Good morning, ladies and gentlemen and welcome to the TDS and UScellular's Third Quarter 2023 Operating Results Conference Call. At this time all participants are in a listen-only mode. And please be advised that this call is being recorded. After the speakers' prepared remarks there will be a question-and-answer session. Please follow the Operator's instructions. Now at this time I’ll turn the call over to Ms. Colleen Thompson, Vice President, Corporate Relations. Please go ahead, ma’am.

Good morning, and thank you for joining us. We want to make you all aware of the presentation we have prepared to accompany our comments this morning, which you can find on the Investor Relations sections of the TDS and UScellular websites. With me today, and offering prepared comments, are from TDS, Vicki Villacrez, Executive Vice President and Chief Financial Officer; from UScellular, LT Therivel, President and Chief Executive Officer; Doug Chambers, Executive Vice President, Chief Financial Officer and Treasurer, and from TDS Telecom, Michelle Brukwicki, Senior Vice President of Finance and Chief Financial Officer. This call is being simultaneously webcast on the TDS and UScellular Investor Relations website. Please see the websites for slides referred to on this call, including 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 UScellular's wireless partnerships. TDS and UScellular filed their SEC Forms 8-K, including the press releases and our 10-Qs earlier this morning. 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 version included in our SEC filings. I will now turn the call over to Vicki Villacrez. Vicki?

Okay. Thank you, Colleen, and good morning, everyone. Before we get into the details for the quarter, I want to reiterate that as we announced in connection with last quarter’s earnings call, the Board of Directors of TDS and US Cellular have each decided to initiate a process to explore strategic alternatives for UScellular. We are not going to comment on that process at this time, however to say that it is active and ongoing. With that, let's get into the details for the quarter. I am pleased that both business units delivered year-over-year improvements in adjusted EBITDA due to cost optimization programs and efforts to streamline expenses across almost every part of the enterprise. At the same time, we continue to make key network investments in order to take advantage of growth opportunities that can enhance our competitive positions. Year-to-date through September, UScellular made steady progress de-leveraging, reducing short and long-term debt by approximately $340 million, while generating free cash flow. We also renewed the EIP facility for another two years at a very attractive rate. TDS was also opportunistic and entered into a $300 million secured term loan in order to fund our fiber expansion program. And while investing back into both our businesses is a priority, the current interest rate environment and access to capital remain a challenge. Going forward, we will pace and size our capital expenditures in order to remain within our funding capacity and leverage ratio thresholds, even if it means moderating our spend in the near term. As you can see on Slide 3 at the end of the quarter, TDS and UScellular combined have available sources of liquidity including cash and other sources. We have long dated debt, extending any sizeable maturities until well into the future. This helps us to manage the balance sheet effectively by keeping short-term maturities to a minimum while we are investing to deploy fiber in new communities and continuing our multi-year mid-band deployment. With that, I'll now turn it over to LT.

