Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q4 2013 Earnings Presentation
33 slides from Telephone And Data Systems's earnings presentation, Feb 26, 2014
Slide 1: Fourth Quarter 2013 Results 2014 Strategic Priorities
February 26, 2014 Fourth Quarter 2013 Results 2014 Strategic Priorities
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: Upcoming conferences
Upcoming conferences March 4: Morgan Stanley Technology, Media & Telecom Conference (San Francisco) March 10: Deutsche Bank 22nd Annual Media, Internet & Telecom Conference (Palm Beach) 3
Slide 4: TDS 2014 priorities
TDS 2014 priorities • Active portfolio management to improve returns • Oversight of cable and HMS growth initiatives • Effective resource and asset allocation • Return value to shareholders through dividends and share repurchases • Pursue strategic initiatives consistent with long-term strategies •
Slide 5: U.S. Cellular
K US. Cellular
Slide 6: Positioning U.S. Cellular for success
Positioning U.S. Cellular for success • Nearly 90% of customers had access to 4G/LTE at year end • Best device portfolio in our history • Launched iPhone and iPad in November • Rolled out Shared Data plans to monetize data growth • Implemented a new billing system to support operational strategies a
Slide 7: Strategic priorities for 2014
Strategic priorities for 2014 • Drive subscriber growth • Differentiate through refined value proposition • Drive revenue growth through smartphone adoption and data monetization • Focus on equipment subsidies and cost management • Capital expenditures expected be approximately $640 million 7
Slide 8: Drive subscriber growth
Drive subscriber growth • Increase gross additions with high-quality network, strong device portfolio, connected devices, product and pricing improvements • Reduce churn through device portfolio, including Apple devices, membership experience, customer lifecycle management • Enhance and expand distr
Slide 9: Differentiate through refined value proposition
Differentiate through refined value proposition • Best-in-class 4G/LTE network • Launch new products and services that leverage our network • Membership experience • Treat customers like neighbors not numbers • Rewards Program • Create a localized experience for customers 9
Slide 10: Drive revenue growth
Drive revenue growth • Increase smartphone penetration • Launch new products and services that utilize and monetize our data network • Connected devices • Shared Data plans • Growth in data traffic will drive revenue and ARPU growth 10
Slide 11: Focus on subsidies and cost management
Focus on subsidies and cost management • Align costs with revenues • Manage subsidies • Offer device financing options • Offer attractive lower-cost devices • Manage growth in data usage • Cost-reduction initiatives 11
Slide 12: Customer results - Core markets
Customer results - Core markets* Q4 ‘13 Q4 ’12 Postpaid gross additions 176,000 208,000 Postpaid churn 1.9% 1.7% Postpaid net (losses) (71,000) (19,000) Prepaid net additions (26,000) 37,000 (losses) Retail net additions (97,000) 18,000 (losses) Total retail customers 4,610,000 4,838,000 * Core mark
Slide 13: Smartphone penetration - Core markets
Smartphone penetration - Core markets* * Core markets definition provided in note at the end of this presentation 13
Slide 14: Postpaid ARPU - Core markets
Postpaid ARPU - Core markets* Impact of Rewards Program ($0.81) ($0.74) ($0.76) ($0.97) ($3.32) deferred revenue * Core markets definition provided in note at the end of this presentation 14
Slide 15: Service revenues - Core markets
Service revenues(1) - Core markets* ($ in millions) Q4 ‘13 Q4 ‘12 Service revenues $ 825.1 $867.2 Retail service 726.8 762.5 Roaming 60.3 62.7 Other 38.0 42.0 (1)Service revenues for the core markets for Q4 2012 is a non-GAAP financial measure that is defined in the non-GAAP reconciliation at the en
Slide 16: Total company financial performance
Total company financial performance ($ in millions) Q4 ‘13 Q4 ‘12 Service revenues $825.1 $1,008.9 System operations expense 177.4 221.2 Loss on equipment 269.3 202.9 SG&A expenses 442.7 449.1 Operating (loss) (30.5) (60.8) Total investment and other income 21.7 12.8 Adjusted income (loss) before in
Slide 17: Divestiture impact on Q4 operating income
Divestiture impact on Q4 operating income ($ in millions) Accelerated depreciation, amortization and $44.5 accretion Other costs (3.2) Total impact to operating income $41.3 17
Slide 18: Total company financial performance (cont.)
