TDS Reports Second Quarter 2024 Results


(MENAFN- PR Newswire) CHICAGO, Aug. 2, 2024 /PRNewswire/ --

As previously announced, TDS will hold a teleconference on August
2, 2024, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page tdsinc.

Telephone and Data Systems, Inc. (NYSE:TDS ) reported total operating revenues of $1,238 million for the second quarter of 2024, versus $1,267 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(14) million and $(0.13), respectively, for the second quarter of 2024 compared to $(19) million and $(0.17), respectively, in the same period one year ago.

2Q 2024 Highlights*

UScellular

  • Announced sale of wireless operations and select spectrum assets
  • Now reporting Wireless and Towers segments
    • Wireless
      • Sequential improvement in postpaid gross additions and postpaid net losses
      • Postpaid ARPU grew 2%; service revenues decreased 2%
    • Towers
      • Third-party tower revenues increased 1%
  • Fixed wireless customers grew 40% to 134,000
  • Strong cost management led to increased operating income, net income and Adjusted OIBDA

TDS Telecom

  • Making progress on goal to deliver 125,000 fiber service addresses in 2024
    • Grew total year over year service address footprint 10%
    • Delivered 27,000 fiber services addresses in Q2
  • Operating revenues grew 4%; residential revenue growth of 7%
    • Residential broadband connections grew 5% due to broadband investments
    • Residential ARPU grew 5% due to price increases
  • Strong net income and Adjusted EBITDA growth
    • Good expense discipline

* Comparisons are 2Q'23 to 2Q'24 unless otherwise noted

"TDS is working to optimize our portfolio of businesses to position the Company for future success," said
LeRoy T. Carlson, Jr., TDS President and CEO. "During the second quarter, we announced transactions regarding both UScellular and OneNeck IT Solutions that we anticipate will accelerate achievement of our strategic objectives. We remain focused on effectively operating all our businesses and serving our customers with high-quality communications services, while we work towards successfully closing these transactions and enhancing the performance of our ongoing businesses.

"In Q2, UScellular remained focused on balancing subscriber growth with financial discipline and reported solid ARPU growth, good expense discipline, and improved profitability - all combining to generate higher free cash flow. While postpaid handset subscribers declined in the quarter, UScellular saw a return to subscriber growth in prepaid and steady growth in fixed wireless.

"TDS Telecom reported another quarter of notable growth in revenue and profitability as a result of its broadband investments. TDS Telecom added an additional 27,000 marketable fiber service addresses and is making good progress on its long-term goal of 1.2 million marketable fiber service addresses."

Announced Transaction and Exploration of Strategic Alternatives for UScellular
On May 28, 2024, Telephone and Data Systems, Inc. (TDS) and UScellular announced that they have entered into a definitive agreement to sell UScellular's wireless operations and select spectrum assets to T-Mobile. The transaction is expected to close in mid-2025, subject to regulatory approvals and the satisfaction of customary closing conditions.

UScellular retains its nearly 4,400 owned towers, its equity method investments, and approximately 70% of its spectrum assets. The strategic alternatives review process is ongoing as UScellular seeks to opportunistically monetize its spectrum assets that are not subject to the T-Mobile transaction.

2024 Estimated Results

TDS' current estimates of full-year 2024 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of August
2, 2024 and should not be assumed to be current as of any future date. TDS undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.

2024 Estimated Results



UScellular

Previous

Current

(Dollars in millions)



Service revenues

$2,950-$3,050

Unchanged

Adjusted OIBDA1, 2

$750-$850

Unchanged

Adjusted EBITDA1, 2

$920-$1,020

Unchanged

Capital expenditures

$550-$650

Unchanged




TDS Telecom

Previous

Current

(Dollars in millions)



Total operating revenues

$1,070-$1,100

$1,050-$1,080

Adjusted OIBDA1

$310-$340

$330-$360

Adjusted EBITDA1

$310-$340

$330-$360

Capital expenditures

$310-$340

Unchanged

The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2024 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.