Thanks, Vicki. Good morning, everybody. If we turn to slide five. Even with the August 4th announcement of the review of strategic alternatives for UScellular, it's important that we remain focused on operating the business to produce the best operational and financial results possible. And I'm pleased to update you on our progress this morning. First and foremost, our top priority remains improving our customer trajectory, while balancing subscriber growth with financial discipline. While financial results are on track, driving subscriber growth additions remains our primary challenge amidst a very challenging competitive environment. Postpaid ARPU was a highlight again this quarter, increasing 2% and the team has done an excellent job helping our customers realize the value of our premium plans and services. This ARPU growth was particularly impressive given a significant number of flat rate customers that we added to the base. These flat rate plans were designed to compete against the wireless offers cable companies have been flooding the market with. We're seeing strong adoption; almost 40% of postpaid handset gross adds in the quarter were on those flat rate plans. We remain pleased with our flat rate plan performance and I'll remind you that these plans deliver similar lifetime economics as our other offerings, since the cost of the device is borne by the customer. Another accomplishment in the quarter was that adjusted OIBDA and adjusted EBITDA improved significantly, up 35% and 28% respectively over the past year. We were free cash flow positive in the quarter and for the nine months ended in 2023 and we expect to be for the full year. I'm really pleased with the cost efficiency our team has driven, particularly in that challenging competitive environment. Speaking of the competitive environment as it relates to driving subscriber growth, we're being very targeted and deliberate with our promotional spend, we are pausing campaigns from time-to-time based on various factors in a given market. As we head into the busy holiday selling season, you'll see us running a number of aggressive promotions designed to target new subscribers, as well as recent upgrades for our existing customers and thus increase the percentage of customers in contract. Those aggressive promotions are needed because the market for wireless customers is certainly what I would characterize as fiercely competitive. That competition includes our traditional competitors AT&T, Verizon, T-Mobile, but also increasing and significant pressure from the cable companies that resell wireless. Those now compete with us in about 60% of our footprint. This year's Apple Watch is a good example. We saw hyper-aggressive offers in the market. It's important to note that cable's combined pricing and promotional tactics are pressuring industry ARPU. These competitive dynamics result in ARPU and margin pressure that subsequently challenges the ability to invest in network capacity and future technology developments. This is a really important shift in dynamics for our industry. While I think our results show that we're striking a balance between subscriber growth and financial results, as an industry, we should be focusing on the actions required to balance competitive pricing, with the investment capacity required to effectively keep the U.S. globally competitive. Turning to growth initiatives, our third-party tower revenues had another strong quarter, revenues up almost 8%. The wireless industry has moderated capital expenditures in ’23; we've experienced a slowdown in new tenant and amendment activity in the second and third quarters. I do expect that will impact tower revenue growth rates in 2024. That being said, we still believe we're uniquely positioned in the tower space, and I think we have a lot of opportunity to grow. Fixed wireless continues to be a bright spot for us. Fixed wireless revenues were up 35%. We finished the quarter with 106,000 customers. To date, the vast majority of those subscribers are running entirely on low band spectrum. We expect strong subscriber growth to continue with the launch of our mid band spectrum. I'm pleased that we received access to C band spectrum a few months earlier than planned, and we’re consequently able to further improve our 5G network experience faster than initially anticipated. As mentioned earlier this year, we've been upgrading a number of sites so they can be deployed as soon as we receive mid band clearance. Those sites are now operational, allowing us to bring faster speeds and more capacity to mobile and to our fixed wireless customers. We’re doing that earlier than we expected. Our mid band deployment is multi-year like all of our deployments. By the end of 2024 almost 50% of our data traffic will be carried on sites that are equipped with mid band. Where we've enabled mid band, we're marketing a 300-megabit fixed wireless product and that's really competitive in the marketplace. On average, our fixed wireless subscribers are using about 170 gigabits per month this year. That's significantly lower than our peers. However, I do expect that our customers' usage is going to grow as they get access to the upgraded mid band experience. More notably regarding network initiatives, we will be shutting down our CDMA network at the beginning of 2024. The team has done a great job migrating the base away from CDMA-dependent devices. Less than 42,000 customers are left, down from 386,000 just 18 months ago. We believe we're going to continue to see more customers migrate over the next several months. We intend to reform that spectrum to support our LTE network. We expect to observe additional operational savings once that CDMA network is fully shut down in 2024. As always, I want to thank the team for all their hard work and continued dedication. I’ll now turn the call over to Doug Chambers to provide more details on our financial results. Doug?

