Good day. Thank you for standing by. Welcome to TDS and UScellular’s Third Quarter Earnings Results Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the call over to your speaker today, Ms. Jane McCahon. Please go ahead..

customer, culture and community. Going forward, each quarter, we’re going to briefly highlight a recent action that illustrates this commitment. Before turning the call over, I want to remind everyone that due to the FCC’s anti-collusion rules related to the ongoing Auction 110, we will not be responding to any questions related to spectrum auctions.

And now I’d like to turn the call over to Pete Sereda.

Pete?.

Thanks, Jane, and good afternoon, everyone. Before speaking about the balance sheet, I want to recognize all the actions that both business units are taking to lead to higher returns and stronger businesses over the next several years. As we’ve discussed on past calls, maintaining financial flexibility is one of the pillars of our corporate strategy.

Over the years, we’ve worked to retain relatively low leverage levels, long-dated debt maturities, sufficient undrawn revolving credit facilities and term loans, and significant cash balances to make sure we have the financial resources we need to fund our businesses.

On Slide five, I want to call your attention to all the work that has been done to raise new capital to fund the growth in our businesses while at the same time, lowering the average cost of our balance sheet.

As you can see, we’ve raised $3.4 billion since the beginning of 2020 at an average cost of 4.9%, and redeemed six separate bond series comprising $1.6 billion in debt with a weighted average cost of 7%. The annual run rate savings on this called debt is approximately $33 million.

The new capital is a mix of low-cost preferred stock and very long-term retail bonds, along with shorter-term EIP securitization debt and bank term loan debt. This fulfills a commitment we made at the beginning of the year to reduce the average cost of our balance sheet and diversify our funding sources.

Going forward, we believe that we will continue to have excellent access to the debt capital markets through a variety of instruments in order to continue to fund our business. Finally, before turning the call over to LT, I want to point out that our income tax rate for the quarter was 29%.

This is up significantly from the 2020 level in which we saw significant one-time benefits from the CARES Act, which have not recurred. With that, I will turn the call over to LT.

LT?.

Everyone, if we turn to Slide seven, I’m really pleased with the progress that we’re making against our strategic priorities. We continue to see positive momentum in those growth areas of our business, and we’re making progress toward our return on capital goals.

Later on, I’m going to let Doug cover the operational and the financial highlights of the third quarter but first, I thought I’d provide a few thoughts on some of these strategic priorities. So top of mind for me continues to be the competitive environment.

During the third quarter, we saw a continuation of aggressive promotions in the industry for both new and existing customers. They have had an impact on our postpaid subscriber results and on loss on equipment for the quarter. We expect a high level of promotional aggressiveness to continue through the holiday season and beyond.

I’m really pleased with the operational pivot that we’ve made toward regionalization. We’ve effectively leveraged that regional strategy to test a variety of different offers and to help us hone in on an approach that properly balances subscriber growth with profitability.

We had a variety of offers in the marketplace in conjunction with the iPhone launch, some much more aggressive than others. And I’m pleased that we’re now set up to effectively trial multiple approaches in the marketplace, which are going to help us be much more effective in optimizing our business.

I spoke to you last quarter about some of our new initiatives to drive growth in our business and government and our prepaid operations. We reported another strong quarter of results for prepaid and we’re seeing positive momentum in business sales, particularly in the IoT space and the private networking space.

We’re also seeing some really terrific traction in our tower business. Applications are up substantially, and operating metrics, particularly cycle times, have improved meaningfully. It’s clear to the industry that we’re open for business in towers, and we’re really seeing the benefit of that approach.

Talking briefly about network, our network modernization program and multiyear 5G deployment remains on track. The majority of our traffic is now carried by sites that have 5G deployed. Uniquely important, we’re getting 5G devices into our customers’ hands. So far, we have about a quarter of our smartphone subscribers with 5G-capable devices.

I’ll talk a bit about millimeter wave spectrum. We’re optimistic on use of this spectrum for fixed wireless access. We’re continuing trials to validate network performance and customer experience, and we recently launched commercial offers in a small set of markets. We have more aggressive commercialization planned in 2022.

