Good morning. This session is for Citi clients only, and disclosures are available at the back of the room, next to the AV desk. Welcome back to Citi's 2024 Global TMT Conference. I'm Mike Rollins with Citi Research, and we're pleased to welcome Michelle Brukwicki, Senior Vice President of Finance and CFO of TDS Telecom. Michelle, thank you so much for joining us.
Thank you very much for having us. We're very happy to be here.
Great, and we may get into some survey questions during our time together, so if you'd like to participate in those, you can, scan the QR codes, with your phone. It'll bring up the selections. We're gonna ask questions live today in the room to get your perspective on, some interesting topics, and then, the results are anonymous, and we don't track anyone. So, please feel free to participate at your leisure. So with that out of the way, you know, I have one other additional item I'd like to share. We are going to keep today's discussion with Michelle to TDS Telecom, since I'm not able to discuss or ask about any of the recent corporate announcements by the company. So, thanks for your understanding in advance.
So Michelle, with all those housekeeping items out of the way, if you could share with us your strategic and operating priorities as you look out over the next few years for the TDS Telecom business?
Yeah, so at TDS Telecom, we've got a lot of really great and exciting things going on. We're in the middle of what we call a transformation into being a fiber-based company. Our vision is to be a fiber-based company, to serve our customers extremely well, be easy to do business with, and we started on this journey, you know, in earnest a couple of years ago, and we are in the middle of it, and this is what's gonna take us into the next several years as we keep going down this path. And when I say we're transforming ourselves into a fiber-based company, TDS Telecom was built up through a series of ILEC acquisitions, copper-based facilities. We got into cable about a decade ago, and we have been...
You know, we see that fiber is the winning technology out there. We believe it's the winning technology out there, and so we started with upgrading ourselves, our copper facilities to fiber probably about ten to 12 years ago, and we've been doing that consistently over that time period. And then really, where our growth is coming from is that we took that model of building fiber networks, running fiber networks, and we took it outside of our existing geographies, and we're now embarking on new territories, going into communities as the fiber overbuilder in about 100 new communities, mainly in the Pacific Northwest and in Wisconsin.
So we have worked for the last couple of years to get those communities to some stage of initially launching, getting the fiber built to a point where we can initially launch and start serving some customers, and these are gonna be multi-year builds, and so that's what's gonna take us into the next few years. That's an exciting expansion growth story, and like I said, we are not, you know, forgetting about our legacy markets. We continue to upgrade ourselves to fiber in our legacy markets, and with the government program, the Enhanced ACAM program, which we're going to be participating in in almost all of our states with, you know, many, many addresses, that's gonna get fiber even deeper into our legacy copper-based network.
So we're very excited about where this journey is gonna take us and where we'll end up, after all of this investment.
It gives us a lot to dive into. You know, maybe just one question.
Yeah.
Fiber's been around a long time.
Yeah.
What changed that catalyzed both the further build-out of fiber within the footprint, as well as the pursuits of edge-out? What changed in the model, the investment cycle-
Yeah
... capital allocation, that enabled and catalyzed TDS Telecom to make this pivot?
Yeah. Well, it was back, like I said, about a decade ago. 10 to 12 years ago is when we really started seriously upgrading our copper network to fiber, and it was at that time that... Well, as everybody knows, data usage just keeps increasing, and so our network was needing enhancements and upgrades, and, you know, for a certain amount of time, that was being done just with copper. And at some point, we said, "You know what? If we're going to make any further investments in this network, let's make it be fiber." And that's when we started doing it in certain areas and in a few communities, mainly in, it was in Tennessee, is where we really started to say, "Let's just overbuild ourselves completely with fiber and see how that goes." And customer demand was very high.
It was very successful, and we said, "You know, this needs to be the direction we go in the future. Any network investments now into our legacy ILEC markets, it's going to be fiber.
Mm-hmm.
So that's what changed. It was many, many years ago, and as we were building fiber in our ILEC markets and getting very comfortable with running fiber networks, it really became a competency of ours in terms of knowing how to build, having partners who work with us to do those construction projects, and then how to operate it, and we've learned that running a fiber network is the most efficient network to run, and so it is a lower-cost network over time versus copper, and so as we developed that competency and really became, you know, firm believers that fiber was the technology to take us into the future, at the same time, we got into, well, that was the pivot in the legacy market.
