Good morning. My name is Suzanne, and I will be your conference operator today. At this time, I'd like to welcome everyone to the TDS U.S. Cellular First Quarter 2020 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. Ms. Jane McCahon, you may begin your conference.

Thank you, Suzanne, and good morning and thank you everyone for joining us. We want to send out our very best wishes that you and your families are well. We've worked hard to prepare our materials and remarks today to share with you about the strength of our businesses and provide insight into what we believe will be the most significant opportunities and challenges we will face in the coming months. Please continue to provide us feedback about what we can do to provide timely and important information. Now back to the normal script. I want to make you all aware of the presentation we prepared to accompany our comments this morning, which you can find on the Investor Relations sections of the TDS and U.S. Cellular websites. With me today, from all corners of the world and offering prepared comments from TDS, Pete Sereda, Executive Vice President and Chief Financial Officer; from U.S. Cellular, Ken Meyers, President and Chief Executive Officer; Doug Chambers, Senior Vice President and Chief Financial Officer; and from TDS Telecom, Vicki Villacrez, Senior Vice President of Finance and Chief Financial Officer. This call is being simultaneously webcast on the TDS and U.S. Cellular Investor Relations websites. Please see those websites for slides referred to on this call including our non-GAAP reconciliations. We provide guidance for both adjusted operating income before depreciation and amortization or OIBDA and adjusted earnings before interest taxes depreciation and amortization or EBITDA to highlight the contributions of U.S. Cellular's wireless partnerships. As shown on slide 2, the information set forth in the presentation and discussed during this call contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Please review the safe harbor paragraphs in our press releases and the extended versions included in our SEC filings. We have updated our safe harbor statements to include specific risks related to COVID-19 and its impacts on our businesses and have provided that here specifically on slide 3. TDS and U.S. Cellular filed their SEC forms 8-K, including press releases and forms 10-Q yesterday. In terms of our upcoming IR schedule on slide 4, we will be virtually attending the JP Morgan Global Technology Media and Communications Conference on May 12. And our open-door policy is now more of an open phone or open video policy, so please reach out to us if you'd like to arrange a meeting. And now, I'd like to turn the call over to Pete Sereda.

Thanks, Jane, and good morning everyone. Our mission at TDS from our founding 50 years ago has always been to provide outstanding communication services to our customers and meet the needs of our shareholders, our employees, and our communities. And I think now more than ever, we all recognize the importance and responsibility of providing critical communications and data services that our customers and communities depend on. I'll start on slide 5. First, in order to serve our customers, we've continued to invest in our networks to ensure that we can meet their increased data and usage demands. And now with work at home and remote learning, these investments are proving to be critical. To keep our customers connected to these essential services, both U.S. Cellular and TDS Telecom have signed the FCC's pledge not to turn off service or charge late fees due to a customer's inability to pay their bill because of circumstances related to COVID-19. We're also grateful to our employees for their dedication in serving our customers, and we recently enacted a number of programs, such as work at home, social distancing, and additional cleaning to protect them and their families. And for our stockholders and our debt holders to support our long-term sustainability goals, we've always strived to be financially conservative. Turning to slide 6. Maintaining financial flexibility through a strong balance sheet is one of the pillars of our corporate strategy, and over the years we have worked to retain relatively low leverage levels, long-dated debt maturities, sufficient undrawn revolving credit facilities, and significant cash balances, while at the same time making sure we have the financial resources we need to fund our businesses. If you can see on the slide, at March 31st, TDS had nearly $1.5 billion in available funding sources including cash and cash equivalents, available credit facilities, a mostly undrawn term loan, and an undrawn EIP securitization facility. We also have a number of other potential sources, including our own towers and wireless partnerships. As you can see, most of our debt is very long-dated. Turning to slide 7, I also wanted to highlight some recent liquidity initiatives and anticipated tax benefits. We had completed all of our financing initiatives for 2020, prior to the onset of the COVID-19 outbreak. So we are not in a position of having to complete any financings currently. We have been advised by our banks that the debt markets have opened up sufficiently, such that we would be able to raise new money if the need arose, although we do not currently see such a need. Since the impacts of the COVID-19 outbreak began to be felt by the overall economy in our businesses, we are monitoring cash activity and balances and other metrics more closely. We have not detected any meaningful degradation in our cash flows that would cause us to draw down on our existing credit facilities, but have determined that it is not necessary at this time, as we have sufficient liquidity to run our businesses. Our business trends do not currently indicate that we are in danger of violating any bank covenants. The potential strength of our credit banks is very strong. However, as previously planned, TDS recently drew $50 million under its $200 million delayed draw term loan to fund capital expenditures, at TDS Telecom and U.S. Cellular for the first time and as previously planned, around $125 million on its EIP securitization facility to pay for the spectrum purchase in Auction 103. And because both stock prices were at very depressed levels during the quarter, we purchased stock at both companies in a measured fashion balancing the market opportunity to buy shares at extremely favorable prices with the requirement that we preserve liquidity in case the current general economic situation becomes worse than we currently anticipate. Lastly, due to precarious federal tax legislation, we had a low effective tax rate in the quarter. And we project a reduction of income tax expense throughout the remainder of 2020, as a result of an anticipated tax refund in 2021. I will now turn over the call to Ken Meyers.