We’re offering commercial millimeter wave fixed wireless access speeds of up to 300 megabits per second and to date, we’re seeing many customers experiencing speeds that far exceed that.

Given the speeds that we’re seeing in our trials and the enthusiastic reception we’ve received from customers, there’s clearly demand for this type of home broadband service. We also believe this product can be a game changer in conjunction with deeper fiber build-outs and helping to bridge the digital divide.

I’m also optimistic that the House will be able to address their differences shortly and see their way clear to pass the infrastructure funding bill that’s already been passed by the Senate on a bipartisan basis.

Hope we can reach a satisfactory outcome so that we have the funding needed to get this technology deployed to those un- and those underserved areas that need it. Talk briefly about supply chain constraints. They’ve impacted us, like everyone in the industry. We’ve continued to experience some constraints on certain devices.

We think we’re managing this pretty effectively and it has not had a material impact on our results to date. On the network side, we’re seeing extended lead times for various network-related components from multiple suppliers but today, we’ve been able to mitigate these risks in partnership with our suppliers.

Like everyone, we continue to closely monitor ongoing global supply and logistics risk. I’d like to end with a comment about the people at UScellular, and we recently completed our annual engagement survey. The results confirm what I’ve observed since joining this company. Engagement is incredibly high.

We recently received a Net Promoter Score of 40, which is an amazing loyalty score. This is especially important right now, given expectations about what you’re hearing in the press around the great resignation. On that note, our current retention rates are actually higher than they were a year ago.

That has a tangible impact on our financials when it comes to things like on-boarding and training costs. I’d like to close by recognizing and thanking all of our associates who work every day to improve our customer experience and help improve UScellular overall. With that, Doug, I’ll turn it over to you to cover the details of the quarter..

Thanks, LT. Good afternoon. Let’s start with a review of customer results on Slide eight. Postpaid handset gross additions increased by 3,000 year-over-year, largely due to higher switching activity in combination with our strong promotional activity. Of course, this was against a backdrop of industry-wide promotional aggressiveness on handsets.

We saw connected device gross additions decline 26,000 year-over-year. This was driven by lower sales of Internet products such as hotspots and tablets compared to the prior year, when we experienced an increase in demand due to the pandemic.

Total smartphone connections increased by 8,000 during the quarter and by 65,000 over the course of the past 12 months. That helps to drive more service revenue given that smartphone ARPU is substantially higher than feature phone ARPU. Moving to Slide nine.

I also want to call out the strong trends for prepaid, which were driven by enhancements to our prepaid offerings. We saw prepaid gross additions improve by 9,000 year-over-year. Next, let’s turn to the postpaid churn rate shown on Slide 10. Postpaid handset churn, depicted by the blue bars, was 0.95%, up from 0.88% a year ago.

This was driven by voluntary churn, which continues to run higher year-over-year, as a result of increased switching activity and aggressive industry-wide competition. Involuntary churn also increased slightly in the quarter but is still below pre-pandemic levels.

Total postpaid churn, combining handsets and connected devices, was 1.15% for the third quarter of 2021, higher than a year ago as we’ve also seen churn increase on connected devices due to certain business and government customers disconnecting devices that were activated during the peak periods of the pandemic in 2020.

Now let’s turn to the financial results on Slide 11. Total operating revenues for the third quarter were $1.016 billion, a decrease of $11 million or 1% year-over-year. Retail service revenues increased by $25 million to $699 million. The increase was driven in part by a higher average revenue per user, which I will discuss in a moment.

Inbound roaming revenue was $30 million. That was a decrease of $12 million year-over-year, driven by a decrease in data volume and rates. One of the factors contributing to this data volume decrease is the merger of Sprint and T-Mobile and the migration of Sprint roaming traffic to T-Mobile’s network.

Other service revenues were $59 million, flat year-over-year. Finally, equipment sales revenues decreased by $24 million year-over-year due to a decrease in average revenue per unit, in large part, as a result of an increase in promotional activity as well as a decrease in overall sales volume.

We continued to engage in aggressive promotional activity during the third quarter of 2021 to remain competitive with the industry. As LT mentioned earlier, our level of promotional aggressiveness differed by region, as we looked to optimize our approach between subscriber gains and profitability.

