Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q1 2013 Earnings Presentation
30 slides from Telephone And Data Systems's earnings presentation, May 3, 2013
Slide 1: First Quarter 2013 Results
May 3, 2013 First Quarter 2013 Results
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 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 in
Slide 3: Important Information
IMPORTANT INFORMATION: TDS and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of TDS in connection with TDS 2013 annual meeting of shareholders. Information regarding TDS direct
Slide 4: Upcoming conferences
Upcoming conferences 5/14/13 – U.S. Cellular Annual Shareholders Meeting 5/22/13 – Analyst day at CTIA – Las Vegas 5/24/13 – TDS Annual Shareholders Meeting 4
Slide 5: New developments
New developments • Providing guidance on adjusted income before income taxes to provide better visibility to contributions of non‐controlled entities • Complexity and timing of accounting treatment • Divestiture Transaction • NY1 & NY2 deconsolidation • Monetization of towers and spectrum in Divesti
Slide 6: U.S. Cellular
K US. Cellular
Slide 7: Q1 Update
Q1 Update • In core markets, postpaid gross adds up 1% and strong prepaid performance • Continued elevated churn • Key Actions • Strong success at Walmart and expansion into Sam’s Club • 4G LTE smartphone adoption continues • Repeated third‐party recognition for network and customer experience • Con
Slide 8: Strategic priorities for 2013
Strategic priorities for 2013 • Accelerate growth • Expansion of device line‐up • Penetrate small business • Innovate customer experience • Optimize distribution • 4G LTE expansion • Control expenses • Billing system conversion • Reduce complexity and cost across the company 8
Slide 9: Core markets – customer results
Core markets – customer results Q1 ‘13 Q1 ‘12 Postpaid gross additions 184,000 182,000 Postpaid churn 1.55% 1.43% Postpaid net losses (32,000) (21,000) Prepaid net additions 31,000 5,000 Retail net losses (1,000) (16,000) Total retail customers 5,012,000 4,959,000 9
Slide 10: Core markets - Continued growth in smartphone penetration and ARPU
Core markets ‐ Continued growth in smartphone penetration and ARPU Smartphones Sold Smartphone Customers Postpaid Average (% of total devices) (% of postpaid base) Monthly Revenue Per 50% User 70% $55.00 45% $54.50 60% 40% $54.00 50% 35% $53.50 30% $53.00 40% 4G/LTE 25% $52.50 30% 20% $52.00 15% $51
Slide 11: Core markets – service revenues
Core markets – service revenues ($ in millions) Q1 ‘13 Q1 ‘12 Service revenues $899 $913 Retail service 794 783 Roaming 61 77 Other 44 53 11
Slide 12: Total company – financial performance
Total company – financial performance ($ in millions) Q1 ‘13 Q1 ‘12 Service revenues $996.3 $1,023.8 System operations expense 216.3 233.2 Loss on equipment 156.3 118.7 SG&A expenses 420.1 442.2 Operating income 1.5 85.2 Adjusted income before income taxes (1) $225.8 $250.5 (1) Adjusted income befor
Slide 13: Impact of divestiture on Q1 operating income
Impact of divestiture on Q1 operating income ($ in millions) Accelerated depreciation, amortization and accretion $38 Employee related costs, including severance 3 Contract termination and other costs 4 Total impact to operating income $45 13
Slide 14: Total company financial performance (cont.)
Total company financial performance (cont.) ($ in millions, except per share amounts) Q1 ‘13 Q1 ‘12 Total investment and other income $16.6 $9.4 Net income attributable to U.S. Cellular shareholders 4.9 62.5 Diluted earnings per share attributable to $0.06 $0.73 U.S. Cellular shareholders Cash flows
Slide 15: 2013 guidance
2013 guidance (1) (as of 05/03/13) Core Markets (2) Divestiture Total Company Markets (2)(3) (2)(3) Service revenues $3,475 ‐ $3,575 M $145 ‐ $165 M $3,620 ‐ $ 3,740 M Adjusted income before income taxes (4) (5) $560 ‐ $660 M $35 ‐ $55 M $595 ‐ $715 M Capital expenditures Approx. $730 M $5 M Approx.
Slide 16: 2013 guidance (cont.)