2024 Estimated Results2


UScellular


TDS Telecom

(Dollars in millions)




Net income (GAAP)

N/A


N/A

Add back:




Income tax expense

N/A


N/A

Income before income taxes (GAAP)

$60-$160


$60-$90

Add back:




Interest expense

185


-

Depreciation, amortization and accretion expense

660


270

EBITDA (Non-GAAP)1

$905-$1,005


$330-$360

Add back or deduct:




(Gain) loss on asset disposals, net

15


-

Adjusted EBITDA (Non-GAAP)1

$920-$1,020


$330-$360

Deduct:




Equity in earnings of unconsolidated entities

155


-

Interest and dividend income

15


-

Adjusted OIBDA (Non-GAAP)1

$750-$850


$330-$360


Actual Results


Six Months Ended

June 30, 2024


Year Ended

December 31, 2023


UScellular


TDS

Telecom


UScellular


TDS

Telecom

(Dollars in millions)








Net income (loss) (GAAP)

$


42


$


42


$


58


$

(483)

Add back:








Income tax expense (benefit)

41


10


53


(26)

Income (loss) before income taxes (GAAP)

$


83


$


52


$


111


$

(509)

Add back:








Interest expense

91


(2)


196


(8)

Depreciation, amortization and accretion expense

329


131


656


245

EBITDA (Non-GAAP)1

$


503


$


181


$


963


$

(272)

Add back or deduct:








Expenses related to strategic alternatives review

21


-


8


-

Loss on impairment of goodwill

-


-


-


547

(Gain) loss on asset disposals, net

11


6


17


10

(Gain) loss on license sales and exchanges, net

7


-


(2)


-

Adjusted EBITDA (Non-GAAP)1

$


542


$


187


$


986


$


285

Deduct:








Equity in earnings of unconsolidated entities

80


-


158


-

Interest and dividend income

6


2


10


4

Other, net

-


2


-


2

Adjusted OIBDA (Non-GAAP)1

$


456


$


183


$


818


$


279

Numbers may not foot due to rounding.



1

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above.
EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are infrequent or unusual; such items may occur in the future.
Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS' operating results before significant recurring non-cash charges, nonrecurring expenses, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, gains and losses, and expenses related to the strategic alternatives review of UScellular while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for June 30, 2024, can be found on TDS' website at tdsinc.



2

2024 Estimated Results do not reflect any anticipated costs, expenses or results of the strategic alternatives review referenced above.

Conference Call Information
TDS will hold a conference call on August
2, 2024 at 9:00 a.m. Central Time.

  • Access the live call on the Events & Presentations page of tdsinc or at
  • Access the call by phone at (888)330-2384, conference ID: 1328528.

Before the call, certain financial and statistical information to be discussed during the call will be posted to tdsinc. The call will be archived on the Events & Presentations page of tdsinc.

About TDS
Telephone and Data Systems, Inc. (TDS) provides wireless; broadband, video and voice; and hosted and managed services
to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom, and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed approximately 8,500 associates as of June 30, 2024.

Visit tdsinc for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: whether the announced transaction whereby UScellular has agreed to sell its wireless operations and selected spectrum assets to T-Mobile will be successfully completed or whether UScellular will be able to find buyers at mutually agreeable prices for its spectrum assets that are not subject to the agreement with T-Mobile; whether any such strategic alternative will result in additional value for TDS or its shareholders and whether the process will have an adverse impact on TDS' businesses; strategic decisions regarding the tower business; intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the ability to attract people of outstanding talent throughout all levels of the organization; TDS' smaller scale relative to larger competitors; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS' businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which TDS does business; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and UScellular indebtedness or comply with the terms of debt covenants; the effect on TDS' business if the collateral securing its secured term loan is foreclosed upon; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment, including changes in regulatory support received and the ability to pass through certain regulatory fees to customers; pending and future litigation; cyber-attacks or other breaches of network or information technology security; control by the TDS Voting Trust; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; and the impact, duration and severity of public health emergencies. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under "Risk Factors" in the most recent filing of TDS' Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K.

For more information about TDS and its subsidiaries, visit:
TDS:
UScellular:
TDS Telecom:
OneNeck IT Solutions:

United States Cellular Corporation

Summary Operating Data (Unaudited)

As of or for the Quarter Ended

6/30/2024


3/31/2024


12/31/2023


9/30/2023


6/30/2023

Retail Connections










Postpaid










Total at end of period1

4,027,000


4,051,000


4,106,000


4,159,000


4,194,000

Gross additions

117,000


106,000


129,000


128,000


125,000

Handsets

73,000


63,000


80,000


84,000


83,000

Connected devices

44,000


43,000


49,000


44,000


42,000

Net additions (losses)1

(24,000)


(44,000)


(50,000)


(35,000)


(28,000)

Handsets

(29,000)


(47,000)


(53,000)