We were also looking for growth opportunities, and we did a whole evaluation of where to go next, and we landed on cable. But cable also, similar business model to what we were already doing. It's a little different technology, but you're serving customers, running a network. And so we decided to grow by doing a couple cable acquisitions, and we did, for us, a couple sizable cable acquisitions in 2013, 2014. And we would've kept going on cable acquisitions, but at that time, the multiples really started increasing. And TDS Telecom, and TDS in general, is a very financially disciplined company, so we were not going to keep doing acquisitions just at any cost. And so the acquisition pipeline slowed down for us after the couple larger ones that we did.
And we said, "Well, if this acquisition strategy isn't going to, you know, continue in a big way, what else could there be?" And we said, "Well, we've been organically building fiber in our existing networks, in our existing markets. What if we took that competency and that know-how and went into new markets and went in as an overbuilder and organically started growing?" Did a lot of you can imagine with TDS Telecom we did a lot of analysis on this, and, you know, got ourselves comfortable that this was a really viable path forward. And we started slow. We started this in 2017 with one market right outside of our home base in Madison, Wisconsin. And, you know, did that overbuild into that community and got great results, customer take rates. It was very successful, so we said, "You know what?
Let's take that a little bit farther." Went to more communities around Madison, Wisconsin area, same results, and then we started branching out farther, a little farther into Wisconsin, and then eventually we went out to Coeur d'Alene, Idaho, was our-
Mm
... first Pacific Northwest market. And so we took that growth strategy, you know, test and learn, test and learn, and got bigger over, you know, 2017, 2018, 2019, 2020. And after we really kind of proved this out in a number of different markets, that's when we started to really build the funnel and go bigger over the last couple years.
Remind us, sorry, of the size of-
Yep
... each of these, so you've got a, you know, the homegrown telecom footprint of X-
Yep
... cable TV, edge-out, and then, you know, how the fiber's gonna get infused into all-
Yep
... of this.
So we can slice and dice our service addresses in a couple of different ways. One is by technology. So we have just over 1.7 million service addresses across our serving territories, and if you break those down into what technology we're using, about half is fiber today, and about a quarter of it is still copper, and about a quarter of it is DOCSIS, or DOCSIS 3.1. The other way that you can look at our service addresses, that 1.7 million, is by market type, and that's what I've been talking about, the different types of markets. So our ILEC markets, our legacy copper markets, our cable markets, and then our new expansion markets. So of the 1.7 million service addresses, about 800,000 of them are the ILEC markets, and like I said, we've been putting fiber into those markets for a long time now.
E-ACAM will take fiber even further into those markets. The ILEC is about 44% fibered up today, and then that will just keep growing, especially with Enhanced ACAM over the next few years. So in terms of a path forward for our ILEC markets, having that governmental program to help us get fiber even deeper into rural America, where, you know, it would be uneconomical to do it on our own, that's gonna be a really nice path forward for those ILEC markets. So that's about half of our service addresses. Then we have about 500,000 of the 1.7 million in our cable markets, so primarily DOCSIS 3.1, and that can offer gig speeds today. But even in our cable markets, we've been putting fiber.
We've overbuilt ourselves in a couple small pockets, and any new greenfield builds, new neighborhoods, we build those with fiber, so we're about 17% fiber in our cable addresses.
Mm.
We will never probably overbuild all of our cable addresses with fiber, but any new addresses, any growth, we certainly will, and we will do cable selectively, you know, as potentially competitive response to other actions. Then we have the expansion markets. Those are the new markets, the brand-new markets for us. We're the fiber overbuilder, about 400,000 addresses today, in those markets. Those are 100% fiber, and they will continue to only be fiber as we keep building those out. We're about 1.7 million service addresses today. The publicly stated goal that we've put out is about we're gonna get to about 2.2 million within the next few years. That actually will just keep growing.
At some point, we'll update our longer-term goals, as we get a little bit more clarity about Enhanced ACAM, and where that's gonna take us, but it'll be at least 2.2 million service addresses with, you know, a really large percentage of those being fiber, certainly, almost all of them able to offer gig or faster to our customers.
Great. Let's try to get our audience here involved in our discussion. So, we're gonna put up a question about the forward path of investment.
Okay
... and what is the best path for TDS Telecom to create value?... sustain the current multi-year investment strategy into fiber, slow the pace of the fiber footprint expansion, and just accelerate the path to positive annual free cash flow generation, or accelerate fiber deployments, including with BEAD, which can then accelerate revenue growth and future profit potential. So we'll see what our audience thinks of that.
Yeah, that would be great.