A portion of the resulting promotional costs reduced equipment sales revenues and increased loss on equipment, which represents equipment sales revenue less cost of equipment sold.

In addition, loss in equipment in the third quarter of 2020 was mitigated by the impacts of the pandemic, specifically lower switching activity and less aggressive promotional activity. As a result of the combined impact of these factors, loss on equipment increased $19 million year-over-year from $5 million in 2020 to $24 million in 2021.

This change in loss in equipment was the driver of our decline in profitability year-over-year. We expect the aggressive promotional environment to persist for the remainder of 2021 and into 2022, and our full year guidance for 2021 reflects the corresponding financial impact. Now a few more comments about postpaid revenue shown on Slide 12.

Average revenue per user or connection was $48.12 for the third quarter, up $1.02 or approximately 2% year-over-year. On a per account basis, average revenue grew by $2.72 or 2% year-over-year.

The increases were primarily driven by favorable plan and product offering mix and increase in regulatory revenues and an increase in device protection revenues. Turning to Slide 13. As we continue our multiyear network modernization and 5G rollout, control of our towers remains critical.

By owning our towers, we ensure that we maintain operational flexibility to add new equipment and make other changes to our cell sites without incurring additional costs. As you can see on the slide, with the assistance of our third-party marketing agreement, we have seen steady growth in tower rental revenues.

Third quarter tower rental revenues increased by 6% year-over-year. We are seeing positive momentum in tower co-location applications and we’ll continue to focus on growing revenues from these strategic assets. Moving to Slide 14. I want to comment on adjusted operating income before depreciation, amortization and accretion and gains and losses.

Keeping simple, I’ll refer to this measure as adjusted operating income. As shown at the bottom of the slide, adjusted operating income was $213 million, a decrease of 8% year-over-year. As I commented earlier, total operating revenues were $1.016 billion, a 1% decrease year-over-year.

Total cash expenses were $803 million, an increase of $8 million or 1% year-over-year. Total system operations expense increased 1% year-over-year. Excluding roaming expense, system operations expense increased by 7% due to higher circuit costs, cell site rent, and maintenance expense.

Roaming expense decreased $8 million or 17% year-over-year, driven by lower data rates and lower voice usage.

Cost of equipment sold decreased $5 million or 2% year-over-year due to a significant decline in connected device sales, partially offset by a slightly higher average cost per unit sold as a result of the mix shifting more heavily toward smartphone sales.

Selling, general and administrative expenses increased $11 million or 3% year-over-year, driven primarily by an increase in bad debts expense and costs associated with supporting enterprise projects and billing system upgrades. Turning to Slide 15.

I’ll touch on 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 quarter was $262 million, a decrease of $20 million or 7% year-over-year.

Equity and earnings of unconsolidated entities remained flat year-over-year, and we expect the fourth quarter 2021 distribution from the LA Partnership to be in line with the distribution received in the fourth quarter of 2020. Next, I want to cover our guidance for the full year 2021. For comparison, we’re showing our 2020 actual results.

First, we have narrowed our guidance for service revenues to a range of $3.075 billion to $3.125 billion, maintaining the midpoint. For adjusted operating income and adjusted EBITDA, we are maintaining our guidance ranges of $850 million to $950 million and $1.025 billion to $1.125 billion, respectively.

Maintaining wider ranges reflects our expectation of a continued highly competitive environment for the remainder of the year as well as uncertainty related to the amount of promotional expense that will be incurred during the holiday selling season.

For capital expenditures, we are decreasing our guidance range to $700 million to $800 million as we are moving certain equipment and project spend into 2022. This shift did not impact our 2021 build plan and, as LT mentioned, our multiyear 5G and network modernization program remains on track.

We have also provided a breakdown of capital expenditures by major category. I will now turn the call over to Vicki Villacrez.

Vicki?.

Eau Claire, Sparta and Onalaska, Wisconsin, creating a Western cluster; Billings, Montana, the first in this state; and several communities just southeast of Charlotte in North Carolina, where we operate a cable market today. In total, these communities add more than 270,000 additional service addresses to our existing fiber deployment plan.

