Slide 1: Third Quarter 2014 Results
Third Quarter 2014 Results October 31, 2014
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 • 11/12/14 – Wells Fargo - New York • 1/6/15 – Citi – Las Vegas 3
Slide 4: TDS third quarter update
TDS third quarter update • Return value to shareholders • Repurchased $10.7 million of TDS shares • Repurchased $6.5 million of U.S. Cellular shares • Paid $14.5 million in TDS dividends • Additional agreements to monetize non-core spectrum • Transferring 148 million MHz/pops of non-operating market
Slide 5: U.S. Cellular
K US. Cellular
Slide 6: Drive subscriber growth
Drive subscriber growth Positive postpaid net additions for quarter • Increase gross additions with high-quality network, strong device portfolio, connected devices and competitive pricing • Postpaid gross additions up 52% • Competitive offerings • iPhone – strong sales including new iPhone 6 • Shar
Slide 7: Drive revenue growth
Drive revenue growth • Increase smartphone penetration • Postpaid smartphone penetration increased from 47% to 58% • Launch new products and services that utilize and monetize our data network • Connected devices are 6% of postpaid base • Shared Connect Plans (shared data) • Penetration increased se
Slide 8: Customer results
Customer results Q3 ‘14 Q3 ’13 Postpaid gross additions 251,000 165,000 Postpaid churn 1.6% 1.7% Postpaid net additions (losses) 52,000 (60,000) Prepaid net (losses) (2,000) (11,000) Retail net additions (losses) 50,000 (71,000) Total retail customers 4,550,000 4,713,000 8
Slide 9: Monthly Postpaid Churn rate
Monthly Postpaid Churn rate* 2.50% 2.00% 1.50% 1.52% 1.00% 0.50% 0.00% Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 * Core markets – definition provided in note at the end of this presentation 9
Slide 10: Smartphone sales and penetration
Smartphone sales and penetration* Smartphones Sold Smartphone Customers (% of total devices) (% of postpaid base) 70% 90% 80% 60% 70% 50% 60% 3G 40% 50% 4G 40% 30% 30% 20% 20% 10% 10% 0% 0% Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 10
Slide 11: Average Postpaid Revenue Metrics
Average Postpaid Revenue Metrics ARPA $60.00 ARPU $134.00 $59.00 $132.00 $58.00 $130.00 $57.00 $128.00 $56.00 $126.00 $55.00 $124.00 $54.00 $122.00 $53.00 $120.00 $52.00 $118.00 $51.00 $116.00 $50.00 $114.00 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3' 14 Q3 '13 Q4 '13 Q1 '14 Q2' 14 Q3 '14 ARPU – Average Revenue
Slide 12: Equipment Installment Plan Metrics
Equipment Installment Plan Metrics Q3 2014 YTD 2014 Number of Transactions (1) 238,000 334,000 EIP as a % of total postpaid devices sold 38% 19% EIP equipment revenue $78.2M $111.8M EIP accounts receivable (ST & LT) $128.6 M $128.6M EIP bad debts expense $4.1M $7.1M (1) Includes feature, connected a
Slide 13: Total operating revenues- up 7%
Total operating revenues- up 7% ($ in millions) Q3 ‘14 Q3 ‘13 Service revenues $ 851.1 $ 862.3 Retail service 743.8 752.3 Roaming 66.6 72.0 Other 40.7 38.0 Equipment revenues 149.4 76.9 Total operating revenues $1,000.4 $ 939.2 13
Slide 14: Financial performance
Financial performance ($ in millions) Q3 ‘14 Q3 ‘13 Total revenues $1,000.4 $939.2 System operations expense 199.8 177.4 Loss on equipment 158.5 116.5 SG&A expenses 397.5 410.5 Total investment and other income 26.1 27.2 Adjusted income before income taxes (1) $ 127.0 $194.7 (1) Adjusted income befo
Slide 15: 2014 guidance
2014 guidance (as of 10/31/14) 2014 Estimates 2014 Estimates 2013 Actual (Current) (Previous) (Core)* Total operating revenues $3,900 - $4,000 M Unchanged $3,729 M Adjusted income before $375 - $450 M $350 - $450 M $ 518 M income taxes (1) Capital expenditures $600 M $640 M $ 735 M (1)Adjusted incom
