TDS revealed 3Q 2020 results and both video and broadband growth, specifically fiber broadband, are leading the charge. The fiber broadband growth is not surprising, but video growth has been elusive for many.
Video growth is a priority for TDS, as the company explained on its quarterly earnings conference call this morning. The company now counts 53 IPTV markets, up from 34 a year ago. Within these IPTV markets, TDS is seeing a 40% video penetration of its broadband customers.
“Approximately 40% of our broadband customers in our IPTV markets take video, which for us is a profitable product,” said Vicki L. Villacrez, TDS CFO on today’s conference call. “Our strategy is to increase this metric as we expand into new markets that value these services and through our new TDS TV+ product.”
TDS TV+ is a new cloud TV platform featuring streaming TV, TiVo middleware, and Android STBs. IPTV is available in about 39% of TDS territory today, which the company intends to grow by adding additional IPTV markets.
TDS Fiber Broadband
Turning to broadband, customers are adopting higher speeds and it’s driving revenue growth. About 12% of TDS broadband subscribers now take gigabit service. And over 38% take 100 Mbps or faster service. These higher speeds have pushed broadband ARPU up 5%, according to the company.
TDS now reaches 280K locations with fiber broadband, both in its incumbent territory and in its expansion territories. That translates to 34% coverage of its footprint with FTTP. Its current fiber construction plan will take total serviceable locations to 320K. TDS sees fiber penetration of between 30 – 40% in their fiber markets.
TDS total broadband serviceable addresses were 823K at the end of 3Q 2020, with 64% served by copper DSL broadband. TDS DSL capabilities for those locations is roughly 1/3 each for the categories of 10 Mbps or less, 10 Mbps to 24 Mbps, and 25 Mbps to 100 Mbps.
The company’s wireline business unit generated $173 million in revenue in 3Q 2020 (including its cable business), with an adjusted EBIDTA of $53 million.
Expansion is paying off for TDS. Its current fiber broadband expansion plan has contributed an additional $15M in revenue so far this year, Villacrez noted, with $20 million expected by year end.
Beyond the current fiber plan, Villacrez says TDS is evaluating additional expansion opportunities for fiber markets.
“We are evaluating other areas where it makes sense to expand on our existing footprint or to expand into new markets with this fiber overbuild strategy,” said Villacrez. “We look for strong household formation and attractive demographics that have pent up demand to buy these superior services.”
Villacrez also noted TDS looks at target build costs per household passed, which must meet its expectations before the carrier decides to build.