Total company financial performance (cont.) ($ in millions, except per share amounts) Q4 ‘13 Q4 ‘12 Net income (loss) attributable to U.S. Cellular $1.6 $(39.6) shareholders Diluted earnings (loss) per share attributable to $0.02 $(0.47) U.S. Cellular shareholders Cash flows from operating activitie
Slide 19: Slide 19
Slide 20: Pursuing cable and HMS growth, targeted wireline investments
Pursuing cable and HMS growth, targeted wireline investments Wireline • TDS TV launched in 11 markets; enabled 93,000 service addresses • Excellent progress on broadband stimulus projects Cable • Acquisition of Baja Broadband and successful integration HMS • Acquisition of Denver-based solutions pro
Slide 21: Strategic priorities for 2014
Strategic priorities for 2014 Wireline • Deploy fiber where economically justified • Enables TDS TV and increased broadband speeds Cable • Improve customer penetration in Baja markets • Acquire additional cable properties with attractive competitive environments and demographics HMS • OneNeck IT Sol
Slide 22: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q4 ‘13 Q4 ‘12 Change Wireline $181.0 $185.4 (2%) Cable 21.5 --- N/M HMS 70.0 36.1 94% Total operating revenues(1) $271.9 $221.5 23% Expenses(1)(2) 206.1 165.6 24% Adjusted income before income $66.1 $56.2 18% taxes(3) (1) Reflects intercompany elimin
Slide 23: Wireline operating performance
Wireline operating performance ($ in millions) Q4 ’13 Q4 ’12 Change Residential $73.0 $73.6 --- Commercial 59.2 58.2 2% Wholesale 48.7 53.7 (9%) Total operating revenues $181.0 $185.4 (2%) Expenses(1) 120.7 130.2 (7%) Adjusted income before income $60.5 $55.6 9% taxes(2) (1) Represents cost of produ
Slide 24: Broadband speeds, IPTV driving wireline residential revenue growth
Broadband speeds, IPTV driving wireline residential revenue growth ILEC* Residential Customers Wireline Residential Average by Broadband Speeds Revenue Per Connection 12/31/13 12/31/12 12/31/13 12/31/12 > 5 Mb 78% 71% $40.93 $39.87 > 10 Mb 34% 26% * At 12/31/13, ILEC residential broadband customers
Slide 25: Wireline managedIP connections increased 35%
Wireline managedIP connections increased 35% 25
Slide 26: Cable operating performance
Cable operating performance (as of 12/31/13) Connections Q4 ‘13 Video 69,200 Operating revenues $21.5 Broadband 61,000 Expenses(1) 16.4 Voice 17,200 Total cable connections 147,400 Adjusted income before income $5.1 taxes(2) Industry (as of 12/31/13) Penetration Baja Penetration Video 41% 32% Broadb
Slide 27: Hosted and Managed Services operating performance
Hosted and Managed Services operating performance ($ in millions) Q4 ’13 Q4 ’12 Change Recurring service revenues 20.7 18.7 10% Equipment sales and other 49.3 17.4 N/M Operating revenues $70.0 $36.1 94% Expenses(1) 69.5 35.5 96% Adjusted income before $0.5 $0.7 (29%) income taxes(2) (1) Represents c
Slide 28: 2014 TDS Telecom guidance
2014 TDS Telecom guidance(1) (as of 2/26/14) 2014 Estimates 2013 Actual ($ in millions) Operating revenues $1,050 - $1,100 $947 Adjusted income before $250 - $280 249 income taxes (2) Capital expenditures Approx. $200 $165 (1) There can be no assurance that final results will not differ materially f
Slide 29: Appendix
Appendix 29
Slide 30: Q4 2012 core market service revenues
Q4 2012 core market* service revenues(1) Core Divestiture NY1 & ($ in millions) Markets* Markets NY2 Consolidated Service $867.2 $101.4 $40.3 $1,008.9 revenues Retail 762.5 95.5 28.0 886.0 Service Roaming 62.7 3.7 9.7 76.1 Other 42.0 2.2 2.6 46.8 1) Core market service revenues for 2012, adjusted to
Slide 31: Adjusted income before income taxes reconciliation (actual results)
Adjusted income before income taxes reconciliation (actual results) Three Months Ended 12/31/13 Three Months Ended 12/31/12 ($ in millions) U.S. Cellular TDS U.S. Cellular TDS Consolidated Telecom Consolidated Telecom (1) Wireline Cable HMS Total TDS (2) (1) Wireline Cable HMS Total TDS (2) Income b
Slide 32: Notes on Core Markets and non-GAAP measures
(1) The U.S. Cellular Consolidated amounts represent GAAP financial measures and include the results of both the Core Markets and the Divestiture Markets. The amounts for Core Markets and Divestiture Markets represent non-GAAP financial measures. TDS believes that the amounts for the Core Markets an
Slide 33: Ea TELEPHONE AND
Ea TELEPHONE AND TDS. paTA SYSTEMS” K Cellular
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