Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Robert W. Baird Growth Stock Conference 2007
31 slides from Telephone And Data Systems's conference presentation, May 9, 2007
Slide 1: LeRoy T. Carlson, Jr. Baird Growth Stock Conference
LeRoy T. Carlson, Jr. President and CEO, TDS Baird Growth Stock Conference May 9, 2007
Slide 2: Safe Harbor
Safe Harbor 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 a
Slide 3: TDS – 12/31/06
TDS – 12/31/06 • Diversified telecommunications company with 7 million customers in 36 states – U.S. Cellular (81% owned) – wireless – TDS Telecom (100% owned) – wireline – ILEC and CLEC operations • Strong balance sheet • Free cash flow positive • 33 years of consecutive dividend increases 3
Slide 4: U.S. Cellular Majority-Owned or Managed
K US.Cellular Majority-Owned or Managed KR US. Cellular We connect with you: \
Slide 5: U.S. Cellular Growth Strategies
U.S. Cellular Growth Strategies • Differentiate with high customer satisfaction: ¾ Quality network ¾ Dedicated people ¾ Competitive product offerings • National, wide-area and family plans with focus on post pay • Competitive data offerings • Strategically strengthen regional footprint 5
Slide 6: Postpay Churn < 2%
Postpay Churn < 2% 10- 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% 1.5% 1.5% 1.5% 1.5% 1.5% 1.4% 1.3% 1.2% 1.1% 1.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 6
Slide 7: Highlights – 12 months ended
Highlights – 12 months ended 12/31/06 12/31/05 Service Revenues $ 3,214.4 M $ 2,827.0 M +14% Operating Revenues 3,473.2 M 3,030.8 M +15% Operating Income 289.9 M 231.2 M +25% Operating Cash Flow 865.0 M 697.0 M +24% Customers 5,815,000 5,482,000 +6% ARPU $47.23 $45.24 +4% Churn - postpay 1.5% 1.5% -
Slide 8: New Calling Plans
New Calling Plans • Wide area and national plans • More value to customers • Increased ARPU • Repositions family plans • Simplicity – one portfolio of plans across all markets 8
Slide 9: Data Revenues
Data Revenues SM easyedge & SMS Revs (millions) % Service Revs. 2006 $217 M 7% 2005 131 5% 2004 67 3% 9
Slide 10: Post Pay Focus ≈84%
Post Pay Focus ≈84% Prepay Wholesale Post pay 10
Slide 11: Improving our Competitive Position
Improving our Competitive Position K US. Cellular We connect with you: US. Cellular Footprint 3 SSE’ Options from AT&T EEE) Carroll Wireless... Auction 58 [9 To US Cellular [J To Alltel
Slide 12: Barat Wireless and U.S. Cellular with Affiliates
Barat Wireless and U.S. Cellular with Affiliates Auction 66 USM with Affiliates Barat Wireless (Incremental) 24.1 Million Incremental Pops Barat Wireless (Overlap)
Slide 13: EVDO Trials
EVDO Trials • 2005: Technical trials • 2006: Market launch in Milwaukee • 2007: Release A general availability • U.S. Cellular wants to ensure that: – Technology is supported by value-added applications customers will want and value – It’s ready to fully support the new technology and any new servic
Slide 14: Sources of Income
Sources of Income 2006 2005 Los Angeles Investment Market Investment Income $62.2 $52.2 Cash distributions $60.5 $38.5 Eligible Tele. Carrier (ETC) $67.5 $50.6 14
Slide 15: USM 2007 Outlook
USM 2007 Outlook (As of April 23, 2007) Net Retail Customer Additions 375,000 - 425,000 Service Revenues Approx. $3.5 billion Operating Income $375 - $425 million Dep., Amort. & Accretion Approx. $615 million Capital Expenditures $600 - $615 million 15
Slide 16: USM: Excellent Prospects
USM: Excellent Prospects • Proven strategy • Financially strong • Extensive network and distribution • Dedicated people • Positive momentum 16
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Slide 18: TDS Telecom
TDS Telecom Largest Equivalent Access Line States 12/31/06 % of total Wisconsin 391,200 32% Michigan 152,500 13% Minnesota 118,900 10% Tennessee 116,500 10% Georgia 61,400 5% New Hampshire 41,600 3% Indiana 37,800 3% 76% 18
Slide 19: Growth in Equivalent Access Lines
Growth in Equivalent Access Lines 1,300,000 1,200,000 1,100,000 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 2002 2003 2004 2005 2006 19
Slide 20: TDS Telecom Strategy
TDS Telecom Strategy • Be the preferred broadband provider • Bundle aggressively • Defend core markets • Drive video and fixed wireless trials 20
Slide 21: DSL
DSL • 147,200 customers (ILEC & CLEC) • 83% of ILEC lines DSL equipped • 71% DSL market share in markets offering DSL • Primarily consumer • Product bundles • Offering 4 & 6 MB speeds in select markets 21
Slide 22: Growth in DSL
Growth in DSL 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2002 2003 2004 2005 2006 22
Slide 23: Video Trials - ILEC
Video Trials - ILEC • Complete fiber build-out of subdivision ≈4,000 homes • Combination fiber & advanced DSL 23
Slide 24: Fixed Wireless Trial - CLEC
Fixed Wireless Trial - CLEC • Market trial in Wisconsin • Eliminates “last mile” loop from RBOC • Un-licensed and licensed spectrum • Trialing high-speed data & VOIP 24
Slide 25: 2006 Outlook-TDS Telecom
2006 Outlook-TDS Telecom TDS Telecom: ILEC Guidance as of 2/23/2007 Operating Revenues $645 - $655 million Operating Cash Flow(1): Approx. $270 million Operating Income Approx. $135 million Depreciation and amortization $135 million Operating Cash Flow Approx. $270 million (2) Capital Expenditures $
Slide 26: 2007 Outlook – TDS Telecom
2007 Outlook – TDS Telecom TDS Telecom: ILEC and CLEC Guidance as of (2) 4/23/2007 Operating Revenues $850 - $900 million Operating Cash Flow(1): $285 - $305 million Operating Income $130 - $150 million Depreciation and amortization $155 million Operating Cash Flow $285 - $305 million Capital Expend
Slide 27: Stock Repurchases
Stock Repurchases • U.S. Cellular – 500,000 shares authorized – 170,000 shares de minimus authorized – 670,000 shares ASR completed in April 2007 • TDS – $250 million of special common shares authorized 27
Slide 28: Marketable Equity Securities
Marketable Equity Securities • U.S. Cellular – VOD mature May 2007 – settle with shares • TDS – VRSN mature May 2007 – settle with shares 28
Slide 29: Special Common Shares
Special Common Shares • Provides financial and strategic flexibility • March 5, 2007 TDS announced it was no longer considering a possible U.S. Cellular transaction ¾ Exchange ratio unacceptable ¾Terms uneconomical 29
Slide 30: Reconciliation of U.S. Cellular Additional Information
Reconciliation of U.S. Cellular Additional Information Y ear E n d ed at D ec. 31, 2006 U .S . C ellular O perating cash flow : O p eratin g in co m e as rep o rted $ 289,896 A dd: D epreciation, am ortization and accretion 575,112 O p eratin g cash flo w $ 865,008 Y ear E n d ed at D ec. 31, 2005 U
Slide 31: TDS: Strong Company
TDS: Strong Company • Strong balance sheet • Over $1 Billion in cash • U.S. Cellular in 2006 • Double digit revenue growth • OCF up 24% • Free cash flow positive • Improving margins •TDS Telecom • Free cash flow • Strong DSL growth 31
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