Through the third quarter, we have 358,000 total fiber service addresses and are working to build out the footprint in these announced markets, growing to 929,000 service addresses over the next several years. Year-to-date, we completed construction of 51,000 fiber addresses, adding 20,000 service addresses in the quarter.

This progress continues to be slower than planned due to permitting complexity and contractor scheduling delays and is putting pressure on service address delivery targets in the fourth quarter. For example, in Meridian, Idaho, we experienced a temporary delay on more than 35,000 service addresses and just recently have restarted construction.

As a result, we expect to fall short of our construction goals this year but still improve our delivery compared to last year. Therefore, we have lowered our guidance for capital expenditures to reflect these delays, but we still expect to be within the guidance range for revenue and adjusted EBITDA for the year.

We also continue to proactively manage future construction and customer equipment inventory demand where we are seeing lengthening lead times with our suppliers. As an example, some contractors have experienced staffing shortages and are unable to complete fiber builds in the desired time frame.

We will continue to monitor these challenges and update you on our progress going forward. On Slide 25, total revenues increased 2% year-over-year to $252 million, driven by the strong growth in residential revenues, which increased 6% in total.

The chart includes residential revenue mix, which highlights the increasing contribution of our expansion markets.

Incumbent wireline markets also showed solid residential growth of 3% due to increases in broadband connections as well as increases from within the broadband product mix, partially offset by a 4% decrease in residential voice connections. Cable residential revenues grew 6%, also due to increases in broadband connections as well as the product mix.

Commercial revenues decreased 6% in the quarter, primarily driven by lower CLEC connections, partially offset by a 5% increase in broadband connections. Wholesale revenue decreased 5% due to certain state USF support timing. So let me sum up the combined financial results for the quarter as shown on Slide 26.

Total revenues increased 2% from the prior year as growth from our fiber expansions and increases in broadband subscribers exceeded the declines we experienced in our legacy business.

Cash expenses increased 3% due to both supporting our current growth as well as spending related to future expansion into new markets, which is not yet reflected in our revenues. Future market costs include direct costs such as sales, marketing, real estate and technicians, in addition to shared service costs necessary to support new market growth.

As a result, adjusted EBITDA decreased 2% to $77 million, as expected. Capital expenditures were down 1% to $91 million as increased investment in fiber deployments were offset by decreased spent on core operations. And on Slide 27, we provided our updated 2021 guidance. Our revenue and adjusted EBITDA are right in line with our expectations.

And now that we are closer to the end of the year, we are narrowing our ranges and slightly increasing the midpoint on revenue. We expect revenues to be between $990 million and $1.02 billion, and adjusted EBITDA to be between $295 million and $315 million.

With the construction delays and build challenges I mentioned earlier, we are lowering our expectations for capital expenditures to be between $400 million and $450 million. It’s the dedication and hard work of all our associates that contribute to our company’s success and for that, I am grateful.

I look forward to sharing our final 2021 quarterly results with everyone in February. Now I’ll turn the call over to Jane..

Thanks, Vicki. Operator, we’re ready to take questions..

. Your first question is from Ric Prentiss with Raymond James. Your line is open..

Thanks. Good afternoon, everyone..

Hey, Ric..

Hey..

First question I’ve got is on the guidance. Obviously, a lot of the ranges tightened across UScellular and TDS. And Doug, you called out how we did not tighten the UScellular OIBDA line.

Just want to understand a little bit about what it would take in the competitive environment responses to head toward the midpoint or maybe the low end or the high end of this type of guidance if you think about how it compares to last year..

Yes. Hello, Ric. Thanks for the question. So -- and you hit on it, it’s really the promotional -- the level of promotional activity that’s going to dictate where we end up in the guidance.

So to the extent that we are very successful with customer acquisition, have a lot of promotional takes, we’re going to be to the lower end of the guidance and to the extent that we don’t quite meet our goals, might be the higher end of the guidance.

As you know, when we -- for our promotions, most of them are administered through trailing credits, about half of that promotion expense hits loss in equipment in the quarter that we mentioned, the promotion. The rest is amortized to service revenue over the life of the contract.

