Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q3 2013 Earnings Presentation
28 slides from Telephone And Data Systems's earnings presentation, Nov 1, 2013
Slide 1: Third Quarter 2013 Results, 2013 Guidance
November 1, 2013 Third Quarter 2013 Results 2013 Guidance
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 expectat
Slide 3: Upcoming conferences
Upcoming conferences • 11/13/13 - Wells Fargo Securities Economics & Research Tech, Media & Telecom Conference (New York) • 12/9/13 - UBS 41st Annual Global Media and Communications Conference (New York) • 1/7/14 - Citi’s 24th Annual Global Internet, Media and Telecommunications conference (Las Vega
Slide 4: Strategic Actions
Strategic Actions • Continue to monetize non-strategic assets • Spectrum: nearly 75% of MHz pops sold for over $400 million • Towers: process moving along • Capital allocation strategy update • Invest in business • Closed Baja acquisition in August for $267.5 million • Announced HMS acquisition in O
Slide 5: U.S. Cellular
K US. Cellular
Slide 6: Strategic priorities for 2013
Strategic priorities for 2013 • Completed implementation of new billing system • Expanded device line-up – launching the iPhone and iPad on Nov. 8 • Nearing completion of 4G LTE to nearly 90% of customers by year-end • Interoperability success 6
Slide 7: Core markets – customer results
Core markets* – customer results Q3 ‘13 Q3 ’12 Postpaid gross additions 165,000 196,000 Postpaid churn 1.7% 1.6% Postpaid net (losses) (60,000) (23,000) Prepaid net additions (losses) (11,000) 59,000 Retail net additions (losses) (71,000) 36,000 Total retail customers 4,713,000 4,820,000 * See note
Slide 8: Core markets - Continued growth in smartphone penetration
Core markets* - Continued growth in smartphone penetration * See note at end of presentation for definition of Core markets 8
Slide 9: Core markets – service revenues
Core markets* – service revenues(1) ($ in millions) Q3 ‘13 Q3 ‘12 Service revenues $862.3 $889.6 Retail service 752.3 758.5 Roaming 72.0 89.8 Other 38.0 41.3 (1) Service revenues for Q3 2012 is a non-GAAP financial measure that is defined in the non-GAAP reconciliation at the end of the presentation
Slide 10: Total company – financial performance
Total company – financial performance ($ in millions) Q3 ‘13 Q3 ‘12 Service revenues $862.3 $1,036.4 System operations expense 177.4 249.2 Loss on equipment 116.5 144.0 SG&A expenses 410.5 438.5 Operating income (loss) (43.2) $48.1 Total investment and other income 27.2 16.5 Adjusted income before i
Slide 11: Impact of divestiture on Q3 operating income
Impact of divestiture on Q3 operating income ($ in millions) Accelerated depreciation, amortization and accretion $45.6 Other costs (2.3) Total impact to operating income $43.3 11
Slide 12: Total company financial performance (cont.)
Total company financial performance (cont.) ($ in millions, except per share amounts) Q3 ‘13 Q3 ‘12 Net income (loss) attributable to U.S. Cellular shareholders ($ 9.9) $ 35.5 Diluted earnings (loss) per share attributable to ($0.12) $0.42 U.S. Cellular shareholders Cash flows from operating activit
Slide 13: 2013 guidance
2013 guidance (1) (as of 11/01/13) Divestiture Divestiture Total (Dollars in millions) Core Markets Core Markets Markets Markets Total Company Company ( 2) (2) (2)(3) (2)(3) (2)(3) (2)(3) Previous Current Previous Current Previous Current Service revenues $3,475 - $3,575 $3,450 - $3,500 $140 Unchang
Slide 14: 2013 guidance (cont.)
