Telephone and Data Systems, Inc. (TDS) Q3 2026 Earnings Call Transcript

Operator: Ladies and gentlemen, thank you for joining us. And welcome to the TDS and Array Third Quarter 26 Operating Results Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press 9 to raise your hand and 6 to unmute. I will now hand the conference over to John Toomey, Treasurer, Vice President and head of corporate relations. Please go ahead.

John Toomey: Morning, and thank you for joining us. The presentation we prepared to accompany our comments this morning can be found on the Investor Relations sections of the TDS and Array websites. With me today in offering prepared comments are on behalf of TDS, Walter Carlson, president and CEO Vicki L. Villacrez, Executive Vice President and Chief Financial Officer. On behalf of TDS Telecom, Kenneth Dixon, president and CEO of TDS Telecom. Christopher Bautfeldt, vice president of financial analysis and strategic planning of TDS. On behalf of Array Digital Infrastructure, Anthony J. Carlson, president and CEO of Array. This call is being simultaneously webcast on the TDS and Array Investor Relations websites. Please see the websites for the slides referenced on this call including non GAAP reconciliations. TDS and Array filed their SEC forms 8-K including the press releases, earlier this morning. As shown on slide 2, the information set forth in the presentation and discussed during this call contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties. Please review the Safe Harbor paragraphs in our press releases and the full description of risk factors included in our SEC filings. I will now turn the call over to TDS President and CEO, Walter Carlson. Walter?

Walter Carlson: Thanks, John, and good morning, everyone. TDS made progress during the third quarter on our mission to transform the organization. Over the past several years, we have taken many strategic actions that position us well both for today and the future. Those include exiting the wireless business, monetizing spectrum at attractive values, retaining tower assets that can benefit from future demand, investing in fiber without the burden of high leverage in a period of rising interest rates, and repurchasing shares at prices we believe are attractive. Today, I am pleased to share TDS and Array Digital Infrastructure's third quarter results, which reflect the progress we are making. TDS Telecom delivered record construction activity and strong fiber customer growth. But has more work to do to offset pressures on profitability. Array delivered strong revenue growth as it continues to optimize the portfolio. Across both businesses, we remain confident in our strategy and the investments we are making to create long term value. Turning to slide 3 and our 2026 enterprise priorities, our objectives remain clear. Grow and strengthen our fiber business maximize the value of our tower portfolio maintain disciplined capital allocation, and continue transforming our business for the future. As Ken Dixon and Christopher Bautfeldt will explain, TDS Telecom continues to expand its fiber footprint while increasing its focus on converting those addresses to customers. As Anthony Carlson will describe, Array is advancing its strategic priorities. Through increased tower colocations, and continued efforts to monetize its C band spectrum. I do want to briefly comment on TDS's previously announced offer to acquire the minority interest of Array in an all stock transaction. As we noted in our September 1 press release, we continue to believe there could be strategic benefits to such a combination. However, after extensive review on both sides, the 2 parties were unable to reach agreement on value and form of consideration. With that process behind us, TDS continues to be laser focused on supporting both Array and TDS Telecom as they advance their respective strategic objectives and build shareholder value. I continue to be encouraged by the progress being made in both business units and by the work underway to strengthen our culture during this period of transformation. I would like to personally thank every associate across the enterprise for their continued commitment and contributions. I will now turn the call over to Vicki.

Vicki L. Villacrez: Thank you, Walter, and good morning, everyone. As Walter highlighted, our enterprise priorities are centered on creating long term value and our capital allocation is aligned to support them. First is fiber. TDS Telecom continues to advance its long term goal of reaching 2.1 million marketable fiber service addresses. Adding 76 thousand in the third quarter. TDS Telecom now has a footprint of over 2 million addresses an 8% over the prior year. And 63% of those addresses are served with fiber today. Delivering on this level of continued expansion requires intentional oversubscription, which drives pull forward capital, but is necessary to fill our pipeline to mitigate for temporary construction delays such as permitting or other factors. As we have noted previously, being first to market with fiber is a critical part of our investment thesis, It supports expected returns in the low to mid teens and our fiber investments. We continue to see attractive opportunities to be first to fiber, and our strong capital position provides us the flexibility to pursue these investments. We remain confident in our long term growth and the value they can create. Second, I am pleased to share that following the termination of TDS' offer to acquire Array, we were in the market and have now virtually exhausted all of our prior share repurchase authorization $520 million Given recent share prices, and our view of the company's intrinsic value, we viewed this investment as an excellent use of available capital. Further, in an effort to afford us future flexibility, the TDS Board has approved an additional $250 million share repurchase authorization. This is an open authorization that is not time bound and allows us to remain opportunistic as market and business conditions evolve. Finally, in the quarter, we completed the acquisition of Granite State Communications, a tuck in market in New Hampshire that brings 13 thousand fully fibered service addresses to the portfolio strengthening our Northeast fiber cluster. Thank you, and now I will turn the call over to Kenneth Dixon, to discuss TDS's fiber business.

