TDS Telecom is ringing in the New Year with the theme of change. President and CEO Jim Butman noted to investors at the Citi 2023 Communications Media & Entertainment Conference that part of the slated changes in 2023 will be fresh opportunities to collaborate with sister company UScellular in key Midwestern markets.
As of now, the overlap between TDS Telecom and UScellular’s footprints is 40%. When customers are looking to buy broadband service in key Wisconsin markets, they can opt to bundle up with UScellular’s wireless service, too. “Broader bundling has to come from partnerships, and TDS Telecom is a way to learn and develop that model,” UScellular CFO Doug Chambers explained. Both TDS Telecom and UScellular are owned by parent company TDS.
As for TDS Telecom’s fiber build updates, the team is still achieving year over year increases to their fiber service addresses by 50%. That comes despite vendor hurdles in the Pacific Northwest that set back its 2022 build plan. Of 100 communities that TDS is building out-of-territory, 17 of them are operational and the product is selling. The majority of the others in progress have locked-in contracts and prices via RFPs. “Costs are going up, but we’re offsetting them with new techniques. Our engineers are working with vendors and lowering the costs,” said Butman.
When it comes to ROI and market penetration, Butman pointed to early TDS fiber markets in central Wisconsin that are receiving a market share of over 50%, even in a three-player market, across cable, broadband and wireline ILEC. From their service addresses, 65% have access to fiber-grade speeds while the other 35% are still copper. That mix could change with subsidy funding from the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program. “The beauty of that is that state grants and the BEAD program can help with that…We’re feeling good about going deeper into our incumbent areas,” said Butman.
On the wireless side, Chambers noted UScellular is hoping to snag a substantial cut of BEAD funding, despite the program’s focus on fiber installations. “We’re highly focused on advocacy. We’re meeting with the FCC and Congressmen to show them the benefits of fixed wireless,” noted Chambers.
Even with delayed BEAD windfalls, heavy capital investments and marketing hurdles peeking around the corner in 2023, TDS is keeping its eye on the prize that comes from patience. “There’s going to be a roll-up in the fiber overbuild industry,” predicted Butman. “TDS will be in a good position because these fiber investments will start producing really nice cash flow… We’re just at the start of this thing.”
TDS isn’t the only one with its eye on potential merger activity. Shenandoah Telecommunications (Shentel) indicated late last year it might be interested in scooping up small fiber players who hit a wall.
This story's byline has been corrected. It was written by Karen Fischer.