TDS Telecom is increasing its year-end new fiber passings target from 175,000 to 200,000, boasting “better than expected” fiber results in the third quarter.
The operator passed 61,000 locations with fiber this quarter, bringing its year-to-date total to 127,000. Overall fiber passings now stand at 709,000.
CFO Michelle Brukwicki said TDS expects to launch fiber in all its expansion markets by the end of 2023. These markets are primarily in TDS’ home state of Wisconsin and the Pacific Northwest, including recently announced markets in Montana (Missoula, Butte, Helena and Great Falls), Idaho (Twin Falls and Caldwell) as well as Fond du Lac and Sheboygan, Wisconsin.
TDS this quarter elected to participate in the Federal Communications Commission’s Enhanced Alternative Connect America Model (A-CAM) in 24 states. It’s aiming to deliver 100/20 Mbps speeds to 270,000 underserved locations in its ILEC footprint.
The company will receive $90 million in annual Enhanced-ACAM support (up from $82 million per year under the existing A-CAM program) beginning in 2024 through 2038.
“We expect to receive a total of about $1.3 billion of E-ACAM revenue support over the next 15 years,” Brukwicki said. “We anticipate this program will help to accelerate the delivery of higher speed broadband to various rural high-cost areas that we serve.”
The extended broadband subsidy comes as TDS faces “increasing competitive pressures” in its incumbent territory.
“We consider capital prioritization and expected economic returns as we respond to competition in select ILEC markets with fiber builds,” she added. “The E-ACAM program will provide funding to help us defend these markets.”
For 2024, Brukwicki said TDS plans to “slow [its] spending and focus on driving broadband penetration and revenues in our new fiber markets,” implying the company will lower its new passings target for that year.
“Service addresses in 2024 will likely be closer to what we delivered in 2022,” she said. For context, TDS reached 133,000 new fiber passings last year.
Financials
TDS operating revenue of $256 million was flat year on year, but residential revenue increased 4% to $177 million, driven by growth in wireline expansion revenue, which grew to $20 million.
Net loss attributable to TDS shareholders was $17 million, compared to a loss of $25 million in Q3 2022.