You know-
Yeah
... just as we're going through kind of the opportunity set, you know, one of the things that was kind of interesting is you, you've had some adjustments this year to guidance.
Yep.
Can you talk us through, in terms of the operating performance, what's going well, you know, maybe what hasn't gone to plan?
Yep. So I'll start with 2023, something that went well. So we, if anybody is tracking us and tracking our capital spending, we had very big capital years in 2022 and 2023 in order to get those about 100 new markets to some point of it being initially launched, so a lot of capital spend and a lot of service address delivery. Last year, in 2023, we exceeded our service address delivery. We were shooting for about 200,000. We ended up about 217,000 marketable fiber addresses we added last year. So that's a plus. That was an overperformance last year. Now, this year, we have slowed our capital spending a bit. We can't keep at the pace that we were going the last couple of years.
We're slowing this down a little bit, now that we've got our markets initially launched, and we will make sure that we're pacing our capital to stay within, you know, leverage targets that we've set for ourselves and to try to be able to fund as much of our growth as we can with our own profitability, our own Adjusted EBITDA. And so this year, you're seeing a lower capital, and we're focusing on selling into those addresses that we have been launching over the last year or so. I will say the broadband net adds are coming in slower than we had expected, and there's a few reasons for that. It's not just in our expansion markets, and it's in our legacy markets as well.
In our expansion markets, we realized that in, you know, a few of our areas, we needed more door-to-door staffing people. That's a good news story because we can fix that.
Mm-hmm
... and that we're on, and we've got that all rolling forward. There's also some of the addresses that we were planning on getting this year are coming in a little bit slower than expected. We're running into some permitting delays in some of our markets. That's a common thing that anybody who builds fiber knows you're gonna run into certain delays from, you know, your municipalities with the permitting. Sometimes you run into delays on your locates, things like that. So we are running into a little bit of that this year. Again, that's a good news thing 'cause that's a timing thing-
Mm-hmm
... and that's easily able to be worked through. But the service addresses are delayed a little bit. So those things do impact when our expansion broadband net adds, you know, hit our books. In our legacy markets, in our cable and our ILEC, we are experiencing more competitive threats in those markets, especially on the cable side, with either the ILEC upgrading to fiber or fiber overbuilders creeping in, and so that is impacting our net adds in our cable markets. So we've got responses to those, too. Again, like we're not going to just go and overbuild ourselves with fiber everywhere as a competitive response.
Sometimes that might make sense in cable, but not always, and so there's, that's where you look then for, like, retention offers, maybe some marketing campaigns, speed upgrades, things like that, in order to compete and defend your market share in those markets. So that's an area that I would say, you know, we're not hitting as fast as we had originally planned. One other area that this year we're seeing a little bit more than others is video connections that they are. They're not, in terms of gross adds, customers aren't taking video at the same rate that they were taking it maybe even a year ago.
Hmm.
So this has really been in just the last few quarters for us that we're noticing this. Still a substantial number of our customers who sign up for broadband also want a video product from us, so it still is a big enough percentage of our customers that it makes it worth offering video for us, but it's just slower, and so the broadband net adds and the video net adds are the couple things that made us change guidance in the second quarter, and we lowered our revenue guidance a bit, but on the other side, where are we overperforming, I would say in terms of profitability, we're significantly overperforming.
In our expansion markets, we are finding that we're operating those networks even more efficiently than we had assumed in our business cases, and so that's adding to our profitability, and our entire organization is really, really motivated to be as efficient as we possibly can. I mean, we are really watching our hiring, we're watching our T&E, we're streamlining processes, because everybody's very motivated to know that the more we can generate Adjusted EBITDA, that's gonna help fund our capital investments for the growth, and everybody's very aligned on that. So we actually, you know, raised our Adjusted EBITDA guidance in the second quarter, and that's definitely an area that, for the last few quarters, we've been-
Hmm
... overperforming on.
Let's see what our survey results-
Yeah
... reveal. So the results, 25% sustain the current multi-year investment strategy into fiber.
Okay.
75% accelerate fiber deployments, including with BEAD, to accelerate revenue growth and future profit potential. So-
Yeah
... you know, within that, given the answer from our audience, as you think about that opportunity, you mentioned going from 1.7 million homes to 2.2 million homes. Is there a business plan somewhere laying around that could be significantly more expansive, and what could be the catalyst that may unlock that for TDS Telecom?