Kenneth Dixon: Thank you, Vicki, and good morning, everyone. At TDS Telecom, we are transforming our business to be fiber centric. Slide 6 shows our progress at the end of the third quarter. We now have over 2 million service addresses and 63% of those are served by fiber. 19% are served by coax, meaning 82% of our addresses can get gig speeds today. Our incumbent markets are 56% fiber, And with the support of EACAM, and our fiber deeper investments. We continue to drive copper out of our network. As shown on slide 7, we delivered 76 thousand marketable fiber service addresses in the third quarter. Bringing us to approximately 181 thousand for the first 9 months of the year. This represents the best third quarter fiber address delivery in company history. And demonstrates our continued momentum. Being first to fiber and seizing the current opportunity are critical. Which is why our fiber build plan is supported by historic levels of construction crews and our EACAM activity reached its highest level since the program began. In the third quarter, we added 27 thousand new ILEC fiber addresses and expect that number to increase in the fourth quarter. That momentum is driving our CapEx guidance for the year. Looking ahead, we plan to deliver 25% of our EACAM addresses next year. With less construction competition in rural areas today, we are seizing the opportunity to retain crews and accelerate our investments. As a result, we have a large pipeline of addresses in various stages of construction and investment across many markets. This pipeline positions us well to meet our goals, both this year and long term. In summary, our build teams are delivering at a record pace, giving us confidence in the construction plan and the opportunity ahead. Turning to sales. We ended the third quarter with 17 thousand fiber net adds. Our highest quarterly result in company history up 50% year over year. We also saw improvement in our fiber churn when compared to last year's third quarter. Which is typically the industry's highest quarter for churn. We are seeing the benefits of our new sales leadership and expanded capabilities. We have additional door to door vendors to attack the record open for sale opportunities to complement our existing teams. We have also increased capacity in our multidwelling space to accelerate sales for those units. In terms of customer acquisition, we have shifted a significant portion of volume toward the .com channel, which is our lowest cost of acquisition. We are excited by the sales opportunities we see as we close out 2026 and move into 2027. In our cable markets, subscriber trends continue to stabilize during the third quarter. As you know, 22% of our cable addresses today are served with fiber. As we continue to become a more fiber centric company, I am pleased to share that we are beginning activities to convert 30 thousand coax addresses to fiber. Our operational transformation is centered on efficiency, improving the customer experience, and simplification. As I have noted before, we continue to make progress modernizing our systems and remain on track with our transformation road map. Making it easier for customers to do business with us. Turning to slide 8. Our long term goals reflect the scale and long term value we expect to create through our fiber growth strategy. We believe fiber is the superior broadband technology not only for today, but well into the future. With the delivery of 76 thousand fiber addresses in the quarter, We now serve over 1.2 million fiber service addresses. 63% of our total footprint and 82% of addresses capable of gig speeds. We are building at a record pace. Improving our execution, and steadily shifting the business toward fiber. We know there is more work ahead but the progress we are making reinforces our confidence in our strategy. And long term value of the fiber centric business we are creating. Before I turn it over to Christopher, I wanna comment briefly on our third quarter financial results. We are very bullish on our fiber growth future, but continue to see pressure on our legacy business. This is a driver for our updated guidance. Which Chris will cover in more detail. Thank you. And I will now turn the call over to Christopher.

