TDS Telecom sees urgent need to increase fiber footprint in 2021

TDS is not naming the markets or the number of markets and addresses where it plans to expand its fiber because of the growing competition in the 1-Gig space. (Image by Alex Fox from Pixabay)

TDS Telecom’s leadership said that the company believes that there is a “sense of urgency” around its fiber strategy and it plans to increase its fiber build within its existing wireline footprint and also in expansion markets outside its footprint.

In fact, the company feels such a sense of urgency that it is not naming the markets or the number of markets and addresses where it plans to expand its fiber footprint because of the growing competition in the 1-Gig space. TDS currently offers 1-Gig speeds to 56% of its market using both fiber-to-the-home and cable.

Speaking during the company’s second quarter earnings call with investors, Vicki Villacrez, senior vice president and CFO of TDS Telecom, said that the company will identify its next expansion markets once it signs construction agreements.

TDS reported that it now has fiber to 37% of its wireline footprint, or 338,000 residential addresses, and has a long-term goal of reaching 657,000 addresses in its wireline footprint and its expansion markets. Villacrez said TDS is still targeting adding fiber to 320,000 residential addresses over the next few years. However, she did indicate that goal could be impacted by construction and permitting delays. “We continue to manage construction and customer equipment but are seeing lengthening lead times with suppliers,” she noted.

TDS ended the second quarter with 478,700 total broadband customers, an increase of 11,400 from the end of the first quarter. The company reported 34,900 commercial broadband customers, up from 34,400 at the end of the first quarter.

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TDS reported operating revenues of $252 million, up from $249 million at the end of the first quarter and up from $241 million in the same quarter of the previous year. The company’s wireline revenue was $86 million, up from $81 million on the same quarter of 2020. The company’s capital expenditures for the quarter were $99 million, a 33% increase from the same quarter in 2020. However, Villacrez said the increased cap ex spending was due to the company’s fiber expansion and was expected. The company said it is still planning to have capital expenditures for the entire year in the range of $775 million to $875 million.

Villacrez said that the company saw its broadband revenues grow 16% in the quarter and attributed that growth to the company’s investment in new markets as well as customers increasing their broadband connection speeds and moving to higher priced packages.

Interestingly, TDS sees continued growth in its TDS video product. In fact, Villacrez said that 41% of the company’s broadband customers in the new expansion markets are adding video to their package. “Customers are telling us how important video is to the service offering,” she said. “The video product is profitable and the state-of-the-art platform that we bundle provides a superior experience.”

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