Thank you, Pete. Good morning, everyone. I hope you and your loved ones are doing well during these challenging times. Having been in this industry for many years, I have navigated various disruptions, including natural disasters and financial crises, but I have never encountered the current level of disruption and uncertainty. I am incredibly proud of our organization and everyone involved. To all our team members at U.S. Cellular, I am grateful to be part of your team, and I appreciate your ongoing commitment to supporting each other, our customers, and our communities. Now, moving to slide 9, I want to give you a brief overview. Despite the uncertainties ahead, U.S. Cellular remains strong. We provide essential services to our customers, which will continue to be in demand. Our culture is robust, and we are committed to serving our customers with a solid network and excellent customer service. Our financial stability is also solid, as Pete just mentioned. While I won't delve into the first quarter results in detail, Doug will discuss them shortly. These results set the stage for our outlook in the coming quarters. We’ll present our usual metrics but will concentrate our discussion on current trends and our strategic priorities for the year. Firstly, let’s talk about our operations today. Following a significant transition in late March, April has been about moving toward a different, yet stable environment. We responded to the stay-at-home orders by enabling remote work where possible. In our open retail stores and call centers, we’ve implemented numerous safety measures to protect our associates and customers. Currently, around 80% of our customer service work is handled remotely, allowing for ample social distancing in call centers. We've also enhanced cleaning practices. To serve our customers better, we’ve kept stores open in each market, with around 70% of company-owned stores operating on reduced hours. We’re modifying stores and equipping associates with personal protective gear, limiting the number of customers in-store, and introducing curbside services. Additionally, we've mobilized associates from closed stores to assist with customer care and telesales. Our proactive outreach to customers has been well received. Regarding recent trends, store traffic is currently about 50% of pre-COVID levels. To support customers impacted by the crisis, we signed the FCC's Keep America Connected Pledge, committing to not disconnect customers or charge late fees due to payment difficulties. This may lead to higher bad debt expense, and we've recorded an additional charge of about $9 million this quarter. Bad debt will be a critical focus in the upcoming quarters. We’ve also removed usage caps and waived overage fees for customers to ensure they have access to necessary data services during the crisis. Our supply chain for handsets is functioning well, although there are constraints with routers and hotspots due to sudden demand as suppliers shift from 4G to 5G devices. We expect supply to remain tight for at least another quarter. On the network side, we are monitoring its performance closely amidst the pandemic. Our networks are designed to handle peak usage periods, and we’ve observed extended periods of high usage throughout the day, with only a slight increase in overall peak demand. Fortunately, traffic has dispersed from urban areas to residential sites, improving network performance. In summary, U.S. Cellular has effectively adapted to significant changes over the past couple of months. Moving on to slide 10, we need to align our business with the strategic priorities we previously discussed. Customer growth will be challenging due to the nationwide decline in retail activity, but we see opportunities in our Iowa and Northern Wisconsin markets, plus the new iPhone launch and an increase in connected device sales. We remain focused on reducing churn, especially while customers are under lockdown. However, we are planning for churn risks related to customers benefiting from the FCC pledge. On the expenses side, we are committed to reducing spending, but bad debt will continue to be an area of concern. We will also need to adjust spending to accommodate increased costs associated with cleaning, protective equipment, and higher customer usage. Currently, we do not foresee major disruptions to our network investments, although some localized projects have been delayed due to regulatory office closures. We are working with industry partners to navigate these challenges. The CBRS spectrum auction is slightly delayed, and the C-Band auction may shift to next year, but we are confident in our 5G rollout and millimeter-wave spectrum inventory. Before I hand off to Doug, I want to touch on the anticipated impact of COVID-19 for the full year. For our guidance purposes, we expect markets to emerge from lockdown by the end of Q2, with some easing of social distancing in Q3 and a return to normal by the end of Q3. We anticipate some service revenue loss from waiving fees and a decline in equipment sales due to reduced store traffic. On the expense side, bad debt is projected to rise as more customers participate in the FCC pledge; however, we expect labor costs to remain stable. With that, I’ll turn the call over to Doug.