So that’s really the main thing that we have in play that could flex in the range is the level of promotional activity and the takes that we have from our customers..

And as you think about last year, Christmas, obviously, holiday season was still COVID affected.

How are you thinking about this year the fourth quarter versus what we might have seen last year fourth quarter, the competitive activity and your success?.

We’re hoping this quarter will be a bit more robust. We’re expecting a higher switcher pool this year, and that’s going to help on the customer acquisition side. We’re expecting to do fairly well on churn as well. So I think we’re going to have a little bit better fourth quarter, as far as opportunity, this quarter than we did last year..

Okay. And final question is you guys have talked a little bit about fixed wireless access. We’ve seen Verizon talk about it on their call; T-Mobile talked about it on their call.

Can you walk us through a little bit? It sounds like yours might be a little more tied to local, state or federal support levels, but help us understand how you’re at least getting the possibility of fixed wireless access as you may understand the trial phase..

Yes, Rick, this is LT. So I think that there’s one fundamental difference between what Verizon is doing and what we’re doing is that we’re running our fixed wireless access trials and the commercialization off of macro cellular. Verizon is primarily doing it off of small cells.

So if you think about where small cells reach, you’re generally going to be deploying those in more dense environments. In our case, right, we’re trying to reach more rural areas where, frankly, I think that there’s a greater level of opportunity vis-a-vis the other competitors. We’ve seen terrific results from our technical trials.

And so we’ve pivoted this now to commercial trials and testing customer demand. So far, we’re very encouraged. Candidly, it’s still very small volume trials.

So we’ve got to work through operationalization, think things like how to -- can we get to a self-install, how do we manage distribution sort of from a door-to-door and a digital perspective, we’ve got to develop that. So there’s a fair amount of work then from an operational perspective.

It has to go into operationalizing this technology, but we’re very excited about the speeds that we were able to realize, and not just realize in the lab but actually realize in real-world environments. Now you mentioned the government subsidies.

Certainly, those will come into play, in the sense that it costs anywhere between two to three times as much to connect the rural subscriber, it also connects between 1.5 to two times as much to build a tower in rural America. And so it is an expensive proposition to reach everyone with this technology. We’re excited.

We think in the near term, we’ve got a pretty good momentum behind the business. Certainly, ‘22 will be a year of kind of testing and scaling. And I think there’s a lot of upside.

I think there will be a lot more upside that could come with the government infrastructure bill in order to really, really utilize this technology to reach all the corners of America, all the un- and underserved areas. That’s going to require subsidies.

It’s going to require subsidies behind infrastructure, and it’s going to require subsidies behind affordability. So I’ve been spending a fair bit of time talking to folks in D.C. about that. I’m cautiously optimistic that we’re going to get that across the goal line. But we don’t require those subsidies to turn this into a profitable product.

You can expect to see us scaling that kind of throughout 2022 and we’ll certainly give updates as we do..

Great. Thanks..

Your next question is from Simon Flannery of Morgan Stanley. Your line is open..

Great. Thank you. If I could stay on that last theme, LT. Maybe you can just give us your latest thoughts on how 5G is going to play out for your consumer and enterprise customers. What is the revenue, the ARPU opportunity there? And related, maybe update us on your rollout we did see the news out of the FAA and FCC today on C-band.

I know it doesn’t directly affect you immediately, but I didn’t know if you had any color on how that’s going to be resolved..

I don’t have any color. If I did, I’d -- well, I don’t is the simple answer. I mean I think as we think about the impact of that ruling, our C-band spectrum, which would be what is affected, we’re not going to be firing that spectrum up until 2023, late 2023.

And I have a lot of confidence that situation will get resolved by that point, and so I don’t think that it necessarily affects our rollout one bit. In terms of 5G deployment, I’ll let Mike talk just a little bit about some of the specifics behind where we’re at but we continue to move forward well in our modernization plan.

I’ll let him cover the details. And then what I’ll do is I’ll come back and talk briefly about monetization. But Mike, maybe you could just share a little bit more about how we’re doing from a deployment perspective..