(38,000)


(29,000)

Connected devices

5,000


3,000


3,000


3,000


1,000

ARPU2

$

51.45


$

51.96


$

51.61


$

51.11


$

50.64

ARPA3

$

130.41


$

132.00


$

131.63


$

130.91


$

130.19

Handset upgrade rate4

4.1
%


4.5
%


5.8
%


4.5
%


4.8
%

Churn rate5

1.16
%


1.22
%


1.44
%


1.30
%


1.21
%

Handsets

0.97
%


1.03
%


1.22
%


1.11
%


1.01
%

Connected devices

2.47
%


2.52
%


3.03
%


2.64
%


2.65
%

Prepaid










Total at end of period1

439,000


436,000


451,000


462,000


462,000

Gross additions

50,000


41,000


43,000


52,000


50,000

Net additions (losses)1

3,000


(13,000)


(11,000)


-


(8,000)

ARPU2, 6

$

32.37


$

32.25


$

32.32


$

33.44


$

33.86

Churn rate5

3.60
%


4.06
%


3.87
%


3.68
%


4.18
%

Market penetration at end of period










Consolidated operating population

32,550,000


32,550,000


32,350,000


32,350,000


32,350,000

Consolidated operating penetration7

15
%


14
%


15
%


15
%


15
%

Capital expenditures (millions)

$


165


$


131


$


148


$


111


$


143

Total cell sites in service

6,990


6,995


7,000


6,973


6,952

Owned towers

4,388


4,382


4,373


4,356


4,341

1

First quarter 2024 connections were adjusted to remove subscribers that could no longer access the UScellular network due to the CDMA shutdown. This resulted in 11,000 and 2,000 subscribers removed from the postpaid and prepaid base, respectively, that are not included in Net additions (losses) for the quarter.

2

Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period.
These revenue bases and connection populations are shown below:


.

Postpaid ARPU consists of total postpaid service revenues and postpaid connections.


.

Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

3

Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

4

Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections.

5

Churn rate represents the percentage of the connections that disconnect service each month.
These rates represent the average monthly churn rate for each respective period.

6

Fourth quarter 2023 Prepaid ARPU excludes a $6 million reduction of prepaid revenue related to an adjustment to correct a prior period error recorded in the fourth quarter of 2023.

7

Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets.

TDS Telecom

Summary Operating Data (Unaudited)

As of or for the Quarter Ended

6/30/2024


3/31/2024


12/31/2023


9/30/2023


6/30/2023

Residential connections










Broadband










Incumbent

243,700


245,100


244,800


248,800


249,200

Expansion

107,800


100,400


92,200


79,400


70,200

Cable

198,500


202,400


202,900


204,400


204,200

Total Broadband1

550,000


547,900


539,800


532,600


523,600

Video

124,800


128,800


131,500


132,400


132,300

Voice

275,600


279,400


281,600


284,000


288,200

Total Residential connections

950,400


956,100


952,900


949,000


944,100

Commercial connections

201,500


206,200


210,200


217,400


223,300

Total connections

1,152,000


1,162,200


1,163,100


1,166,400


1,167,400











Residential revenue per connection2

$


65.26


$


64.58


$


62.74


$


62.15


$


61.97











Capital expenditures (millions)

$



78


$



87


$



143


$



172


$



132

Numbers may not foot due to rounding.

1

Total residential broadband connections increased by 8,100 during the three months ended March 31, 2024, due primarily to net additions of 6,400 as well as certain other adjustments.

2

Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)


Three Months Ended

June 30,


Six Months Ended

June 30,


2024


2023


2024

vs. 2023


2024


2023


2024

vs. 2023

(Dollars and shares in millions, except per share amounts)












Operating revenues












UScellular

$

927


$
957


(3)
%


$
1,877


$ 1,942


(3)
%

TDS Telecom

267


257


4
%


534


510


5
%

All Other1

44


53


(19)
%


89


118


(24)
%


1,238


1,267


(2)
%


2,500


2,570


(3)
%

Operating expenses












UScellular












Expenses excluding depreciation, amortization and accretion

713


759


(6)
%


1,442


1,538


(6)
%

Depreciation, amortization and accretion

165


161


2
%


329


330


-

(Gain) loss on asset disposals, net

5


3


49
%


11


13


(19)
%

(Gain) loss on license sales and exchanges, net

8


-


N/M


7


-


N/M


891


923


(3)
%


1,789


1,881


(5)
%

TDS Telecom












Expenses excluding depreciation, amortization and accretion

178


189


(6)
%


351


374


(6)
%

Depreciation, amortization and accretion

67


60


11
%


131


119


10
%

(Gain) loss on asset disposals, net

4


2


N/M


6


3


N/M


248


251


(1)
%


488


496


(1)
%

All Other1












Expenses excluding depreciation and amortization

58


56


-


111


124


(11)
%

Depreciation and amortization

1


4


(34)
%


7


7


(24)
%

(Gain) loss on asset disposals, net

-


-


(95)
%


(1)


