38 slides from Telephone And Data Systems's proxy contest presentation, May 5, 2014
Slide 1: May 2, 2014
May 2, 2014 Ea TELEPHONE AND TDS pata systems” JK US Cellular
Slide 2: Safe Harbor statement
Ea TOS. Safe Harbor statement TTA ie ‘Safe Harbor Statement Under the Private Secures gation Reform Actof 1995: A infrmaton set for in this presentaton, except hstoral angfacualinformaton, represents forwaréiookng statements. Thsincudes ‘al statements about the company’s pans, beset, estates, and ex
Slide 3: Important Information
BS TOS. IMPORTANT INFORMATION: TDS and its directors, executive officers and other members of its management andemployeesmay be deemedto beparticipants inthesolitation ‘of proxies from theshareholders of TDSin connection with theTDS2014 annualmeeting of shareholders. Information regarding TDS direct
Slide 4: Current TDS director slate ensures continued execution on strategic actions
Current TDS director slate ensures continued ‘TOS. execution on strategic actions ii Ee ‘TDS isa controlled company undergoing significant change ‘The TDS Board believes that: Members have been very active in urging meaningful action and helping ‘TDS set its course for sustainable, profitable future
Slide 5: TDS director candidate: Clarence A. Davis
(Management Experience 1 Significant leadership and operational ‘experience in mutiple industries including technology (CEO—Nestor Ine], accourting (CFO, COO-American Instiute of Cetfied Public Accourtarts), manufacturing, ‘madi /oroadcartng, griculture Board Experience ‘Current orformerdirecter of
Slide 6: TDS director candidate: George W. Off
(Management Experience ‘Substantial eecutivemanagement and ‘operational experience for marketing ‘Services firm (Co-founder andCEO, Cataing ‘Marketing Corporation) and multinational ‘manufacturer (CEO, CheckpointSystems) Board Experience ‘Current orformermamber of mutinle boards, including The Retai
Slide 7: TDS director candidate: Mitchell H. Saranow
‘TBS. TDS director candidate: Mitchell H. Saranow (Management Experience Business Expertise "Significant leadership experiencein + Successfulbusinessfounder and ‘manufacturing (Founder-Fluid innovator ‘Management, SureTintTechnologis) cable «* Substantial epertiseinstrategie (Co-founder, Mid-Adartie
Slide 8: TDS director candidate
(Management Experience Business Expertise ‘More than 25yearof management experience, + Significant businessexpertise in many including tractonalteleosCo-ourder and EO,Mid-” SSrareoortne tascormonteavone Maine Commurications; various operating rolesstnjustryinciedine M&A operations, RochesterTelephon
Slide 9: TDS Board composition
Ea ‘TOS. TDS Board composition The TDS Board, in close collaboration with TDs’ controlling shareholder, seeks to optimize performanceby assemblinga diverse group of directors with deep experienceand expertise in a broad array of industries relevant to its businesses and across multiple business disc
Slide 10: TDS Board continues to take decisive action to improve performance
[=| ‘TBS. TDS Board continues to take decisive action to improve performance The TDS Board fully recognizes the significant competitive challenges faced by TDS’ current businesses and the enterprise asa whole, and is actively engaged, alongwith the controlling shareholder and management, to: ‘+ Iden
Slide 11: Executing on strategic actions
Executing on strategic actions ‘Actions discussed at 2013 annual meeting Execution ‘Strengthencompetitive position through divestiture Closed May2013;U.S. Cellular of underperforming markets at U.S. Cellular received $480 million Generating substantial proceedsthrough Sold over $400 million in monet
Slide 12: Executing on strategic actions
‘TBS. Executing on strategic actions EEE ‘Simplifycapital tructureandincreasefinancial Share consoldationcompleted in 2012 flexibility Enter adjacent lines of businessthat leverage Bought firstcable/broadband core capabiltiesandprovidefuturegrowth and company (Baja Broadband) in August ‘enhancedretu
Slide 13: Current initiatives; some with short-term financial impact
[=| ‘TBS. Current initiatives; some with short-term financial impact + Capita allocation strategy; $250 million share repurchase authorised in August 2013 + Us.callular + Conversion to new billing and operational support system — temporarilyimpacting churn ‘and financial results; provides significan
Slide 14: Recent corporate governance highlights
Ea TBS. Recent corporate governance highlights Te + In 2013, the Corporate Governance and Nominating Committee considered desired skills, backgrounds, and characteristics for potential new board members. In its annual board assessment, the full board also considered its ‘composition and discussexper
Slide 15: Our mission
[== TBS. Our mission To provide outstanding communications services to ‘our customers and meet theneeds of our shareholders, ‘our people, and our communities.