Yeah. We're always looking at how big this could be. And we've had different size programs. The one that we're talking about, that's the one that we're executing on right now. But so there's a couple ways that that could be bigger. One, the areas that we've chosen to go into for our expansion markets, we did a lot of diligence on those markets, and we chose areas of high growth. And so we go into an area, and there's usually, like, a cluster of markets. Maybe you have kind of a core market that you start with, and then there's other surrounding communities, and they're high-growth areas.
And so these markets that we're going into should be able to continue showing growth for us for many, many years to come, as you do edge-outs of those, and you just, you know, benefit from the natural growth of the communities. So there are organic growth opportunities. We do have those, you know, slated out in, like, a 10-year plan.
Mm-hmm.
We give you one-year guidance, but, you know, our team is looking out over multiple years and see the growth potential there, and that's on the organic side. There might also be, at some point in a few years, we think that there could be, you know, inorganic growth opportunities as well. You know, we've talked about this fiber deployment being a land grab, and that's why we were so focused in 2022 and 2023 on getting our flags planted in the communities that we had chosen. Because the economics of this is such that, you know, we're going into communities that already have a cable provider, so that's a strong, high-quality broadband provider, and we're going into areas where the LEC has generally not upgraded itself with fiber. So we can come in, and we're, like, the second-
Mm-hmm
... you know, high-speed broadband provider, competing mainly with cable. And those are the types of areas that we chose to go into. Now, once you go in as an overbuilder, if another company wants to come in as an overbuilder, the economics just don't work as well, and so that's why... And things have generally operated pretty rationally in the marketplace on that. And once an overbuilder comes in, it doesn't always make sense for the LEC to upgrade to fiber. They've already lost some market share, and it's hard to get that back. We know that from experience because we're a LEC provider in certain geographies, and so we have, you know, real-life experience and see how that plays out when we're on the other side of it.
So, in terms of, you know, being able to be organic and go into new communities, as communities that get gobbled up and flags get planted, it's not gonna make sense to keep going and adding new communities to our funnel if others have already started fibering them up. So the organic growth path will probably slow down here pretty soon in the next few years. But at that point, perhaps there will be acquisition opportunities that we would definitely wanna be ready for, because we are a long-term operator. We build the networks. We're a long-term operator. We wanna own the customers, we wanna serve the customers, but we realize not everybody who's investing in fiber maybe has that same objective and same strategy.
So there may be builders, network owners who want to get out and turn it over to a long-term operator.
Great. I'm gonna queue up our second survey question, which, I think is gonna be the question du jour today, at the conference around convergence.
Yeah.
Especially in light of today's news. Should TDS Telecom offer converged bundle services? The choices for our streamers are: Yes, mobile and video bundles provide for higher penetration and profits. Yes, but only for mobile services. No, just stay a pure-play broadband access provider and leave the rest to someone else.
Yeah.
So we'll see what our group here thinks of that.
Yeah.
But before we get to that, you know, when you look at the multi-year model, it sounds like where you've seen kind of the shaving of performance was more on the cable side-
Mm-hmm
... for some of the things that you're doing, you know, as the insurgent with fiber.
Right.
But when you look at that fiber model, and you look at that 10-year model that you've built, when you do the sensitivity, what's the minimum penetration and the minimum ARPU that TDS wants to achieve to feel like they can get a healthy return on capital, and it's a worthwhile project? Like, what, what are those cutoff points that you look at in the business model?
Yeah, well, I'll start with what we are aiming for.
Mm-hmm
... in the business model, and we've stated this publicly, and we've stuck to it, and we're holding ourselves accountable to it. So in our model, broadband penetration is one of the very key metrics, as you know, in making the fiber business model work. And we are shooting for being, you know, at least 40% broadband penetration in a steady state, which means, like, after the market is built, and you've launched-
Mm
... all of your areas, so that's usually, like, year four or five. Within the first year, we are generally seeing you get to about 25%-30% penetration. Then you just sort of tick up to get to that 40% over the next few years. So that's what we're shooting for. ARPU is also an important assumption, and then the build cost is an important assumption that goes into this. We don't have hard and fast rules of you have to hit this on a particular metric.
Mm-hmm.
We look at all of it in total and say, then, what is the return? What's the IRR on that, that market in total?
Mm-hmm.
We realize that there could be some pluses or minuses in some of those metrics, but we look at the IRR in total to make sure that it is gonna be over our weighted average cost of capital, hopefully even higher than that.
Mm.
