Dycom Industries at TD Cowen Symposium: Strategic Growth in Fiber Networks

On Thursday, 20 March 2025, Dycom Industries (NYSE: DY) presented at the TD Cowen 4th Annual Fiber-to-the-Home Symposium, outlining its strategic initiatives in fiber deployment and AI-driven infrastructure. While the company anticipates growth opportunities, challenges such as cost variations and permitting were also addressed, reflecting a balanced outlook on future prospects.

Key Takeaways

• Dycom anticipates a revenue increase of 10% to 13% this year, driven by fiber to the home programs.
• The company is focusing on long-term partnerships for maintenance and service contracts.
• Significant growth potential is expected from government programs like BEAD, starting in 2026.
• Dycom is exploring AI infrastructure opportunities, including connecting data centers with high-capacity fiber.
• A positive outlook on labor and equipment supply supports ongoing projects.

Financial Results

• Dycom projects a revenue increase of 10% to 13% for the year.
• Industry estimates indicate approximately 10 million homes were passed last year, with growth expected over the next five years.
• Customers have added 37 million passings to their build plans over the past 14 months.

Operational Updates

• Dycom provides comprehensive services from engineering to maintenance for fiber and HFC networks.
• The company emphasizes long-term partnerships to ensure ongoing maintenance and service contracts.
• Most work is self-performed, with subcontractors used to supplement efforts.
• Investments in recruitment and training are key to maintaining a skilled workforce.
• Equipment supply is stable, with no significant bottlenecks anticipated.

Future Outlook

• The BEAD program is seen as a significant opportunity for rural fiber deployment, expected to impact revenue in 2026.
• AI infrastructure is a focus area, with plans to build networks for data centers and improve internal efficiencies.
• Dycom is optimistic about its position in the expanding fiber network and AI-driven infrastructure markets.

Q&A Highlights

• The industry has become more efficient, with lower labor pressures than in previous years.
• Dycom differentiates itself through its national presence and comprehensive service offerings.
• The competitive environment remains regional or local, with ISPs conducting the majority of work.

In conclusion, Dycom Industries is poised for growth in the fiber network and AI infrastructure sectors, leveraging both private and public investments. For a detailed discussion, refer to the full transcript below.

Full transcript - TD Cowen 4th Annual Fiber-to-the-Home Symposium:

Greg Williams, Host: Great. Good afternoon. Welcome to our fourth annual Fiber to the Home Symposium. My name is Greg Williams. I cover cable, wireless, and telco.

I’m joined in this afternoon’s session by Dan Pajovic, the president and CEO of DICOM. This session will be a forty five minute fireside chat. I will try to leave some questions for the audience. Just submit some anonymous questions into the portal. I have a screen over here that shows you the questions.

I can try to get to them. We have a lot of content here. But, Dan, without further ado, thank you for joining us. I believe you have a safe harbor statement as well.

Dan Pajovic, President and CEO, DICOM: Yeah. Great. First, thanks for having me, and great to see everybody. If I if I could, I’d just like to point everybody to the disclosures on our IR website related to any safe harbor statements, any forward looking statements I might make today. And with that, let’s jump right in, Greg.

Greg Williams, Host: Great. Well, let’s start with your brief overview of your company. What is Dycom’s area of focus, specifically its role now in fiber to the home deployment as this event is fiber to the home?

Dan Pajovic, President and CEO, DICOM: Yeah. So DICOM’s a leading provider of specialty contracting services. We were across all 50 states in The US, limited to The US. And and we do work for the telcos, the MSOs, typically designing, engineering, program management, construction, and then the maintenance of fiber networks, you know, HFC networks, you name it. And, you know, it’s a business that, again, from a the perspective of the maintenance side and the new installations, and of course, Cyber at Home is certainly getting quite active and busy these days.

Greg Williams, Host: Can you give us just a brief overview of a mix of customers, whether it’s by type or even specific customers? And and and what’s keeping you most busy?

Dan Pajovic, President and CEO, DICOM: Yeah. I think, you know, for folks that follow DICOM, you would see that we typically report out our top five or our top 10 customers. And they’re the names that you would imagine, you know, whether it’s AT and T or Comcast or Charter or Verizon, Frontier. I could go on and on. But it’s important to point out that, we have hundreds of customers that were active.

So, you know, we do rural work. We do work for you know, very small co ops, very small ISPs, all all around and across the country. And and as I said before, you know, that work can come in all shapes and sizes. You know, in some cases, you know, we’re doing the engineering work and some of the preplanning work. Of course, we like it when we can be involved through all stage of all stages of a project.

You know, if we can get in early, we can help with the planning ahead of it, do the engineering work, do the permitting work, program management, you know, across the the the entirety of the project itself, and then, of course, the construction. And I think, one of our focuses is to get that maintenance work that follows on with the customers as well. You know, we wanna be there in perpetuity, making sure that we can keep their networks up and running and keep people connected.

Greg Williams, Host: Right. And and how much of the work is actually fabric construction versus the planning, the preplanning, the engineering? You know, what’s the business exposure to this? And and how does how does it compare to last year? You know, what’s 2025 setup look

Dan Pajovic, President and CEO, DICOM: like? Absolutely. And and I know everybody follows a lot of the stats that are out there. So industry sources would say that there was about 10,000,000 homes passed, last year. So that’s been increasing year over year.

And, of course, if you look at the curves, you know, over the next five years, you know, a lot of growth and opportunity still exists there. For us, as I said, we have this underlying, maintenance and services business that we do. You know, we don’t give exact sizing on that, but it’s a large part because we are focused again on a long term aspect. But in addition to that, as I said, we do do the engineering. The fiber to the home builds have ramped up considerably over the our customers, you know, the the what we really learned coming out of COVID was is that every home needs to get a high speed broadband connection and and the customers have certainly rallied around that.

