Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q2 2022 Earnings Presentation
25 slides from Telephone And Data Systems's earnings presentation, Aug 5, 2022
Slide 1: Second Quarter 2022 Results
Second Quarter 2022 Results August 5, 2022
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 UScellular and TDS Telecom, except historical and factual information, represents forward-looking stateme
Slide 3: Well positioned for long-term sustainable growth
Well positioned for long-term sustainable growth Continued demand for broadband Connectivity, whether fixed or mobile, is a necessity to remote education, health care and work Maintaining a sound financial foundation for the enterprise so that each of our businesses can take advantage of growth oppo
Slide 4: UScellular
3 uscellular
Slide 5: Key strategic priorities
re m Key strategic priorities 3 uscellular @ Advance Our Mission @ Continued Focus on Growth @ Expand Return on Capital @ Leverage Infrastructure Programs @ Advance the Network @ Invest in our Team a TDS
Slide 6: Multi-pronged growth strategies
Multi-pronged growth strategies Focus on Growth 6
Slide 7: Postpaid connections
Postpaid connections Gross Additions* Net Additions* 10 175 5 (1) 150 0 (5) (2) 40 (5) -5 (3) (10) 125 40 -10 40 35 34 -15 100 (31) -20 (36) 75 -25 125 -30 50 101 105 -35 91 94 (9) -40 (8) 25 -45 0 -50 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Handsets Handsets Connected devices Co
Slide 8: Postpaid churn rate
Postpaid churn rate 1.60% 1.40% 1.35% 1.30% 1.30% 1.20% 1.11% 1.15% 1.10% 1.10% 1.10% 1.00% 0.95% 0.88% 0.80% 0.60% 0.40% 0.20% 0.00% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Handsets Total Postpaid 8
Slide 9: Prepaid connections
Prepaid connections Gross Additions* Net Additions* 15 75 10 5 10 11 50 0 74 (5) (4) 65 63 -5 55 56 25 (18) -10 -15 0 -20 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 9 *In thousands
Slide 10: Total operating revenues
Total operating revenues ($ in millions) $1,200 $1,068 $1,014 $1,016 $1,010 $1,027 $900 $228 $286 $223 $244 $240 $62 $61 $65 $64 $65 $28 $30 $24 $21 $18 $600 $684 $697 $693 $702 $700 $300 $0 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Retail service Roaming Other service Equipment sales Note: Q3'21 retail service
Slide 11: Postpaid ARPU & ARPA
Postpaid ARPU & ARPA Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) 5% Y/Y Growth 4% Y/Y Growth $50 $132 $128 $48 $124 $46 $120 $49.71 $50.07 $116 $129.93 $130.43 $48.62 $127.14 $44 $47.74 $48.12 $125.25 $125.99 $112 $108 $42 $104 $40 $100 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q2'21 Q3'2
Slide 12: Tower revenues
Tower revenues • 4,323 owned towers (63% of total cell sites) • 2,284 colocators Tower rental revenue ($ in millions) 13% Y/Y Growth $24 $22.9 $22.3 $21 $21.5 $20.7 $20.2 $18 $15 $12 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 12
Slide 13: UScellular operating performance
UScellular operating performance ($ in millions) Q2'22 Q2'21 % Change Service revenues $ 783 $ 774 1% Equipment sales 244 240 2% Total operating revenues 1,027 1,014 1% System operations expense 192 204 (6)% Cost of equipment sold 275 258 7% SG&A expenses 339 334 2% Total cash expenses (1) 806 796 1
Slide 14: 2022 guidance
2022 guidance * ($ in millions) As of August 4, 2022 2021 Actual 2022 Previous Estimates 2022 Current Estimates Service revenues $3,115 $3,100-$3,200 Unchanged Adjusted OIBDA (2) $869 $750-$900 Unchanged Adjusted EBITDA (2) $1,054 $925-$1,075 Unchanged Capital expenditures $780 $700-$800 Unchanged 2
Slide 15: Slide 15
Slide 16: Our strategy is built on five pillars that will continue to transform our business
Our strategy is built on five pillars that will continue to transform our business Expand footprint through fiber Increase top line through average deployments in new markets Grow Grow revenue per connection growth, and consider acquisitions Scale Revenue broadband penetration growth, and continued
Slide 17: Investments are driving footprint expansion and improved broadband services
Investments are driving footprint expansion and improved broadband services Quarterly Highlights Total Service Address Mix • Fiber Expansion 1.3M 1.4M Service Addresses • Deployed 17,000 marketable fiber service addresses in the quarter 25% 7% • Expanded fiber to 34% of our footprint 34% (Y/Y growth
Slide 18: Strategy continues to drive residential broadband growth
Strategy continues to drive residential broadband growth • Growth of 22,000 residential broadband connections • 68% of customers are taking 100 Mbps or greater vs. 63% in prior year • Residential broadband revenues grew 11% Residential Broadband Connections Residential Broadband Connections by Speed
Slide 19: Broadband growth is offsetting legacy revenue declines
Broadband growth is offsetting legacy revenue declines Operating Revenues Residential Revenue per Connection $300 ($ in millions) $60.00 $59.67 $252 $256 $8 $12 $57.66 $200 $86 $88 $55.00 5% 3% $66 $68 Residential $100 (Y/Y growth) Revenue Y/Y $46 $44 growth $50.00 $45 $45 $— Q2'21 Q2'22 $45.00 Whol
Slide 20: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q2’22 Q2’21 % Change Total operating revenues $ 256 $ 252 2% Cash expenses (1) 180 174 4% Adjusted EBITDA (2) $ 76 $ 78 (2)% Capital expenditures $ 120 $ 99 21 % 20 (1) (2) -See final slide for explanations
Slide 21: 2022 TDS Telecom guidance
2022 TDS Telecom guidance* ($ in millions) As of August 4, 2022 2021 Actual 2022 Previous Estimates 2022 Current Estimates Total operating revenues $1,006 $1,010-$1,040 Unchanged (2) Adjusted OIBDA $310 $260-$290 Unchanged (2) Adjusted EBITDA $310 $260-$290 Unchanged Capital expenditures $411 $500-$
Slide 22: Appendix
Appendix
Slide 23: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 ($ in millions) UScellular TDS Telecom TDS (3) UScellular TDS Telecom TDS (3) Net income (GAAP) $22 $19 $39 $35 $22 $34 Add back: Income tax expense 18 7 27 (10) 7 (11) Income before i
Slide 24: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2022 Estimated and 2021 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2022 Estimated and 2021 Full Year In providing 2022 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: total cash expenses 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 UScellular SEC Forms 8-K, less depreciation, amortization and accretion and gain/losses. 2) EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income ad
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