Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q1 2019 Earnings Presentation
25 slides from Telephone And Data Systems's earnings presentation, May 3, 2019
Slide 1: First Quarter 2019 Results
First Quarter 2019 Results May 3, 2019
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 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, and expectati
Slide 3: U.S. Cellular
K US. Cellular
Slide 4: Executing on 2019 strategic priorities
Executing on 2019 strategic priorities • Attract new customers and strengthen our base • Improved subscriber results • Postpaid handset churn remained low at 0.99% in Q1 • Drive revenue growth • Operating revenues up 3% ▪ 30% of postpaid customers on unlimited plans ▪ Inbound roaming revenue up 22%
Slide 5: Total postpaid connections
Total postpaid connections Gross Additions Net Additions 200,000 40,000 30,000 150,000 20,000 10,000 (1,000) 6,000 100,000 0 179,000 172,000 (13,000) 146,000 -10,000 137,000 129,000 (32,000) (37,000) 50,000 -20,000 -30,000 0 -40,000 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 5
Slide 6: Postpaid handsets connections
Postpaid handsets connections Gross Additions Net Additions Smartphone Connections 150,000 25,000 3,450,000 20,000 125,000 3,400,000 15,000 100,000 10,000 20,000 15,000 3,350,000 5,000 75,000 5,000 133,000 136,000 0 3,409,000 3,300,000 3,397,000 111,000 50,000 102,000 96,000 -5,000 3,349,000 (14,000
Slide 7: Postpaid churn rate
Postpaid churn rate 1.6% 1.4% 1.29% 1.29% 1.26% 1.23% 1.19% 1.2% 1.02% 1.00% 0.99% 0.97% 1.0% 0.92% 0.8% 0.6% 0.4% 0.2% 0.0% Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Handsets Total Postpaid 7
Slide 8: Total operating revenues
Total operating revenues (in millions) $1,200 $1,051 $1,001 $1,000 $974 $966 $942 3% $242 $297 $233 $225 $218 $800 $75 $89 $100 $91 $82 $600 $400 $649 $652 $659 $663 $659 $200 $0 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Retail service Other service Equipment sales 8
Slide 9: Postpaid revenue
Postpaid revenue Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) $45.75 $120 $45.50 $119 $45.25 $118 $45.00 $45.58 $119.60 $119.42 $44.75 $45.44 $117 $118.84 $45.31 $118.57 $118.22 $44.50 $44.74 $116 $44.25 $44.34 $44.00 $115 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q1'18 Q2'18 Q3'18 Q4'18 Q
Slide 10: Adjusted OIBDA
Adjusted OIBDA ($ in millions) Q1'19 Q1'18 % Change Total operating revenues $ 966 $ 942 3 % System operations expense 176 179 (1)% Cost of equipment sold 233 219 7 % SG&A expenses 326 326 – Total cash expenses (1) 735 724 2 % Adjusted OIBDA (2) $ 231 $ 218 6 % (1), (2) - See slide 25 for explanatio
Slide 11: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q1'19 Q1'18 % Change Adjusted OIBDA (2) $ 231 $ 218 6% Equity in earnings of unconsolidated entities 44 38 16% Interest and dividend income 6 4 59% Other, net — (1) 92% Adjusted EBITDA (2) $ 281 $ 259 8% (2) - See slide 25 for explanation 11
Slide 12: 2019 guidance
2019 guidance * ($ in millions) 2019 Previous 2019 Current As of May 2, 2019 2018 Actual Estimates Estimates Total operating revenues $3,967 $4,100-$4,300 $4,000-$4,200** Adjusted OIBDA (2) $790 $725-$875 Unchanged Adjusted EBITDA (2) $963 $900-$1,050 Unchanged Capital expenditures $515 $625-$725 Un
Slide 13: bendbroadband
@ bendbroadband 13
Slide 14: Executing on 2019 strategic priorities
Executing on 2019 strategic priorities Wireline and Cable • Intense focus on increasing broadband penetration • Deploy Cloud TV platform - TDS TV+ • Wireline • Execute fiber program both in and out of the current ILEC footprint Service Addresses at March 31, 2019 (762,700) • Rural Broadband Deployme