Thanks, LT. Good morning. Let's start with a review of customer results on Slide 6. Postpaid handset gross additions decreased year-over-year by 23,000, largely due to the intense competitive environment from traditional carriers and MVNOs, as well as a decline in the pool of available customers. Correspondingly, postpaid handset net additions were down 16,000. Connected device gross and net additions include fixed wireless subscribers. As LT mentioned, we continue to see great momentum in fixed wireless, with our base of customers up 57% in the prior year, and up 10% sequentially. Postpaid handsets were decreased year-over-year and increased sequentially. The sequential increase is partially due to seasonality and a decrease in our in-contract customer base. We've also been experiencing a positive trend in postpaid handset churn over the past year, due in part to the aggressive device offers extended to new and existing customers that we maintained from mid-June 2022 through February 2023. Moving to Slide 7, prepaid gross additions declined 10,000 and net prepaid additions decreased 2,000. In terms of gross additions, the overall pool of available customers declined year-over-year, which we believe is partially driven by competitively priced postpaid offerings. Now let's turn to the financial results starting on Slide 8. Total operating revenues for the third quarter decreased 11%. Consistent with the industry we saw a decline in upgrade rates contributing to the lower equipment sales. Service revenue declined 2% due to a decrease in our average retail subscriber base and roaming revenue. Inbound roaming revenue declined 53% as a result of negotiating lower rates with other carriers. Note that this decrease in inbound roaming revenue was almost entirely offset by a corresponding decrease in our outbound roaming expense, despite a 58% increase in our off-net data traffic. On the positive side, LT mentioned the increase in postpaid ARPU. This increase was partially driven by increased device protection revenues and favorable plan and product offering mix as a result of customer adoption of higher value, higher tier plans. We continue to see consistent growth in our highest tiers of unlimited plans. As of the end of the quarter, 46% of our postpaid handset customers are now on these higher tier plans, and that's up from 38% just one year ago. Now let's turn to tower results on Slides 9 and 10. As you can see, the business delivered another strong quarter with 8% revenue growth. Including U.S. fiber sites, our tower tenancy ratio is currently 1.54, up from 1.46 two years ago. We've also added a couple of additional disclosures this quarter to provide you with insight into both the geographical diversity and carrier composition of our tower portfolio. As we noted last quarter, our towers are well positioned geographically, with about 30% of them not having a competing tower within a two-mile radius. Our tower revenue is well distributed among the large wireless carriers. Next, let's turn to our quarterly operating performance shown on Slide 11. For this discussion, I will refer to adjusted operating income before depreciation and amortization as adjusted operating income. As I noted, total operating revenues declined 11%. However, with lower device sales, lower promotional costs, lower bad debt expense, and a steadfast focus on controlling costs, cash expenses decreased, and this decline more than offset the decline in revenue. System operations expense declined 6% due primarily to the previously mentioned decrease in off-net roaming expense. In 2024, we will begin to realize net savings associated with the shutdown of our CDMA network that LT previously mentioned, offset partially by decommissioning costs. Starting in 2025, we expect annual run-rate savings of approximately $30 million related to the CDMA shutdown. These expected savings will help mitigate expense increases associated with our ongoing 5G mid-band deployment. Loss on equipment sales, or loss on equipment sold less cost of equipment sold, decreased $25 million as a result of lower device sales and promotional costs. As previously mentioned, we ran an aggressive new and existing promotion for the entire duration of the third quarter of 2022 and did not execute this level of promotional intensity in 2023. Selling, general and administrative expenses decreased 10% driven primarily by decreases in bad debts expense, and the favorable impact from the reduction in workforce that was executed in the second quarter of 2023. As we indicated last quarter, we estimate full-year run-rate savings related to the reduction in workforce of approximately $45 million, which we expect to fully realize in 2024. Wrapping up the slide, adjusted operating income increased 35% and adjusted EBITDA, which incorporates the earnings for equity method investments, along with interest and dividend income increased 28%. Both of these amounts have been adjusted to exclude the $3 million of expenses incurred in the third quarter related to our strategic alternatives review. Capital expenditures decreased 18%, mainly driven by the timing of expenditures in 2023, relative to the prior year. Free cash flow was $237 million for the nine months ended September 30, 2023. We expect healthy positive free cash flow for the full year 2023 as we continue to invest in our multi-year 5G mid-band deployment while prudently managing our free cash flow. As shown in Slide 12, service revenue and capital expenditure guidance remains unchanged. Furthermore, we have retained the midpoints of our adjusted operating income and adjusted EBITDA guidance and tightened the ranges of these measures reflecting reducing uncertainty given we are in the later stages of the year. I will now turn the call over to Michelle Brukwicki. Michelle?

