Michelle Brukwicki: Yep. Thanks, LT, and thanks, Mike, for the question. So yeah, we’re building our fiber networks Mike. I mean, we have thought about all the different ways to leverage those networks. We certainly do work with wireless companies. If there’s a way for us to provide fiber to towers and for things like that we certainly do that. But in terms of opening it up and being a wholesale provider that’s not where we’re going with these at this point. Our business model our long-term vision is to own our networks and to serve our customers on those networks and we think that we can do a really great job of serving those customers and offering them the products and services that they need and want at competitive prices, and so we think that we do that in a very high-quality way. And so at this point, we’re not considering opening up our networks to others.
Michael Rollins: Thanks very much.
Michelle Brukwicki: Okay. Thanks, Mike.
Operator: Next question comes from the line of Sergey Dluzhevskiy with GAMCO Investors. Your line is open.
Sergey Dluzhevskiy: Good morning. Thank you for taking the questions. My first question is for LT around competition with cable. So as you said, cable you’re competing with cable across about two-third of your footprint. And they have been quite aggressive. Obviously, you’re using these larger companies which — who are in turn responding to even larger players in the wireless industry. So in this environment, what could you sell or do effectively as a regional provider to improve its competitive position over medium term? And specifically in competition with cable, what has been working better for you over the past few quarters based on your experience?
LT Therivel: Hey, Sergey, yeah, so I mean you put out a bit of numbers, I know I mentioned these in the intro. But the interesting challenge that we’re facing with the cable players is — the first is something that we saw in Europe in the LTE days, which is cross subsidizing wireless with wireline. So using wireline profits to help subsidize the wireless business. And that’s a challenging dynamic to fight against from a pricing perspective, right? In some cases we’ve got cable in the marketplace for $29, unlimited with one line free for a year. So you’re talking about $15 a month on the Verizon network. And so it’s a challenging pricing dynamic to fight against. Then I mentioned the WiFi offloading dynamics. In many cases they’re using — their WiFi offload is much higher than ours.
And so the correspondingly their use of cellular is lower. So what do we do to compete? At its core our industry still competes on network and price. And so the first thing that you can do is you can bring the price of the bundle down to compete against wireless — excuse me, compete against cable and we’re doing that with fixed wireless, right? So one of the things that I’m very pleased about is the success of our fixed wireless business and a lot of those customers come with bundled lines. And so kind of go back at them — fight the war on their turf so to speak. And I think the success of our fixed wireless business is proof around that strategy being a good one. I think the second thing that you can do is make sure that you’re paying a lot of attention to your existing customer base and you’re insulating them as best you can.
And so our in-contract rates going up and consequently our churn rate is going down is another good dynamic around our ability to compete successfully with cable. The third piece Sergey is I also think that this is a long game, right? In the long run it is very difficult to compete in our industry if you don’t have owner’s economics. In the short to medium term, I referenced right they’ve got — they have a share of gross adds that is much higher than their existing market share. And so there’s still room — plenty of room to grow. But in the long run investing in a really high-quality network experience is another insulating factor to be able to help you compete successfully. And so we have to invest. And we have to invest behind a mid-band.
We have to invest behind high speeds, quality 5G and making sure that we have a highly competitive network. And so your ability as a wireless player to invest not just in low prices but also in high speeds and high quality to me in the long run is the best way to compete against the cable wireless players. They have plenty of room to grow, but we think we can compete aggressively.
Sergey Dluzhevskiy: Got it. Another question is on towers. If you could maybe summarize your primary objectives for the Tower business for this year or maybe over the next two years. Obviously, you mentioned the current environment as wireless companies a lot of that depends on mid-band deployments and lowering the capital spending plans that impacted overall revenue trajectory in the near term. But even in this environment I guess what are the opportunities to improve revenue trajectory? And what are the primary objectives over the next few years?
LT Therivel: Yes. So I would — Sergey, I would chunk it up a little bit in terms of let’s call it a one year to two year time frame versus a three year to five year time frame. For the next one to two years I mean the objective is simple it’s continue to grow revenue. And the easiest way to do that is to be a co-location partner of choice. And so we continue to market those towers aggressively the ones that we already have in place. We’ve talked in the past about potentially being able to open up other assets on those towers to people to collocate with us. And so co-location rate and continuing to improve that co-location rate is probably our primary objective. We think we are well-positioned to do so. The challenge is in the next one to two years how much co-location activity, how much new Tower build activity will there be for operators.
And so there’s kind of a secondary objective in the next one to two years which is to make sure that we’re financially healthy and we’re built for the long-term. That’s something that we’ve always focused on as a business. Not just in our tower business, but more broadly. And so I feel good about the long-term trajectory and our ability to let’s call it weather the storm of the next year or two as operators not just US cellular, but others kind of pull back a little bit on capital. What we want to be positioned for is that three year to five year time frame when if I — as I talked about a little bit in my answer to Rick’s question. If we don’t see more spectrum come online, operators are going to have to densify. And if they densify, we think we’re in a very good position.
In past earnings call, we’ve shared how our tower portfolio, in many cases a large portion of our tower portfolio, doesn’t have another tower within a mile, two miles, three miles of its tower. So it’s not one of these situations. Most of our towers don’t have these situations where you have one tower and there’s another one right next to it. And so it’s very difficult to differentiate yourself other than by price. In our case, we’re differentiated by location. And as some of our competitors have to densify into rural America, we think that portfolio is really well-situated. And so in the long run, we see some really attractive growth on that. So co-location rate and let’s call it a healthy financial profile would be the metric for the next year or two.
Long-term, it would be overall top-line revenue growth and potentially even new tower expansion when we can invest to support other people’s densification efforts.
Sergey Dluzhevskiy: Great. And my last question is for Michelle. I think a few quarters ago, you highlighted pickup in overbuilding in your ILEC markets. Maybe if you could provide an update where the situation is now, how do you typically respond to an overbuilder, your approach in 2024? And also, as you think about your fiber build, if you could talk about how you prioritize your build, keeping the overbuilding activity in mind and other factors that you kind of prioritize?