Thanks Ken and good morning everyone. Let me touch briefly on postpaid connections results during the first quarter shown on slide 11. Postpaid handset gross additions were down due to two factors. Early in the quarter, we pulled back on promotional activity to focus on brand initiatives. And as we moved back to a more competitive posture, store traffic dropped due to the impacts of COVID-19. Partially offsetting this was a jump in demand for connected devices. Total smartphone connections increased by 4,000 during the quarter and by 63,000 over the course of the past 12 months. That helps to drive more service revenue given that ARPU for a smartphone is about $21 more than ARPU for a feature phone. As mentioned, we saw a 7,000 increase in connected device gross additions year-over-year. This was driven by March gross additions of Internet products such as hotspots and routers, as a result of an increase in demand by consumers, as well as our business and government customers. Both customer groups were seeking wireless products to meet their needs for remote connectivity resulting from the stay-at-home orders from various states in response to COVID-19. In April, we saw about a 50% decline in-store traffic, negatively impacting gross additions, equipment sales, and accessory margin. Although connected device activity remains stronger than prior year, we expect gross additions to trend below prior year levels through the duration of the COVID-19 crisis and perhaps beyond. Next I want to comment on the postpaid churn rate shown on slide 12. Postpaid handset churn depicted by the blue bars was 0.95% for the first quarter of 2020. We saw higher handset churn in January and February as compared to prior year, primarily as a result of aggressive industry-wide competition. However, we saw a decrease in defections in March as customer shopping behaviors were altered due to the overall COVID-19 crisis and related stay-at-home orders. Total postpaid churn combining handsets and connected devices was 1.21% for the first quarter of 2020, also lower than a year ago. Currently, as you would expect, churn on both handsets and connected devices is running at very low levels. April looks like it will follow that trend with both voluntary churn and involuntary churn trending lower than pre-COVID-19 crisis levels. Keep in mind, involuntary churn is depressed as customers that have signed up for the FCC pledge are not being disconnected for nonpayment. Now, let's turn to the financial results on slide 13. Total operating revenues for the first quarter were $963 million, a decrease of $3 million year-over-year, while service revenue increased $21 million. Retail service revenues increased by $12 million to $671 million. The increase was due largely to higher average revenue per user, which I'll cover on the next slide. As part of caring for our customers during the COVID-19 crisis beginning in March, we elected to waive overage charges and we also waived late fees and other fees in conjunction with the FCC pledge. Inbound roaming revenue was $37 million. That was an increase of 10% or $3 million year-over-year, driven by higher data volume partially offset by lower rates. Since late March, we have seen a decline in data traffic both from an inbound as well as an outbound perspective. This trend has continued on into April. The extent to which roaming traffic will be impacted in the future will depend upon the duration and pervasiveness of stay-at-home orders, as well as customer behavior in response to the outbreak. Other service revenues were $54 million that was an increase of $6 million year-over-year, including an increase in tower rental revenues. Finally, equipment sales revenues decreased by $24 million or about 10% year-over-year due to changes in the average selling price and mix of devices sold. Going forward for the rest of the year, equipment revenues are expected to trend in line with gross additions and upgrades. Now, a few more comments about postpaid revenue shown on slide 14. Average revenue per user or connection was $47.23 for the first quarter up $1.79 or approximately 4% year-over-year. On a per account basis, average revenue grew by $4.08 or 3% year-over-year. The increase was driven by several factors, including a higher mix of smartphones relative to connected devices, an increase in regulatory recovery revenues and increased device protection revenues. Let's move next to our profitability measures on slide 15. First, I want to comment on