Christopher “Chris” Bautfeldt: Thanks, Ken. Turning to slide 9. The chart on the left shows our quarterly fiber service address delivery over the past 7 quarters, and reflects the build momentum we are experiencing. As Ken highlighted, we had company record address delivery in the third quarter, representing 82% increase year over year and the momentum continues as we head into the fourth quarter. For the full year, we remain on track to deliver between 150 thousand and 300 thousand new fiber service addresses. The chart on the right illustrates the continued expansion of our fiber footprint. Over the past 3 years, we have increased the number of fiber service addresses across our markets by 77% demonstrating steady and meaningful progress toward our long term fiber goals. On slide 10, residential fiber net adds were 17 thousand in the third quarter. 50% increase compared to prior year, driven by continued footprint expansion, and ongoing copper to fiber conversions. Residential fiber connections have grown 81% over the past 3 years, outpacing our fiber footprint growth. We expect continued fiber connection growth as we expand our footprint. Turning to slide 11, the chart on the left depicts our residential revenue per connection, which grew 2% year over year. This growth reflects annual price increases, partially offset by promotional activity. The chart on the right highlights total residential revenue between copper, cable, and fiber. You will see that fiber revenue is up 14%, or $12 million versus prior year. Which largely offsets the legacy revenue stream pressures we are experiencing. In cable, revenues are down 7% versus the third quarter of 25. Reflecting continued market pressures, partially offset by a onetime benefit in the quarter. Adjusting for this benefit, cable revenues would have been down 10%. As Ken highlighted, we are increasing investment in sales capacity in our cable markets and are starting to see progress. Overall, total residential revenue declined $3 million compared to prior year. Excluding the impact of divestitures, residential revenues were relatively flat. As Ken noted, we are deploying fiber across our footprint at a record pace to help mitigate legacy headwinds. Slide 12 summarizes our financial performance. Total operating revenues declined 3% in the quarter. 1% excluding the impact of divestitures. The remaining decline reflects continued legacy revenue stream pressures, partially offset by fiber revenue growth. Cash expenses increased 4% as costs to support our growing expansion markets along with inflationary cost increases, including fuel and people related costs, were not fully offset by our transformation and ongoing cost containment initiatives. Also note that the third quarter cash expenses include $4.2 million of strategic alternatives costs, primarily related to workforce reductions. This compares to $3.5 million incurred in the prior year. We continue to drive efficiencies in the organization to help offset inflationary increases and costs associated with expanding service and growing our footprint. The decline in adjusted EBITDA for the quarter reflects these cost pressures, as well as top line headwinds from divestitures and legacy revenue streams. Capital expenditures totaled $251 million in the quarter. Reflecting higher address delivery, a higher mix of buried versus aerial builds, and a record level of addresses under construction across our fiber markets that will be delivered in future quarters. We are seeing higher costs to complete our builds. slide 13 reflects our guidance for 2026, which has been updated. We are projecting total telecom revenues of $990 million to $1.01 billion down from our prior guidance. We were anticipating fiber revenues to more than offset legacy declines during the second half of 2026, but we continue to work toward that inflection point. We also moved our adjusted EBITDA guidance range downward to $290 million to $310 million as the lower revenue expectations fall to the bottom line. We are experiencing higher costs to support our extended hours to service customers in areas where we are building fiber. From a capital perspective, we have increased our guidance by $100 million from our prior midpoint to $750 million As Vicki and Kenneth both highlighted, delivery of fiber addresses at a record pace requires that we have a large funnel of addresses and the flexibility to pivot when delays arise from permitting and other factors. Nearly half of this increased CapEx is driven by a pull forward of future spend. Which we expect will contribute to address delivery in 2027. The remaining increase is largely due to higher EACAM build costs, and a pivot to construct more of the buried addresses in our expansion markets. As I mentioned earlier. Before turning over the over the call, I want to thank the entire TDS team for their continued execution and focus. Their efforts across fiber delivery, customer growth, and operational transformation are critical to the progress we are making toward achieving our long term objectives. I will now turn the call over to Anthony.

