Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q1 2021 Earnings Presentation
29 slides from Telephone And Data Systems's earnings presentation, May 7, 2021
Slide 1: First Quarter 2021 Results
First Quarter 2021 Results May 7, 2021
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 about Telephone and Data Systems, Inc., including its subsidiaries UScellular and TDS Telecom, except historical and factual information, represents forward- looking statem
Slide 3: Upcoming investor relations calendar
Upcoming investor relations calendar • 5/11/21 - J.P. Morgan Virtual Non-Deal Roadshow from management: Ted Carlson, Vicki Villacrez and Jane McCahon • 6/16/21 - NYSE Virtual Investor Access Day from management: Doug Chambers, Vicki Villacrez and Jane McCahon 3
Slide 4: Financing Strategies
Financing Strategies • Continue to maintain ample liquidity and flexibility • Employ a conservative financing strategy with long-dated repayment obligations • Evaluating a wide range of potential funding options to lower cost of the balance sheet (1) $1.7 Billion of Available Sources* Long-term debt
Slide 5: UScellular
3 uscellular America’s Locally Grown Wireless
Slide 6: UScellular Strategic Priorities
UScellular Strategic Priorities • Maintain the health and safety of customers & associates • Focus on Growth ◦ Regional approach to drive market share expansion ◦ Expanded digital capabilities, focused on customer lifecycle ◦ New branding highlights our strong, local presence ◦ Renewed focus on Prep
Slide 7: Postpaid connections
Postpaid connections Gross Additions Net Additions Smartphone Connections (in thousands) (in thousands) (in thousands) 175 30 3,550 25 150 3,525 52 20 66 15 3,500 125 28 39 10 42 9 3,475 44 8 100 5 3 3 0 — 3,450 (3) 75 (3) 3,528 -5 3,515 3,425 119 -10 (20) 3,486 3,483 50 102 104 3,472 90 85 -15 3,40
Slide 8: Postpaid churn rate
Postpaid churn rate 1.60% 1.40% 1.21% 1.21% 1.20% 1.12% 1.06% 1.01% 1.00% 0.95% 0.89% 0.92% 0.88% 0.80% 0.71% 0.60% 0.40% 0.20% 0.00% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Handsets Total Postpaid 8
Slide 9: Total operating revenues
Total operating revenues ($ in millions) $1,200 $1,073 $1,027 $1,023 $963 $973 $297 $900 $252 $252 $201 $220 $54 $59 $60 $58 $54 $37 $42 $33 $28 $41 $600 $671 $658 $674 $683 $685 $300 $0 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Retail service Roaming Other service Equipment sales 9
Slide 10: Postpaid revenue
Postpaid revenue Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) $48 $128 $124 $46 $120 $116 $44 $47.51 $47.65 $47.23 $47.10 $124.87 $125.25 $112 $123.27 $46.24 $122.92 $120.70 $108 $42 $104 $40 $100 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 10
Slide 11: Towers: Building value
Towers: Building value • 4,270 Owned towers (63% of total cell sites) • 1,917 colocators • Signed Master Lease Agreement with DISH Wireless; revenues expected to begin in 2022 Tower rental revenue ($ in millions) $20.3 $19.6 $19.7 $19.1 $18.7 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 11
Slide 12: Adjusted OIBDA
Adjusted OIBDA ($ in millions) Q1'21 Q1'20 % Change Service revenues $ 771 $ 762 1 % Equipment sales 252 201 26 % Total operating revenues 1,023 963 6 % System operations expense 185 180 3 % Cost of equipment sold 275 217 26 % SG&A expenses 305 335 (9)% (2) Total cash expenses 765 732 5 % (3) Adjust
Slide 13: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q1'21 Q1'20 % Change (3) Adjusted OIBDA $ 258 $ 231 12 % Equity in earnings of unconsolidated entities 42 45 (7)% Interest and dividend income 2 4 (52)% Other, net — 1 N/M (3) Adjusted EBITDA $ 302 $ 281 8 % (3) - See final slide for explanation 13
Slide 14: 2021 Guidance
2021 Guidance* ($ in millions) 2021 Previous 2021 Current As of May 6, 2021 2020 Actual Estimates Estimates Service revenues $3,067 $3,025-$3,125 $3,050-$3,150 (3) Adjusted OIBDA $876 $800-$950 $850-$950 (3) Adjusted EBITDA $1,063 $975-$1,125 $1,025-$1,125 Capital expenditures $940 $775-$875 Unchang
Slide 15: 15
15
Slide 16: TDS Telecom strategy
TDS Telecom strategy We remain committed to our strategic priorities • Focus on growth ◦ Continue execution of broadband growth strategy ◦ Execute on fiber expansion and A-CAM buildout ◦ Disciplined approach to acquisitions • Expand penetration of TDS TV+ • Operate lean - reinvest savings into growt
Slide 17: Highlights and trends
Highlights and trends • Residential revenues increased 9% due to increases in broadband connections and speeds • Growth from fiber investments, cable and A-CAM support helps to offset legacy revenue declines Residential Connections Residential Revenue per Connection 480,000 $70.00 5% 9% 420,000 $64.