adjusted operating income before depreciation, amortization, and accretion and gains and losses. To keep things simple, I'll refer to this measure as adjusted operating income. As shown at the bottom of the slide, adjusted operating income was $231 million flat year-over-year. As I commented earlier, total operating revenues were $963 million, a decrease of $3 million year-over-year. Total cash expenses were $732 million, decreasing $3 million year-over-year. Total system operations expense increased year-over-year. Excluding roaming expense, system operations expense increased by 6%, mainly driven by increases in cell site rent expense and maintenance expense, while total data usage on our network increased by 59%. Roaming expense decreased by 13% year-over-year, due to lower rates, partially offset by a 55% increase in off-net data usage. As I said earlier, outbound roaming has been and is expected to be lower as roaming activity has decreased in relation to stay-at-home orders. Cost of equipment sold decreased by 7% year-over-year. We also expect cost of equipment sold to trend in line with gross additions and upgrade levels. Selling, general, and administrative expenses increased by 3% year-over-year, driven by an increase in bad debt expense of $9 million, primarily as a result of U.S. Cellular's participation in the FCC pledge to not terminate service due to customers' inability to pay. As a result of our participation in the pledge, we expect to have further negative impacts to our financial results including bad debt expense. Moving to slide 16. Shown next is adjusted EBITDA, which starts with adjusted operating income and incorporates the earnings from our equity method investments along with interest and dividend income. Adjusted EBITDA for the first quarter was $281 million flat year-over-year. Earnings of unconsolidated entities increased by $1 million or 3%, while interest income decreased by $2 million due to a decrease in the average amount invested for the quarter as well as lower interest rates. Adjusted operating income and adjusted EBITDA do not include depreciation, amortization, and accretion expense. In connection with the network modernization and 5G initiatives, we are upgrading several of the network equipment elements. This results in the recognition of accelerated depreciation on certain of the assets being replaced. As a result, depreciation, amortization, and accretion expense was up 5% from a year ago. Our final slide, Slide 17 provides our updated guidance for the year. As we have highlighted throughout the call, there is a good deal of uncertainty related to potential business outcomes for the year. Given the timing of the COVID-19 outbreak and the manifestation of its impacts having only begun to take effect in mid- to late March, we essentially have less than one month of data to consider as we think about the likely outcomes for the year. However, in that time, we have seen limited impacts on revenue. On the cost side, we have seen more impact, although still modest, driven primarily by the FCC pledge and the associated incremental bad debt expense as previously discussed. These outcomes in our consideration of other potential impacts on the business including those related to customer sales activity, roaming, and other operational costs to care for associates and customers have informed the guidance we are providing today. I want to take a moment to remind everyone that our guidance is on service revenues not total operating revenues, which includes both service revenues and equipment sales. Variations in equipment sales typically have a corresponding impact on cost of equipment sold and as a result are less impactful to our profitability measures. Therefore we believe that service revenues are the more meaningful revenue measure for guidance purposes. For total service revenues, we have maintained our range of approximately $3.0 billion to $3.1 billion. We have lowered our adjusted operating income and adjusted EBITDA ranges by $50 million each to $725 million to $850 million and $900 million to $1.025 billion, respectively. For capital expenditures, we are maintaining our guidance range of $850 million to $950 million. As Ken noted in his opening remarks, at this point we continue to make good progress on our key projects, such as VoLTE deployments, 4G LTE network modernization, and 5G and do not currently anticipate any major disruption to any of them. I will now turn the call over to Vicki Villacrez.