And that's what we've been historically making our decisions on. And so far, we're seeing our business cases play out. Like I said, we're actually seeing that we're operating, like, on the OpEx side, even a little bit more efficiently than we had planned. Our build costs are usually coming in right as planned. And our ARPUs and our penetrations are generally coming in as planned. So especially our new markets that are just getting off the ground, the ones that came in at the end of 2023, they're right on that trajectory of that penetration curve, and so this is all still giving us confidence that this is the right strategy, this is the right model for us.
In your markets, especially the telecom and the fiber markets, but across your markets, are they more susceptible to fixed wireless competition or less susceptible to fixed wireless competition? 'Cause there's different characteristics that I can imagine in that equation would be, you know, pros and cons for the wireless companies trying to offer-
Yeah
... the service, and then the customer demand and interest for a value-based service.
Right. So I would say that it's a different answer depending on which markets we're talking about exactly. In our all fiber and our cable areas, fixed wireless is there, but it's not as much of a threat, because data usage just really keeps going up substantially every year. And we believe that cable and fiber are the best methods in order to deliver the what the customer is needing and using.
Mm-hmm.
And so there is a little bit of a risk there, but not much in our cable and fiber areas. Where fixed wireless is a threat is in our ILEC areas where we have not upgraded to fiber, like where we're still competing with a copper product. And fixed wireless is a valid, you know, co-competitive substitute, for our DSL copper-based product. Now, as we keep going with fiber deployments in our ILEC, especially with the Enhanced ACAM program, we'll be getting fiber farther and farther out into those markets, and so that will be our sort of defense mechanism, there. But there will always be a place, I think, for fixed wireless, in that you're not going to be able to get fiber to 100% of all locations.
Where it's not economical to take fiber, I think that's a great use case for fixed wireless. You know, we recognize that and appreciate that that can, you know, kind of fill that gap.
You mentioned ACAM a few times.
Yep.
For our audience that may be less familiar with the regulatory backdrop.
Yeah
... can you just give us the elevator explanation of-
Yep
... what ACAM from BEAD or other programs for-
Right
... the rest of the telecom industry?
Right, so there are two federal programs. The Enhanced ACAM program is one, and the BEAD program is the other, and we have been participating in the original ACAM program. That started in about 2017, and the objective of that was. It's a federal government program from the FCC, you know, provide a certain level of support to companies in order to get higher-speed broadband out to the most rural areas of your markets, so areas that do not have competition. There's no cable out there. There's no high-speed alternative out there, and so we had been working down the ACAM program. That was a 10-year program. We had been working down that since 2017. The speeds under that program were requiring us to get to 25 megabits down, three megabits up, and as we all know, that's not really sufficient anymore.
And so the FCC undertook, you know, an evaluation of the program. You know, we were very involved in helping think through all of this, and they came out with an enhanced ACAM program in 2023 to say, "Okay, ACAM recipients, if you'll participate in this, you'll get additional funding for longer, so out to 2038." So this is a 15-year regulatory support program, but in exchange, now you have to get speeds of 100 megabits down, 20 megabits up, so getting it a bit more modern in terms of what customers are going to need and demand. So we are part of that program, and we're still working with the FCC.
It's all based on the broadband map of which addresses qualify for this, and so we're still working on finalizing our specific addresses that we have to build out to. Those builds will take place over the next few years. It's supposed to be done by the end of 2020. If addresses are part of the enhanced ACAM program, those addresses are not eligible for BEAD funding, which makes sense that you're not gonna have two federal programs supporting the same addresses. So for us, because we participate in the enhanced ACAM program, and we will get funding to build those speeds out to those addresses under that program, those addresses are taken off the table for BEAD, so we are likely- we are not participating in BEAD. Our addresses won't be eligible under that program.
But this implicitly is giving you almost a right of first refusal to upgrade your markets-
Correct
... and potentially retain a leading position in those markets.
Right, that is our objective. I mean, we really want to be able to serve those customers with exceptional broadband, and in some of these areas just would not have been economical to do just with our own private funding. And so with this government support, along with some additional monies that we'll put into the program, you know, we'll be able to get fiber very, very deep into our network, and that's very exciting for us.
Let's see the results of our second survey.
Yeah
... and we'll tackle convergence in our last few minutes.
Okay.
So, I will use the word interesting. So, half said, yes, mobile and video bundles provide for higher penetration and profits. Yes, but only mobile services. So, you know, no one responded to just stay a pure-
Okay
... broadband provider.
Yeah.
It's an interesting question, and
Yeah
... so how did you know, I think on the second quarter earnings call, you disclosed that you're preparing a mobile bundle.