-


N/M


60


60


(2)
%


117


131


(11)
%

Total operating expenses

1,199


1,234


(3)
%


2,394


2,508


(5)
%

Operating income (loss)












UScellular

36


34


6
%


88


61


44
%

TDS Telecom

19


7


N/M


46


15


N/M

All Other1

(16)


(8)


N/M


(28)


(14)


N/M


39


33


17
%


106


62


72
%

Investment and other income (expense)












Equity in earnings of unconsolidated entities

39


38


3
%


82


82


-

Interest and dividend income

7


6


28
%


12


11


13
%

Interest expense

(73)


(62)


(18)
%


(131)


(116)


(14)
%

Other, net

1


-


N/M


2


1


N/M

Total investment and other expense

(26)


(18)


(42)
%


(35)


(22)


(62)
%

Income before income taxes

13


15


(13)
%


71


40


77
%

Income tax expense

6


15


(57)
%


26


28


(8)
%

Net income

7


-


N/M


45


12


N/M

Less: Net income attributable to noncontrolling interests, net of tax

4


2


N/M


13


6


N/M

Net income (loss) attributable to TDS shareholders

3


(2)


N/M


32


6


N/M

TDS Preferred Share dividends

17


17


-


35


35


-

Net income (loss) attributable to TDS common shareholders

$

(14)


$
(19)


24
%


$

(3)


$
(29)


91
%













Basic weighted average shares outstanding

114


113


1
%


113


113


1
%

Basic earnings (loss) per share attributable to TDS common shareholders

$
(0.13)


$ (0.17)


25
%


$
(0.02)


$ (0.25)


91
%













Diluted weighted average shares outstanding

114


113


1
%


113


113


1
%

Diluted earnings (loss) per share attributable to TDS common shareholders

$
(0.13)


$ (0.17)


23
%


$
(0.03)


$ (0.25)


89
%

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

1

Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)


Six Months Ended

June 30,


2024


2023

(Dollars in millions)




Cash flows from operating activities




Net income

$



45


$



12

Add (deduct) adjustments to reconcile net income to net cash flows from operating activities




Depreciation, amortization and accretion

467


456

Bad debts expense

51


53

Stock-based compensation expense

29


14

Deferred income taxes, net

16


22

Equity in earnings of unconsolidated entities

(82)


(82)

Distributions from unconsolidated entities

80


78

(Gain) loss on asset disposals, net

16


16

(Gain) loss on license sales and exchanges, net

7


-

Other operating activities

5


4

Changes in assets and liabilities from operations




Accounts receivable

6


19

Equipment installment plans receivable

5


7

Inventory

54


52

Accounts payable

(14)


(124)

Customer deposits and deferred revenues

7


(9)

Accrued taxes

7


56

Accrued interest

5


(1)

Other assets and liabilities

(78)


(59)

Net cash provided by operating activities

626


514





Cash flows from investing activities




Cash paid for additions to property, plant and equipment

(451)


(629)

Cash paid for intangible assets

(15)


(8)

Other investing activities

1


8

Net cash used in investing activities

(465)


(629)





Cash flows from financing activities




Issuance of long-term debt

440


391

Repayment of long-term debt

(401)


(209)

Repayment of short-term debt

-


(60)

Tax payments for TDS stock-based compensation awards

(10)


(3)

Tax payments for UScellular stock-based compensation awards

(12)


(6)

Repurchase of TDS Common Shares

-


(6)

Dividends paid to TDS shareholders

(61)


(76)

Payment of debt issuance costs

(16)


-

Distributions to noncontrolling interests

(3)


(2)

Cash paid for software license agreements

(21)


(20)

Other financing activities

(1)


-

Net cash provided by (used in) financing activities

(85)


9





Net increase (decrease) in cash, cash equivalents and restricted cash

76


(106)