Anthony J. Carlson: Thanks, Chris, and good morning. The third quarter represented another meaningful step in executing our strategy to optimize tower operations. Our year over year results are now becoming increasingly comparable as Q3 25 marked both the launch of Array as a stand alone tower company and the commencement of the T Mobile MLA. As highlighted on slide 18, when adjusting for DISH and excluding T Mobile interim site revenue, cash site rental revenue grew 20% year over year. After also fully excluding the impact of the T Mobile MLA, cash site rental revenue grew 7% year over year, demonstrating the strong organic growth of our tower portfolio. As T Mobile continues its network integration activities, we are continuing to see the expected reduction in interim site revenue as those sites are terminated. Importantly, our leasing pipeline and sustained application activity continue to support healthy revenue growth which is expected to partially offset the impact of declining interim site revenue over time. Turning to slide 19. We continue to gain greater visibility into the expected population of tenantless towers following T Mobile's integration process. Based on the information available today, we have refined our estimate to 1.2 thousand to 1.6 thousand tenantless towers. As a reminder, however, T Mobile has until January 2028 to designate its committed sites under the new MLA. Given the likelihood that a meaningful number of towers will remain without tenants in the near term, we remain intensely focused on our ground lease optimization initiatives. While this is a multiyear effort, we have made progress in reducing lease costs on towers that are likely to become tenantless and identifying the most uneconomic sites for decommissioning. More broadly, we are accelerating our ground lease buyout program, which expands tower level margins while further reducing portfolio risk. Moving to slide 20, there has been minimal change since last quarter. With the notable exception that we received regulatory approval for the sale of certain 600 MHz and 700 MHz spectrum licenses. Subject to FCC finality and customary closing conditions, we expect the transaction to close by year end. We also continue to pursue opportunities to monetize our remaining spectrum holdings primarily our C band spectrum. This spectrum is deployment ready today and we remain confident in its value as a highly attractive 5G asset And the absence of near term build out requirements allows us to remain disciplined, and avoid being forced sellers. Slide 21 summarizes the results of our partnership or noncontrolling investment interests. As a reminder, 2025 investment income and distributions were impacted by several onetime factors, including the impact of the Iowa partnership selling their wireless operations to T Mobile and distributions received from Verizon related to their transactions with Vertical Bridge. Equity income for the 9 months ending September 30 was $116 million. Turning to slide 23. Array delivered a strong quarter with year over year revenue growth driven primarily by the T Mobile MLA complemented by solid growth from the rest of our customer base. As discussed in prior quarters, the year over year increase in cost of operations reflects the reclassification of certain property tax and insurance expenses from SG and A into cost of operations. This change also contributed to the year over year reduction in SG and A expense. SG and A continued to include costs associated with winding down the legacy wireless operations, although those expenses declined further during the quarter. In addition, SG and A remained elevated due to strategic alternatives related costs incurred in evaluating the proposal received from TDS to acquire the remaining publicly held shares of Array. Consistent with their classification, these costs are excluded from adjusted OIBDA. With the withdrawal of the TDS proposal, we do not expect these costs to recur in the fourth quarter. On slide 24, our outlook remains unchanged. We expect total operating revenue of $205 million to $215 million adjusted OIBDA of $60 million to $75 million, and adjusted EBITDA of 220 million to $235 million. Capital expenditures are expected to be $25 million to $35 million driven by an expected increase in ground lease buyout activity during the remainder of the year. In closing, Array continues to make meaningful progress, on its journey to becoming a leading tower company. Want to personally thank our team for their dedication, execution, and contributions throughout the year. We remain firmly focused on completing the T Mobile integration, expanding our customer relationships, and optimizing our ground lease portfolio. The momentum across the business is clear, and I am excited about the opportunities ahead and the progress we will continue to achieve together. Will now turn the call back to Walter.

Walter Carlson: Thank you, Anthony. As I noted in my opening remarks, TDS continues to make solid progress advancing our strategic priorities. The momentum we are seeing across the businesses positions us well as we come into the last 2 months of 2026. And look forward to 2027. I would like to again thank all of the outstanding associates across the TDS enterprise for their continued dedication and hard work in serving our customers and supporting the advancement of our business. Operator, we will now open the line for questions.

Operator: We will now begin the question-and-answer session. Please limit yourself to 1 question and 1 follow-up. A reminder that if you have a reminder that if you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press 9 to raise your hand and 6 to unmute. Your first question comes from the line of Ric Prentiss with Raymond James. Your line is open. Please go ahead.