There’s been separately. There’s been a lot of federal and other state funding that’s rallied around that. And it’s and, you know, we talk about it really having become a utility that that at the end of the day, everybody wants to make sure that they’re they’re up and running and they can meet the needs and and speeds that we need to operate in today’s world. So with that, you know, we’ve we’ve seen and followed many of our customers as they ramped up their program over the past few years. And, there’s a lot of complexity to that.

You know, making sure that we’re hitting the passings and delivering on the expectations that the customers have and that our customers are talking out about publicly, takes a lot of preplanning. So, Greg, to your question, you know, where we can get in the engineering, that’s fantastic. Where we can’t where we don’t, we still wanna be in a place where we’re gonna plan with the customers and plan out how we go attack and and and look at different parts of their geographies to ultimately bring in the number of passings. We see that only continuing to grow. We’re we’re we’ve we’ve commented that over the past year, about fourteen months now, our customers have added an incremental 37,000,000 passings to their build program plans.

37,000,000 is obviously a massive number. What we talked about 140 to 150,000,000, you know, homes across The United States, Thirty Seven Million in in addition to their current plans. And, you know, for folks on the call, there’s approximately 76,000,000 homes that have been passed today with a single fiber connection. There’s about 12,000,000 that have more than one fiber connection. So 37,000,000 incremental to the point is, is a significant number.

And as we look at that ramp, you know, over these next five plus years, we see continued increase. And in fact, you know, for us, we did give an outlook for the year. And a large part of that outlook in that 10% to 13% increase that we expect in our revenue is related to these fiber in the home programs continuing to ramp. And our customers continue to find success, you know, both in the penetration that they’re getting and and and certainly in the ARPU, as that’s grown over the past few years.

Greg Williams, Host: And so when I think about that backlog, I guess, it’s 37,000,000 homes and then, the cadence going forward. I mean, I I look at 10 and a half million when I add up all my providers this year. It’s a peak year, and I see that repeating sort of next year, AT and T, Verizon, etcetera, still keeping, the pedal to the metal. But then after that, do you see it sort of tapering off? Do you see BEAT sort of filling in that gap?

I’m just kind of thinking about the build curve, if you will, in the next five years.

Dan Pajovic, President and CEO, DICOM: Yeah. And I think some of that still has to be played out. Our customers have talked about their aspirations. Some have been specific about what that cadence is year over year. We certainly see this being, you know, greater than five years to get all of that work done ultimately.

You know, at some point when you take that, you mix it with, you know, some of the hyperscaler things, when you mix it with some of the rural, there is gonna be pressure on the market. And and at the end of the day, you know, we’ve seen in the fiber to home builds over the past few years, you know, there’s there’s challenges around permitting. There’s challenging around inspections and locating and giving municipalities. And I and I do think that will continue to be somewhat of a bottleneck as we move through it. Our customers have done a great job overcoming that in the builds, and I think they’ve got really good idea, you know, certainly an idea of of how these builds can continue and what that future looks like.

We just think ultimately, they’re all gonna be on a little bit of different cycles, a little bit of a different timing. As as those numbers, the actual passings do start to come down over time, I think it’s important to remember that at some point in time, you know, the the lot lines are gonna get wider, You know, the the cost of the passing I know it’s talked about a lot about cost per passing. Of course, what we do is cost per foot. Right? It’s cost per mile, cost per each.

So as those lot lines get wider, they’ll have the homes get further apart. It is important to remember that in those outer years, generally speaking, and again, this isn’t this isn’t for every single customer, but generally speaking, you’re gonna get to homes that cost more ultimately to get past. So all that to say, you know, we see continued revenue growth opportunities, you know, certainly over the next five years.

Greg Williams, Host: And And even though it does start subsiding a couple of years from now, you mentioned it, the the maintenance, opportunity. Can you maybe, you know, peel the onion out too? What is what is the maintenance opportunity for .com as, you know, you just finish up the builds years from now and you pivot to to a more maintenance mode?

Dan Pajovic, President and CEO, DICOM: Absolutely, Greg. And and and even before maintenance, there’s the drop activity. So that’s the work that’s getting it from the street to the side of the house. And what we generally see is that takes about four years to to hit some kind of terminal penetration rate. So after we get through a given neighborhood, you got about four years of coming back and doing that drop work to get people connected over time.

You have that that that, you know, also combines with maintenance and and listen for sure is is fiber require less maintenance and copper. I’ll just get that out of the way. Ultimately, it does. It’s a passive network. You know, copper has more pieces and parts that we maintain on a given day.

But the important part here is is one, there’s a lot more plant going in the ground. And so, you know, our goal and certainly part of our strategy is continue to capitalize on getting the maintenance and service contracts that follow. But what I always like to say is there’s there’s always gonna be roads that get moved. There’s always gonna be new neighborhoods that get built, and there’s always gonna be, you know, unfortunately, somebody that hits a pole or knocks a pole over or puts a backhoe in the ground somewhere they’re not supposed to. So that activity will always continue regardless whether, you know, the the the networks themselves are passive or active.

It’s been a priority for us. You know, we we really wanna be long term partners for our customers. We wanna be long term partners in the communities. So we do prioritize getting that maintenance and service work and having that in in perpetuity over time. We try in our network with our customers every day.

And like I said, we continue to see a ton of opportunities as more plant gets installed nationwide.

Greg Williams, Host: Right. And with that more plant installed in near term, I guess, what we’re also hearing is, you know, private equity backed ISPs, they may have slowed down in ’24, but it seems to be picking up again in 2025. We just had a panel, moments ago about, you know, private backed capital still seeing that 8,000,000 to 10,000,000 builds a year. Is that something you’d agree with? It’s a loaded question.