Thank you, Doug, and good morning, everyone. Turning to Slide 14, I'll share third quarter highlights for TDS Telecom. Our team delivered 61,000 fiber service addresses in the quarter, our highest quarter-to-date, bringing our year-to-date total to 127,000 at the end of September. Given where we are in the year and the strong momentum we've had, we are raising our 2023 goal to 200,000 fiber service addresses, up from 175,000. Another important milestone for our fiber program is that we expect all of our expansion markets will be launched by the end of 2023. These markets are primarily in Wisconsin and the Pacific Northwest. A few of our recently announced markets are Missoula, Butte, Helena and Great Falls, Montana, Twin Falls and Caldwell, Idaho, and Fond du Lac and Sheboygan, Wisconsin. Another important highlight this quarter is that TDS Telecom elected to participate in the federal enhanced ACAM program in 24 states. This program will provide us with revenue support through 2038 in return for us delivering increased speeds of 100 megabits down and 20 up to approximately 270,000 locations. As a reminder, the existing ACAM program provided $82 million a year through 2028. The new program increases the revenue amount to approximately $90 million per year beginning in 2024 and extends to 2038. Therefore, we expect to receive a total of about $1.3 billion of E-ACAM revenue support over the next 15 years. We anticipate this program will help us accelerate the delivery of higher-speed broadband to various rural high-cost areas that we serve. This is a fantastic outcome for TDS Telecom and our customers. Now let's jump into our quarterly results starting on Slide 15. As you just heard, with our successful fiber service address results, we have increased our fiber service address goal to 200,000 this year. We are really proud that we have developed a strong competency in managing builds and navigating challenges. Longer term, you can see where we are in our scorecard. We are targeting 1.2 million marketable fiber service addresses by 2026. We ended the quarter with 709,000. So we're making good progress. We are also targeting 60% of our total service addresses to be served by fiber by 2026. We ended the quarter with 44%. This reflects progress in growing fiber through our expansion markets, as well as fibering up our incumbent markets. Specifically, by 2026, we plan to serve half of our ILEC addresses with fiber. At the end of the quarter, 40% of our ILEC were fibered up. Lastly, we expect to offer speeds of one gig or higher to at least 80% of our footprint by 2026. We finished the quarter with 69% at gig speed. We continue to believe these long-term targets are achievable. Although our address delivery numbers may fluctuate from year to year, depending on various factors, our 2026 goals remain front and center throughout the organization. We are pleased with the results of our fiber builds to date. We continue to achieve the broadband penetration that we projected in our business cases. On Slide 16, you can see that we are growing our footprint with an 11% double-digit growth in total service addresses year-over-year. Shown on the graph on the right, we see increasing demand for higher broadband speeds, with 75% of our customers taking 100 megabits per second or greater, up from 69% a year ago. We continue to increase the availability of gig-plus speeds, and we're now even offering 8 gig speeds in certain markets. Customer take rates for these speeds are growing with 14% of our customer base on 1 gig or higher at the end of the quarter. Our broadband investments are driving positive results, including a 10% increase in total residential broadband revenue. As shown on Slide 17, we experienced a 5% increase year-over-year in total broadband residential connections. Average residential revenue per connection was up 3% due to price increases in product mix, partially offset by promotions. We had another quarter of 4% growth in residential revenues, with expansion market residential revenues increasing to $20 million in the quarter. This aligns with our expectation of steady revenue growth following the timing of service address delivery as penetration ramps in these new markets. Residential wireline incumbent and cable revenues were flat, as a decline in video and voice connections was offset by price increases and growth in broadband connections. Our wireline incumbent, which includes our ILEC market is facing increasing competitive pressures. We consider capital prioritization and expected economic returns as we respond to competition in select ILEC markets with fiber builds. The E-ACAM program will provide funding to help us defend these markets. As expected, commercial revenues decreased 12% in the quarter, primarily driven by lower CLEC connections. Lastly, wholesale revenues decreased 3% for the quarter, primarily due to lower special access revenue. On Slide 18, you can see our quarterly performance. Operating revenues were flat in the quarter as the growth in residential revenue was offset by the decline in commercial and wholesale. Cash expenses decreased modestly in the quarter. This decrease is a result of our intense focus on cost efficiencies and disciplined spending. As a reminder, the expense results shown here include the cost to initially launch our fiber markets, which are incurred upfront prior to generating revenues. Adjusted EBITDA was up 3% in the quarter as a result of the decrease in cash expenses. Capital expenditures of $172 million were up modestly from the prior year due to our investments in fiber. Keep in mind that these investments support our multi-year strategy and our goal of increasing free cash flow and return on capital over the long run. Slide 19 shows our 2023 guidance. We are keeping our revenue guidance range unchanged from last quarter, although we expect to be towards the low end of our range of $1.03 billion to $1.06 billion. Even though we are expecting to deliver more fiber addresses than originally planned this year, the majority will be launched in late 2023, and it will take time for penetrations and revenues to build. Adjusted EBITDA is expected to remain between $270 million and $300 million in 2023. As we look forward, we are still on track to have our expansion communities launched this year. This means we can begin serving customers and generating revenues. Starting next year, and over the next several years, we expect our broadband penetration, revenues, and adjusted EBITDA to grow. Moving on to CapEx, consistent with our increase in expected fiber service address delivery and our investments to establish internal construction crews, we now expect capital expenditures for this year to be approximately $550 million. As Vicki mentioned earlier, going forward, we will continue to size and pace the timing of our capital expenditures to be commensurate with our financial capacity. Due to the pull forward of service addresses and corresponding higher CapEx in 2023, next year, we plan to slow our spending and focus on driving broadband penetration and revenues in our new fiber markets. Service addresses in 2024 will likely be closer to what we delivered in 2022. In summary, we remain on track to achieve our 2026 fiber program goals. Recognizing that the number of service addresses may fluctuate from year to year, we will give more specific guidance for 2024 during our year-end call. However, we wanted to provide directional insight on next year's fiber program in the context of our expected address and CapEx results for 2023. In closing, I want to acknowledge all of the TDS Telecom associates. It is taking a tremendous amount of engagement and adaptability to execute on our strategy. I want to thank the entire organization for pulling together to make that happen. I'll now turn the call back over to Colleen.

