TDS Telecom's CFO: We’re targeting 1.2 million fiber service addresses by 2026

TDS Telecom has set an aggressive goal to target over 1 million locations for service over the next three years. During the second quarter, the service provider deployed fiber broadband services to 41,000 marketable service addresses, bringing its total to 66,000 this year through June.

Michelle Brukwicki, CFO of TDS Telecom, told investors during its second-quarter earnings call that it is getting closer to covering more of its markets with fiber. “Longer term, we are targeting 1.2 million marketable fiber service addresses by 2026,” she said. “We ended the quarter with 648,000, so we're making good progress towards that goal.”

She added that TDS targets 60% of its total service addresses to be served by fiber by 2026. The telco ended the quarter with 41%. “This reflects progress in growing fiber through our expansion markets as well as installing more fiber in our incumbent markets,” Brukwicki said.

During the second quarter, the service provider added 20,000 new fiber service addresses. Brukwicki said the service provider is “well positioned towards hitting our goal of 175,000 service addresses for the year.”

Although TDS Telecom is not immune to supply chain and labor issues, the service provider has found methods to keep the network build on track. “We're successfully navigating challenges in getting our builds completed, and with about 100 communities in various stages of development, we can shift and pace our construction, when necessary,” Brukwicki said.

Ramping the gig

As it continues to build fiber to more locations, TDS Telecom will also make higher speeds available to more customers. The telco has continued to focus on offering 1 Gbps and other rates, including 8 Gbps in some markets.

“We’re expecting to offer speeds of 1 gigabit or higher to at least 80% of our footprint by 2026,” Brukwicki said. “We finished the quarter with 68% at gigabit speeds.”

Customers appear to be responding to TDS’ efforts. The company noted that it is seeing an increasing demand for higher broadband speeds, with 74% of its customers taking 100 Mbps or greater, up from 68% a year ago.

Brukwicki said that more customers are adopting gigabit speeds. “We continue to increase the availability of Gig+ speeds, including offering eight gig speeds in certain markets,” she said. “Customer take rates of these speeds are growing with 13% of our customer base on one gig or higher at the end of the quarter.”

Broadband leads revenue mix

TDS Telecom’s broadband investments are paying off. The telco reported that residential broadband revenue rose 8% during the second quarter.

The provider also saw a 5% increase year-over-year in total broadband residential connections. It ended the quarter with a total of 523,600 broadband subscribers. Likewise, average residential revenue per connection rose by 4%. Brukwicki said that the increase was “due to price increases and overall product mix, partially offset by promotions.”

Finally, TDS Telecom's residential revenues across all its markets rose 4% to $175 million, while declines in commercial and wholesale revenues partially offset this trend. Commercial revenues declined 10% in the quarter to $39 million, primarily driven by lower CLEC connections and wholesale revenues decreased 4% for the quarter, to $43 million primarily due to lower special access revenue.

TDS Telecom is progressing in expanding its broadband reach outside its traditional territory. “Expansion market residential revenues were up to $18 million in the quarter,” Brukwicki said. “This aligns with our expectations of steady revenue growth following the timing of service address delivery as penetration ramps in these new markets.”