But

Dan Pajovic, President and CEO, DICOM: Yeah. Yeah. It is a it is a little loaded question there, Greg. Yeah. You know, I think everyone is different.

We certainly saw a couple years ago from, you know, from more of an overbuilding standpoint. We saw a couple years ago a lot of people talking about it. It’s certainly some activity there that has tapered off. You know, there’s there’s some folks that are doing really doing really well, have robust plans around you know, how they’re attacking that work. Certainly from the private equity side, there continues to be conversations.

You know, we have seen folks react to the overbuilding becoming more challenging as more people have tried to enter that space. And then, of course, as as the ILEX are building out their footprints themselves. So I think there is some competitive, some competitive spirit there for sure.

Greg Williams, Host: Got it.

Dan Pajovic, President and CEO, DICOM: I

Greg Williams, Host: wanted to pivot to the the cost structure. I was a little surprised, both the private panel and private equity panel and the Verizon panel cost per home passed. Verizon noted it could be down 10%. Some private equity folks were saying that, you know, inflation sort of behind us, and and I’m just curious. At the same hand, I pulled an FBA report recently that said we’re up to $18, you know, a a foot versus $16 for Buried at least.

So I’m hearing a lot of different things. And curious to hear, do you resonate with the Verizon’s cost per home pass going down or or cost going up?

Dan Pajovic, President and CEO, DICOM: Yeah. I’ll I’ll I’ll give you our perspective, Greg. So first is the industry has become much more efficient. When when the cyber, the home builds started, and everybody really started to hit the market at once, it it takes time for the industry itself. You know, that’s both the customers.

It’s certainly us. It’s it’s the municipalities. It’s it’s the entire supply chain to figure out, you know, how best to implement that work. And so I think upfront, there’s a lot of capacity that was that that was behind it and trying to get that in place, you know, at a speed. You’re not as efficient until you get that learning curve in place and you really start going.

You know, many of these customers now have been building for several years. They have that figured out over time. For us, what what really is an index there and and can turn to cost savings, if if we have good outlooks to what these builds are and there’s a lot of time behind them, that that helps a ton, you know, with getting labor attraction. Certainly, it helps from a productivity standpoint. All of those parts and pieces that ultimately drop to the bottom line to make it less costly for our customers.

You need that. You need to get to the learning curve, and you need a good outlook in front of you. So we’re in a good spot from fiber to home builds. Right? We’re in a good spot for where we are, and and we’re in a good spot when I talk about the 37,000,000 incremental passings.

We’re in a good spot that those can be added into builds. You know, certainly there’s ramps associated with it. Those ramps take some time. But we’re not in a place that we were a few years ago where you’re starting from zero. So I think all of that goes in that plus column, right?

And when I think when the customers talk about cost savings, the labor pressure is certainly a lot less than it was a few years ago. You know, the CPI is is certainly less than it was a few years ago. All of those different inflation factors better today than they were. On the other side, and I think this is where it becomes unique to the different builds and where customers are in their individual programs. So certainly, I wouldn’t be commenting, you know, against customers and and their programs.

But, as I said before, overall is the passings, you know, the less aerial mix that you have and the more underground that you’re gonna have is gonna drive costs up. The further that those homes get apart, you know, that will drive costs up. So I I think you have at the end of the day, I think you have a little bit of both. And I think each customer and each parts of the build that they’re looking at are gonna be different. For us, you know, like I said, I think in the out years of the overall fiber home build cycle, you are gonna end up with homes that are just gonna be further apart.

And, you know, for us, again, when when we price by the foot or by the mile, that’s gonna mean they’re gonna cost more per home. But, on the other side, you have efficiencies that you’re gaining over time.

Greg Williams, Host: So a lot of puts and takes. There’s the learning curve. There’s the efficiency, the better preplanning, but then you’re saying more buried, less dense. You know, maybe in the next two years, is it is it sort of does all those puts and takes sort of neutralize out, or do we gonna see, you think, you know, any meaningful rising costs for phone have a for HomePass?

Dan Pajovic, President and CEO, DICOM: You know, I think, the the challenge here with many things is is it just entirely demands on the build itself. And and I really think this is an opportunity where we can partner with our customers and and often do partner with our customers to help, you know, work through that process. And that’s not to say that that they don’t do an excellent job themselves. They do. But we can bring a lot of insights from the municipality, from a labor standpoint, from productivity efficiency standpoint.

So we can try and optimize that curve ultimately. I think, you know, I think, Greg, that the the direct answer to your question is is it it depends on the customer. It depends on where they are in their build and which part of the build that that we’re going to help them with. But in the longer term, you certainly you’re gonna get to places that just the homes are gonna be further apart or there’s gonna be more on the ground as part of it.

Greg Williams, Host: And how would tariffs impact your business? I mean, I I imagine most of the pass through because it’s gonna be on the equipment side. Maybe I’m wrong.

Dan Pajovic, President and CEO, DICOM: Yeah. For for us, you know, for the most part, the materials that we put the plant that we install is procured by our customers. You know, we handle some component of logistics. We’re bringing out to the sites and opposite doing the installation. You know, from a tariff perspective, there could certainly be cost impacts on their side that could affect, you know, how much work they wanna go do and the velocity with which they wanna do it.

There could also be timing, you know, if if everything’s gotta be, you know, coming from The US. They’re trying to move away from offshore. For some of the items, not much of it is already coming from US companies. But, you know, all those things could impact timing to our for our own equipment. At the end of the day, you know, we we buy a lot of equipment to do the installation.

