Array Digital Infrastructure, Inc. (AD) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the 2022 Annual Meeting of Shareholders of United States Cellular Corporation. And I want to say that I am especially pleased that we can be in person again. I am LeRoy T. Carlson, Jr., a director and Chairman of the company. I will be chairing this meeting. At this time, I call the meeting to order. I'd like to thank everyone present and on the webcast for participating in the meeting. It is now 8:31 on May 17, 2022, and the polls are open for voting on the matters before the annual meeting, as set forth on the Notice of Annual Meeting and proxy statement and on the agenda for this meeting. The rules of conduct that we will be following for this meeting are set forth on the reverse side of the agenda. If you do not have a copy of the agenda and rules of conduct and would like a copy, please raise your hand and one will be brought to you. I'd like to take this opportunity to introduce the other directors of the company who are present. When I call your name, would you please rise? Laurent C. Therivel, Director and President and Chief Executive Officer of the company. Walter C.D. Carlson, Director of the company and partner at Sidley Austin LLP; J. Samuel Crowley, Director of the company and former senior executive of Gold's Gym International, Michaels Stores and CompUSA; Deirdre C. Drake, Director of the company and Executive Vice President, Chief People Officer and Head of Communications of the Company; harry J. Harczak, Jr., Director of the company, Managing Director of Sawdust Capital and former Executive Vice President of CDW Corporation; Michael C. Irizarry (sic) [ Michael S. Irizarry ], Director of the company and Executive Vice President, Chief Technology Officer and Head of Engineering and Information Technology of the company; Gregory P. Josefowicz, Director of the company and former Chairman, Chief Executive Officer and President of Borders Group Inc.; Cecelia D. Stewart, Director of the company and former President of U.S. Consumer and Commercial Banking of Citigroup Inc. I would also like to introduce director nominees who are standing for election for the first time at today's meeting: Esteban C. Iriarte, Executive Vice President and Chief Operating Officer, Millicom International S.A. (sic) [ Millicom International Cellular S.A. ]; and Vicki L. Villacrez, TDS's incoming Executive Vice President and Chief Financial Officer. We welcome both of them to the Board and look forward to working with them. I would also like to introduce the other officers of the company who are present today: John C. Gockley, SVP, Senior Vice President, Legal and Regulatory Affairs; Eric Jagher, Senior Vice President and Chief Marketing Officer; Matthew Kolpin, Director Business Strategy; Frederick Lubeley, Vice President, Strategy and Planning; Jane McCahon, Vice President, Corporate Relations and Corporate Secretary of the company; John Kelsh, General Counsel and Partner of Sidley Austin LLP. I would also like to take this opportunity to thank Ronald E. Daly, who has served with great distinction for 18 years on this Board, and Peter L. Sereda, who has also served with great distinction for 8 years on the Board. We thank them both for their exemplary service. I would also like to take this opportunity to introduce Amy Graves of PricewaterhouseCoopers LLP, the company's independent registered public accountants, who is participating telephonically. Ms. Graves, do you wish to make a statement at this time?

Mr. Chairman, thank you. I do not have a statement to make. However, I will be more than happy to respond to any appropriate question that shareholders may have either now or after the meeting.