Slide 16: Diversified telecommunications company
Diversified telecommunications company ‘+ Two principal business units > U.S. Cellular (84%-owned)—wireless; 92% of core retail customers are postpaid (NYSE: USM) > TDS Telecom (wholly owned)—cable/broadband, TV and voice; hosted and managed services + 5.8 million customers nationwide + Fortune500*
Slide 17: Operations
Slide 18: Capital structure
[=| TOS. Capital structure + Since the IPO in 1981 until 2012, the Series A Common Shares have had 10 votes pershare and the Common Shares have had one vote pershare. + In 2012, shareholders approved a recapitalization, and the aggregate voting power of the Series A Common Shares was capped at 56.7%
Slide 19: Delivering value to shareholders
Delivering value to shareholders [==] + 40 years of consecutive dividend increases Tos. + TDS andUS. Cellular have activeshare repurchase programs * June 25, 2013-US. Cellular paid $5.75 per share special cash dividend + August 2, 2013-TDS Board approved $250 million share repurchase authorization ‘
Slide 20: Strong financial foundation
Strong financial foundation “TDS Long-Term Debt Maturity Schedule|S in milions) sm $ seom
Slide 21: Ample liquidity
Ample liquidity ae OSS Liquidity available to TDSas of March 31, 2014 (S in mi Cash and cash equivalents $8729 ‘Government-backed securities®) 401 ‘Availablecredit factties 821 Total $1,595.1 Other actual or potential sources of liquidity Planned monetization of towers andspectrum relatedto divestit
Slide 22: U.S. Cellular
K US. Cellular
Slide 23: Accomplishments in 2013
Rus Celular Accomplishments in 2013 Nearly 90% of customers had access to.4G/LTE at yearend Launched iPhone and iPad in November Rolled out Shared Data plans to monetize data growth Implemented a new billing system to support operational strategiesand increase efficiency Management team changes Dive
Slide 24: Strategy to compete in 2014
Kus Cellular Strategy to compete in 2014 BSAA AS ESN SR BT SL LE ETS Drive customer growth Differentiatethrough refined valueproposition Drive revenuegrowth through smartphone adoption and data monetization Focus on equipment subsidies and cost management
Slide 25: Drive customer growth
KusCetlular Drive customer growth SS + Increase gross additions with high-quality network, strong device portfolio, connected devices, product and pricing improvements + Postpaid gross additions up 12% + Reduce churn through device portfolio, including Apple devices, membership experience, customer
Slide 26: Differentiate through refined value proposition
Kus Cellular Differentiate through refined value proposition + Best-in-class 4G/LTE network + Launch new products and services that leverage our network + Membership experience + Treat customers like neighbors not numbers + RewardsProgram + Create a localized experience for customers + New local adv
Slide 27: Drive revenue growth
us Cellular Drive revenue growth + Increase smartphone penetration * Postpaid smartphone penetration increased from 43% to + Launch new products and services that utilize and monetize ‘our data network + Connected devices + Simple Connect Plans (no contract) + Equipment installment plans + Shared Co
Slide 28: Smartphone penetration - Core markets
Kus Cellular Smartphone penetration- Core markets* (Ge ofpospsig bese) ag DIPSET Iss * Core maketa-defintion provides in note at We end af is presentation =
Slide 29: Postpaid ARPU - Core markets
us Cellular Postpaid ARPU - Core markets* SSE "Core mariats-dufntion provided in nate at the end ofthis pravectation =
Slide 30: Focus on subsidies and cost management
Kus Cellular Focus on subsidies and cost management 7a + Align costs with revenues + Manage subsides + Offer equipment installment plans + Offer attractive lower-cost devices + Manage growth in data usage + Cost-reduction initiatives
Slide 31: TDS Telecom
TDS Telecom
Slide 32: 2013 - Pursued cable/broadband and HMS growth, targeted wireline investments
2013 - Pursued cable/broadband and HMS MS growth, targeted wireline investments ee Wireline ‘+ TDSTV launched in 11 markets; enabled 93,000 service addresses + Excellent progress on broadband stimulus projects ‘+ Meaningful cost reduction to mitigate impact of lower wholesale and regulatory revenues
Slide 33: Broadband speeds, IPTV driving wireline residential revenue growth
Broadband speeds, IPTV driving SF wireline residential revenue growth ILEC Residential Customers by Wireline Residential Average Broadband Speeds Revenue Per Connection P| 3/31/14 | 3/31/13 | > 5Mb 79% 73% $40.79 $39.99 >10Mb —-36% 29% = + IPTV, data products and cost reductions to offset losses in
Slide 34: Cable/Broadband supports profitable growth
aS Cable/Broadband supports profitable growth Seer a BAA, + Attractivecompetitive landscape andmarket demographics ‘+ Strong potentialto increase ‘penetration to national averages + Abilityto leverage TDS ‘expertise, platform and technologies; SG&A savings + Recently upgradednetwork- 96% of network
Slide 35: Growing Hosted and Managed Services
Growing Hosted and Managed Services @oneNeck Se SSS ‘+ Comprehensive suite of IT outsourcing services aimed at mi companies market + Salesforce has end-to-end IT services to cross ell and drive recurring revenues
Slide 36: Current TDS director slate ensures continued execution on strategic actions
[=| TOS. Current TDS director slate ensures continued execution on strategic actions + TDS isa controlled company undergoing significantchange ‘+The TDS Board believes that: + Members have been very active in urging meaningful action and helping DS set its course for sustainable, profitable future g
Slide 37: Core markets
Rus cellular Core markets* SE SEIS a ES ONO Raa Cea Ua ea Ua eo +* For Qi 2014, core markets are equal to total company results. For ‘comparability, core markets, as presented here, excludesthe results of Divestiture markets and NY1 and NY2 Partnerships, which were deconsolidated on April 3, 2013, a
Slide 38: ES) tevepHone ano
ES) tevepHone ano TDS pata systems”