TDS plans to cover 60% of its footprint with fiber by 2026

TDS Telecom added 35,000 new fiber-enabled locations in the fourth quarter bringing its total fiber-enabled addresses to 400,000 at year-end. That is up significantly from the 20,000 new fiber locations the company added in the third quarter.

The company added 86,000 new fiber addresses in 2021, which is lower than its target of adding 150,000 new addresses in the year. However, during the third quarter earnings call, TDS Telecom SVP and CFO Vicki Villacrez warned investors that the company would miss that target because of permitting problems and contractor delays.

 Villacrez said on the company’s fourth quarter investor call that TDS continues to struggle with supply chain problems, permitting issues and scheduling delays but nevertheless it is committed to expanding its fiber footprint as rapidly as possible.

TDS grew service addresses 7% year-over-year from 1.302 million in fourth quarter of 2020 to 1.387 million in fourth quarter 2021.  In addition, the company is now offering 1-Gig services to 58% of its footprint.

TDS ended the quarter with 500,000 residential broadband customers, up from 459,300 at the end of 2020 and 35,700 commercial broadband connections compared to 34,000 in the year-ago period.

TDS Telecom’s 4Q revenue from residential broadband connections increased 4% to $57.86, up from $55.66 in the fourth quarter of 2020.  And for the full year, TDS Telecom’s revenue surpassed $1 billion up 2% from $976 million in 2020.

The company spent $411 million in capital expenditures in 2021, of which 40% went to its fiber expansion markets. TDS plans to increase its capital expenditures to between $500 million and $550 million for 2022 with 54% of that funding going toward its fiber expansion.

TDS management outlined aggressive goals for the next five years, including doubling its current broadband connections from 500,000 to 1 million and growing its broadband-enabled locations to 2.2 million by 2026 with approximately 60% of those locations being outfitted with fiber. The company had previously committed to reaching 929,000 service addresses with fiber “over the next several years” but this is the first time TDS has put a date to that goal. TDS management also said that they want to provide 1-Gig speeds to 80% of the company’s footprint by 2026.

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Doug Chambers, CFO, treasurer and EVP of TDS, said that TDS realizes that its five-year strategy is bold but it believes that there is a “sense of urgency” to increasing its fiber footprint because of interest from consumers and also because of the rapid growth in overbuilders that are entering its markets. “We believe the opportunity is so great and we feel like we have to go faster,” Chambers said.

Chambers added that in 2022 TDS expects its addressable markets to increase by one-and-a-half to two times what it did in 2021. “The window for the best markets will go away with more activity,” he said. “We have to seize the opportunity.”

TDS’ parent company Telephone and Data Systems reported overall operating revenues of $1.372 million for the fourth quarter compared to $1.376 million for the same period in 2020.