Thank you, Doug, and good morning, everyone. I want to start by discussing the measures TDS Telecom has taken as a vital partner in the communities we serve during the COVID-19 pandemic. Our response exceeded the FCC's Keep Americans Connected pledge, which we have extended to June 30. We are not disconnecting service for customers unable to pay their bills and are waiving late fees due to pandemic-related disruptions. Additionally, TDS provided free broadband for 60 days to new customers who are low-income, families with children, or college-aged students, and we are making monetary contributions in our communities to support those in need. The crisis has confirmed the critical nature of high-speed Internet, showcasing the significance of both our investments and our advocacy for rural America. Our immediate pandemic response involved preparing for a surge in home Internet usage, and we experienced a notable increase in demand for our broadband products. Simultaneously, we were pleased to see a rise in demand for our voice products as well. We serve some of the most rural areas in the country where mobile connectivity may not suffice for work or education, and customers are returning to traditional voice services. Thanks to our investment in expanding fiber into our network, we have well-established and stable systems. We have been fortunate that our workforce has remained healthy and responsive to the rising demand for products, services, and support. We are minimizing our technicians' time in customers' homes and commend our team's ability to operate effectively and safely in this situation. As we see increased customer demand for innovative solutions, we are accelerating our move towards self-service options for customer interactions. Overall, we are very satisfied with our start to the year and our ability to swiftly adapt to the pandemic's effects while staying committed to our strategic goals outlined at the end of the previous year. Now, let’s discuss our financial results for the quarter. Despite the pandemic's impact, our results reflect positive trends. Consolidated revenues rose 4% compared to the previous year, with roughly half attributed to the Continuum cable acquisition that closed last year. Organic growth in broadband and video services from our fiber expansions in wireline, alongside increasing cable ARPU and broadband subscriber numbers, also contributed. Cash expenses, including the acquisition, increased by 7% and by 5% excluding it as we increased investments in our new markets. Adjusted EBITDA decreased 2% to $82 million. Capital expenditures went up by 27% to $54 million as we continue investing in fiber deployment. We launched two new out-of-territory fiber markets this quarter. I will elaborate on our total fiber program shortly. Now, let’s move to our segments, starting with wireline. Broadband residential connections increased by 3%, driven by substantial growth in our out-of-territory markets, where we offer up to 1 gig broadband speeds. Currently, about one-third of our broadband customers are utilizing speeds of 100 megabits or more, compared to 25% last year, contributing to a 4% increase in average residential revenue per connection in this quarter. Wireline residential video connections climbed by 9% compared to the previous year. Video remains a significant aspect for our customers, as around 40% of broadband customers within our IPTV markets also subscribe to video services, which are profitable for us. We aim to improve this metric as we enter new markets that recognize the value of these services, while also monitoring potential impacts of the pandemic on cord cutting. Our multiyear fiber program is showing progress, with 32% of our wireline service addresses now served by fiber, up from 27% last year, supporting revenue growth and expanding our wireline footprint by 5%. We’ve announced the addition of Spokane, Washington to our Pacific Northwest Cluster, which will connect over 87,000 homes and businesses with our 1 gig network. We are also planning further expansions