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Slide 17: Third quarter update
Third quarter update • Wireline • Fiber/IPTV results encouraging, with the upcoming launch of 5 additional fiber-based IPTV markets this year • Cost reductions drive 10% increase in adjusted income before income taxes • Cable • Improve customer penetration in Baja Broadband markets • Leverage strong
Slide 18: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q3 ‘14 Q3 ‘13 Wireline $178.1 $181.8 Cable 28.5 14.4 HMS 67.5 38.7 Total operating revenues(1) 273.2 234.5 Expenses(1)(2) 199.1 170.7 Adjusted income before income taxes(3) $73.2 $63.9 (1) Reflects intercompany eliminations. (2) Represents cost of pr
Slide 19: Wireline operating performance
Wireline operating performance ($ in millions) Q3 ’14 Q3 ’13 Residential $73.9 $74.3 Commercial 57.2 57.1 Wholesale 46.6 49.8 Total service revenues 177.7 181.1 Expenses(1) 111.5 121.5 Adjusted income before income taxes(2) $66.4 $60.2 (1) Represents cost of products and services and selling, genera
Slide 20: 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 9/30/14 9/30/13 9/30/14 9/30/13 > 5 Mb 82% 77% $41.47 $41.12 > 10 Mb 39% 32% IPTV Connections 9/30/14 9/30/13 IPTV 20,700 12,200 20
Slide 21: Wireline managedIP connections increased 14%
Wireline managedIP connections increased 14% 160,000 managedIP Connections 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Q3 '12 Q4 '12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Wireline Commercial ARPU 9/30/14 9/30/13 Total Commercial Connections $52.42 $51.83 21
Slide 22: Cable operating performance
Cable* operating performance Q3 ‘14 Q3 ‘13 (as of 9/30/14) Connections Total operating revenues $28.5 $14.4 Video 109,100 Broadband 106,400 Expenses(1) 22.6 11.9 Voice 41,800 Adjusted income before $ 5.3 $ 2.5 income taxes(2) Total cable connections 257,300 Industry Baja Total cable (as of 9/30/14)
Slide 23: Hosted and Managed Services operating performance
Hosted and Managed Services operating performance ($ in millions) Q3 ’14 Q3 ’13 Service revenues $27.8 $23.2 Equipment revenues 39.7 15.5 Total operating revenues 67.5 38.7 Expenses(1) 66.0 37.6 Adjusted income before $ 1.5 $ 1.3 income taxes(2) (1) Represents cost of products and services and selli
Slide 24: 2014 TDS Telecom guidance
2014 TDS Telecom guidance(1) (as of 10/31/14) 2014 2014 Estimates 2013 Estimates (Previous) Actual ($ in millions) (Current) Total operating revenues $1,075 - $1,125 $1,050 - $1,100 $947 Adjusted income before $275 - $300 $260 - $290 $249 income taxes (2) Capital expenditures $210 $200 $165 (1) Ther
Slide 25: Appendix
Appendix 25
Slide 26: Adjusted Income Before Income Taxes Reconciliation – 2013 Full Year Actual Results
Adjusted Income Before Income Taxes Reconciliation – 2013 Full Year Actual Results ($ In millions) Divestiture Markets and TDS U.S. Cellular NY1&NY2 U.S. Cellular Telecom Consolidated Partnerships* Core* Total Income (loss) before income taxes $258 $85 $173 $49 Depreciation, amortization and accreti
Slide 27: Adjusted income before income taxes reconciliation (actual results)
Adjusted income before income taxes reconciliation (actual results) Three Months Ended 9/30/14 Three Months Ended 9/30/13 TDS TDS U.S. Cellular Telecom U.S. Cellular Telecom ($ in millions) Consolidated Wireline Cable HMS Total TDS (1) Consolidated Wireline Cable HMS Total TDS (1) Income (loss) befo
Slide 28: Notes to non-GAAP reconciliation
(1) The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above. (2) Actual results for the three months ended September 30, 2013 includes $45.7 million of incremental ac
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