Rick Prentiss: Can you hear me okay? Yeah. We can hear you fine, Vicki. Good morning. Good morning. Good morning. Good morning. Yeah. Hey. Thanks for doing the call and taking the questions. I have a couple. 1 starting on the TDS Telecom side. As we have looked at. And thanks for that chart. Showing kind of fiber versus copper versus coax. As we look at that, obviously, pressure on the legacy side. You talked a little bit cable and what you are doing there. Trying to get some more coax to fiber. Changes in sales stuff. As I look at copper side, it looks like copper, you have had some divestitures. But kinda down $10 million year over year on the revenue line in copper markets. But also down $2 million sequentially, 1Q to 2Q, 2Q to 3Q. What do we think about turning that around? I think you mentioned putting some more ILEC fiber out there, but how should we think about stemming that trend on the copper side And when do we think, broadly speaking, the business inflects so that you get revenue growth at the total level and EBITDA or EBITDA growth at the total as well as you kind of balance fiber versus legacy.

Kenneth Dixon: Hi. Thanks for the question. Yeah. what is beautiful for us this year is the EACAM program. And, as you saw, 27 thousand address that we delivered in the third quarter in our ILEC market This is core to our strategy is deploying fiber into those EA CAM markets and then along the route, picking up those copper served addresses today in our legacy footprint. So we saw a nice acceleration in the third quarter We have a funnel, very robust in terms of addresses. For our EA CAM in the fourth quarter. And then as you see from some of my comments, we have got record crews right now from a construction standpoint And candidly, the largest amount of addresses in our pipeline here going into the fourth quarter So that gives us confidence that we are going to continue to be able to attack those copper markets and ultimately deploy fiber.

Operator: And Rick, to answer your question around total revenue growth, what I would say is that we expected in the second half of this year that our revenue our fiber revenue growth would more than offset these legacy declines.

Christopher “Chris” Bautfeldt: But we are still working towards that inflection point. I will say that inflection point is around the corner. it is not years away. And just like Kenneth said, our strategy is to accelerate our fiber business as much as possible to offset these legacy pressures in the near term.

Rick Prentiss: Very good. And how about as we look down to the OIBDA line? Obviously, you are investing a lot of CapEx. Like, Vicki mentioned, someone had mentioned kind of the return on capital hurdle for these projects in the low and mid teens. How do we think about the OIBDA turning around and becoming growth then?

Christopher “Chris” Bautfeldt: Yeah. So just to elaborate on that, obviously, plays a huge role in EBITDA. So we are doing everything we can to get to that inflection point on revenue. That will drop to the bottom line We also are on pace to hit our transformation initiatives. We have put a line in the sand that by year-end 2028, we will have $100 million in run rate benefits We are still tracking towards that goal and so the. Increase in accelerated fiber revenue growth as well as those transformation efforts will help also turnaround EBITDA in the future.

Rick Prentiss: Great. And the second 1's for Anthony. Obviously, it seems like we get daily, weekly, buzz from what SpaceX is doing, what DISH is doing. Can you let us know how many DISH sites you had and what is happening as far as any discussions on the tower side with satellite companies in general and how soon might we see something from satellite companies impact you guys?

Anthony J. Carlson: So in terms of your first question, we had 330 DISH sites Of course, you know, they are no longer paying for those. They are in the process of banning that equipment. But that is about how many we had. You know, we are not we are not gonna comment on any sort of particular satellite company, but what we will say is that we have great assets. That are attracted to anybody who is interested in building out a terrestrial network, indeed, the largest carriers of the United States, and many other players as well are already tenants of ours, and we look forward to working with anybody who is interested in building out terrestrial networks.

Rick Prentiss: And as you think strategically, if satellites do something terrestrially, how do you think of the impact on your tower business Neutral, positive, very positive. What. what is kind of the array of outcomes that you kinda look at what might happen in this still fog of war, unclear exactly what is happening.