Sure. Thanks, LT. Good evening, Simon. --.

How are you?.

Good. As we shared before, the program is a multiphase program, and we’re well into Phase three. So we’ve got about 35% of our sites upgraded and right on track with what we committed to do.

And we’re seeing nice traffic on the sites that have been upgraded and customers are experiencing a better throughput on the network, so we’re happy with the deployment and the progress, and full steam ahead..

And let me just talk -- let me come back to monetization just a little bit. So I mean on the consumer side, we don’t see an opportunity to, let’s call it, incrementally monetize 5G via price plan premiums. Where I do see an opportunity to monetize it is via new products and services and I think fixed wireless is a great example.

So the speeds that I was quoting and the deployment that I’m quoting is based on millimeter wave, but you could certainly expect to see us to use C-band to serve those customers as well. And I think that will be an attractive source of revenue and profitability for us.

And obviously, I think providing a great 5G experience is going to be key to driving market share. And if I think about our 5G availability, we feel very good about our availability vis-a-vis our competitors. We provide a really high-quality network experience, which is core to our value proposition.

I think 5G will be a key part of providing a quality network. It’s always been a differentiation point for us. And I think you can expect that it will be that in the future as well..

Great. And just a follow-up on the competitive environment. What are you seeing from T-Mobile? They have just rolled out new retail partnerships with Walmart and Target, and have been very focused on the rural and smaller markets recently.

So are you seeing a major change there or is it fairly incremental?.

We are not seeing a major change there. I think thus far, we continue to compete well with T-Mobile. I think from a distribution perspective, I think they’re trying to find a way to create distribution without necessarily having to build it themselves, and that’s a difficult value proposition.

We feel good about our network of distribution, company-owned stores, dealer stores plus some of those same partnerships that you’re talking about. We have good distribution coverage in rural America that supplements the strong network.

And so thus far, at least, we haven’t seen a meaningful increase in win share or in subscriber effect from what T-Mobile has been doing..

Great. All right. Thanks, LT..

Thank you..

Your next question is from Sergey Dluzhevskiy of GAMCO Investors. Your line is open..

Good evening, guys. Thank you for taking the questions. My first question is for LT. I think you guys, as part of your growth initiatives, are trying to expand digital capabilities, focusing on customer life cycle.

Could you talk a little bit about your efforts there and where you are now and where would you like to be in a few years? And how those expanded digital capabilities should help you both on the cost side and potentially on the revenue side?.

Certainly, Sergey. Good to hear from you. So digital, if you think about digital pre-pandemic, digital was like a nice to have, right. It was an accompaniment to your physical store footprint. That’s not the case anymore. Digital and a strong digital presence is absolutely a requirement.

If you don’t have a positive and constructive digital experience for your customers, you’re quickly going to become irrelevant. I think the good news is that we’ve invested significantly in our digital experience, and we’re seeing it in the numbers. So we crossed over an average of four in the App Store and our app.

We’ve seen similar increases on the Android side from our app. And so customers are enjoying the new capabilities we’re providing, much more user-friendly experience, and you’re seeing that just in terms of customer engagement. Obviously, the other places that you have to invest, and we’re doing both, one is on the website.

So you have to be able to create a positive exploration experience for your customers. We’ve invested there and we’re seeing higher customer experience scores. And you have to provide digital platforms for your partners to interact with you. And so we’ve pivoted a fair amount of investment toward digital.

We’re seeing the improvements in terms of customer engagement. And I expect, in the long run, that’s going to manifest itself in two areas. I think in the truly long run, you’re going to see gross adds via digital and people will explore, purchase, get the product, fire it up, do all their service via digital.

I think we’re a long way away from that being the majority of the transactions in the industry. I think brick-and-mortar will still matter. But I do think that digital will play a role and a greater role on the gross add side of the equation. I think what you’re really going to see is on upgrades.

I think that upgrades will increasingly be done digitally. I think a good measure of performance over the long run is the percentage of upgrades that are managed digitally. It obviously helps you on the cost side. It also helps you on the customer satisfaction side.