We are.
What is the TDS Telecom view of convergence? When we've seen other telecom companies start to offer a wireless product, or cable for that matter, they have had to absorb a significant amount of dilution to just-
Yeah
... ramp up the marketing, and the customer acquisition, and the devices. So, is that something that we need to be mindful of for TDS Telecom?
Yeah, so you are right. We are getting very close to launching a mobile product. It's gonna be called TDS Mobile. We're very excited about this. We've been working on this for a long time. I would say we've actually been looking at mobile, doing an MVNO-type offering, for many years, and it did not make sense for a long time. But things have changed in the ecosystem over the last couple of years, especially, and now it can make economic sense for companies like TDS Telecom, our size, to be able to do this. And what changed is that there are well, call it, like, middlemen in the middle of this that are helping enable broadband companies to be able to offer an MVNO. So we are participating through the NCTC arrangement, so the National Content and Technology Cooperative.
It's an industry coalition. We've been an NCTC member for many, many years, and we've worked with them through to get video content, so a way to kind of, you know, bring smaller providers together, leverage your buying power, and get video content. The NCTC put together an arrangement to offer an MVNO for broadband players as well, and so they established relationships with a platform company and with a wireless, a nationwide 5G wireless carrier.
Is that disclosed, by the way, who it is?
It is disclosed on the NCTC website. It's all over the place, but yes, and so we have decided to participate along with a lot of other smaller, you know, broadband players in the NCTC program, and this is a faster way to market for us to be able to offer the MVNO, so when we talk about convergence, we are looking at it more from, like... We mean bundling. We don't believe that you actually have to be the owner of the wireless network underneath, you know, serving your customers.
We are just looking at this as an opportunity to bundle, and that there is enough customer demand out there that they want to get a bundled offering and get the discounts that go along with that from their broadband provider, that it makes it worth having a mobile product in our portfolio of products. Also, if you think about who we compete with, especially when we go into our expansion, new fiber markets, we're competing with cable companies, like, you know, large cable companies, who are offering this service. They offer mobile along with video, and voice, and broadband, and so for us to effectively compete, we wanna have the same product portfolio set that we can offer to our customers, and mobile is the last element of that. We already offer a really great broadband product.
We offer a video, great video product, voice, and now we'll have mobile, too. So be very well-positioned competitively across all of our markets, especially in those expansion markets. And so yes, this seemed like this was finally the right time, and the right ecosystem had come together to enable us to be able to do this in a relatively efficient way.
Mm-hmm.
In terms of the economics, we are not going to become a mobile provider. Like, this is a complementary product that we are doing in order to enhance our broadband product. We are a broadband company, and that's our primary product. This is a complementary product to that, and it, you know, we believe that it's going to help us get the broadband net adds that we are expecting. Any time you have a customer bundle, it does reduce churn. We've seen that over years with our video and our voice products as well, so that's also a benefit. In terms of the financials, for 2024 in our guidance, like this is coming soon, but there's not gonna be a big impact in 2024, so that's already factored into our guidance.
But this is something that will not have a substantial impact on our financials going forward. So even when you think about, you know, the next few years, there will be some revenue. We're gonna manage this product to make sure that it is break even at worst and, you know, profitable at best. Like, so we are not expecting any type of significant Adjusted EBITDA dilution because of this, and, and we will make sure to manage it that way.
And so given the context and, you know, the process of having the 10-year model, when you introduce mobile into the bundling opportunity and the sales opportunity, what happens to penetration in the model for broadband? Is it so does this get you to a higher penetration, similar penetration? Like, what's that delta, and-
Yeah
... are there any other, like, long-term economics as you're just thinking about what this does to the return on capital for TDS?
Yeah. So we actually think that, having mobile is going to help us get to similar broadband penetrations that we had been assuming in our models.
Yes.
Like, this is helping us-
Yeah
... get to our goal-
To that 40.
Yeah, of the broadband penetration. We would look at it and say, if you didn't have mobile in your bundle-
Mm-hmm
... you might have a harder time getting to that broadband penetration. There's getting to be enough customer demand, customer awareness of the ability to bundle these products together, that you might start losing out on customers if you don't have this. And so we wanted to make sure that that did not happen to us, and so we're bringing this into the bundle to make sure that we can actually achieve our broadband penetrations that we're expecting through our business cases.
Michelle, thank you so much-
Yeah
... for joining us today.
Yeah, thank you very much.
Thank you.
It's been a pleasure.
Thank you.
Thank you.