Slide 15: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) % Q1’19 Q1’18 Change Wireline $ 171 $ 175 (3)% Cable 60 55 8 % Total operating revenues * 230 231 – Cash expenses (1) 150 151 (1)% Adjusted EBITDA (2) 83 81 2 % Capital expenditures $ 42 $ 40 5 % * Includes intercompany eliminations (1), (2) - See sl
Slide 16: First quarter Wireline highlights
First quarter Wireline highlights • Growth in video and broadband driving an increase in residential revenue per connection • Demand for higher speeds is strong • Growth from fiber investments and A-CAM support helps to offset legacy revenue declines Residential Revenue Per ILEC Broadband Take Rate
Slide 17: First quarter fiber program update
First quarter fiber program update • Investing over $150 million in 2019 to deploy fiber in attractive markets • Q1 Fiber-to-the-Home to 27% of Service Addresses (SA) • Launched 2nd out-of-territory market • Driving residential revenue growth In ILEC Footprint Out-of-Territory ● Investing $50 millio
Slide 18: Wireline operating performance
Wireline operating performance ($ in millions) % Q1’19 Q1’18 Change Residential $ 81 $ 80 1 % Commercial 43 48 (9)% Wholesale 46 47 (3)% Total operating revenues 171 175 (3)% Cash expenses (1) 110 112 (2)% Adjusted EBITDA (2) 63 65 (3)% Capital expenditures $ 29 $ 29 2 % (1), (2) - See slide 25 for
Slide 19: First quarter Cable highlights
First quarter Cable highlights • Broadband connections increase 9% • Revenues increase 8% • Adjusted EBITDA increases 22% Steady Growth in Connections Residential Revenue Per Broadband Penetration Connection 175,000 44% 6% 1% 44.0% 150,000 43.5% Total $56.60 125,000 connections (Y/Y) 43.0% (Y/Y grow
Slide 20: Cable operating performance
Cable operating performance ($ in millions) % Q1’19 Q1’18 Change Residential $ 49 $ 46 8% Commercial 10 10 8% Total operating revenues 60 55 8% Cash expenses (1) 40 39 3% Adjusted EBITDA (2) 20 16 22% Capital expenditures $ 13 $ 11 14% (1), (2) - See slide 25 for explanations 20
Slide 21: 2019 TDS Telecom guidance
* 2019 TDS Telecom guidance ($ in millions) 2019 Previous 2019 Current As of May 2, 2019 2018 Actual Estimates Estimates Total operating revenues $927 $900-$950 Unchanged Adjusted OIBDA (2) $303 $280-$310 Unchanged Adjusted EBITDA (2) $313 $290-$320 Unchanged Capital expenditures $232 $300-$350 Unch
Slide 22: Appendix
Appendix 22
Slide 23: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation* Three Months Ended March 31, 2019 Three Months Ended March 31, 2018 Total Total U.S. TDS U.S. TDS ($ in millions) Cellular Wireline Cable Telecom TDS (3) Cellular Wireline Cable Telecom TDS (3) Net income (GAAP) $58 N/A N/A $31 $70 $55 N/A N/A $21 $
Slide 24: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2019 Estimated and 2018 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2019 Estimated and 2018 Full Year In providing 2019 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes. TDS believes that the impact of income taxes cannot be reason
Slide 25: Footnotes and non-GAAP definitions
1) Total cash expenses represent total operating expenses as shown in the Consolidated Statement of Operations Highlights in the TDS and U.S. Cellular SEC Forms 8-K, less depreciation, amortization and accretion and gain/losses. 2) EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income
Telephone and Data Systems — Q1 2019 Earnings Presentation on 6ix