Anthony J. Carlson: Well, obviously, there is there is sort of big strategic questions about hey, you know, what is the. Assuming potential other major entrants become, you know, terrestrial network players? You know, what is the end number of sort of terrestrial networks. But if that number goes up, I do not think there is any alternative, but it being broadly bullish. For our business because we are in the business of leasing space on towers if the number of major carriers goes from 3 to 4 or more, those carriers will need to use our space, and that means more revenue for us. So I think that is broadly bullish. You know, I do not think a scenario where satellite companies are able to replace terrestrial networks entirely with satellite based services is very likely I think that there are many laws of physics reasons for that have been the claw of this discussed by many other people in many other forums, so we broadly believe that. We think that you know, direct to device communication is broadly complementary to the terrestrial service that is provided by terrestrial mobile networks. And we think it is great for consumers. So we have. We are broadly bullish on this. on the opportunities from additional mobile carriers. Great.

Rick Prentiss: Thanks, guys.

Operator: A reminder that if you would like to ask a question, please raise your hand. Your next question comes from the line of Michael Rollins with Citi. Your line is open. Please go ahead.

Michael Rollins: Thanks, and good morning. I am curious Morning, Michael. Good morning. I am curious if you could just share more perspective on the competitive landscape from the combination of fixed wireless, satellite You have got, you know, the potential for some overbuilds or incumbent builds depending on which markets we are talking about for you guys. And just how you are thinking about the long term penetration or share opportunity and where broadband ARPUs go over time if competition stays where it is or picks up a bit, Thanks very much.

Kenneth Dixon: Hey. Good morning. So where TDS has deployed fiber, we are not seeing a material impact from satellite. I would say if you look at areas that we have deployed fiber, I think I will just point to some of the things that we have seen most recently in the third quarter. We actually saw our fiber churn improve on a year over year basis 20 basis points. And that was an improvement in what I would say, during mover season where we usually see elevated churn. The next thing, as we have put addresses out into the market with those marketable addresses, We had our biggest fiber net add in our customer and our company history at 17 thousand So the demand for our services is fantastic. We believe, strongly that fiber is the best solution for broadband. And if we look at the usage, utilization on our network in terms of consumption, of data, it grew double digits again on a year over year basis. And we see that growth continuing and we see with more and more artificial intelligence usage in the home, that fiber is absolutely the best solution. So we feel very confident in our fiber strategy In terms of ARPU, as I said, we absolutely believe that we are going to continue to see the usage on our network And we believe a fiber strategy with the ability to go to multi gig PON, whether it is up to 8 on XGS or 25-gig PON, that over time, you will see ARPUs increase based on the need for more and more data. So we believe our fiber strategy is right on. And that is 1 of the reasons why we just spoke about converting 30 thousand of our cable addresses over that we feel are great opportunity at very low cost. To move to fiber. And why we are so bullish on the EACAM program to accelerate that and to candidly take as much copper out of our network in the next couple of years as possible.

Christopher “Chris” Bautfeldt: And Mike, with respect to penetration rates, so in our expansion markets, we are still consistently hitting on average 25% penetration by month 12, A lot of that has to do with our robust pre sales model. And kind of pent up demand because typically we have presales 20% penetration that leads into that nice month 12 penetration. And then we are still targeting steady state penetration rates of 40%. In our more mature markets, are hitting those targets. And then with respect to EACAM, we have shared that our targeted penetration rates are 65% to 75%. We are still in the early stages of deploying in these EACAM markets. But we do have some areas that have passed that 12-month mark and they are trending really nicely to those long term targets.

Michael Rollins: Thank you.

Operator: Once again, if you would like to ask a question. Your next question comes from the line of Sergey Dluzhevskiy with Gamco Investors. Your line is open. Please go ahead.

Sergey Dluzhevskiy: Good morning. Can you guys hear me? Yes. Good morning. Great. My first question is for Walter. You mentioned that a potential combination between TDS and Array still has benefits in your opinion, but given the fact that the 2 parties could not agree on consideration and price, What set of circumstances could lead TDS to potentially try again? And maybe if Array. If Array monetizes its remaining spectrum, and becomes a smaller company, is that. Does that make things easier for a potential combination? Kind of any thoughts on that front would be appreciated.

