As always, I want to thank the team for all their hard work and continued dedication. I’ll now turn the call over to Doug Chambers to provide more details on our financial results. Doug?
Douglas Chambers : Thanks LT. Good morning. Let’s start with a review of customer results on Slide 6. Postpaid handset gross additions decreased year-over-year by 23,000, largely due to the intense competitive environment from traditional carriers and MVNOs as well as a decline in the pool of available customers. Correspondingly, postpaid handset net additions were down 16,000. Connected device gross and net additions include fixed wireless subscribers. And as LT mentioned, we continue to see great momentum in fixed wireless. With our base of customers up 57% in the prior year, and up 10% sequentially. Postpaid handsets were decreased year-over-year and increased sequentially. The sequential increase is partially due to seasonality and a decrease in our in-contract customer base.
Also we have been experiencing a positive trend in postpaid handset churn over the past year, due in part to the aggressive device offers to new and existing customers that we maintain from mid-June 2022 through February 2023. Moving to Slide 7, prepaid gross additions declined 10,000 and net prepaid additions decreased 2,000. In terms of gross additions, the overall pool of available customers declined year-over-year, which we believe is partially driven by competitively priced postpaid offerings. Now let’s turn to the financial results starting on Slide 8. Total operating revenues for the third quarter decreased 11%. Consistent with the industry we saw a decline in upgrade rates contributing to the lower equipment sales. Service revenue declined 2% due to a decrease in our average retail subscriber base and roaming revenue.
Inbound roaming revenue declined 53% as a result of negotiating lower rates with other carriers. Note that this decrease in inbound roaming revenue was almost entirely offset by a corresponding decrease in our outbound roaming expense, despite a 58% increase in our off-net data traffic. On the positive side, LT mentioned the increase in postpaid ARPU. This increase was partially driven by increased device protection revenues and favorable plan and product offering mix as a result of customer adoption of a higher value higher, tier plans. We continue to see consistent growth in our highest tiers of unlimited plans. And as of the end of the quarter 46% of our postpaid handset customers are now on these higher tier plans. And that’s up from 38% just one year ago.
Now let’s turn to tower results on Slides 9 and 10. As you can see, the business delivered another strong quarter with 8% revenue growth. Including U.S. fiber sites, our tower tenancy ratio is currently 1.54, up from 1.46, just two years ago. We’ve also added a couple of additional disclosures this quarter and to provide you with insight into both the geographical diversity and carrier composition of our tower portfolio. As we noted last quarter, our towers are well positioned geographically with about 30% of them not having a competing tower within a two-mile radius. And you can see that our tower revenue is well distributed among the large wireless carriers. Next, let’s turn to our quarterly operating performance shown on Slide 11. For this discussion, I will refer to adjusted operating income before depreciation and amortization as adjusted operating income.
As I noted, total operating revenues declined 11%. However with lower device sales, lower promotional costs, lower bad debt expense and a steadfast focus on controlling costs, cash expenses decreased and this decline more than offset the decline in revenue. System operations expense declined 6% due primarily due to the previously mentioned decrease in off-net roaming expense. In 2024, we will begin to realize net savings associated with the shutdown of our CDMA network that LT previously mentioned, offset partially by decommissioning costs. Starting in 2025, we expect annual runrate savings of approximately $30 million related to the CDMA shutdown. These expected savings will help mitigate expense increases associated with our ongoing 5G mid band deployment.
Loss on equipment or equipment sales less cost of equipment sold, decreased $25 million as a result of lower device sales and promotional costs. As previously mentioned, we ran an aggressive new and existing promotion for the entire duration of the third quarter of 2022 and did not execute this level of promotional intensity in 2023. Selling, general and administrative expenses decreased 10% driven primarily by decreases in bad debts expense, and the favorable impact for the reduction in workforce that was executed in the second quarter of 2023. As we indicated last quarter, we estimate full year runrate savings related to the reduction in workforce of approximately $45 million, which we expect to fully realize in 2024. Wrapping up the slide adjusted operating income increased 35% and adjusted EBITDA, which incorporates the earnings for equity method investments, along with interest in dividend income increased 28%.
Both of these amounts have been adjusted to exclude the $3 million of expenses incurred in the third quarter related to our strategic alternatives review. Capital expenditures decreased 18%, mainly driven by the timing of expenditures in 2023, relative to the prior year. Free cash flow was $237 million for nine months ended September 30 2023. And we expect healthy positive free cash flow for the full year 2023 as we continue to invest in our multi-year 5G mid band deployment while prudently managing our free cash flow. As shown in Slide 12, service revenue and capital expenditure guidance remains unchanged. Further, we have retained the midpoints of our adjusted operating income and adjusted EBITDA guidance and tightened the ranges of these measures reflecting reducing uncertainty given we are in the later stages of the year.
I will now turn the call over to Michelle Brukwicki. Michelle?
Michelle Brukwicki : Thank you, Doug, and good morning, everyone. Turning to Slide 14, I’ll share third quarter highlights for TDS Telecom. Our team delivered 61,000 fiber service addresses in the quarter, our highest quarter-to-date, bringing our year-to-date total to 127,000 at the end of September. Given where we are in the year and the strong momentum we’ve had, we are raising our 2023 goal to 200,000 fiber service addresses, up from 175,000. Another important milestone for our fiber program is that we expect all of our expansion markets will be launched by the end of 2023. These markets are primarily in Wisconsin and the Pacific Northwest. And a few of our recently announced markets are Missoula, Butte, Helena and Great Falls, Montana, Twin Falls and Caldwell, Idaho and Fond du Lac and Sheboygan, Wisconsin.