Okay, we will now open up the call to questions. As a reminder, our focus today is on the quarter. We will not be taking questions on the strategic alternatives reviews for UScellular. Operator, we are ready for the first question.

Thank you, Ms. Thompson. Please follow the Operator's instructions. We'll go first this morning to Rick Prentiss at Raymond James.

Thanks. Good morning, everybody.

Good morning, Rick.

First question, thanks for the extra color on the tower revenue distribution pie chart. Have you had a chance to think through the T-Mobile 29%, I think it shows? How much is Sprint or potential Sprint churn that might be out there? LT, I think you mentioned that you expect the industry CapEx slowdown will affect the 2024 tower leasing revenue, but just also wondering about kind of a churn effect.

Good morning, Rick. We don't—so of the Sprint T-Mo disconnects, a lot of that activity occurred in the fourth quarter of last year and the first quarter of this year. We've had about 100 cumulative lease terminations as a result of the merger. That slowed way down in the second and third quarter. So we think we're through most of it. So the short answer is, we don't think there's a lot left with respect to additional terminations. You can see sequencially, our tenancy rate went down a little bit because of that exact reason.

Okay. That's what I was wondering. Okay. And then on fixed wireless, obviously, you've got the C-band now earlier than originally planned. Can you help us understand where you think the addressable market is as far as households for the fixed wireless product? How many households do you cover now? How many households would you like to cover over the next couple of years, just so we can kind of size that opportunity?

Certainly, Rick. Let me explain the situation a bit. Firstly, as we activate our mid-band spectrum, we improve the speed experience for our customers and increase our capacity. I closely monitor whether we need to halt sales due to the effects of fixed wireless subscribers on the mobile network. So far, we've only had to restrict sales to a very small number of towers, and the impact on the mobile network has been manageable. We expect this to continue as we carefully rollout mid-band. The choice of which towers to upgrade is influenced by the demand from fixed wireless. Looking at our growth rate over the past 18 to 24 months, I anticipate that it will persist. It’s hard to predict the full potential of the product. If I compare it to cable products and improved fiber networks, I can see it reaching 400,000 or more households. However, as those households start using the mid-band spectrum, their usage will rise, and we will need to adjust based on mobile capacity demands. It’s too early to know what that will look like since we're just beginning to roll out this product. Overall, we remain optimistic and haven’t needed to shut down any sites or stop sales at any locations yet. I believe 400,000 is the highest estimate for the addressable market because we will need to manage capacity. I hope that answers your question.

