Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Deutsche Bank 16th Annual 2008 Media and Telecommunications Conference
28 slides from Telephone And Data Systems's conference presentation, Jun 9, 2008
Slide 1: Deutsche Bank 16th Annual 2008 Media and Telecommunications Conference
Kenneth R. Meyers Executive Vice President and Chief Financial Officer Peter L. Sereda Vice President and Treasurer Deutsche Bank 16th Annual 2008 Media and Telecommunications Conference June 9, 2008
Slide 2: Kenneth R. Meyers, Executive Vice President and Chief Financial Officer
Kenneth R. Meyers Executive Vice President and Chief Financial Officer
Slide 3: Safe Harbor
Safe Harbor Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this presentation, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates,
Slide 4: Strong foundation for future growth
NEED NEW MAP 4 Strong foundation for future growth
Slide 5: U.S. Cellular Growth Strategies
U.S. Cellular Growth Strategies • Focus on the postpay customer • Differentiate with high customer satisfaction: ¾Quality network ¾Broad distribution ¾Excellent customer service • National, wide-area and family plans • Competitive products and data offerings • Strategically strengthen competitive fo
Slide 6: U.S. Cellular 2008 Objectives
U.S. Cellular 2008 Objectives • Focus on retail postpay customers • Profitable growth • EVDO in more markets • New data products • More data-intensive smart phones 6 Strong foundation for future growth
Slide 7: Postpay Churn < 2%
Postpay Churn < 2% 11- year track record… and still strong 2.0% 1.9% 1.9% 1.9% 1.9% 1.8% 1.8% 1.7% 1.8% * * * 1.7% 1.6% * 1.6% 1.6% 1.6% 1.5% * * 1.5% 1.4% 1.4% 1.4% 1.3% 1.2% 1.1% 1.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1 Q '08 * retail postpay 7 Strong foundation for future gro
Slide 8: Growing Demand for Smart Phones
Growing Demand for Smart Phones BlackBerry® and Windows Mobile® mobile platforms 2007 • BlackBerry® 8830 • MOTO Q™ 2008 • BlackBerry® Pearl • HTC PPC6800 • MOTO Q9c • BlackBerry® Curve 8 Strong foundation for future growth
Slide 9: Strong Growth in Data Revenues
Strong Growth in Data Revenues 400 367.6 Data rev per avg customer $6.26 at Q1’08 350 300 250 217 200 131 150 100 68 50 0 2004 2005 2006 2007 9 Strong foundation for future growth
Slide 10: U.S. Cellular 2008 Guidance
U.S. Cellular 2008 Guidance Net retail customer additions 200,000 – 275,000 Service revenues $3.9 – 4.0 billion Operating Income $435 – 510 million Depr., amortization & accretion Approx. $615 million Capital expenditures $565 – 615 million 10 Strong foundation for future growth
Slide 11: TDS Telecom
TDS Telecom 11 Strong foundation for future growth
Slide 12: TDS Telecom Strategy
TDS Telecom Strategy Provide outstanding customer satisfaction • Be the preferred broadband provider in its markets …aggressively deploy advanced network • Bundle aggressively – bigger the bundle the less the churn** One service churn ~2.8% Two service churn ~1.8% Three service churn ~ .8% ** 2007 C
Slide 13: TDS Telecom 2008 Objectives
TDS Telecom 2008 Objectives • Add DSL customers • Increase DSL speeds • New broadband services • Aggressively market bundles and triple play • Streamlining for efficiency 13 Strong foundation for future growth
Slide 14: TDS Telecom Guidance
TDS TELECOM Guidance (ILEC and CLEC) Operating revenues $810 – 840 million Operating income $110 – 140 million Depr, amort. & accretion Approx. $160 million Capital expenditures $130 – 160 million 14 Strong foundation for future growth
Slide 15: Peter L. Sereda, Vice President and Treasurer
Peter L. Sereda Vice President and Treasurer
Slide 16: Liquidity