We’ve got great partnerships, you know, with the different vendors and manufacturers there. Obviously, we’re in constant communication with them about tariffs and potential impacts. As as it stands today, we feel good. One coming out of COVID, a lot of those folks brought a lot brought their supply chain into The US or or certainly look for redundancy where they couldn’t. So I think that helps.

And and as we look at a shorter term impact from tariffs, we’re not hearing concerns today. You know, if it’s longer than six months or something that’s, you know, maybe unprojected today in some of the discussions analysis that’s coming from the new administration, then that could change. But as it stands today, we feel good certainly about what this year looks like in front of us.

Greg Williams, Host: Hey. Can you talk about the pricing environment? Are you charging more customers, you know, 24 over twenty twenty three? And, is there upside in your pricing?

Dan Pajovic, President and CEO, DICOM: I I mean, there’s always inflation mechanics for all of us. Right? Wait wage escalates every year even though it’s less than it was a couple years ago. You know, those those pieces do come into play. Equipment typically costs a little bit more.

You know, all of those things certainly come through at the end of the day. Overall, though, like I said, you know, we really look towards the efficiencies that we can bring to customers. And so our goal for them is always to try and drive the total cost down. Right? Of course, at the same time, you know, we’re looking for efficiencies internally, you know, whether that’s from operating leverage, you know, whether it’s from the work that we’ve been doing, with Peddi.

Obviously, a huge focus on safety, huge focus on quality, and then the efficiency that we work towards in the field. Our goal is is that that we can win for both, right, that we can drive cost ultimate cost down to them while at the same time and as we’ve shown these past few years that we can show margin improvement as well.

Greg Williams, Host: And maybe talking about equipment and labor, you know, what’s the latest you’re seeing in terms of equipment? Maybe we can bifurcated equipment first, any bottlenecks that you’re seeing that we’ve seen in the past. And what do you expect in terms of equipment and supply to get you to do your job over the next year?

Dan Pajovic, President and CEO, DICOM: Yeah. Equipment’s, you know, it took a while to get through the a little bit of a COVID overhang there and to get folks caught up with all of our equipment manufacturers. You know, we’re in a good place now. We certainly got, our orders are being met. We’re not seeing any of the delays that we saw before.

And again, overall, they feel good about their ability. Continue to keep us in front of the equipment that we need as we continue to grow. Very different landscape than it was a couple years ago. And and like I said earlier, you know, we’ve got some fantastic partnerships there and and certainly appreciate, you know, the relationships we have and and our ability to keep the equipment out part of the builds. I I think I need to get to labor next.

Greg Williams, Host: Yes. So labor.

Dan Pajovic, President and CEO, DICOM: Yeah. I’ll I’ll jump right into that, because I think the the two go do go hand in hand. We spend a lot of time planning. You know, there’s a lot of strategy behind it. We we wanna make sure that in all cases, we’re keeping labor and we’re keeping equipment side in front of our customers’ bills.

And and, you know, we’re we’re very proud of if some of those constraints that we had coming out of COVID in ’20 calendar ’20 ’1, calendar ’20 ’20 ’2. We were able to to to ensure that our customers’ builds weren’t impacted by our inability to either get equipment or to keep labor in front of the curve. So we’ve invested, huge amounts into our labor force. That’s from certainly a recruitment standpoint, how we go through recruitment, but also on the training front. So, you know, we’ve we’ve completely rebuilt all of our training programs throughout the business.

And what we’re trying to do is is certainly provide technical expertise, but also provide opportunity for our folks so that they can see when they join Diacon what that opportunity looks like for a full career and not something that’s a short term opportunity just to come to a bill. So we made investments there. We made investments in facilities and in training facilities around the country so we can continue to train the talent. And and all those hopes are, of course, one drops to safety side, the quality side, and the efficiency. But two, you know, we wanna make sure that we’re keeping people on a long term perspective.

It’s a huge effort. Right? I mean, there is a there is turnover in the work that we do. I talked about, you know, we we have, you know, a lot of folks that we’re taking from an environment where they weren’t working out in the elements. They weren’t working in the heat, packing tools up and down ladders, working with complex machinery.

We really feel like we’ve put a lot of time and energy into bringing them in the business the right way so we can train them into the skill sets, but also get them acclimated to the environments we work. But I think the big part is is we gotta show them opportunity. You know, these builds, the fiber to the home builds that are out in front of us, that’s a great landscape and backdrop so that they can see that there’s many years of work to go do. And then within Dycom, they can see the opportunities to rise through the ranks. You know, many many of our top leaders with tools, and work their way up.

That’s something we’re very proud of. I started with my tools, in my past. So, you know, from an opportunity set, we really feel like that differentiates us in the labor space.

Greg Williams, Host: What is your mix of in house versus outsourced labor these days? And maybe tell us about the benefits or the pros and cons of each side.

Dan Pajovic, President and CEO, DICOM: Yeah. So we we we do self perform a large part of our work, the majority of our work. We do use subcontractors. We don’t publish the percentages. And because part of that, Greg, is is and and this is important.

We we use subcontractors in different parts of the business in different ways. So we use them to augment. When a new build starts, we might bring in more subcontractors upfront as we’re ramping up, you know, in house talent for particular builds in particular areas. We might use more subcontractors. And then there’s just a general subcontractor mix.

And and again, we do look at those as long term partnerships. We wanna make them successful. We’ve helped grow many of our subcontract partners into larger businesses, brought different levels of expertise to them so they can continue to be successful. But all of the work we do, there’s not any work that we do here that we only do with subcontractors. Every type of work, we do in house, our people are trained to do it.

And again, you know, that is the majority of our work is done in house forces.