in our major clusters. During the quarter, we completed construction on 14,100 fiber addresses, achieving higher than expected take rates in launched areas, though we are encountering some delays due to permitting and utility dependencies related to the aerial portions of our fiber build. We temporarily halted door-to-door sales and redirected those teams to customer support, resulting in a rise in online sign-ups due to our direct marketing efforts. Regarding wireline financial results, total revenues declined by 1% to $169 million due to a continuing drop in CLEC commercial revenue, which offset the strong growth in residential revenue—up 4% due to video and broadband growth, even though residential voice connections decreased by 4%. Commercial revenues fell by 10% to $39 million this quarter, mainly because of lower CLEC connections while wholesale revenues remained unchanged year over year. Wireline cash expenses rose by 3%. Employee expenses increased as we hired staff for our new markets. We continue to see lower costs associated with legacy services, which are partially offset by rising video programming fees. We incurred maintenance costs due to tornado damage in some Tennessee markets during the quarter, leading to a 9% drop in wireline adjusted EBITDA to $57 million. Now moving to cable, total cable revenues grew as customers continue valuing our broadband services. Total cable connections rose by 10% to 372,000, including 31,000 from the acquisition and a 6% organic increase in broadband connections. Organic broadband penetration is up by 19 basis points to 44%. Cable revenues increased by 19% to $71 million, driven partly by the acquisition; excluding it, cable revenues rose by 10% thanks to broadband growth for both residential and commercial customers. Our emphasis on broadband connection growth and reliable service led to a 27% increase in total residential broadband revenue, with organic growth of $4 million or 17%. The revenue increase is also attributable to a 10% rise in average residential revenue per connection due to a higher-value product mix and price increases. Cash expenses rose by 17% mainly due to acquisition-related costs, or 7% excluding the acquisition, resulting from increased employee expenses and plant maintenance. Thus, cable adjusted EBITDA climbed by 22% to $25 million this quarter, enhancing margins by 100 basis points. We also want to share some key indicators we are monitoring regarding the pandemic's effects on our business. From a customer standpoint, we expect an increase in bad debt in upcoming periods, and we have adjusted our reserves accordingly. Many of our most vulnerable customers are small businesses, representing about 20% of our total revenue. While we’ve noticed increased demand for residential products, there are still areas with copper customers who can’t upgrade to higher speeds, although customer departures remain low. Operationally, our top priority is ensuring the safety of our customers and employees. We have expanded safety protocols for our frontline workers and temporarily paused door-to-door sales. TDS TV+ has been launched in select cable markets, featuring a more efficient installation process that decreases customer contact time, with more launches planned over the next few months. Additionally, portions of our fiber builds rely on third parties in advance of deployment, which might affect our ambitious construction schedule. Considering these factors and the overall uncertainties for the year, our 2020 guidance remains unchanged from what we shared in February. Despite the uncertainty, we see a pathway toward our objectives and remain dedicated to meeting our expectations. I want to extend my gratitude to all our employees for their unwavering dedication in facing these new challenges. Whether it's our customer-facing staff or those who have transitioned to remote work, we've had a challenging yet successful start to the year and are committed to keeping our employees, customers, and communities safe. I will now turn the call back to Jane.