Cash, cash equivalents and restricted cash




Beginning of period

270


399

End of period

$



346


$



293

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


ASSETS






June 30, 2024


December 31, 2023

(Dollars in millions)




Current assets




Cash and cash equivalents

$







322


$







236

Accounts receivable, net

1,037


1,074

Inventory, net

148


208

Prepaid expenses

88


86

Income taxes receivable

4


4

Other current assets

42


52

Total current assets

1,641


1,660





Assets held for sale

120


15





Licenses

4,724


4,702





Other intangible assets, net

173


183





Investments in unconsolidated entities

507


505





Property, plant and equipment, net

4,988


5,062





Operating lease right-of-use assets

966


987





Other assets and deferred charges

753


807





Total assets

$






13,872


$






13,921

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)


LIABILITIES AND EQUITY






June 30, 2024


December 31, 2023

(Dollars in millions, except per share amounts)




Current liabilities




Current portion of long-term debt

$








29


$








26

Accounts payable

327


360

Customer deposits and deferred revenues

282


277

Accrued interest

17


12

Accrued taxes

43


43

Accrued compensation

94


149

Short-term operating lease liabilities

145


147

Other current liabilities

149


170

Total current liabilities

1,086


1,184





Liabilities held for sale

34


-





Deferred liabilities and credits




Deferred income tax liability, net

992


975

Long-term operating lease liabilities

873


890

Other deferred liabilities and credits

786


784





Long-term debt, net

4,103


4,080





Noncontrolling interests with redemption features

16


12





Equity




TDS shareholders' equity




Series A Common and Common Shares, par value $0.01 per share

1


1

Capital in excess of par value

2,542


2,558

Preferred Shares, par value $0.01 per share

1,074


1,074

Treasury shares, at cost

(437)


(465)

Accumulated other comprehensive income

11


11

Retained earnings

1,957


2,023

Total TDS shareholders' equity

5,148


5,202





Noncontrolling interests

834


794





Total equity

5,982


5,996





Total liabilities and equity

$






13,872


$






13,921

Balance Sheet Highlights

(Unaudited)




June 30, 2024




TDS


TDS
Corporate


Intercompany


TDS


UScellular


Telecom


& Other


Eliminations


Consolidated

(Dollars in millions)










Cash and cash equivalents

$

195


$




58


$




125


$




(56)


$

322











Licenses and other intangible assets

$



4,715


$




177


$





5


$




-


$



4,897

Investment in unconsolidated entities

461


4


49


(7)


507


$



5,176


$




181


$




54


$




(7)


$



5,404











Property, plant and equipment, net

$



2,540


$
2,429


$




19


$




-


$



4,988











Long-term debt, net:










Current portion

$




20


$




-


$





9


$




-


$

29

Non-current portion

2,887


3


1,213


-


4,103


$
2,907


$





3


$
1,222


$




-


$



4,132

United States Cellular Corporation

Segment Results

(Unaudited)



Three Months Ended

June 30,


Six Months Ended
June 30,

UScellular

2024


2023


2024
vs. 2023


2024


2023


2024

vs. 2023

(Dollars in millions)












Operating Revenues












Wireless

$

902


$

932


(3)
%


$
1,826


$
1,892


(3)
%

Towers

58


57


3
%


116


113


3
%

Intra-company eliminations

(33)


(32)


(4)
%


(65)


(63)


(3)
%

Total operating revenues

927


957


(3)
%


1,877


1,942


(3)
%













Operating expenses












Wireless

885


916


(3)
%


1,779


1,868


(5)
%

Towers

39


39


1
%


75


76


(1)
%

Intra-company eliminations

(33)


(32)


(4)
%


(65)


(63)


(3)
%

Total operating expenses

891


923


(3)
%


1,789


1,881


(5)
%













Operating income

$

36


$

34


6
%


$

88


$

61


44
%













Adjusted OIBDA (Non-GAAP)

$

227


$

198


14
%


$

456


$

404


13
%

Adjusted EBITDA (Non-GAAP)

$

268


$

239


13
%


$

542


$

491


10
%

Capital expenditures

$

165


$

143


15
%


$

295


$

351


(16)
%


Three Months Ended

June 30,


Six Months Ended
June 30,

UScellular Wireless

2024


2023


2024
vs. 2023


2024


2023


2024

vs. 2023

(Dollars in millions)