Greg Williams, Host: Got it. Maybe talk a little bit about BEED. You know, .com shares were down a few weeks ago with nearly everything else for that matter, when, you know, we were sort of at Microsoft and we were at DeepSeek, and then the BEED concerns. But on the latter, again, early this month, we saw potential modifications to BEED, guidelines. Some changes could be positive, right, because the ISPs could be seeing streamlining rules and, you know, no rate regulation and and and union concessions, but then some are negative.

There could be more delays. And then, of course, more would go to satellite, and that’s the biggest part, I think, why the stock was impacted. So maybe you can share, you know, your thoughts on, you know, changes in BEED. I understand BEED’s not in your guidance at 10% to 13%, but, you know, it’s still something we all gotta think about, you know, and and how you’re positioning for these possible changes.

Dan Pajovic, President and CEO, DICOM: Yeah. And and thanks for making that point. So it’s not in our outlook that we gave for the year. We still do think that there’s a possibility of some feed revenue, hitting the industry this year. We still think that there’s possibility, but most likely, it’s gonna be in calendar 2026.

It’s gonna be when that program ramps up. Satellites are gonna play a part. They’re always gonna be a part. They’re certainly gonna be more of a part now. But the reality is, and you’ve heard it from some states that have talked about like Louisiana when they say, hey, $3,500 per passing is a number we can make all of our, you know, I think 80 or 90% of their homes are fiber.

We can make that work. That’s not a high bar from what was getting talked about. I think as more of that information comes to bear, I we continue to believe that there’s gonna be a significant fiber opportunity related to be related to getting rural America connected and bridging the digital divide. But it’s gonna take some time to play out. We we can speculate what percentage of the 42,000,000,000 plus the match, let’s call it 50 in total.

We can speculate you know, how much of that ultimately goes to fiber. I think some of the other programs that, like Louisiana, awarded, $500,000,000 that was not to fiber. I think some of those certainly, you know, might not make it through the new administration and some of the work that’s being done there. But but the actual fiber bill, it’s getting America connected. Everybody’s behind that.

That’s been a bipartisan, you know, supported issue for a long period of time. And as you pointed out, that that left side, all of the requirements that were included in the B program that that would add cost, that certainly could add time. If those measures get relieved, whether that’s the pricing cap, you know, whether it’s some of the the requirements around the labor force, any of those things could, one, increase the appetites from our customer base. You know, many of them have talked about how some of those program requirements didn’t make it very attractive. So we could see more entrants, from certainly from some of the larger ISPs.

And then the second part, that all helps the economics. So if if those get removed, remember that those costs per passing would come down in line with it. Right? So there’s more homes that I think could possibly qualify. I wouldn’t wager a guess on exactly what the number against the 50,000,000,000 is, but what I would say is, you know, even if it’s pick pick some number, of billions, that come through the program, that’s still very large for our space, and that’s a lot of work to get done over four years.

So we still see it as an op a real opportunity. Obviously, pieces that need to get worked out. We don’t wanna get ahead of it. That’s why we didn’t include it in our outlook, but still optimistic that that, you know, the consumer the consumer today really would prefer to have fiber. You know, we hear that time and time again from our customers.

We certainly hear that, you know, across the space. They prefer to have fiber, so where it makes economical sense. Again, we think that whether it’s BEED or some of the other federal programs, I mean, there’s still a lot of hard enough money out there. Their states are using their own funds, to connect some of these rural homes. So we still think that rural fiber opportunity is significant.

Greg Williams, Host: Yeah. When we spoke with the Louisiana folks at Metro Connect, they said, to your point, a vast majority of the projects one were fiber. A vast majority was was underground. Obviously, they’ve got weather, so they need to stay underground with hurricanes, etcetera. But it does it does seem to bode well that the preference by far would be, to get it fiberized rather than satellite, which might not be the long term solution.

So, I mean, if I had to contextualize it, maybe you’re saying instead of maybe being, like, really great, it’s just maybe a great opportunity still even with the satellites coming in.

Dan Pajovic, President and CEO, DICOM: Yeah. Or I I gotta do you know, if you have an opportunity, I’m not sure my hands are on the screen, but if you have an opportunity any opportunity that’s like this and then you start moving around the edges, it doesn’t change that there’s a large magnitude that’s gotta come through our space at a time where, again, you still have the 37 and a a half million incremental passings that our customers are gonna do with private capital. That’s gonna have again, they won’t be on the exact same curve, but they will certainly overlap. And you have the AI hyperscaler, and that will overlap as well. So you have a lot of pieces coming together.

But but, again, yeah, we think the rural’s gonna continue to be a large part of the opportunity.

Greg Williams, Host: And then you mentioned the other subsidies like, guard off. Maybe you can expound on some of those other opportunities because they’re pretty large in size too that we all so focused on BEAT, but there’s plenty to do on all the state level work.

Dan Pajovic, President and CEO, DICOM: Yeah. Inclusive inclusive of BEAT, there’s about a hundred billion dollars of funded programs out there. So BEAT is roughly half, of what we see. And and that doesn’t include, again, some of the states now using their budgets to to backfill and and get some of these rural homes connected. So completely absent of the those continue to move along.

We talked about RDOF. I think that the number that, for phase two of RDOF, I think it’s 10 to 15,000,000,000 that’s still behind it. That hasn’t been awarded yet. That opportunity is still there. And and again, all of this just comes together to meet the need.

Right? And I think it’s really important, Greg, just to to come back to that. We we gotta get homes connected with high speed broadband. Right? Everybody everybody needs a connection so they can watch events like today, you know, so they can have their video conferences and all the technology needs to have at home.

We still think fiber is gonna play a large part of that, and we’re certainly glad to see, you know, our customers, you know, from a private capital standpoint, have continued, you know, to to increase their velocity and the ultimate volume and the passings. And then on the rural side, we still think that the dollars, whether it’s BED, whether it’s RDOF, whether it’s EACAM or some of the other funding mechanisms from the states, are gonna help to bridge that with subsidized funding.