Thank you, Vicki and Suzanne. We're ready to take questions.

Thank you. And our first question comes from Simon Flannery of Morgan Stanley. Your line is open.

Great. Thank you very much. Good morning. And thank you for all the detailed color. That's very helpful. A question on the wireline and on the wireless side. On the wireline, can you talk a little bit more about self-install on both the cable and on the traditional telco side? How much are you able to do? And to what extent does this delay activity? And what do you think you can do going forward on that once we get past this? And then on the wireless side, you talked about the momentum in connected devices. Can you just give us a little bit more color on how a connected device ARPU particularly the new ones you're selling compares to your traditional phone ARPU? Thanks.

Vicki, why don't you take that first part?

Yes. So good morning. First, let me say, I am truly amazed at how our employees quickly transitioned in this environment and have continued to operate effectively and at the same time developed new processes and tools to put in place to keep our customers and our frontline workers safe. Safety has really been our number one priority. And so as we think about some of the innovations that we've put in place we have focused on doing as much equipment assembly outside of the home. We've transitioned to using a technology that provides our technicians with video assist capabilities to help the customer self-service within the home. And we have reduced our truck rolls in all of our fiber broadband upgrades. So we have found that our network and our lines are secure and reliable and steady and we're able to do broadband upgrades from a remote standpoint. So all of that is helping to keep our technicians safe and reduce the amount of time that they are spending in the home. I also mentioned that we have temporarily ceased our door-to-door sales activity. And in place of that, we have been working very diligently to hang door hangers. So we're able to go out and put door hangers on customers' homes. And we've redeployed our door-to-door sales teams onto the phones. And so our calls and our web sales are picking up with speed. And we're finding right now just in the recent activity on the website, our broadband sales on the website, we're seeing about 40% are taking video. And within our new broadband promotion, we're seeing 30% of those customers taking voice sales. So we've seen a real initial surge of product demand during the pandemic.

Great.

Average revenue from some of these connected devices is slightly less than that of a typical smartphone, but significantly higher than what we observe in the prepaid segment, currently around $40. I mention this because the growth is quite recent. While we've had many devices out for a while, much of our growth is due to this new segment. We are currently moving through our first billing cycle for it, so it's something we are monitoring closely. At this point, I am very optimistic about it.

Great. Thanks a lot, Ken.

Okay, great. Thanks for taking my question. The first one on the wireless side. Thanks for the color on the store traffic quarter-to-date. Can you just give us any sense of how that traffic is converting into new connects and/or upgrades, given that it seems like your customers are coming into the store, they're probably doing it with more purpose than just kind of shopping or browsing?

I don't think we've seen a significant change in the closure rate. Traffic is down. Historically, we had a number of customers who paid their phone bills in person, and we are now picking those up curbside to manage traffic in stores. Currently, the closure rate is not much different from before; it's just that overall retail activity has slowed down.

Got it. And then, again another one on the wireless side, just kind of balancing the growth in data usage with maybe more consumers tightening budgets on economic weakness. Can you talk about what sort of trends you're seeing in upgrade rates to unlimited plans?

There isn't a significant change at the moment because with the FCC pledge, customers do not need to switch from an 8-gig plan to an unlimited plan to benefit from increased usage. Until the pledge concludes, I don't expect to see that change. However, I think we may observe that people are using more data for a longer period when the overages and caps are reinstated. That’s when we can expect to see a shift in migration.

Got it. That makes sense. And then, one for Vicki on TDS Telecom. You called out a lot of COVID-related headwinds that have emerged since February, but you're keeping the guidance as is. Can you talk about what potentially is offsetting some of these headwinds that have recently emerged?

Sure. I think in my prepared comments I had mentioned that this pandemic certainly has validated just how important our services are and also the importance of the investments that we've made into our network. And so, our immediate response, number one, was to shift to more Internet use from the home. And at the end of March we saw a significant surge of demand for our broadband products, as I mentioned in my earlier question and answer there, including the reinstallation of some voice lines. So we saw our network usage increase 60% during our non-peak and 15% during our peak hours. And yet our network has remained very stable throughout. So that traffic really represented a growth rate of 24% in average gigabytes per month per user. So pre-COVID, during COVID. As I look at the backside of this pandemic, that's really some of the headwinds that we outlined in our slide. Bad debt will most certainly increase especially with our decision to extend the FCC pledge through June 30th. But we did increase our reserves in the first quarter to a certain extent and will reevaluate that again at the second quarter. Small business customers are also a concern as they make up most of our commercial revenues, which I had sized at 20% of our total revenue. So small business customers and their ability to pay and stay in business is a real watch item for us. On the upside, I was indicating we had a surge of product demand, March and April gross adds were up significantly. And while we're just starting to see this surge slow, we're well ahead of our expectations. And at the same time our voluntary churn is very low. So all of those puts and takes, we really see a path to our guidance at this point.