Retail service

$

666


$

686


(3)
%


$
1,344


$
1,378


(2)
%

Other

52


49


7
%


102


99


3
%

Service revenues

718


735


(2)
%


1,446


1,477


(2)
%

Equipment sales

184


197


(6)
%


380


415


(9)
%

Total operating revenues

902


932


(3)
%


1,826


1,892


(3)
%













System operations (excluding Depreciation, amortization
and accretion reported below)

194


203


(4)
%


390


398


(2)
%

Cost of equipment sold

211


228


(7)
%


427


480


(11)
%

Selling, general and administrative

313


333


(6)
%


637


670


(5)
%

Depreciation, amortization and accretion

154


149


3
%


308


307


-

(Gain) loss on asset disposals, net

5


3


40
%


10


13


(23)
%

(Gain) loss on license sales
and exchanges, net

8


-


N/M


7


-


N/M

Total operating expenses

885


916


(3)
%


1,779


1,868


(5)
%













Operating income

$

17


$

16


5
%


$

47


$

24


97
%













Adjusted OIBDA (Non-GAAP)

$

196


$

168


16
%


$

392


$

344


14
%

Adjusted EBITDA (Non-GAAP)

$

196


$

168


16
%


$

392


$

344


14
%

Capital expenditures

$

160


$

140


13
%


$

286


$

346


(17)
%

N/M - Percentage change not meaningful

United States Cellular Corporation

Segment Results

(Unaudited)



Three Months Ended

June 30,


Six Months Ended
June 30,

UScellular Towers

2024


2023


2024
vs. 2023


2024


2023


2024

vs. 2023

(Dollars in millions)












Third-party revenues

$

25


$

25


1
%


$

51


$

50


2
%

Intra-company revenues

33


32


4
%


65


63


3
%

Total tower revenues

58


57


3
%


116


113


3
%













System operations (excluding Depreciation, amortization and accretion reported below)

19


19


(1)
%


37


37


1
%

Selling, general and administrative

9


8


8
%


16


16


(3)
%

Depreciation, amortization and accretion

11


12


(5)
%


21


23


(5)
%

(Gain) loss on asset disposals, net

-


-


N/M


1


-


N/M

Total operating expenses

39


39


1
%


75


76


(1)
%













Operating income

$

19


$

18


7
%


$

41


$

37


10
%













Adjusted OIBDA (Non-GAAP)

$

31


$

30


6
%


$

64


$

60


7
%

Adjusted EBITDA (Non-GAAP)

$

31


$

30


6
%


$

64


$

60


7
%

Capital expenditures

$


5


$


3


N/M


$


9


$


5


89
%

N/M - Percentage change not meaningful

TDS Telecom Highlights

(Unaudited)














Three Months Ended

June 30,


Six Months Ended

June 30,


2024


2023


2024

vs. 2023


2024


2023


2024

vs. 2023

(Dollars in millions)












Operating revenues












Residential












Incumbent

$

90


$

89


1
%


$

180


$

175


3
%

Expansion

28


18


60
%


54


33


65
%

Cable

69


68


1
%


138


136


2
%

Total residential

186


175


7
%


372


344


8
%

Commercial

37


39


(6)
%


74


80


(8)
%

Wholesale

44


43


2
%


88


86


2
%

Total service revenues

267


257


4
%


534


510


5
%

Equipment revenues

-


-


19
%


-


-


(12)
%

Total operating revenues

267


257


4
%


534


510


5
%













Cost of services

98


108


(9)
%


196


212


(8)
%

Cost of equipment and products

-


-


(28)
%


-


-


(7)
%

Selling, general and administrative expenses

80


81


(2)
%


155


162


(4)
%

Depreciation, amortization and accretion

67


60


11
%


131


119


10
%

(Gain) loss on asset disposals, net

4


2


N/M


6


3


N/M

Total operating expenses

248


251


(1)
%


488


496


(1)
%













Operating income

$

19


$


7


N/M


$

46


$

15


N/M

N/M - Percentage change not meaningful

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Free Cash Flow

(Unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,

TDS - CONSOLIDATED

2024


2023


2024


2023

(Dollars in millions)








Cash flows from operating activities (GAAP)

$



403


$



469


$



626


$



514

Cash paid for additions to property, plant and equipment

(216)


(298)


(451)


(629)

Cash paid for software license agreements

(11)


(12)


(21)


(20)

Free cash flow (Non-GAAP)1

$



176


$



159


$



154


$



(135)



Three Months Ended

June 30,


Six Months Ended

June 30,

UScellular

2024


2023


2024


2023

(Dollars in millions)








Cash flows from operating activities (GAAP)

$



313


$



349


$



516


$



390

Cash paid for additions to property, plant and equipment

(137)


(155)


(270)


(351)

Cash paid for software license agreements

(11)


(12)


(20)


(19)

Free cash flow (Non-GAAP)1

$



165


$



182


$



226


$




20

1

Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements.