The trick there is, are you able to create the same kind of ARPU expansion with your upgrades as you are in your physical stores? So one of the things that we’ve seen over the past couple of months is we’ve seen really good performance in ARPU expansion on postpaid, and we’re seeing that because our plan mixes are getting better.

That’s happening because customers are walking into our stores and our associates are doing a really good job upselling plan mix.

There have been some comments that I’ve read about our aggressive promotions with promotions varying by region, but the reason that we’re able to do some of those aggressive promotions is that along with it comes plan mix requirements and our associates do a really good job upselling those plan mixes, upselling accessories and so on.

You’ve got to be able to mirror that kind of upselling in the digital environment. That’s going to take time. It’s going to take investment. I think we’re on a good path. I think we’re making good investments. I think we’re seeing it in our experience scores, but certainly more to come..

Great. And another question on the wholesale front, kind of if you could share your thoughts on wholesale opportunities for UScellular. For example, DISH recently signed a new MVNO agreement with AT&T and they’re going to become their primary MVNO partner.

But I know that in many of your markets, your coverage is probably much better than what AT&T or T-Mobile coverage is.

So do you see an opportunity to do a wholesale deal with DISH? And more broadly, what other wholesale opportunities do you see down the road?.

So I mean I won’t comment on any specific opportunities, but to say that we are, call it, open for business on wholesale, I agree with you. I think that the investment that we’ve made from a coverage perspective and network experience perspective positions us very well for those kinds of deals.

I think that we can offer a very high-quality experience to a potential MVNO partner or a wholesale partner. We’re certainly open to those discussions. It falls perfectly in line with some of the partnership conversations that we’ve had on previous calls. I do think it can be an area of growth for us.

The obvious trade-off is you have to be smart about the competitive implications of opening up your high-quality network to a competitor. And so we always try to balance that. You try to make the economic equation work. It’s certainly something that we’re open to discussing. We’ve had conversations about it in the past.

I’m sure we’ll have more in the future, and it’s something we’ll keep looking at..

Great. And my last question is for Vicki on the TDS Telecom side. So you guys lowered CapEx for various reasons that you described for 2021. But you -- and now the number of pacings that you’re going to do this year is going to be lower than, I think, 150,000 that you were targeting before.

But as you look out in 2022 and assuming that we move past some of the supply chain issues, what is the annual pace of build that you would be targeting over the next few years? How much higher could you go over 150,000 level based on your current strategy and your current capital allocation?.

Sure. Good evening, Sergey. Thank you for that question. First off, let me just say that a few quarters of slower than desired construction is not deterring us at all from this market expansion program. As you know, this is a very long multiyear program and investment for the future.

And so the market -- the new market announcements we’ve made to substantially expand this program, I think, underscores our confidence in what we’re doing. The impact for 2022 could really translate into more service addresses delivered in the first quarter of next year and that would have a delay of revenues coming into the financials.

But I expect that we’ll continue to see top line growth, as we’ve seen all year, and that will go into next year. And of course, I can provide more specifics on our guidance in February. But from a capital perspective, we lowered our guidance on the capital. We don’t count our fiber service addresses delivered until it’s ready to market.

So construction can be a lot farther along, but a number of things have to happen before we can market the new fiber households. So for example, the contractor has to complete the entire construction end-to-end and light the fiber up all the way to the premise before turning it over to TDS.

And then we have to inspect it for quality and then get that new location into our system. So we have a lot of construction to complete along the way, which is really in our accounting for capital spending.

But I think that the announcement of these new markets and the increase in -- the substantial increase in our program, I am signaling that we will have increased capital spending going into 2022. And as you think about it longer term, I expect that we’ll have elevated levels of capital spending taking us through 2022, 2023 and into 2024.

And then we’ll start to see the completion of these markets coming down, starting to come down at the end of 2024 and then getting more largely completed in 2025 and 2026. So, really excited about planting the flags now and taking advantage of this opportunity that’s in front of us..

Great. Thank you..

With no further questions, I would like to hand the call back to Jane..

Thank you very much, and we really appreciate you joining us on a Thursday afternoon, and please get in touch with us with any additional questions or comments. Have a great night..

This concludes today’s conference. Thank you for participating. You may now disconnect..