Walter Carlson: Sergey, thank you for the question. We do not comment on specific future plans with respect to topics of that type. I would offer the following, We do think that the benefits from a combination of Array with TDS would be meaningful. And that is why we proceeded with the offer that we made When we cannot reach agreement on terms and price, we do not proceed. And we do not predict the future we cannot predict the future with great clarity, so there may be circumstances where it makes sense to do this again. And there are so many things that can happen in life, it would be hard to predict exactly what they might be but I want to underscore what I said in my remarks, We are focused intently now on building both businesses and being successful in both businesses. That is our priority. We have taken a large amount of costs out of the duplication that we had previously experienced from running Array and TDS separately, so we are running the Array business very efficiently We expect to continue that and have taken many of the costs out but there are good reasons to do it. In the future and if that makes sense, we will consider it at that time.

Sergey Dluzhevskiy: Got it. Great. My second question is for Kenneth. So, obviously, you have been able to accelerate your build engine significantly. Any concerns about building too fast And, also, what is the right balance between the build pace and following it up with appropriate go to market strategy and selling activities so that you are efficiently converting new passings into customers? And maybe if you can talk about what metrics you typically look at when you analyze this type of convert.

Kenneth Dixon: Okay. In terms of the. Let me start with the EACAM. Obviously, this is a phenomenal program and we are the largest recipient of the EACAM funding. And with that, has milestones in terms of locations that need to be delivered at the end of 25. I am sorry, at the end of 26, and we feel confident in terms of our ability to achieve those. We also had those same what I would say milestones with 25% of those locations for next year. So ultimately, that is what is guiding us in terms of our EACAM build, and 1 of the things that is important to us is that it comes at the perfect time. We have a copper revenue challenge and we have a solution with the EACAM program and that funding. And its ability to now bring fiber into those communities. So that is what is really setting the pace for our EACAM builds. The second from an expansion perspective is that our strategy is we wanna be first to fiber. And as I had announced earlier this year with the additional edge-out opportunities of 300 thousand addresses, it is very important for us now that we have established a flag in an expansion market, we have launched our brand, our sales capacity, our customer experience it is now logical for us to look around that footprint where we can edge out to and have that ability to be first to fiber and when we are first to fiber, as Christopher mentioned, we see very, very strong penetration rates. So that is really the strategy that we have talked about all year long. From a sales perspective, I think Christopher had mentioned earlier as soon as we see those addresses go into our expansion markets, We have been very successful as it relates to that presale penetration in hitting that 1-year penetration milestone. The second, I have said this all year long as we have opened up additional new open for sale. We have added a lot of vendor capacity in these geographic areas to go door-to-door. I think that is important. That channel has really developed for us this year and we have seen significant improvement in terms of their sales. The other thing that we have spent a ton of time on this year is trying to drive more and more of our overall distribution to our lowest cost of acquisition channel, which is .com And I think we are just scratching the surface of what we can accomplish there as we go into 2027. And then the last thing is we are constantly looking at our single family unit penetration and we are also looking at our multi dwelling unit penetration. Brought on some fantastic new leadership focused on MDU in the third quarter and we are already starting to see the benefits of that. So, definitely seeing what I would say improved overall sales capacity as we go into fourth quarter and into 2027.

Sergey Dluzhevskiy: Got it. Great. And my last question is for Anthony. So in early September, obviously, and Array said in their press release that they intend to increase their efforts to pursue monetization of remaining wireless spectrum assets. Can you provide maybe a bit more color on that front? And guess, what is the level of interest in C band right now? And how has SpaceX's potential push to become a terrestrial wireless competitor impacting your discussions with potential buyers?

Anthony J. Carlson: Thanks for the question, Sergey. We do not have any further specific update on our monetization efforts at this time, but I think it would be appropriate to reiterate that we think this is a very attractive asset for C-band. it is available now. there is an existing ecosystem of band position creates a lot of opportunity with the upcoming auction. So we continue to think it is a very attractive asset for a wide range of potential buyers. I got it.

Sergey Dluzhevskiy: Thank you.

Operator: A final reminder that if you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press 9 to raise your hand and 6 to unmute. We will pause for just a moment to allow for any additional questions. There are no further questions at this time. I will now turn the call back to John Toomey for closing remarks.

John Toomey: Thanks again for joining us this morning, and as always, please reach out if you have any additional questions. I hope everyone has a great weekend. Thank you.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.