Greg Williams, Host: What does your competition look like these days, and and and how is that changing? You who do you see out there bidding on this stuff?

Dan Pajovic, President and CEO, DICOM: I mean, I would say overall, it hasn’t changed much. You know, we, you know, we we we’re we’re in all 50 states. I believe we’re the only company that’s in all 50 states in our space. And and as I talked about before, you know, we work for a number of customers. So we we really get a good picture of what’s going on state to state, municipality, municipality, customer to customer program to program.

We’ve we’ve got a really good insight whether we’re, you know, actually building the work or just see the opportunities come through. Our generally, you know, we have we have another large competitor. And then, generally, ours is much more of a regional competitive model. So a lot of regional companies, a lot of local companies that are still out there today. Of course, you know, over the years, we’ve acquired a number of those and brought them in to the to the DICOM family.

But we still, see a competitive set that, is largely regional or local. A lot of these projects, Greg, are getting more and more complex. Right? The fiber to the home the fiber to the home programs are complex in trying to make sure that you’re gonna promise and and and and ultimately achieve month over month the kinds of passing that your customers wanna see. If we think about, you know, the rural work and some of the pieces and parts that go along with that, if we think about, again, some of the AI builds, all of that creates complexity that is not the same as you see every day in the in the maintenance and service work or what the industry might be used to.

You know, we think ultimately that that favors DICOM. You know, we can differentiate in that space, bringing in program management, like I said, bringing that end to end from engineering, design, planning all the way through construction in the maintenance side. So what I would say ultimately is is we feel like, you know, we’re well positioned, and and we believe we do a good job at differentiating ourselves across competitive set. And believe that we one, we’ve shown it in the growth we’ve had these past few years and continue to do so in the years to come.

Greg Williams, Host: With the competition being the customer themselves, and we talk about them doing in house versus outsourcing their own builds, we just spoke to an ISP who was saying they could do 30% lower cost per home pass when they do it in house. But you kinda answered some of it. It’s complex business, but help us understand, you know, the risk of competition doing it in I mean, your competitor your customer doing it in house versus outsourcing to you guys.

Dan Pajovic, President and CEO, DICOM: Yeah. It’s it’s pretty rare that we compete with our customers directly on their own work. Most of those relationships are symbiotic. And by that, I mean, they might have part of the work. They’re typically gonna do that with union forces, and then and then there’s another part of the work that we get.

And that can vary based on our agreements. It can certainly vary based on customers. Or sometimes we do all their work. Or to your point, there are customers that do a lot of the work in house. You know, we believe that our offering one, you know, with the volume that we do nationwide and with our footprint, we believe from a from a cost standpoint that we could be highly cost competitive against, you know, the our customers in sourcing.

And certainly that most of them outsource the work and the model, you know, the model in the industry that we exist in is there for a reason. We we think that that will continue over time. You know, every customer is different, and certainly the way that they attack the challenges that they have and how they set up their business can be different. But at the end of the day, you know, we do believe that, the service that we offer, the reliability, you know, our our workforce that’s across so many municipalities in so many states, whether we’re rural or metropolitan, is something that differentiates us and and provides a lot of value to our customers.

Greg Williams, Host: Great. I I wanted to pivot to the GenAI fiber opportunity or the commercial fiber. I know this is a fiber to the home symposium, but I’d be remiss not to talk about GenAI. I know lots of folks on this on this call or or meeting are also interested. You know, huge opportunities out there.

We we cover Lumen and and Unity, and you guys are building out a lot of fiber, on behalf of these providers to connect to. I guess, right now, it’s the training data centers to connect to. They’re sizing this at 40,000,000,000, 50 billion, like, you know, huge pie in the sky numbers, but,

Dan Pajovic, President and CEO, DICOM: big numbers big numbers.

Greg Williams, Host: Yeah. Same idea. And then we’re gonna work with the fringe here. I guess, help contextualize the opportunity for DICOM. You know, maybe we’ll talk about the the training first, and then maybe we could talk about, you know, how that pivots to inference.

Dan Pajovic, President and CEO, DICOM: Yeah. And I think really what what the conversations that we’re having, you know, we’re we’re working with some of our customers today. You know, we were very excited to to talk about the Lumen award that we received a couple quarters ago and the over pull work, and that’s work that we’re actively doing today. I like to call that kinda first at bat, first inning, and what we think is gonna be a long game ultimately to get all of these data centers. If you get these long haul networks reinvigorated for things that haven’t been done in twenty five or thirty years.

But, Greg, the way that we look at it is that the hyperscalers and our customers, they’re they’re looking downfield. These are long term projects. None of these happen overnight. You’re again, you’re talking about things that haven’t been done in decades. So they’re trying to get ahead.

So we really believe that what we’re building today, the conversations we’re having about these future networks to connect the data centers nationwide is really about inference. Right? It’s about getting this high capacity fiber networks in place that aren’t there in in the same capacity today. And I’m sure you you’ve all heard, you know, some of the fiber accounts that are going into these conduits are being talked about. They’re massive compared to what the existing plant is.

And and to have them be private networks so that they can not be jumping from different pieces of equipment so that they can bring that latency down and try and get to this ultra low latency. Again, we believe that’s all for moving to inference and moving from the training phase. It’s just a longer term build. These networks to connect, all of these cities, separate from the overbully where the condo is there. But when you’re doing new construction on these long haul routes, getting through the permitting, getting through the engineering, getting through all the planning side of that, is going to take years.