Slide 18: Broadband highlights
Broadband highlights • Broadband connections increased 9% • Residential broadband revenues grew 16% • 1Gig service available to 55% of total service addresses Residential Broadband Residential Broadband Total Service Addresses Connections Connections by Speed 1,500,000 500,000 100% 2% 1,315,000 4% 6
Slide 19: Video highlights
Video highlights • Bundling strategy leads to churn reduction • Residential video connections continue to hold steady • 37% of Wireline broadband customers take video in IPTV markets Residential Video Connections TDS TV+ Video Mix 150,000 10% 125,000 8% 100,000 6% 75,000 4% 50,000 2% 25,000 0 —% Q1'
Slide 20: Proven and repeatable fiber strategy
Proven and repeatable fiber strategy Leverage our formula to accelerate fiber deployment and our superior suite of products to 150,000 service addresses (incumbent and expansion) in 2021 • Fiber is the superior technology to deliver broadband • Market selection, "flag planting" and clustering are cr
Slide 21: Fiber highlights and trends
Fiber highlights and trends • Fiber-to-the-Home to 321,000 or 38% of Wireline Service Addresses (SA)*, including 10% in our expansion markets • Total Wireline SAs increased 6% to 855,000 with expansion into new markets Wireline Service Addreses * 100% 860,000 32% 33% 34% 36% 38% 840,000 75% 820,000
Slide 22: Fiber highlights and trends
Fiber highlights and trends • Targeting an additional 300,000 service addresses with access to fiber over the next few years (of which 150,000 is planned in 2021) • Total fiber broadband connections increased to 117,000 resulting in 36% broadband penetration Long-Term Service Target Broadband Addres
Slide 23: TDS Telecom operating revenues
TDS Telecom operating revenues ($ in millions) $300 $247 $248 $249 $250 $240 $241 $5 $6 $7 $4 $4 $200 $81 $81 $85 $84 $85 $150 $60 $60 $62 $63 $65 $100 $47 $47 $46 $47 $45 $50 $49 $48 $48 $48 $47 $— Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Commercial Wholesale Residential - Cable Residential - Wireline, Incumb
Slide 24: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q1'21 Q1'20 % Change Residential $ 157 $ 144 9 % Commercial 47 49 (6)% Wholesale 45 47 (3)% Total operating revenues 249 240 4 % (2) Cash expenses 168 160 5 % (3) Adjusted EBITDA 81 82 (1)% Capital expenditures $ 70 $ 54 30 % (2), (3) - See final sli
Slide 25: 2021 TDS Telecom Guidance
* 2021 TDS Telecom Guidance ($ in millions) 2021 Previous 2021 Current As of May 6, 2021 2020 Actual Estimates Estimates Total operating revenues $976 $975-$1,025 Unchanged (3) Adjusted OIBDA $314 $290-$320 Unchanged (3) Adjusted EBITDA $317 $290-$320 Unchanged Capital expenditures $368 $425-$475 Un
Slide 26: Appendix
Appendix 26
Slide 27: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 TDS (4) TDS (4) ($ in millions) UScellular Telecom TDS UScellular Telecom TDS Net income (GAAP) $62 $24 $71 $72 $28 $83 Add back: Income tax expense 27 8 31 4 4 3 Income before incom
Slide 28: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2021 Estimated and 2020 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2021 Estimated and 2020 Full Year In providing 2021 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes. TDS believes that the impact of income taxes cannot be reason
Slide 29: Footnotes and explanations
1) The chart reflects $300 million of long-term debt due in 2022 related to the EIP securitization facility. Although the current facility expires in December 2022, it is the Company’s intent to renew and extend this facility for the foreseeable future. 2) Total cash expenses represent total operati
Telephone and Data Systems — Q1 2021 Earnings Presentation on 6ix