It does. And final one, it's a theoretical question. I'll try to slip that in there. When you think about the difference between OIBDA and EBITDA, a large part is the minority interest. You guys receive dividends from those minority interests. So if you think about one of the strategic alternatives might be to do something with the minority interest, how should we think about theoretically? Why sell something where you get a dividend? Is there some tax-efficient means? Would you consider stock? Just trying to think through the logic of that minority interest line item of what might be interesting to do and why?

Yes, Rick, we're not going to comment on any questions that relate in that area. So we're just not going to comment on any outcome implications. We're not even going to speculate today, but thank you.

You can get without trying.

Yeah, Rick. Operator, next question.

Thank you. We'll go next now to Phil Cusick at JPMorgan.

So you said no outcome or implications, but is there anything you can say about timing in terms of where we are and when we might hear something?

Yes. Thanks, Phil. Thanks for the question to both of you. It is an opportunity for us to reiterate our comments. Our announcement on August 4, we are focused on all strategic options that are in the best interest of the company and its shareholders. This process is active and ongoing. That's all I can comment on right now. I'm not going to comment on the timing or speculate on the timing either. Thank you.

I feel it's worth a shot. Okay. So real question, LT, you're pretty clearly paring back on mobile spending, accepting the slower gross adds that come with that. Does it make sense to pull back further on sales and marketing, especially in a quarter where the noise volume will be high from here to save even more money given the strategic review? And also are you paring back on CapEx as well near term because of the review as well?

So what we try to do as we think about balancing our promotional spend is matching the volume of that spend to the available volume in the marketplace. Fourth quarter, because of the holiday, is when we see the highest level, certainly switching activity. We need to match that available switching activity with as much volume as we can put in the marketplace. I'm not adjusting our promotional spend or our capital spend based on any potential outcomes of the strategic review. What we're doing is adjusting that spend based on what we see as the dynamics in the marketplace. In the third quarter, we saw an opportunity to pull back a little bit in terms of spending, and you see that in our strong financial performance. We see there is going to be an opportunity in the fourth quarter, particularly on the upgrade side to ramp up our volumes. We plan on aggressively pursuing those. As far as capital goes, the capital moves have really been driven by two factors. The first factor is we're very comfortable with the results of our 5G modernization program. We now have 5G active on sites that carry 80% of our traffic. Mike and team have done a really nice job of rolling that out. What we're able to do is slow our capital spending associated with 5G while replacing some of that spending with mid-band. We mentioned it on the call; we got early access to that C-band spectrum. Where we roll that out, we see really strong mobile performance and it helps us sell a better fixed wireless product. Much of the slowdown in CapEx associated with 5G is being replaced by acceleration of mid-band. The net is what you see in both our numbers for this year and thinking about next year, similar capital spend as well. Capital and promotional approach is really driven by marketplace dynamics, not influenced by the strategic assessment.

Okay. Thank you. And then one for Michelle, if I can. Can you dig more into the competition in the ILEC markets? Is that cable footprint expansion you're alluding to or maybe fixed wireless? I'm a little surprised that ACAM funding can be used to defend yourself against cable incursion. Is that what's going on?

Hi, Phil. Thanks a lot for the question. Yes, so in our ILEC, we are facing a little bit more of a competitive pressure than we had in prior years. It’s not primarily coming from fixed wireless. Cable is always a tough competitor for us, but we're starting to see some of the smaller fiber overbuilders coming into some of our ILEC markets. We've been very focused on our ILEC for the last decade. We've been building fiber in our ILEC, and so we've got 40% of our ILEC fibered up right now. We have goals to continue that. It's a really great way to defend and compete in those markets. We see that the E-ACAM program will provide funding to help us defend these markets.

Okay, thank you.

Thanks, Phil. Next question.

