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

Ladies and gentlemen, and thank you for coming to this 2024 Annual Meeting of Shareholders of United States Cellular Corporation. I am LeRoy T. Carlson, Jr., a Director and Chair 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 this meeting. It is now 8:30 am on May 21, 2024, and the polls are open for voting on the matters before this annual meeting as set forth in the notice of annual meeting and proxy statement, and on the agenda for the meeting. The rules of conduct that we will follow 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 at this time 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. LT Therivel, Director and President and Chief Executive Officer of the company; James W. Butman, Director and President and Chief Executive Officer of TDS Telecom; Walter C. D. Carlson, Director of the company, and Senior Counsel at Sidley Austin LLP; Douglas W. Chambers, Director and Executive Vice President, Chief Financial Officer and Treasurer of the company. Deirdre C. Drake, Director of the company and former Executive Vice President, Chief People Officer and Head of Communications of the company. Harry J. Harczak, Jr., Director of the Company and 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; Esteban C. Iriarte, Director of the company and Former Executive Vice President and Chief Operating Officer of Millicom International Cellular S.A.; Gregory P. Josefowicz, Director of the company and Former Chairman, Chief Executive Officer and President of the Borders Group Inc.; Cecelia D. Stewart, Director of the company and Former President of U.S. Consumer and Commercial Banking of Citigroup Inc.; Vicki L. Villacrez, Director of the company and Executive Vice President and Chief Financial Officer of TDS; Xavier D. Williams, Director of the company and CEO of Network Wireless Solutions. I would also like to introduce the other officers of the company who are present today. Eric Jagher, Senior Vice President and Chief Marketing Officer; Frederick Lubeley; Jane McCahon, Vice President, Corporate Secretary of the company. And now we have Sheila Crisostomo, and Sheila is Head of Sales for the company. And I'm sorry, I don't have your exact title because it's not on my sheet Sheila, okay. But a head of sales says it all, right? Okay. Good. I'd also like to take this opportunity to introduce Shaun Goldfarb. Shaun, do you want to stand up or -- okay. Very good. Okay. Of PricewaterhouseCoopers LLP, the company's independent registered public accountants. Mr. Goldfarb, do you wish to make a statement at this time?

Thank you. I do not have a statement [indiscernible]

Great. Thank you. Are there any questions for Shaun Goldfarb, the representative of PricewaterhouseCoopers. Okay. I don't see any. So thank you, Shaun. If there are no questions, we will proceed with the matters on the agenda. To act as inspectors of election, I've appointed Julie Mathews. Julie, can you identify yourself? Thank you. And Jeff Seiders, he's on the phone. Okay. Great. 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 mailing of the notice. We will also dispense with the reading of the minutes of the Annual Meeting of Shareholders held on May 16, 2023. The Secretary has copies of these documents if any shareholder would like to examine them after the meeting. The Board of Directors has set March 25, 2024 as the record date for the shareholders' meeting -- 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 9, 2024. 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 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 of shareholders are those which were set forth in the Notice of Annual Meeting and Proxy Statement. The 3 proposals in the Notice of Annual Meeting and Proxy Statement are: election of directors, ratification of auditors and 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 9, 2024, four directors will be elected by the holders of common shares, and nine 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 Harry J. Harczak, Jr., Gregory P. Josefowicz, Cecelia D. Stewart and Xavier D. Williams 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 James W. Butman, LeRoy T. Carlson, Jr., Walter C. D. Carlson, Douglas W. Chambers, Deirdre C. Drake, 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. The second item of business is the proposal to ratify the selection of PricewaterhouseCoopers LLP as the company's independent registered public accountants for 2024. 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 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. The third 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 SEC. 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. Now 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 8:43 a.m. on May 21, 2024, 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 at least a plurality 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 2025 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 an independent registered public accountants for 2024 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 entitled to vote on this matter and present in person or represented by proxy at this annual meeting. The 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 entitled to vote on this matter and present in person or represented by proxy at this annual meeting. This proposal is therefore also approved. Now 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 4 business days of today. Now since there is no further business to come before this meeting, the meeting is adjourned. But I would now like to ask Laurent -- LT Therivel, President and CEO of UScellular, 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?

Thank you, Ted. Good morning, and thank you all for joining us today. A copy of the slide presentation can be found on our website. The information set forth in the presentation contain statements about expected future events and financial results that are forward-looking and are also subject to risks and uncertainties. Please review the safe harbor paragraphs in our press releases and the extended version included in our SEC filings. At UScellular, we continue to focus on a balanced approach that benefits all of our stakeholders, customers, communities, suppliers, associates and you, our shareholders. I particularly want to recognize our associates and how they've continued to serve our customers with excellence, especially given the fierce competition for subscribers in the markets that we serve. I'm proud of what we accomplished in 2023. We reported a meaningful increase in postpaid average revenue per user of 2%. And additionally, we surpassed $100 million in third-party tower rental revenues, a significant milestone. We grew fixed wireless customers to 114,000 resulting in a 46% increase in that customer base. And while we faced challenges in mobility subscriber growth, we successfully balanced subscriber objectives with financial goals. We enhanced our profitability in 2023. This accomplishment was made possible through disciplined expense management and a focus on operational efficiency across every major category of our spend. We also completed our network modernization initiative, and we began our multiyear mid-band deployment. Finally, in August, the Boards of TDS and UScellular decided to initiate a process to explore strategic alternatives for UScellular, and that process remains active and ongoing. The management of both companies and the Boards remain committed to pursuing the path that is in the best interest of the company and its shareholders. And given the nature of the process, we do not expect to have updates until that process is concluded. We remain committed to connecting people to what matters most. In 2024, UScellular's operational priorities continue to focus on balancing subscriber growth with financial discipline. Retention offers will be a priority throughout the year, ensuring that our valued customers receive the best possible experience as we continue leaning into the Built For Us brand. We expect our strong momentum in fixed wireless to continue throughout 2024, and we remain bullish in the long term in our tower business. In 2024, we plan to keep working on our multiyear cost optimization program as part of our commitment to financial discipline. We remain dedicated to enhancing our network capabilities to our multiyear deployment of mid-band spectrum. By the end of 2024, we expect almost half of our data traffic to be carried on sites equipped with mid-band. And this will enable us to provide an even better experience for our mobile and our home Internet customers enhancing our ability to compete effectively in the marketplace. As always, we are grateful to the associates of UScellular for their dedication and innovation in providing outstanding services, products and experience to our customers. And thank you also to our shareholders and our debt holders for your support of our long-term strategies. There are no other questions from the audience here. I will say thank you, and I will turn it back over to Ted Carlson.

Any questions from the audience for LT? Okay. Thank you all for coming to this meeting. This concludes our presentation, and our question-and-answer period. And again, we are very thankful that you came to our Annual Meeting this year, and we look forward to seeing you again next year with substantial additional progress to report. Thank you.

Thank you, everyone.