2013 guidance (cont.) (1) These estimates are based on U.S. Cellular’s current plans, which include an expansion of the multi‐year deployment of 4G LTE technology which commenced in 2011; such expansion includes deployment in additional markets as well as deployment on the 850 MHz band to provide ad
Slide 17: Slide 17
Slide 18: Q1 update
Q1 update • TDS TV® – early results and expansion plans • Broadband stimulus progress • Hosted and Managed Services • Baja Broadband acquisition • On track to close in Q3 18
Slide 19: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q1 ‘13 Q1 ‘12 Change ILEC $141.5 $145.1 (2%) CLEC 42.6 44.0 (3%) HMS 35.6 17.6 >100% Total operating revenues(1) $217.1 $204.1 6% Expenses (2) 159.5 143.4 11% Adjusted income before income taxes(3) $57.6 $61.1 (6%) (1) Reflects intercompany eliminati
Slide 20: ILEC/CLEC operating performance
ILEC/CLEC operating performance (in millions) Q1 ’13 Q1 ’12 Change Residential $73.0 $74.2 (2%) Commercial 59.4 58.5 2% Wholesale 51.7 56.5 (9%) Total operating revenues $184.1 $189.1 (3%) Expenses (1) 127.3 129.5 (2%) Adjusted income before income taxes (2) $56.9 $60.0 (5%) (1) Represents cost of p
Slide 21: Growth in ILEC broadband speeds and penetration
Growth in ILEC broadband speeds and penetration Speeds Penetration => 5 Mbps 73% => 10 Mbps 29% 21
Slide 22: Bundling reduces residential churn
Bundling reduces residential churn Churn Bundle Q1 ’13 Q1 ’12 Single Play 1.83% 1.80% Double Play 1.21% 1.23% Broadband Double Play 0.98% 1.02% Video Triple Play 0.53% 0.48% Customers with more than one service are less likely to churn 22
Slide 23: ILEC and CLEC managedIP connections increased 60%
ILEC and CLEC managedIP connections increased 60% 23
Slide 24: Hosted and managed services operating performance
Hosted and managed services operating performance (in millions) Q1 ’13 Q1 ’12 $ Change Operating revenues $35.6 $17.6 $18.0 Expenses(1) 34.7 16.5 18.2 Adjusted income before $0.7 $1.1 ($0.4) income taxes (2) (1) Represents cost of products and services and selling, general and administrative expense
Slide 25: 2013 TDS Telecom guidance
2013 TDS Telecom guidance (1)(2) (as of 05/03/13) 2013 Estimates Operating revenues $850 ‐ $900 million Adjusted income before income taxes (3) $220 ‐ $250 million Capital expenditures Approx. $155 million (1) These estimates are based on TDS’ current plans which include a multi‐year deployment of I
Slide 26: Appendix
Appendix 26
Slide 27: Non-GAAP reconciliations for current 2013 estimated results
Non‐GAAP reconciliations for current 2013 estimated results ($ in millions) U.S. Cellular U.S. Cellular Core Divestiture markets U.S. Cellular markets (3) (3) Consolidated (3) TDS Telecom TDS (4) Adjusted operating $3,475‐$3,575 $145‐$165 $3,620‐$3,740 $850‐$900 $4,515‐$4,685 revenues (1) Adjusted i
Slide 28: Adjusted income before income taxes reconciliation – actual results
Adjusted income before income taxes reconciliation – actual results ($ In millions) Three Months Ended 3/31/13 Three Months Ended 3/31/12 U.S. Cellular TDS TDS TDS U.S. Cellular TDS TDS TDS Consolidated Telecom Telecom Telecom TDS Consolidated Telecom Telecom Telecom TDS (3) ILEC/CLEC HMS Total (4)
Slide 29: Adjusted operating revenues non-GAAP definition
(1) Adjusted operating revenues is a non‐GAAP financial measure defined as Operating revenues excluding U.S. Cellular Equipment sales revenues. U.S. Cellular Equipment sales revenues are excluded from Adjusted operating revenues since U.S. Cellular equipment is generally sold at a net loss, and such
Slide 30: First Quarter 2013 Results 2013 Guidance
May 3, 2013 First Quarter 2013 Results 2013 Guidance
Telephone and Data Systems — Q1 2013 Earnings Presentation on 6ix