Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — UBS 38th Annual Global Media and Communications Conference (December 2010)
33 slides from Telephone And Data Systems's conference presentation, Dec 7, 2010
Slide 1: UBS 38th Annual Global Media and Communications Conference
UBS 38th Annual Global Media and Communications Conference December 7, 2010 1
Slide 2: LeRoy T. Carlson, Jr., President and CEO
LeRoy T. Carlson, Jr. President and CEO 2
Slide 3: Safe Harbor
Safe Harbor 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 a
Slide 4: TDS Overview
TDS Overview • Diversified telecommunications company with two principal business units – U.S. Cellular (83%-owned)—wireless; 94% retail postpay (NYSE:USM) – TDS Telecom (wholly-owned)—wireline; broadband focus • 7.2 million customers in 36 states • Fortune 500® member • Controlled company with focu
Slide 5: U.S. Cellular
K US. Cellular
Slide 6: U.S. Cellular Operations
U.S. Cellular Operations • High-quality nationwide network • 47M operating pops; 90M total pops • 6.1M customers in 26 states 6
Slide 7: Recognized for Service, Quality and Integrity
Recognized for Service, Quality and Integrity PC Magazine Readers' Choice Award (2010 Cellular Service Providers: Contract Providers) “It's not the biggest company, but its customers like it just the same. Call coverage and quality were on par with Verizon Wireless, and respondents were much more sa
Slide 8: Excellent Customer Experiences
Excellent Customer Experiences Postpaid churn <2% for 10+ years 2.0% 1.9% 1.9% 1.8% 1.8% 1.7% 1.8% 1.6% 1.7% 1.6% 1.6% 1.6% 1.6% 1.5% 1.5% 1.5% 1.5% 1.4% 1.4% 1.3% 1.2% 1.1% 1.0% 99 00 01 02 03 04 05 06 07 08 09 10 19 20 20 20 20 20 20 20 20 20 20 D' YT 8
Slide 9: Strategy to Differentiate
Strategy to Differentiate • Understand our target customers • Leverage our understanding to create a differentiated strategy • Unique value proposition: – Leverage our core strengths – Focus on building loyal advocates 9
Slide 10: The Belief Project
The Belief Project The value • “One and Done” Contracts proposition eliminates, • Belief Rewards contracts • Phone Replacement while driving • Billing Discounts for Online Payment acquisition, retention • Overage Cap/ Forgiveness and loyalty through protection and rewards 10
Slide 11: Belief Project Expected Results
Belief Project Expected Results • More new customers attracted → incremental gross postpaid additions of at least 10% • Customers spending more → incremental growth in ARPU • Customers staying longer → improvement in already low postpaid churn 11
Slide 12: Attractive Portfolio of Devices
Attractive Portfolio of Devices AndroidTM- powered BlackBerry Windows Tablet Modems 12
Slide 13: Technology Path for Data
Technology Path for Data • EVDO Rev. A (3G) → LTE (4G) • 3G access for 98% of customers now • LTE technical trials under way • LTE launch market likely in late 2011 13
Slide 14: Innovating the Customer Experience
Innovating the Customer Experience • 6.1 million customers • The Belief Project Financially • Valuable spectrum Strong • 4,300 owned towers • Los Angeles minority position 14
Slide 15: TDS Telecom
15 MF TDS Telecom
Slide 16: TDS Telecom Operations
TDS Telecom Operations • 1.1 million equivalent access lines: ILEC 70% / CLEC 30% • ILEC 76% residential and 82% rural / small town • CLEC 80% small / medium commercial 16
Slide 17: Strategies
Strategies • Compete aggressively for broadband services to consumers and businesses • Long-term view— high speed data market will largely evolve into two wired competitors (ILEC and cable) • Selective M&A 17
Slide 18: Broadband and Bundling
Broadband and Bundling High-Speed Data Growth Bundling Reduces Churn Number of customers 250,000 Voice churn 2.2% 200,000 Voice + HSD churn 1.6% 150,000 Voice + DISH churn 1.1% 100,000 Triple play* churn 0.5% 50,000 0 2002 2003 2004 2005 2006 2007 2008 2009 YTD '10 44% HSD penetration of 24% of ILEC
Slide 19: Commercial Services
