TDS Telecom stated it’s well-positioned to reach 175,000 new fiber passings by the end of 2023, despite plans to reduce capital spending.
Speaking on the Q2 earnings call, CFO Michelle Brukwicki said the operator is “modestly reducing” its 2023 capex guidance range to be between $475 million and $525 million – slightly down from the $500 million to $550 million TDS anticipated in Q1.
Adjusted EBITDA for the year is expected to increase from a $260 million to $290 million range to now fall between $270 million and $300 million. Brukwicki noted the updated guidance is a result of “disciplined spending across the organization.”
“It's important to note that by the end of this year, we expect almost all of our fiber expansion markets to be initially launched,” she said. “As our fiber program builds mature and we increase our broadband penetration, we expect the pressure on adjusted EBITDA to lessen.”
TDS in the quarter added 41,000 fiber passings, bringing its total to 648,000. The company’s long-term goal is to reach 1.2 million passings by 2026, with Brukwicki adding TDS is also “targeting 60% of our total service addresses to be served by fiber” by that time.
TDS has announced fiber builds in several states, including Idaho, Indiana, Maine, Montana, North Carolina, New Mexico, Tennessee, Washington and Wisconsin.
“We're successfully navigating challenges in getting our builds completed and with about 100 communities in various stages of development, we can shift and pace our construction when necessary,” said Brukwicki.
TDS is also a proponent of the Alternative Connect America Model (A-CAM) program extension, which the Federal Communications Commission just adopted.
Namely, the extension will increase funding support for participating providers through 2038 and up speed requirements to 100 Mbps downstream and 20 Mbps upstream.
Brukwicki said the new A-CAM speed requirements now match those outlined in the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program. The operator “will be working closely” with the FCC to determine its specific obligation requirements, and that will occur “over the next couple of months.”
“We really think this is going to be the best way for us to get to work and start to serve those customers in the most rural parts of our markets with higher speeds as quickly as possible,” she added.
Future of FWA
TDS executives on the call mentioned they are exploring “strategic alternatives” for subsidiary USCellular, though they didn’t elaborate on what that process would entail.
It’s unclear how a strategic review might impact TDS’ fixed wireless access (FWA) business. The company ended Q2 with 96,000 FWA subscribers and in July “surpassed 100,000 customers,” according to USCellular President and CEO Laurent Therivel.
Commenting on the BEAD program, Therivel called fixed wireless “a fantastic solution” to provide service in places where fiber might be too expensive or impractical to deploy.
“Based on our conversations with state officials, we believe that fixed wireless completing a meaningful role in connecting the unserved and underserved in America, we believe we're well positioned to participate in that space,” he said. “We expect to be able to compete for about $7.5 billion in broadband funding that will help us subsidize tower builds that aren't economical otherwise.”
Financials
TDS operating revenue was $257 million, up 1% from $256 million in Q2 2022, with residential revenue up 4% to $175 million.
Net loss attributable to TDS common shareholders was $19 million, compared to $18 million in the year-ago quarter. Capital expenditures for Q2 totaled $132 million.