Liquidity March 31, 2008 • Cash $1,210 M • Available credit facilities 1,296 M Total: $2,506 M • 3,700+ owned towers • Los Angeles minority position 16 Strong foundation for future growth
Slide 17: Long Term Debt Repayment
Long Term Debt* Repayment Par call feature provides financial flexibility on 65% LTD $600 $500 $400 $300 $200 $100 $- 08 13 18 23 28 33 38 43 20 20 20 20 20 20 20 20 * Excludes monetization debt 17 Strong foundation for future growth
Slide 18: Financial Ratios … Positive Trends
Financial Ratios … Positive Trends TDS Consolidated U.S. Cellular 2006 2007 2006 2007 Free Cash Flow to Debt (Lease-Adjusted) (1) 7.7% 17.7% 7.5% 20.4% Total Debt (excluding monetization liabilities) to OCF (2) 1.5x 1.2x 1.2x 1.0x EBITDA Interest Coverage (3) 5.3x 6.6x 10.5x 13.5x Total Debt (exclud
Slide 19: Free Cash Flow – OCF less CAPX
Free Cash Flow – OCF less CAPX 685 585 485 385 U.S. Cellular TDS Telecom 285 Corporate 185 85 -15 2003 2004 2005 2006 2007 19 Strong foundation for future growth
Slide 20: Stock Repurchases
Stock Repurchases Shares/($) Full Year 2007 1 Q ’08 TDS 2,076,979 ($127 M) 1,041,016 ($45 M) U.S. Cellular 1,006,000 ($83 M ) 150,000 ($11 M) 20 Strong foundation for future growth
Slide 21: Investment Grade
Investment Grade TDS USM Outlook Moody’s Baa3 Baa3 Ratings Watch Positive Standard & Poor’s BBB- BBB- Positive Fitch BBB+ BBB+ Stable 21 Strong foundation for future growth
Slide 22: TDS: Excellent Prospects
TDS: Excellent Prospects • Opportunity to improve profitability • Generating free cash flow • Improved return on capital • Sound business strategies & experienced teams • Excellent balance sheet • Investment grade • A Fortune 500® company 22 Strong foundation for future growth
Slide 23: Reconciliation
Reconciliation U.S. Cellular 2003 2004 2005 2006 2007 Operating Income (as reported) $106,532 $162,583 $231,197 $289,896 $396,199 Add: Depr/Amortization/Accretion 434,495 502,564 490,093 555,525 582,269 (Gains) losses on assets 95,503 (10,806) (24,266) 19,587 54,857 Operating Cash Flow: 636,530 654,
Slide 24: Reconciliation – TDS Ratios
Reconciliation – TDS Ratios TDS Consolidated 2006 2007 Free Cash Flow to Debt (Lease-Adjusted) Cash Flow from Operating Activities $ 892 $ 941 Capital Expenditures (722) (700) Less: Dividend (43) (46) Less: Tax Benefit from Stock Option Exercise (4) (4) Add: Cash taxes related to monetized securitie
Slide 25: Reconciliation – TDS Ratios
Reconciliation – TDS Ratios 2006 2007 EBITDA Interest Coverage EBITDA $ 1,471 $ 1,644 Interest Expense $ 276 $ 250 EBITDA Interest Coverage 5.3x 6.6x 2006 2007 Total Debt to Capital Current Maturities of Long-term Debt $ 3 $ 4 Notes Payable 35 - Long-term Debt (excluding monetizations) 1,633 1,632 T
Slide 26: Reconciliation – USM Ratios
Reconciliation – USM Ratios US Cellular 2006 2007 Free Cash Flow to Debt (Lease-adjusted) Cash Flow from Operating Activities $ 701 $ 863 Capital Expenditures (580) (565) Less: Dividends - - Less: Tax Benefit from Stock Option Exercise (1) (1) Add: Cash taxes related to monetized securities - 35 Add
Slide 27: Reconciliation – USM Ratios
Reconciliation – USM Ratios 2006 2007 EBITDA Interest Coverage EBITDA $ 979 $ 1,142 Interest Expense 94 85 Total Interest $ 94 $ 85 EBITDA INTEREST COVERAGE 10.5 x 13.5 x 2006 2007 Total Debt to Capital Current Maturities of Long-term Debt $ - $ - Notes Payable 35 - Long-term Debt (Excluding Monetiz
Slide 28: TDS: Excellent Prospects
TDS: Excellent Prospects • Opportunity to improve profitability • Generating free cash flow • Improved return on capital • Sound business strategies & experienced teams • Excellent balance sheet • Investment grade • A Fortune 500® company 28 Strong foundation for future growth