It’s gonna take time to to get these data center clusters connected around the country. And and I wanna just make a a quick point. There there’s been conversations around permitting and easing permit restrictions, and and I think that is a great thing. Ultimately, whether it’s fiber to the home, you know, whether it’s these long haul routes, ultimately, a given community or municipality, they only want so much work and activity happening. So many streets torn up, in their cities at a time.

So even if you remove some of those constraints, the municipalities are only gonna let the work go so fast. So back to the AI, huge huge amount of planning to go into these. These are linear routes. It’s not like fiber to the home. I refer to that as more of a shotgun approach where you can bring in a lot of homes from different communities to get to your total.

Here you’re going end to end. And so getting that set up the right way, working through that so you have good crew flows, you have the right equipment there. Again, so you’re working with municipalities on traffic control and the permitting side. You know, we think this is, you know, certainly over five years, probably ten years worth of work. And meanwhile

Greg Williams, Host: training side or is that the inference side then?

Dan Pajovic, President and CEO, DICOM: On the for inference.

Greg Williams, Host: Both. Okay. So pivots. Yeah.

Dan Pajovic, President and CEO, DICOM: Yeah. So yeah. Because I think, Greg, I think while we talk about being in the training phase today, the networks that we’re building are really for the inference phase. Right? That that the data centers are working through the training today, but pushing out to that edge, and like I said, reducing that latency, these networks are really getting there to meet the need because it’s gonna take five plus years to get all of this up and running and get it to a level that the hyperscalers need.

Greg Williams, Host: Right. That that’s the big conversation too is the training feels like it’s direct routes, but it could feel more one and done, whereas the inference would be more in availability zones in major metro markets. Are are is there a lot of new routes being built then, you think, in inference? Because one would surmise that, of course, training, you need a new route to, you know, to the middle of nowhere where they’re doing training where the power is. But on inference, you know, you’ve got parent and child data centers already built with availability zones.

Do they need new incremental routes? Maybe shovels in the ground for that. And you’re saying absolutely yes?

Dan Pajovic, President and CEO, DICOM: Well, I think so I think you we look at it just a little bit different. Yeah. And and we talk about training, and we talk about inference for sure, but we also talk about existing infrastructure. So there’s the data centers that are there today. And, again, the hyper the the conversations with the hyperscalers is they wanna get their existing cloud connected.

Right? They wanna get their data centers connected. And it’s not to say that they aren’t today, but in in with a higher capacity, with redundancy of these routes, and and moving towards a place where these that that the fiber will be a ultra low latency network. So that that work is happening just to connect what they have today. The other side that you’re talking about, which absolutely is related to inferences, are they gonna move data centers to the edge?

And this is where I come back to to get everything connected and get all these clusters around the country connected today, connecting NFL cities for all the hyperscalers, getting, you know, getting these networks some level of redundancy. I mean, they’re talking about triversity, quadversity, multiple connections on different routes to data centers. That’s a very large scale opportunity. If you add in bringing data centers closer to the edge, absolutely, it’s incremental, but you’re already starting from a from a huge, huge, driver, coming into our space. So we’d certainly love to see that happen.

The point I’d like to make is is whether that part happens or not, there’s still a ton of work to be done.

Greg Williams, Host: Right. So you’re saying, it’s not just the edge deployment for AI and inference. It’s also what you mentioned, triversity and quadversity, meaning, you know, you need three or four separate physical demarcation points, for redundancy and and disaster recovery, etcetera. Right? And that can be

Dan Pajovic, President and CEO, DICOM: At least at least two. Exactly right, Greg.

Greg Williams, Host: And and are you I mean, it’s not like people define it as training versus inference, but from your sense, are we still you know, are we are we when do you think we’d move more to the inference mode? I mean, I’ve heard that we’re at, like, eighty twenty training inference, and that’ll flip the twenty eighty training inference. But when when do you think that sort of flows flows and and flips?

Dan Pajovic, President and CEO, DICOM: Yeah. I’m gonna I’m gonna leave that up to the experts that, again, these hyperscalers, they’re the the conversations we have with them certainly are more around future planning, Greg. So, when the actual you when the circuit flips, so to speak, compared to whether the builds need to happen and where we are in the build phase, again, we just think those two are independent. But I’ll leave I’ll leave exactly when that happens, or we could also talk about where quantum is gonna be and how many years out, you know, the potential for quantum networks is in quantum computing. I’ll leave that to the experts that are spending all their time on it every day.

We’re just excited to be part of it, and to have great partnerships in that space. And again, we just think it’s gonna be a significant driver, in telecommunication sector in the coming years.

Greg Williams, Host: And with the training phase that we’re in, the hyperscalers are funding this, like, with a ton of upfront capital or NRCs, you know, in our fiber world, more so than the past. Possibly, it could have been 40 or 50% upfront and some of it’s 80% upfront. And I’ve heard cases where, like, certain hyperscalers are throwing a % upfront. Does that does that in turn flow to DICOM then to build faster as well? I’m just trying to understand if it flows down to, like, Aloomin or Verizon and then then in turn flows to you.

Is that does that expedite your your your build? I I assume so. I’m just curious how that how it flows.

Dan Pajovic, President and CEO, DICOM: Sure. From and and some of the customers have talked about it. From a velocity, how quick they wanna get these networks in place, the answer is as quickly as possible. Right? As quickly as possible.

They wanna stay ahead. And this is not the majority of the spend. When we talk about hyperscaler spend and 300 plus billion dollars, you know, related to AI infrastructure, this is not the majority of that even though it’s significant to our space. And again, I think that’s another note. Right?

But but what is here is a lot of time to get these networks to go nationwide. So, you know, from from a is is the is the impetus there to go fast? Absolutely. Are there are there bottlenecks and barriers that can keep it that will keep it from going overly fast and and have it compressed into a couple of years? Absolutely.