Thank you. Are there any questions for the representatives of PricewaterhouseCoopers? If there are no questions for the representatives of PricewaterhouseCoopers, we will proceed with the matters on the agenda. To act as inspectors of election, I have appointed Julie Mathews of Telephone and Data Systems, Inc. and Jeff Seiders of Computershare Trust Company, our independent transfer agent and registrar. Will the holders of any undelivered proxies please hold them up so that they may be picked up by the inspectors of election at this time? If you are voting by ballot, please raise your hand so that our inspectors of election can see you. All matters scheduled for business at this meeting will be introduced from the chair. If any shareholder with a proper purpose would like to address the business at hand, I would ask you to raise your hand and address the chair, identifying yourself and disclosing the nature of your business. Shareholders will also have an opportunity following the formal part of the meeting and management presentation to ask any questions they may have. In the interest of time, we will dispense with the reading of the Notice of the Meeting and the affidavit of meeting of the notice. We will also dispense with the reading of the minutes of the Annual Meeting of Shareholders held on May 18, 2021. Secretary has copies of these documents if any shareholder would like to examine them after the meeting. The Board of Directors has set March 22, 2022, as the record date for this shareholders' meeting. The secretary also has a record of shareholders as of that date. By order of the Board of Directors of the company, management of the company distributed a Notice of Annual Meeting and proxy statement to shareholders of the company on April 5, 2022. The company solicited proxies from the shareholders. The inspectors tabulated the proxies received before this meeting and advised me of the voting results immediately prior to the commencement of this meeting. Virtually all votes are received through proxies, and the voting results with respect to all matters are generally known before the meeting starts. Accordingly, the inspectors of election have been instructed to advise me prior to the announcement of such results only in the event that there are any changes in outcome considering any votes delivered, changed or revoked after the commencement of this meeting and prior to the closing of the polls for voting. I've been advised that the inspectors of election have confirmed that a majority of the voting power of the company's issued and outstanding shares and of each class is represented at today's meeting, that a quorum is present and that the formal business of the meeting may proceed. Since the company was not notified in advance of the intention of any shareholder to nominate a director or to present a motion at this annual meeting in accordance with the bylaws, the only matters which may properly come before the meeting involving a vote -- or involving a vote of shareholders involved -- excuse me, properly come before the meeting involving a vote of shareholders are those which were set forth in the Notice of Annual Meeting and proxy statement. The 4 proposals in the Notice of Annual Meeting and proxy statement are: one, election of the directors; two, ratification of auditors; three, approval of 2022 Long-Term Incentive Plan; and four, advisory vote on executive compensation. The first item of business is the election of directors nominated by the Board of Directors. As indicated in the Notice of Annual Meeting and proxy statement dated April 5, 2022, 3 directors will be elected by the holders of common shares and 8 directors will be elected by Telephone and Data Systems, Inc. as the sole holder of Series A common shares. The Board of Directors has nominated J. Samuel Crowley, Gregory P. Josefowicz and Cecelia D. Stewart for election as directors by the holders of common shares. The election of the directors by the holders of common shares requires the affirmative vote of at least a plurality of the votes cast by the holders of common shares present in person or represented by proxy and entitled to vote with respect to such directors. The Board of Directors has also nominated LeRoy T. Carlson, Jr., Walter C.D. Carlson, Deirdre C. Drake, Harry J. Harczak, Jr., Esteban C. Iriarte, Michael S. Irizarry, Laurent C. Therivel and Vicki L. Villacrez for election as directors by the holder of Series A common shares. The election of the directors by the holder of Series A common shares requires the affirmative vote of at least a plurality of the votes cast by the Series A common shares present in person or represented by proxy and entitled to vote with respect to such directors. The Board of Directors unanimously recommends a vote for each of the nominees for election as directors. [Voting]

The second item of business is the proposal to ratify the selection of PricewaterhouseCoopers LLP as the company's independent registered public accountants for 2022. This proposal will be voted on by the Series A common shares and common shares voting as a group present in person or represented by proxy at the meeting. This proposal will be approved if it receives the affirmative vote of a majority of the votes cast by such persons. The Board of Directors unanimously recommends a vote this proposal. [Voting]

The third item of business is the proposal to approve the United States Cellular Corporation 2022 Long-Term Incentive Plan. This proposal will be voted on by the holders of Series A common shares and common shares voting as one group present in person or represented by proxy at this meeting. This proposal will be approved if it receives the affirmative vote of a majority of the votes cast by such persons. The Board of Directors unanimously recommends a vote for this proposal. [Voting]

The fourth item of business is the proposal to approve, on an advisory basis, the compensation of our named executive officers. This item of business was proposed by the Board of Directors pursuant to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This proposal will be voted on by the holders of Series A common shares and common shares voting as one group present in person or represented by proxy at this meeting. This proposal will be approved if it receives the affirmative vote of a majority of the votes cast by such persons. The Board of Directors unanimously recommends a vote for this proposal. [Voting]

If you have not yet completed delivery of your proxies or ballots, please do so now since we will be closing the polls for voting at this time. [Voting]

It is now 8:45 a.m. on May 17, 2022, and the polls are closed for voting. Since the inspectors have not informed me of any changes in outcome on any of the proposals, we will proceed with the announcement of the voting results at this time. With respect to the election of the directors, each of them received a substantial majority of the votes of the class of stock voting for such director. Accordingly, each of such persons has been elected as a Director of United States Cellular Corporation for a term expiring at the 2023 Annual Meeting of Shareholders or until his or her successor shall have been elected and qualified. The proposal to ratify the selection of PricewaterhouseCoopers LLP as independent registered public accountants for 2022 has received the affirmative vote of holders of a substantial majority of the combined voting power of the Series A common shares and common shares. This proposal is therefore also approved. The proposal to approve the United States Cellular Corporation 2022 Long-Term Incentive Plan has received the affirmative vote of holders of a substantial majority of the combined voting power of the Series A common shares and common shares. This proposal is therefore also approved. The proposal to approve, on an advisory basis, the compensation of our named executive officers has received the affirmative vote of holders of a substantial majority of the combined voting power of the Series A common shares and common shares. This proposal is therefore also approved. The inspectors will tally any additional votes received after the commencement of this meeting and prior to the closing of the polls and furnish a written report of the final vote count with respect to the matters voted on today which will be included in the minutes of the meeting. These voting results will be reported on a Form 8-K that will be filed within four business days of today. Since there is no further business to come before this meeting, the meeting is adjourned. And I would now like to ask LT Therivel, President and CEO of U.S. Cellular, to provide a brief business update. After that, we will open the floor for any questions that you may have. In addition, after we have concluded here today, Colleen Thompson, TDS Vice President of Corporate Relations, will be available if you would like to discuss other matters of interest or if you have further questions. LT?