2013 guidance (cont.) (1) These estimates are based on U.S. Cellular’s current plans, which include an expansion of the multi-year deployment of 4G LTE technology; such expansion includes deployment on 700 MHz in additional markets as well as deployment on the 850 MHz band to provide additional capa
Slide 15: Slide 15
Slide 16: Strategic priorities for 2013
Strategic priorities for 2013 • MSN expands Hosted and Managed Services Platform into Rocky Mountain region • Solutions provider now enabled to sell full suite of products and services with an end- to-end solution to support middle market’s IT needs • TDS TV® – early results and expansion plans • Ba
Slide 17: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q3 ‘13 Q3 ‘12 Change Wireline $181.8 184.1 (1%) Cable 14.4 --- N/M HMS 38.7 36.4 6% Total operating revenues(1) $234.5 $220.4 6% Expenses (2) 170.7 161.5 6% Adjusted income before income taxes(3) $ 63.9 $ 59.4 8% (1) Reflects intercompany elimination
Slide 18: Wireline operating performance
Wireline operating performance (in millions) Q3 ’13 Q3 ’12 Change Residential $ 74.3 $ 74.4 --- Commercial 57.8 57.5 1% Wholesale 49.8 52.1 (5%) Total operating revenues $181.8 $184.1 (1%) Expenses (1) 121.5 125.4 (3%) Adjusted income before income taxes (2) $60.2 $59.2 2% (1) Represents cost of pro
Slide 19: Growth in residential broadband speeds and launch of IPTV driving wireline residential revenue growth
Growth in residential broadband speeds and launch of IPTV driving wireline residential revenue growth ILEC* Residential Customers by Wireline Residential Broadband Speeds Average Revenue Per Connection 9/30/13 9/30/12 9/30/13 9/30/12 > 5 Mb 77% 69% Voice $ 35.37 $ 35.62 > 10 Mb 32% 24% Broadband $ 4
Slide 20: Wireline managedIP connections increased 43%
Wireline managedIP connections increased 43% 20
Slide 21: Cable operating performance
Cable operating performance • Results of Baja from August 1, 2013 • $14.4 million revenues; $11.9 million expenses, including $1.8 million of transaction costs 9/30/13 Industry Penetration Baja Penetration 9/30/13 Connections Video 70,300 Video 40% 33% Broadband 59,800 Broadband 38% 28% Voice 16,800
Slide 22: Hosted and Managed Services operating performance
Hosted and Managed Services operating performance (in millions) Q3 ’13 Q3 ’12 Change Recurring service revenues 20.0 18.2 10% Equipment sales and other 18.7 18.2 3% Operating revenues $38.7 $36.4 6% Expenses(1) 37.6 36.2 4% Adjusted income before income taxes (2) 1.3 0.2 >100% (1) Represents cost of
Slide 23: 2013 TDS Telecom guidance
2013 TDS Telecom guidance (1) (as of 11/01/13) 2013 Estimates 2013 Estimates (Dollars in millions) Previous Current Operating revenues $890 - $930 $920 - $960 Adjusted income before income taxes (2) $230 - $260 Unchanged Capital expenditures $165 Unchanged (1) These estimates are based on TDS’ curre
Slide 24: Non-GAAP reconciliation for Q3 2012 Core market service revenues
Non-GAAP reconciliation for Q3 2012 Core market* service revenues (1) ($ in millions) Core Markets* Divested Markets NY1 & NY2 Consolidated Service revenues $889.6 $104.8 $42.0 $1,036.4 Retail Service 758.5 98.1 27.6 884.2 Roaming 89.8 4.6 11.7 106.1 Other 41.3 2.1 2.7 46.1 (1) Core markets Service
Slide 25: Non-GAAP reconciliations for current 2013 estimated results
Non-GAAP reconciliations for current 2013 estimated results ($ in millions) U.S. Cellular Core markets* U.S. Cellular Divestiture U.S. Cellular (3) markets (3) Consolidated (3) TDS Telecom TDS (4) Adjusted operating revenues (1) $3,450-$3,500 $140 $3,590-$3,640 $920-$960 $4,555-$4,645 Adjusted incom
Slide 26: Adjusted income before income taxes reconciliation – actual results
Adjusted income before income taxes reconciliation – actual results ($ in millions) Three Months Ended 09/30/13 Three Months Ended 09/30/12 U.S. Cellular TDS U.S. Cellular TDS Consolidated Telecom TDS Consolidated Telecom (3) Wireline Cable HMS Total (4) (3) Wireline Cable HMS Total TDS (4) Income b
Slide 27: Non-GAAP definitions and footnotes
(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 28: Third Quarter 2013 Results, 2013 Guidance
November 1, 2013 Third Quarter 2013 Results 2013 Guidance
Telephone and Data Systems — Q3 2013 Earnings Presentation on 6ix