Commercial Services managedIP stations • managedIP 25,000 • 10Gig regional fiber 20,000 network • Hosted and Managed 15,000 Services (HMS) 10,000 – VISI 5,000 0 2007 2008 2009 YTD '10 ILEC CLEC 19
Slide 20: Douglas Shuma, Senior Vice President and Corporate Controller
Douglas Shuma Senior Vice President and Corporate Controller 20
Slide 21: U.S. Cellular Financial Highlights
U.S. Cellular Financial Highlights YTD ‘10 YTD ‘09 Service revenues $2,921.1 $2,941.7 Total revenues 3,114.5 3,153.8 Adjusted OIBDA 641.8 748.1 Operating income 201.0 316.8 Depreciation, amortization and 432.4 422.7 accretion Capital expenditures 379.7 357.8 21
Slide 22: Belief Plan Accounting
Belief Plan Accounting 25% Postpaid Customers 20% • Reward points 15% • Bundling allocations 10% 5% 0% p-0 9 c-0 9 r-1 0 -1 0 p-1 0 Se De Ma Ju n Se Smartphones Devices requiring data package 22
Slide 23: U.S. Cellular 2010 Guidance
U.S. Cellular 2010 Guidance As of Nov. 4, 2010 Service revenues $3,925 – $3,975 million Adjusted OIBDA (1) $800 – $850 million Operating income $200 – $250 million Depreciation, amortization Approx. $600 million and accretion (2) Capital expenditures Approx. $600 million (1) Adjusted OIBDA is define
Slide 24: TDS Telecom Financial Highlights
TDS Telecom Financial Highlights YTD ‘10 YTD ‘09 Total revenues $596.7 $591.8 Adjusted OIBDA 205.9 194.7 Operating income 75.0 67.7 Depreciation, amortization 130.2 125.3 and accretion Capital expenditures 95.4 86.8 24
Slide 25: Federal Broadband Stimulus Funding
Federal Broadband Stimulus Funding Applications Total Projects Federal TDS Approved Approved Grants Telecom Funding Round 1 2 $12.5 M $12.5 M --- Round 2 42 $123.5 M $92.6 M $30.9 M 44 $136 M $105.1 M $30.9 M 25
Slide 26: TDS Telecom 2010 Guidance
TDS Telecom 2010 Guidance As of Nov. 4, 2010 Operating revenues $785 – $800 million Adjusted OIBDA (1) $265 – $280 million Operating income $90 – $105 million Depreciation, amortization and Approx. $175 million accretion (2) Capital expenditures (3) Approx. $155 million (1) Adjusted OIBDA is defined
Slide 27: TDS Financial Highlights
TDS Financial Highlights YTD 2010 YTD 2009 Total revenues $3,721.1 $3,758.0 Adjusted OIBDA 851.2 940.4 Operating income 271.5 372.8 Depreciation, amortization and 570.6 557.2 accretion Capital expenditures 486.1 450.6 27
Slide 28: Significant Liquidity
Significant Liquidity Ample Cash Liquidity Available to TDS ($ in millions) Cash and cash equivalents $ 390.0 U.S. Treasury securities and other government guaranteed securities 412.7 Certificates of deposit 97.8 Total Cash Liquidity Available $900.5 Financial Strength $696.4 million available on cr
Slide 29: Long Term Debt Schedule
Long Term Debt Schedule $600 6.625% ‐ TDS ‐ Retail Note (Callable) 7.6% ‐ TDS ‐ Retail (Callable) $500 7.5% ‐ USM ‐ Retail (Callable) 6.7% ‐ USM Institutional Note $400 6.875% ‐ TDS ‐ Retail $300 $200 $100 $0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2
Slide 30: Delivering Value to Shareholders
Delivering Value to Shareholders Shares Repurchased Dividends Per Share (Common/Special Common) (in millions) 7 $0.45 $0.40 6 $0.35 5 $0.30 $0.25 4 $0.20 3 $0.15 $0.10 2 $0.05 $0.00 1 1995* 1997* 1999* 2001* 2003* 2005* 2007 2009 0 2007 2008 2009 YTD '10 * Retroactively adjusted for the effect of th
Slide 31: Adjusted OIBDA
Adjusted OIBDA Consolidated Nine Months Ended September 30, 2010 U.S. Cellular TDS Telecom (1) All Other (2) Total Operating revenues $ 3,114,531 $ 596,741 $ 9,798 $ 3,721,070 Deduct: U.S. Cellular equipment sales revenue 193,444 Service revenues $ 2,921,087 Operating income $ 200,961 $ 75,015 $ (4,
Slide 32: Investment Highlights
Investment Highlights • Strategies focused on providing exceptional customer experiences • Well-positioned in existing markets • Experienced management teams • Financially strong • Fortune 500® company 32
Slide 33: Ed TELEPHONE AND
Ed TELEPHONE AND TDS. pata SYSTEMS” Kus Cellular MES