Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Shareholder Meeting (May 2010)
23 slides from Telephone And Data Systems's shareholder meeting presentation, May 26, 2010
Slide 1: Annual Meeting of Shareholders
Annual Meeting of Shareholders May 26, 2010 1
Slide 2: LeRoy T. Carlson, Jr. President and CEO
LeRoy T. Carlson, Jr. President and CEO 2
Slide 3: TDS Safe Harbor Statement
TDS Safe Harbor Statement 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, belief
Slide 4: TDS Mission
TDS Mission To provide outstanding communications services to our customers and meet the needs of our shareholders, our people, and our communities. 4
Slide 5: TDS Overview
TDS Overview • Diversified telecommunications company with two principal business units – U.S. Cellular (82%-owned)—wireless; 95% retail postpay (NYSE:USM) – TDS Telecom (wholly-owned)—wireline; broadband focus • 7.3 million customers in 36 states • Fortune 500® member • Controlled company with focu
Slide 6: Holding Company Benefits
Holding Company Benefits • Broad industry expertise across wireless, wireline and closely related industries • Offer scale critical to investment-grade credit ratings and access to capital • Financial flexibility • Leverage shared services to reduce costs and improve operational efficiency 6
Slide 7: Long-Term Financial Objectives
Long-Term Financial Objectives Five-year planning horizon: • Increase revenues 4 to 7% annually • Earn return on capital greater than weighted average cost of capital – U.S. Cellular: 8.7% – TDS Telecom: 8.5% • Maintain investment-grade ratings 7
Slide 8: Delivering Value to Shareholders
Delivering Value to Shareholders Dividend—secure and growing • Common share dividend increased annually since 1974 • Q1 ‘10 dividend rate up 4.7% from 2009 • 2009 dividend payout ratio: 24% Repurchasing shares • $250M plan authorized in Nov. 2009 • $232.3M remains on current authorization as of Marc
Slide 9: U.S. Cellular
U.S. Cellular • Sixth-largest, full-service U.S. wireless provider • Differentiating through excellent customer experiences • 47M operating pops; 90M total pops • 6.1M customers in 26 states • Postpay churn <2% for 12 years; 1.4% in Q1 ‘10 • Broad distribution: ~1,500 points of presence • Extensive,
Slide 10: Future Wireless Industry Growth
Future Wireless Industry Growth • Global wireless traffic up 39x (108% CAGR) by 2014, driven by: – Mobile video / Internet – Laptops / emerging devices (Cisco) • Mobile Internet users to surpass desktop Internet users by 2014 (Morgan Stanley) 10
Slide 11: Smartphone and Data Growth
Smartphone and Data Growth Industry Smartphone Penetration (Reported) 55.0% • Majority of postpay ( a s a % o f r e ta il p o s t- p a y s u b s c r ib e r s ) 50.0% 45.0% subscribers across 40.0% 35.0% industry don’t have 30.0% 25.0% smartphones or 20.0% 15.0% premium phones 10.0% 5.0% • Significan
Slide 12: Android Application Development
Android Application Development New Applications and Games • U.S. Cellular in the Market by Month introducing Android 10000 9000 devices in second 8000 half of 2010 7000 6000 • Application 5000 4000 revenue-sharing 3000 2000 opportunity 1000 0 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. '09 '09 '0
Slide 13: Gaining Share
Gaining Share • Target specific postpay segments • Increase share of prepaid growth • Innovative customer satisfaction strategy – High-quality network – Competitive plans and phones – Excellent sales and customer service – Unique services 13
Slide 14: Building Loyalty
Building Loyalty Provide exceptional customer experiences • Strategy based on multi-year research to develop deeper understanding of customer needs, desires and industry pain points • Early U.S. Cellular proof points – Free incoming calls, texts and pix from anyone – My Contacts Backup—never lose yo
Slide 15: Improving Returns
Improving Returns • Grow revenues and continue to leverage infrastructure – Customer loyalty and low churn are key • Successfully execute enablement initiatives – Enhance customer experience – Ultimately increase operating efficiency and reduce costs 15
Slide 16: Technology Path
Technology Path • CDMA 1XRTT → EVDO Rev. A → LTE • 3G access for 98% of customers in 2010 • 4G/LTE field trials under way • 4G/LTE test market in 2011 16
Slide 17: Spectrum
Spectrum Currently owned and operated or won in auction by limited partnerships in which U.S. Cellular is a limited partner 17
Slide 18: TDS Telecom
TDS Telecom • Eighth-largest local exchange company • 1.1 million equivalent access lines • ILEC 76% residential and 82% rural / small town • CLEC 80% small and medium commercial • Strategy to be preferred broadband provider in its rural and suburban markets 18
Slide 19: Broadband and Bundling
Broadband and Bundling High-Speed Data Growth Bundling Reduces Churn 250,000 Voice churn 1.5% 200,000 Voice + HSD churn 1.2% 150,000 Voice + DISH churn 0.8% Triple play* churn 0.4% 100,000 *21% of ILEC residential customers 50,000 have triple play bundles 0 2002 2003 2004 2005 2006 2007 2008 2009 1
Slide 20: Strategies
Strategies • Compete aggressively for broadband pipe to the house; committed to increasing speeds • Long-term view—business will evolve into two-competitor market with cable • M&A (small ILECs and complementary businesses, such as managed services) to achieve growth and return objectives 20
Slide 21: National Broadband Plan
National Broadband Plan • TDS supports the overall goals and objectives of the National Broadband Plan • Many benefits and risks to U.S. Cellular and TDS Telecom • Very complex and lengthy—over 50 notices of proposed rule-making • Court ruling may limit FCC’s authority to act on certain aspects of t
Slide 22: TDS: A Strong Investment
TDS: A Strong Investment • Financially strong • Well-positioned in existing markets • Strategies focused on providing exceptional customer experiences • Experienced management teams • Fortune 500® company 22
Slide 23: Thank You
Thank You • To the 12,300 associates and employees of the TDS companies • To retiring U.S. Cellular president and CEO Jack Rooney • To our shareholders and debt holders 23
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