Telephone and Data Systems, Inc. (NYSE:TDS) Q4 2022 Earnings Call Transcript

And so it’s difficult to make the economics standalone on fixed wireless. But the beautiful part is we don’t have to. We have a core mobility business that subsidizes it. And so that capacity and the capacity demand for that business worked out pretty nicely, and we expect that to continue since we also have the mid band spectrum coming online.

Sergey Dluzhevskiy: My second question is for Doug. You mentioned continued cost optimization efforts. And obviously, U.S. Cellular’s margins continue to be under pressure for various reasons, part of it is competitive intensity in the market, part of it is your counter moves. All of that is putting pressure on margins. But what are some of the cost efficiency initiatives that you have in place for 2023 and beyond that you think could provide meaningful offset to some of those pressures? What are some of the larger buckets of cost savings that you see over the next few years?

Doug Chambers: Yes, it’s really across the business, Sergey. So every single area we’re seeing and we have a significant amount of savings built into our budget. But examples are, we’ve been driving backhaul where way down, sell side rents, we have a program to drive those down. We saved quite a bit of money with our marketing media agencies over the past years, and we’ll continue that going forward. With respect to network maintenance and network software, we’ve done quite a bit with respect to renegotiating contracts with our vendors on those. So if you look at the big buckets of spend, and that’s where we’re placing the main focus. But it’s really across the business that we’re driving savings and we’ve been doing it in a — through a formalized program since 2017, and we haven’t bought up.

Sergey Dluzhevskiy: And my last question is both for LT and Michelle. So I believe earlier this year at the investor conference, management mentioned that in 2023, U.S. Cellular and TDS Telecom will step up their collaboration efforts, including an MVNO relationship, you’re selling each other’s products, potentially applying for big funding or just broadly government funding together. Could you provide more color on these initiatives as far as what you have already been doing kind of in 2023? And what forms of collaboration or partnership do you see as the greatest value creating opportunity for both companies over medium term?

LT Therivel: Michelle, do you want to tackle that one?

Michelle Brukwicki: Yes, I can start and LT, you can certainly feel free to jump in. So yes, thanks, Sergey. Yes, we did mention a couple — a few weeks ago, I guess, it was some collaboration efforts that we’re doing together. On the MVNO front, TDS Telecom is working our way through all of the details of how we can get an MVNO product launch, so that we can get wireless into our bundle of services that we offer to our customers. We hope to get that product launched sometime during 2023 hopefully by midyear. And certainly, we would want to partner with U.S. Cellular under where our territories overlap. However, our territories don’t overlap perfectly. About 40% of our addresses can be covered by the U.S. cellular wireless network.