Telephone and Data Systems, Inc. · NYSE:TDS
Telephone and Data Systems — Q3 2019 Earnings Presentation
25 slides from Telephone and Data Systems's earnings presentation, Nov 1, 2019
Slide 1: Third Quarter 2019 Results
Third Quarter 2019 Results November 1, 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 about Telephone and Data Systems, Inc. including its subsidiaries U.S. Cellular and TDS Telecom (the "company"), except historical and factual information, represents forwa
Slide 3: Upcoming investor relations calendar
Upcoming investor relations calendar • 11/14/19 - Citi Non-Deal Roadshow (New York) ◦ From management: Ted Carlson, Doug Chambers and Jane McCahon • 12/3/19 - Wells Fargo TMT (Las Vegas) One-on-one meetings only ◦ From management: Doug Chambers and Jane McCahon • 12/11/19 - UBS Global TMT (New York)
Slide 4: U.S. Cellular
K US. Cellular
Slide 5: Executing on 2019 strategic priorities
Executing on 2019 strategic priorities • Attract new customers and strengthen our base • Subscriber activity momentum drove improved results • Brand refresh: Bringing Fairness to Wireless • New web-based technology for improved customer experience • New service plans – lower pricing and more data at
Slide 6: Postpaid handsets
Postpaid handsets 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 3,441,000 133,000 136,000 0 3,419,000 124,000 (2,000) 3,409,000 3,300,000 3,397,000 50,000 102,000 102,000 -5,000 (11,00
Slide 7: Postpaid churn rate
Postpaid churn rate 1.6% 1.38% 1.4% 1.29% 1.29% 1.26% 1.23% 1.2% 1.09% 1.02% 1.00% 0.99% 0.97% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Handsets Total Postpaid 7
Slide 8: Total operating revenues
Total operating revenues ($ in millions) $1,200 $1,051 $1,031 $1,001 $1,000 $966 $973 $242 $297 $257 $225 $216 $800 $50 $53 $51 $57 $48 $50 $38 $34 $44 $54 $600 $400 $659 $663 $659 $662 $663 $200 $0 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Retail service Roaming Other service Equipment sales 8
Slide 9: Postpaid revenue
Postpaid revenue Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) $46.50 $120.00 $119.75 $46.25 $119.50 $119.25 $46.00 $119.00 $118.75 $45.75 $118.50 $119.87 $119.60 $118.25 $119.42 $119.46 $46.16 $45.50 $118.00 $45.90 $118.84 $117.75 $45.58 $45.25 $117.50 $45.44 $45.31 $117.25 $45
Slide 10: Adjusted OIBDA
Adjusted OIBDA ($ in millions) Q3'19 Q3'18 % Change Total operating revenues $ 1,031 $ 1,001 3 % System operations expense 199 200 (1)% Cost of equipment sold 266 258 3 % SG&A expenses 358 346 3 % Total cash expenses (1) 823 804 2 % Adjusted OIBDA (2) $ 208 $ 197 6 % (1), (2) - See slide 25 for expl
Slide 11: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q3'19 Q3'18 % Change Adjusted OIBDA (2) $ 208 $ 197 6% Equity in earnings of unconsolidated entities 44 42 5% Interest and dividend income 4 4 4% Adjusted EBITDA (2) $ 256 $ 243 5% (2) - See slide 25 for explanation 11
Slide 12: 2019 guidance
2019 guidance * ($ in millions) 2019 Previous 2019 Current As of Oct. 31, 2019 2018 Actual Estimates Estimates Total operating revenues $3,967 $3,900-$4,100 $3,950-$4,050 Adjusted OIBDA (2) $790 $725-$875 $750-$850 Adjusted EBITDA (2) $963 $900-$1,050 $925-$1,025 Capital expenditures $515 $625-$725
Slide 13: TDS Telecom
@ bendbroadband 13
Slide 14: Executing on 2019 strategic priorities
Executing on 2019 strategic priorities 2019 Priorities • Intense focus on increasing Q3 2019 Highlights broadband penetration 1.Launched a third out-of- • Attractive bundles to lower churn territory fiber market • Deploy Cloud TV platform - TDS TV+ 2.Agreement to purchase Wireline another cable comp
Slide 15: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q3'19 Q3'18 % Change Wireline $ 169 $ 177 (4)% Cable 62 58 8 % Total operating revenues * 231 234 (1)% Cash expenses (1) 162 157 3 % Adjusted EBITDA (2) 73 80 (9)% Capital expenditures $ 81 $ 54 50 % * Includes intercompany eliminations (1), (2) - Se
Slide 16: Third quarter Wireline highlights
Third quarter Wireline highlights • Growth in residential 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 Broadban
Slide 17: Third quarter fiber program update
Third quarter fiber program update • Investing over $150 million in 2019 to deploy fiber in attractive markets • Q3 Fiber-to-the-Home to 29% of Service Addresses (SA) • Driving residential revenue growth In ILEC Footprint Out-of-Territory Investing $50 million in 2019 for Trial market (Sun Prairie
Slide 18: Wireline operating performance
Wireline operating performance ($ in millions) Q3'19 Q3'18 % Change Residential $ 83 $ 81 3 % Commercial 41 46 (9)% Wholesale 45 50 (11)% Total operating revenues 169 177 (4)% Cash expenses (1) 120 118 2 % Adjusted EBITDA (2) 52 61 (16)% Capital expenditures $ 61 $ 41 50 % (1), (2) - See slide 25 fo
Slide 19: Third quarter Cable highlights
Third quarter Cable highlights • Broadband connections increase 7% • Revenues increase 8% • Adjusted EBITDA increases 14% Residential Revenue Per Steady Growth in Connections Connection Broadband Penetration 175,000 2% 6% 45% 150,000 $59.00 $58.65 $58.50 44% Total 125,000 (Y/Y) 44% connections $58.0
Slide 20: Cable operating performance
Cable operating performance ($ in millions) Q3'19 Q3'18 % Change Residential $ 52 $ 47 9% Commercial 10 10 1% Total operating revenues 62 58 8% Cash expenses (1) 42 40 5% Adjusted EBITDA (2) 21 18 14% Capital expenditures $ 20 $ 13 49% (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 Oct. 31, 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-$350 Unc
Slide 22: Appendix
Appendix 22
Slide 23: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation* Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 Total Total U.S. TDS U.S. TDS ($ in millions) Cellular Wireline Cable Telecom TDS (3) Cellular Wireline Cable Telecom TDS (3) Net income (GAAP) $24 N/A N/A $18 $23 $37 N/A N
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
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