Got it. Very helpful. Thank you, Doug.

Thanks. And thoughts to you, your families and employees as we all go through this. First question is on the wireless side, the change in guidance, obviously, service revenue is maintained, but the service or OIBDA is down $50 million. Kind of break that down for us that partially probably was bad debt. But what's made up of that $50 million reduction to guidance?

Well, overall Rick as I look at it in terms of where we started the year, we're going to see as I said a little bit less revenue in the first part of the year from overages and fees that are being waived, okay, and those, kind of, fall right to the bottom line. Similarly with less store traffic and less equipment sales, we're going to see less accessory sales and there's a nice margin on accessory sales that we also won't get there. I talked about a little bit more usage cost from the increase there and the risk around bad debt are really the main components. And they're all things that we just have to watch and manage.

Okay. Speaking of overage fees, late fees, what percent of ARPU or what's that traditionally run as far as how much overage and late fees mean on your ARPUs?

Historically, it has been a couple of percent, nothing major, but I highlight that because we can't predict what things will look like as we come out of this situation.

Can you help us understand what you observed in April regarding reductions in roaming revenue and expenses, considering that the summer months are typically stronger periods?

We are being cautious with the initial one-month data we have right now. We anticipate a decline in traffic, but I don't have sufficient information at the moment to provide a confident response.

Sure, makes sense. And factually what happened to upgrades in the first quarter and obviously store traffic will affect upgrades going forward. How do you see what was the actual for upgrades and what you think might be the trend this year?

I believe upgrades were down 4.5%, slightly less than previous levels. Store traffic has been affecting that towards the end of the quarter, although we saw two strong months prior. The trend continues to be the extended time customers are keeping their phones, as they opt for more expensive, well-built phones that last longer. People are simply holding onto their devices longer. I don't anticipate any significant changes in this regard moving forward. I expect this trend to persist, although the decline in retail traffic might cause some slight reductions in upgrades over the next couple of months, but not drastically.

Makes sense. And do you have a similar small business exposure like Vicki had for the telco side? What percent of your business is small medium business? And is that factoring into the bad debt thoughts?

So, one, a lot of our real small business is all – our all phones that really look like consumer lines. They're in the individual owner's name, right? And my own view is that when we talk about lines at that level not as much risk because they still need their communication devices. It kind of reminds me of back in – years ago when we went through this as an industry the first time and there was – unemployment was higher. People were keeping wireless devices because that was the way they were out looking for a job. That was the way they were being contacted. Right now, I still see this as an absolutely critical vehicle for communications. And I don't know that we're going to see a big jump on that.

Okay. Great. Well again thoughts to all your family, friends, and employees as we go through this. Best wishes.

Appreciate it. The same to you. Be safe.

Suzanne, we have time for one more question.

Great. And your next question comes from the line of Michael Rollins. Please go ahead. Your line is open.

Hi. Thanks and good morning. Just curious as you look at the acceleration of investment into the wireless business this year and you contemplate what's happening in the current environment does this impact your interest to accelerate fixed wireless broadband products into your U.S. Cellular footprint? And maybe just some thoughts in terms of how you're thinking about bringing these new capabilities to customers overtime?

Thank you, Mike. I hope everything is going well for you. We have been interested, excited, and optimistic about fixed wireless from the beginning. The delays in realizing its full potential haven't primarily been network-related but rather related to the equipment needed to fully utilize the advancements in networks. As we advance with 5G and enhance it further with some millimeter-wave technology, we believe we are progressing at an appropriate pace. This technology is still developing, and we want to ensure we don't get too far ahead of ourselves. However, we feel confident about our current speed, which is driven by our optimism about the fixed wireless opportunity. Thank you. I appreciate everybody's time today and flexibility in making this work.

Thank you so much. And any follow-up calls let us know. Stay safe.

And this concludes today's conference call. You may now disconnect.