Thank you. We go next now to Simon Flannery at Morgan Stanley.

Great, thank you very much. Good morning. LT, just following on, on the FWA. Good results continue there. Could you just give us a little bit on the profile of these customers, where they're coming from? Is this in kind of more suburbia? Are you seeing more in rural areas? What's the kind of the sweet spot here for that customer base? And then just coming back to the point you were making about the competitiveness in wireless, cables being aggressive for some time. I mean, their adds have sort of leveled out here for a few quarters. Were you seeing something new? Was it more players in your markets? Or what was the delta here in the last few months that you were kind of trying to highlight? And then maybe just one last one on the fiber side. The slower build, are you going to concentrate more your builds next year on in or out of region on the fiber side?

Thanks, Simon, and kudos to you for not trying to slip in a strategic assessment question. We appreciate it. Yes, let me start with fixed wireless. Interestingly enough, we actually see a fairly decent blend of customers. I'll remind again that this is a low-band product we've been selling thus far, which would lead you to believe that it would skew heavily rural, where the primary competition is satellite or DSL. Interestingly enough, we've seen a really good blend of customers, which would indicate that we're taking from cable. In many cases, we're even taking where cable has upgraded their plan. That gives me a lot of optimism about the mid-band fixed wireless as we roll out that 300 meg product. It isn't purely just a speed game. There's a simplicity of installation. There's a positive customer experience associated with this product. Our churn continues to go down on the product. We continue to see really good churn performance. It's not just a rural-oriented product as I had initially assumed it might be. We see a really robust blend. Let me switch to the cable; your question about cable. What's different? Really, two things are different for us. The first is you've seen just a steady expansion of their footprint. Early on, UScellular was a bit insulated from cable competition because they started in large cities. Our competitors saw a larger competitive impact from cable than we did. A few quarters ago, I mentioned we saw cable competition in 50% of our footprint. As of today, it's 60% of our footprint. We've simply seen an expansion of that cable competition. The other dynamic is that we expect smaller cable players to roll out wireless service, creating a bit of increased competition. We're seeing a larger number of cable players start to subsidize devices. We'll have to track that carefully; it's an interesting dynamic. In the early days, it's quite easy to offer wireless service and see positive net add performance. I think, moving forward, this subsidy will become an important dynamic as we see customers upgrading their devices. For the third question, Michelle, I'll hand it to you.

Yes. Thanks, LT. And thanks for the question, Simon. You asked about next year whether we're going to prioritize fiber in or out of region. The short answer is it's going to be prioritized and out of region, but let me give you a little more context as to why that's our focus. In 2023, given our momentum, we have allowed ourselves to spend more this year and deliver more addresses in 2023, and then we can start selling into those addresses. Next year, we plan to slow our spending, and we expect addresses to come in lower. We expect CapEx to be lower next year than it has been in 2022 and 2023 levels. We're going to be able to deliver addresses at an incrementally lower cost than what we've had in the last couple of years. We will continue to achieve our 2026 fiber program goals. Recognizing that the number of service addresses may fluctuate from year to year, we will give specific guidance for 2024 during our year-end call. Still, we wanted to provide directional insight on next year's fiber program in the context of our expected address and CapEx results for 2023.

Yeah, helpful. Thank you.

Okay, next question?

Thank you. We go next now to Michael Rollins at Citi.

Thanks. Good morning. Just a couple of follow-ups. First, on the wireline side, just curious, as you look at the goals for 2026, can you give us an update in terms of the total spend to get to those goals, whether it's on a gross basis or just capital investment needed to get to that point or on a net basis? So what the net funding need for the businesses over the next few years. And then on the wireless business, you commented a little bit earlier on the churn dynamics. And curious, when you look at your churn versus maybe where some of the national carriers are, is this the obvious opportunity to try to push that down, 20, 30, 40 basis points and improve the total subscriber postpaid phone trajectory for the business? Thanks.

