TDS Telecom is finding that building out fiber-to-the-home (FTTH) broadband and fiber overall as a key priority to not only future-proof its network, but also keep competitors at bay.

Jim Butman, president, and CEO for TDS Telecom told investors during its fourth-quarter earnings call that it is expanding its fiber footprint within its traditional ILEC territory and in other markets as a CLEC.

“It is critical to build these fiber networks and connect subscribers quickly to stay in front of potential competitors,” he said. “We have an active pipeline of identified markets and a tested game plan to plant our flags in new markets that will expand our out-of-territory footprint even further.”

Indeed, the telco invested $130 million in expanding its fiber networks last year. Besides expanding the FTTH network, TDS Telecom connected over 67,000 addresses to its network, brining total fiber addresses to 307,000 in existing and what it calls “growing expansion markets.”

The service provider has set a goal to generate about three percent revenue growth by expanding presence in new markets, enhancing cable while offsetting declines in the business services and wholesale segments.

“We have moved new markets from the planning stage to construction and have been very pleased with our pre-launch registrations and orders,” Butman said.

Enhancing Fiber, Cable Capabilities

As TDS Telecom looks to enhance its broadband standing, the service provider is enhancing its fiber and cable broadband networks.

To meet its fiber footprint expansion goals, TDS Telecom will deploy fiber in existing markets and in territories outside of its wireline footprint. The telco’s fiber build strategy has brought fiber-based broadband to 307,000 or 36 percent of its wireline service addresses, which is up from 30 percent in 2019.

Vicki Villacrez, SVP and CFO for TDS Telecom, said the fiber initiative is “driving revenue growth, while also expanding the total wireline footprint 7 percent to 845,000 service addresses.”

The telco recently announced the expansion of fiber into Boise, Idaho and the Fox Cities, which includes several communities centered around Appleton, Wisconsin.

“These additional markets bring our fiber program, which began in 2019, to 430,000 service addresses, which will expand our total footprint -- our total fiber footprint to 620,000 service addresses by 2024,” Villacrez said. “We continue to be pleased with overall take rates, which are generally exceeding expectations in the areas we have launched to date. We are expecting our fiber service address delivery to double in 2021.”

TDS Telecom is being no less aggressive to enhance its cable network, which now has about 450,000 service addresses. By upgrading the HFC network to DOCSIS 3.1, TDS Telecom now provides 1 Gbps speeds.

Villacrez said “cable is offering the same broadband speeds as we're offering on the fiber side.”

Gigabit Broadband, Video Adoption Rises

It appears that TDS Telecom’s dedication to expanding its FTTH footprint is paying off as the telco reported that broadband subscribers rose during the fourth quarter.

As it fortifies its network with fiber and expands into new markets, TDS Telecom’s residential broadband connections grew 9 percent in the quarter.  

TDS Telecom noted that 13 percent of its wireline customers are purchasing 1 Gbps speeds in the market where this product is available.

Besides 1 Gbps, TDS Telecom is seeing more of its customer base take 100 Mbps speeds and higher. Specifically, 40 percent of its broadband customers are taking 100 Mbps or greater compared to 33 percent a year ago, helping to drive a 5 percent increase in average residential revenue per connection.

Additionally, TDS Telecom is seeing growth in wireline residential video. Wireline residential video connections grew 8 percent. It also expanded its IPTV markets to 55, up from 40 a year ago.

Villacrez said “video remains important to our customers.”

“Approximately 40 percent of our broadband customers in our IPTV markets take video,” she said. “Our strategy is to increase this metric as we expand into new markets that value these services and through our new TDS TV+ product. Our IPTV services in total cover 41 percent of our wireline footprint today, with an opportunity to further leverage our investments in video.”

Here's a breakdown of TDS Telecom’s key metrics:

TDS Telecom Revenues: Total revenues increased 1 percent to $173 million, largely driven by the strong growth in residential revenues, which increased 8% due to growth from broadband and video connections, as well as growth from within the broadband product mix, partially offset by a 2 percent decrease in residential voice connections.

Business: Commercial revenues decreased 8 percent to $37 million in the quarter, which TDS Telecom said was primarily driven by lower CLEC connections.

Wholesale: Wholesale revenues declined 3 percent to $46 million, due to certain state universal service funding (USF) timing support.

Cable: Due to the acquisition of Continuum and increased broadband connections, cable total revenues increased 18 percent to $76 million. What’s more, total cable connections grew 2 percent to 379,000, driven by an 8 percent increase in total broadband connections. Broadband penetration continued to increase, up 200 basis points to 46%.

Telecom and Data Systems Revenues: TDS Telecom’s parent company Telephone and Data Systems reported $1.38 billion in fourth-quarter revenues.

(To keep up with the Q4 broadband earnings, make sure to check out our new report From AT&T to Verizon: Sizing up Q4 Broadband 2020 Earnings)