Array Digital Infrastructure, Inc. 5.500% Senior Notes due 2070 Q4 FY2024 earnings call

Key managerial messages include: Walter Carlson introduced 2025 priorities such as closing the T Mobile transaction, ensuring remaining assets at United States Cellular Corporation are successful, focusing telecom business on fiber strategy, wisely using proceeds from transactions to optimize capital structure, and prioritizing TDS culture. LT Therivel discussed 2024 achievements at United States Cellular Corporation like improving subscriber results, executing strategic transactions, and 2025 operational priorities including investing in customers, built-for-us brand, and mid-band spectrum rollout. Chris Bostilb talked about TDS Telecom's 2024 accomplishments in fiber strategy, residential revenue growth, and 2025 priorities like continuing fiber program, sales execution, launching TDS Mobile, and executing transformation efforts.

For United States Cellular Corporation: In 2024, they had solid financial and operating results. Service revenues declined 2% in Q4 primarily due to a decrease in the average retail subscriber base. Adjusted OIBDA and adjusted EBITDA both increased 3% and 7% respectively for the full year. They paid down over $200 million in debt and were free cash flow positive. For TDS Telecom: In 2024, they grew fiber service addresses by 129,000, surpassing the goal of 125,000, with over 50% of addresses served by fiber. Residential revenues increased 6%, and adjusted EBITDA grew 23% year-over-year. They have new long-term fiber goals including targeting 1.8 million marketable fiber service addresses, 80% of total addresses served by fiber, and 95% of footprint offering speeds of one gig or higher.

United States Cellular Corporation is not issuing financial guidance for 2025 as the pending transaction with T Mobile is subject to regulatory approvals. TDS Telecom forecasts total telecom revenues of $1.03 billion to $1.07 billion in 2025, adjusted EBITDA between $320 million and $360 million, plans to deliver 150,000 fiber service addresses, and expects capital expenditures in the range of $375 to $425 million in 2025.

Risks include the pending transactions with T Mobile and other spectrum deals being subject to regulatory approvals and other closing conditions. The close of the T Mobile transaction is not a certainty. There are contingencies related to the Spectrum transactions with Verizon and AT&T. Also, there are cash obligations related to employee liabilities, income tax obligations, and potential decommissioning costs related to naked towers at United States Cellular Corporation. Additionally, the pace of fiber build and associated costs and funding are risks for TDS Telecom.

Q: Why was now the right time to take on the role and what changes with Walter at the helm?

A: Walter Carlson said the TDS board engaged in succession planning, and it's a transformative time with the sale of wireless operations and spectrum. There will be great continuity with the mission and businesses post transactions.

Q: On the tower side, is AFFO reporting on the path?

A: It is in plans to provide AFFO reporting post T Mobile transaction close.

Q: On TDS Telecom side, about service addresses target and long term?

A: New goals represent large fiber build programs like EACAM and ongoing expansion, with long term over next five years reasonable.

Q: On TDS Telecom guidance and outlook beyond 2025?

A: Investments in sales, construction, and transformation put pressure on adjusted EBITDA in near term but drive future growth.

Q: On USM side, spectrum cap and monetization?

A: Spectrum cap doesn't drive decision making, opportunistic monetization means waiting for fair offer.

Q: Medium term vision for TDS?

A: 2025 priorities are predicates for three to five year growth in tower and fiber business.

Q: Capital allocation priorities for USM?

A: Premature to provide specific guidance, tower business generates attractive cash flows, open to inorganic growth.

Q: TDS Telecom fiber net additions and sales/marketing?

A: Focus on staffing door to door sales teams to improve conversion of passing to paying customers.

Q: TDS Telecom fiber locations and build cost?

A: Organic fiber locations in selected communities, internal construction crews used to keep build cost low.

Q: USM side on wireless partnerships?

A: View partnerships as attractive financial assets, open to transaction if post tax returns better.

Q: USM side on not selling partnerships earlier?

A: Came down to value received, bids were ahead of book and market value.