Uncertainty in regulatory approval for the T-Mobile transaction.
• Timing uncertainty for approval of designated entity spectrum transfers, dependent on SEC and FCC approvals.
• Impact of debt exchange offer on purchase price and leverage levels post-T-Mobile transaction close.

Q: Regarding the designated entity spectrum, what is the timeline for approval compared to the T-Mobile merger?

A: The timing is uncertain, dependent on SEC and FCC approval, but optimistic about closing the designated entities eventually.

Q: How should we think about the free cash flow run rate of $79 million?

A: Not to be taken as a direct run rate for the period until close, but capital expenditures are down in 2025, positively impacting free cash flow, and excess cash is expected at transaction close for a special dividend.

Q: On the TDS Telecom side, how is the third-party door-to-door effort working out for fiber net adds?

A: Fiber net adds were lower in the quarter due to timing of address delivery, but sales teams have been strengthened with additional third-party resources and internal team changes, expecting net adds to ramp as address delivery increases.

Q: Why does TDS not plan to redeem preferred stock?

A: Preferred stock is considered foundational capital, and current focus is on paying down debt, with preferred stock not a current redemption priority.

Q: On the Tower business, what are opportunities for improvement post-T-Mobile transaction?

A: Focus on operational structure to make the Tower business self-sustaining, reducing residual overhead, and leveraging in-house sales and marketing efforts to drive growth.

Q: Thoughts on productive uses of retained spectrum in the near term?

A: Open to leasing or creative uses if selling isn't feasible, but focus is on selling the spectrum, with build-out timelines allowing flexibility.