Hi, Mike. This is Michelle. I'll start and then let LT jump in. In terms of fiber funding and our 2026 goals, I'm not going to give guidance or specific numbers beyond 2023 right now, but I can provide some context. We do still believe that those 2026 goals are achievable. We still have a plan to get to those 2026 goals. It will take additional CapEx versus where telecom had historically been. You've seen the elevated CapEx in 2022 and 2023. I can tell you directionally that CapEx is going to be lower next year, mainly due to the factors I mentioned earlier and in our incumbent and cable markets. We're identifying anything that can be reduced or deferred, especially knowing that the E-ACAM program work is coming. CapEx will continue to be elevated but focus on profitability and managing CapEx so that we're able to self-fund as much as possible.

Mike, let me tackle the churn question. The simple answer to your question is yes. But you'll probably want a little more color than just yes. Talking briefly about churn, what you've identified is the opportunity, which is how do we continue to drive that churn number down. We do see that as the biggest opportunity to improve our net add performance. Doug mentioned in his prepared comments about the positive trend we've seen in postpaid handset churn over the past year. The thing driving that is the aggressive offers we've had in the marketplace around new and existing offers. We plan on doing something very similar through the holiday period. We're focused carefully on upgrades, improving our in-contract rate. The money spent on those upgrade offers is not cheap, but it's efficient since customers in contract churn at a much lower rate. We see this as the biggest opportunity in front of us in the next couple of months.

Thank you.

Next question?

Thank you. We go next now to Sergey Dluzhevskiy at Gabelli Funds.

Good morning. Thank you for taking the questions. My first question is for LT on the tower business. Could you talk a little bit more about the progress you’re making in increasing the number of co-locators, but more broadly, if you could talk about the medium-term strategy for the tower business? What has been working well so far? Would you still need to improve to gain a much larger scale and have more pronounced revenue growth in the business?

Hi, Sergey. The improvement in colocation is evident; we're up 2% year-over-year. Growth in new tenants and amendments on existing towers has slowed. We think that's due to macro industry dynamics, not because of anything we're doing well or not in marketing the towers. We've mentioned it. We've slowed our capital spend. If you look at our competitors, they're seeing the same. We remain optimistic about the future. The FCC does not have spectrum authority right now. There's no spectrum auctions on the horizon. Wireless companies are going to have to densify their grids. A denser grid is good for a tower business, particularly our tower business, which is differentiated in terms of competitiveness. We view this positively.

Yes. Thank you. And my second question is both for LT and Michelle. Earlier this year, management of both companies talked about kind of stepping up collaboration efforts, including an MVNO relationship, reselling each other's products, potentially applying for government funding together. You're close to the end of the year. Where are you in this collaboration process? Looking into 2024, how does it make sense to apply for bid funding or other government funding together or roll out fiber services in some of UScellular's markets if it makes sense to explore possibilities for a bundled offering? And any other thoughts you have on broader collaboration too.

So Sergey, let me begin. We continue to explore opportunities where we can co-sell. We have multiple pilots running where our footprint overlap. It's small, but where it exists, we're finding opportunities for us to market and serve TDS's wireline products. You keyed in on bidding; I think that could be a great opportunity as states define parameters. I'm personally hopeful they choose an approach that creates these opportunities. TDS is well-positioned to bid where those approaches allow. I'll let Michelle share her thoughts on MVNO options.

Yes. For MVNO, we are currently making progress on getting an MVNO product launched for TDS Telecom, called TDS Mobile. We're in the final stages of contract negotiations and integrations with our partners. As an NCTC member, we chose to participate in the NCTC MVNO program and signed up with selected partners. UScellular overlaps with TDS Telecom's footprint in about 40% of our geographies. Where that overlap happens, we expect UScellular to be our partner for offering TDS Mobile. Where that does not overlap, we will have to leverage a different wireless carrier. We're excited about this new TDS Mobile product, close to launching within the next few months.

Got it. Thank you.

Thank you. Ms. Thompson, I'll turn things back to you for any closing comments at this time.

Okay. Thanks, everyone, for your time today. Have a good weekend.

Thank you, Ms. Thompson. Ladies and gentlemen, that concludes the TDS and UScellular third-quarter 2023 operating results call. We'd like to thank you all so much for joining us and wish you all a great day. Goodbye.