There’s no way you can get it done that quickly. From from a pure, kind of dollars perspective for us, whether it’s, long haul routes or any of the work pretty much that we do, the the the vast, vast majority, ninety ninety plus percent, of the work we do is unit pace. So by the foot, by the each. So whether it’s hyperscaler route, you know, we’re gonna install x number of feet or x number of miles or x number of pieces, and then we’re gonna build that no different than we do on the fabric of the home. No different than we do on the maintenance work.

Greg Williams, Host: What are your OpEx and CapEx needs to help, meet these aggressive goals?

Dan Pajovic, President and CEO, DICOM: So typically, we’ve been in the 4% to 5% range, to you know, we we do, purchase the bulk of our fleet. You know, we do that because, one, we’ve got great partnerships with equipment suppliers. We help them from the r and d side for what we need out there in the field. Two, we wanna make sure that our crews can be efficient and effective. And then on the on the resale side, you know, we we do do well, you know, reselling at, you know, in the five to seven year range.

We don’t see that changing significantly, whether that’s the fiber to home ramp up, whether it’s AI or whether it’s rural. Some of the equipment types will change. Certainly, when you’re doing larger fiber installs, the pieces of equipment themselves might be bigger. But if you look at it in the entirety of our spend, you know, we we continue to think that’s gonna be in line with our revenue growth.

Greg Williams, Host: Right. And then there was a little bit of risks or snafus in the last couple months, whether it’s DeepSeek, scaled models. Google just came up, Google Gemma three, which is massively scaling AI. You know, Microsoft chatter about that. Is there, do you see any temporary pauses by hyperscalers kind of maybe reconsidering their models?

Or I guess from your perspective, the pipes get filled regardless. So just your thoughts would be Yeah.

Dan Pajovic, President and CEO, DICOM: So this is again where I go back to this, you know, sort of I’ll do it a third or fourth time. But you’re talking about tiny tiny movement on the very outskirts of this. Importantly and, again, you know, in talking with our customers, in talking with hyperscalers through the entirety of DeepSeek and some of these other pieces, the conversations haven’t changed. And certainly, they’ve come out publicly after each kind of, you know, bump in the road and talk about how their their focus is still there. There’s gonna be iteration in the space.

It’s gonna move in different ways as we all know it’s not gonna be perfectly linear. But all the conversations we’re having, the need has not changed.

Greg Williams, Host: And then the hyperscalers themselves, sometimes they build their own data centers and sometimes they build their own fiber. If they build their own fiber, are are you are you building it on behalf of them or are they also direct customers?

Dan Pajovic, President and CEO, DICOM: Yeah. No. It’s a good question, Greg. I we we we believe that the bulk of the work is gonna continue to go through the ISPs through our the core customers that we have today, because they’re used to building and maintaining these networks. And I think that that’s generally gonna be where hyperscales would like to be.

And it doesn’t mean that there couldn’t be one offs or you could be, you know, inside the fence or within a given cluster that there could be some work opportunities directly for the hyperscalers. But for the most part, we think that’s gonna be through our existing customer base.

Greg Williams, Host: And, you know, we’re talking about AI and and your opportunity, but what about AI for for DICOM itself? You know, we’re another year into the AI frenzy, but, admittedly, from where we sit as investors, we’re trying to figure out, you know, is AI really starting to materialize? Obviously, it’s really early, but, what are the opportunities at DICOM, and and and when would you see tangible benefits to these?

Dan Pajovic, President and CEO, DICOM: Yeah. No. It’s a really important point because not only do we wanna build the AI networks, it’s something that we’ve been working on internally for some time. Right? Innovation is core to DICOM, has been for a long time, continues to be you know, we wanna stay out in front of the industry.

And I get it. Right? The work that we do at the end of the day, it’s boots on the ground. Right? We’re we’re digging holes.

We’re putting conduit in it. We’re pulling fiber through it. But there’s a lot of complexity there, and there’s a lot of opportunity to innovate. We’ve been training we’ve been, training AI for several years, on on the quality front. We train it to read pictures, and we’re taking thousands of pictures every day.

We’ve trained those models so that they can find quality issues, ahead of work getting buried, ahead of work getting covered up, ahead of ahead of work getting inspected. That that’s been a huge benefit for our teams out in the field, and certainly that flows through to customer value and obviously, ultimately, shareholder value. That’s just an example. I don’t wanna give away all of our inside scoop and the things we’re working on. But what I could tell you is is that, like everybody, you know, we’re working hard to try and stay out front of AI.

We’re finding a lot of good applications. If there’s one thing that we’re really good at, we create a huge amount of data every day with all the work that we’re doing across all the customers. We’ve got massive datasets that that we’re looking to see how we can, you know, really bring those in a material way into the business. So that ultimately, again, going back to one of your other questions, you know, we wanna try and drive the cost down for the customer. We wanna try and make the work more efficient.

Certainly, wanna make it safer and make sure we continue to deliver it to quality, you know, that DICOM’s come to be known for across the industry.

Greg Williams, Host: That’s interesting because you would have the advantage of knowing, you know, the soil versus rockiness. And if you have that data from AI, that could be invaluable whether you monetize data yourself or you have a sort of an AI managed service plan. That’d be interesting.

Dan Pajovic, President and CEO, DICOM: We’ve we’ve been very active in all of that, Greg.

Greg Williams, Host: Great. Well, with that, we’re just about out of time. But thank you very much, Dan, and thank you everyone for participating.

Dan Pajovic, President and CEO, DICOM: Yeah. Greg, thanks for having me, and, really appreciate it. Good to see you all.

Greg Williams, Host: Yep. Take care.

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