Thanks, Ted. Good morning and thank you all for joining us today. I'll turn to Slide 2. My comments today include some forward-looking information. Therefore, I ask that you review the safe harbor statement. You can find the slides to this presentation on our Investor Relations website, along with related SEC filings, which include a description of important factors that may cause our actual results to differ from forward-looking statements. Turning to Slide 3. At U.S. Cellular, our mission is and always has been to keep customers connected to the people and the places that matter most to them. This mission guides all of our activities, and I'm proud of the progress we made towards it in 2021 as well as the steps we took to position the business for 2022 and beyond. In 2021, U.S. Cellular grew total service revenues, including core postpaid revenues, and generated positive momentum in the growth areas of our business: business and government, prepaid and fixed wireless. Frontline associates persevered through a very challenging environment due to the ongoing pandemic and the associated requirements and restrictions. We made significant investments in our network to ensure we're providing high-quality connections in all of our markets, especially those underserved by other carriers. As part of this effort, we made successful bids to accumulate mid-band spectrum to enable our 5G growth strategy. We now own 100 megahertz of mid-band spectrum that will cover 80% of our customers. We also launched our Americas Locally Grown Wireless branding campaign, which is gaining traction and will continue to evolve. Turning to Slide 4. Our plan to win in 2022 is supported by a strategy to drive revenue growth and increase our return on capital over time. We're looking to grow our postpaid and our prepaid business, concentrating our efforts on improving our value proposition and our digital experience as well as a continued focus on customer life cycle management. Also, we will leverage our regionalization strategy to further enable a community-focused go-to-market approach. This will drive a deeper understanding of our customers. We continue to expand our high-speed Internet products as we roll out 5G fixed wireless access to more markets and we continue to grow our existing low-band product. We will also continue to invest in business and government with an emphasis on new distribution opportunities and ramping up our sales efforts. Lastly, we'll continue to drive strong revenue growth in our tower business to further leverage these strategic assets. Network performance remains a key driver of customer satisfaction and a hallmark of U.S. Cellular's strategic positioning. Our multiyear network modernization program is on track as we offer 5G in portions of substantially all of our markets and will further expand our 5G footprint in 2022. Working with our partners, Nokia and Qualcomm Technologies, we achieved a world record using our 5G millimeter wave spectrum, attaining near gigabit speeds over a distance of 10 kilometers. This milestone paves the way to bring extended range, high-speed 5G mobility and fixed wireless service with massive capacity and low latency to even more regions across our footprint. That includes more rural areas. The culture at U.S. Cellular is based upon the fundamental belief that U.S. Cellular's long-term success is inextricably tied to associate engagement and high ethical standards. In 2022, we're focused on the further integration of diversity, equity and inclusion in all of our people processes. U.S. Cellular regularly surveys its associates, and those surveys have consistently shown that associates have strong engagement and high overall job satisfaction. Turning to Slide 5. In addition to our continued focus on growing revenues, maintaining expense discipline through operational efficiency is crucial on achieving better returns on capital. We will continue our multiyear program to realize efficiencies in capital expenditures and operating costs. Bringing connectivity to the underserved has been a foundational goal of U.S. Cellular since our company began. Our 5G network is well positioned to meet increasing traffic demand and expand broadband services to help bridge the digital divide in our local communities. Our work deploying 5G millimeter wave technology positions us as an industry leader in delivering affordable, high-speed connectivity to rural America while presenting exciting new business opportunities for U.S. Cellular. In addition, we will aggressively pursue infrastructure, state and local funding as part of our desire to bring better connectivity to the underserved. To help bridge the digital divide, we launched the After School Access Project, a program that provides free mobile hotspots and service to nonprofits that support youth after the school day has ended and provides safe Internet access for homework and for education. We have pledged to donate up to $13 million in hotspots and service to connect up to 50,000 youths across America in 2022. We thank our associates with our dedication to our customers and our communities. We also want to recognize their hard work, resilience and innovation, providing outstanding service to U.S. Cellular customers in exceptionally challenging circumstances. Finally, I also want to thank our shareholders and debt holders for their support. So moving to Slide 6. I'd like to see if there's any questions from the audience today. Seeing none, Ted, I'll hand it back to you.

Thank you, LT, for that fine presentation. And that, ladies and gentlemen, concludes our presentation and question period. Again, I thank all of you for your attendance at this 2022 Annual Meeting, and we do look forward to seeing you again next year with substantial additional progress to report. Again, thank you.