Telephone and Data Systems, Inc.

EBITDA, Adjusted EBITDA and Adjusted OIBDA

(Unaudited)


The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income,
Income before income taxes and/or Operating income. Income and expense items below Operating income are not provided at the
individual segment level for UScellular Wireless and UScellular Towers; therefore, the reconciliations begin with EBITDA and the
most comparable GAAP measure is Operating income rather than Net income at the segment level.



Three Months Ended

June 30,

TDS - CONSOLIDATED

2024


2023

(Dollars in millions)




Net income (GAAP)

$




7


$




-

Add back:




Income tax expense

6


15

Income before income taxes (GAAP)

13


15

Add back:




Interest expense

73


62

Depreciation, amortization and accretion

233


225

EBITDA (Non-GAAP)

319


302

Add back or deduct:




Expenses related to strategic alternatives review

21


-

(Gain) loss on asset disposals, net

9


5

(Gain) loss on license sales and exchanges, net

8


-

Adjusted EBITDA (Non-GAAP)

357


307

Deduct:




Equity in earnings of unconsolidated entities

39


38

Interest and dividend income

7


6

Other, net

1


-

Adjusted OIBDA (Non-GAAP)

$



310


$



263

EBITDA, Adjusted EBITDA and Adjusted OIBDA



Three Months Ended

June 30,

UScellular

2024


2023

(Dollars in millions)




Net income (GAAP)

$



18


$




5

Add back:




Income tax expense

14


19

Income before income taxes (GAAP)

32


24

Add back:




Interest expense

45


51

Depreciation, amortization and accretion

165


161

EBITDA (Non-GAAP)

242


236

Add back or deduct:




Expenses related to strategic alternatives review

13


-

(Gain) loss on asset disposals, net

5


3

(Gain) loss on license sales and exchanges, net

8


-

Adjusted EBITDA (Non-GAAP)

268


239

Deduct:




Equity in earnings of unconsolidated entities

38


38

Interest and dividend income

3


3

Adjusted OIBDA (Non-GAAP)

$



227


$



198


Three Months Ended

June 30,

UScellular Wireless

2024


2023

(Dollars in millions)




EBITDA (Non-GAAP)

$



171


$



165

Add back or deduct:




Expenses related to strategic alternatives review

12


-

(Gain) loss on asset disposals, net

5


3

(Gain) loss on license sales and exchanges, net

8


-

Adjusted EBITDA and Adjusted OIBDA (Non-GAAP)

196


168

Deduct:




Depreciation, amortization and accretion

154


149

Expenses related to strategic alternatives review

12


-

(Gain) loss on asset disposals, net

5


3

(Gain) loss on license sales and exchanges, net

8


-

Operating income (GAAP)

$



17


$



16


Three Months Ended

June 30,

UScellular Towers

2024


2023

(Dollars in millions)




EBITDA (Non-GAAP)

$



30


$



30

Add back or deduct:




Expenses related to strategic alternatives review

1


-

Adjusted EBITDA and Adjusted OIBDA (Non-GAAP)

31


30

Deduct:




Depreciation, amortization and accretion

11


12

Expenses related to strategic alternatives review

1


-

Operating income (GAAP)

$



19


$



18

EBITDA, Adjusted EBITDA and Adjusted OIBDA



Three Months Ended

June 30,

TDS TELECOM

2024


2023

(Dollars in millions)




Net income (GAAP)

$



18


$




7

Add back:




Income tax expense

3


3

Income before income taxes (GAAP)

21


10

Add back:




Interest expense

-


(2)

Depreciation, amortization and accretion

67


60

EBITDA (Non-GAAP)

88


68

Add back or deduct:




(Gain) loss on asset disposals, net

4


2

Adjusted EBITDA (Non-GAAP)

91


70

Deduct:




Interest and dividend income

1


1

Other, net

1


-

Adjusted OIBDA (Non-GAAP)

$



89


$




68

Numbers may not foot due to rounding.

SOURCE Telephone and Data Systems, Inc.

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