Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Barclays Capital Worldwide Wireless and Wireline Conference 2009
31 slides from Telephone And Data Systems's conference presentation, May 28, 2009
Slide 1: Barclays Capital Worldwide Wireless and Wireline Conference
Barclays Capital Worldwide Wireless and Wireline Conference May 28, 2009 1
Slide 2: Steven T. Campbell, Executive Vice President and CFO, U.S. Cellular
Steven T. Campbell Executive Vice President and CFO U.S. Cellular® Barclays Capital May 28, 2009 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: U.S. Cellular license footprint map
JK US Cellular MA 14, Hee L™ ims te * US. Cellular headquarters coal M0 Licenses currently operated by U.S. Cellular EEEEE Licenses owned or won in auction by limited partnerships in which U.S. Cellular is a limited partner
Slide 5: U.S. Cellular Growth Strategies
U.S. Cellular® Growth Strategies • Focus on the postpay customer • Differentiate with high customer satisfaction: ¾Quality network ¾Broad distribution ¾Excellent customer service • National, wide-area and family plans • Competitive products and data offerings • Strategically strengthen competitive f
Slide 6: Postpay Churn < 2%
Postpay Churn < 2% 12- year track record… and still strong 2.0% 1.9% 1.9% 1.9% 1.9% 1.8% 1.7% 1.8% 1.8% 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% 97 98 99 00 01 02 03 04 05 06 07 08 '0 9 19 19 19 20 20 20 20 20 20 20 20 20 6 1Q
Slide 7: Network Quality and Awards
Network Quality and Awards Won seventh consecutive J.D. Power and Associates Award for Call Quality in the North Central Region in the first quarter Added 490 cell sites to enhance coverage and capacity 7
Slide 8: First Quarter 2009
First Quarter 2009 Q1 ’09 Q1 ‘08 Service revenues $ 982 M $ 962 M + 2% ARPU $ 52.54 $ 52.24 + 1% Data revenues $ 157 M $ 116 M +35% Net retail adds 63,000 85,000 Churn–postpay 1.5% 1.4% 8
Slide 9: Strong Data Revenue Growth
Strong Data Revenue Growth (Dollars in millions) 160 $157 155 150 145 $142 140 135 $130 130 $124 125 120 $116 115 110 '0 8 '0 8 '0 8 '0 8 '0 9 1Q 2Q 3Q 4Q 1Q 9
Slide 10: Technology
Technology • Today 23 percent cell sites covered by EVDO 3G • Expect 60 percent of cell sites and 75 percent of customers covered by year-end • Working on LTE standards and monitoring developments 10
Slide 11: ARPU
ARPU $55.00 $54.59 $54.50 $54.00 $53.27 $53.50 $53.00 $52.71 $52.54 * $52.50 $52.24 $52.00 $51.50 $51.00 $50.50 $50.00 1 Q '08 2 Q '08 3 Q '08 4 Q '08 1 Q '09 * Includes reduced roaming revenue due to VZ/AT acquisition 11
Slide 12: Initiatives: 2009 & Beyond
Initiatives: 2009 & Beyond Develop deeper and more customized relationships at every touch point with customer relationship management and electronic data warehouse systems Drive online sales and engagement and support online account management by enhancing uscellular.com Provide faster servic
Slide 13: U.S. Cellular 2009 Guidance (as of May 6, 2009)
® U.S. Cellular 2009 Guidance (as of May 6, 2009) Net retail customer additions 75,000 - 150,000 Service revenues $3.9 - 4.0 billion Operating income $275 - 350 million Depreciation, amortization, Approx. $600 million and accretion Capital expenditures Approx. $575 million 13
Slide 14: Going Forward
Going Forward Continue to offer high-demand products and services, strong network quality, and excellent customer service Maintain strong lineup of data products and services More robust prepaid product Offer competitive wireless solutions for small-to- medium-sized businesses Continuously
Slide 15: Mark A. Steinkrauss, Vice President, Corporate Relations, TDS
Mark A. Steinkrauss Vice President, Corporate Relations TDS™ Barclays Capital May 28, 2009 15
Slide 16: TDS Telecom Footprint
MEF 099 Operations ey ee ys MT e = [ie ee 1A pny On t be - Ks BY Ky 1S Re ae - S ™N OK % P , r ‘ = 2 «ff aks 5 AL MS o La bd s <7 ™ LA TDS TELECOM FOOTPRINT @m ILEC M@™ CLEC GA NC FL
Slide 17: TDS Telecom
TDS Telecom® • 8th largest local exchange company • 1.2 million equivalent access lines, rural and small town • ILEC primarily residential (76%) • CLEC primarily small-medium business (76%) 17
Slide 18: TDS Telecom Strategy
® TDS Telecom Strategy • Be the preferred broadband provider in its markets …aggressively deploy advanced network • Bundle aggressively – the bigger the bundle, the lower the churn • Provide outstanding customer satisfaction • Increased focus on small-medium business market • Focus on efficiency, co
Slide 19: Bundling Reduces Churn
Bundling Reduces Churn Voice churn 1.6% Voice + HSD churn 1.3% Voice + DISH churn 0.9% Triple play 0.6% 19
Slide 20: Growth in High-Speed Data
Growth in High-Speed Data 250,000 200,000 150,000 CLEC 100,000 ILEC 50,000 0 2002 2003 2004 2005 2006 2007 2008 1Q 20 '09
Slide 21: TDS Telecom Initiatives
TDS Telecom® Initiatives • Grow high-speed data customers and revenue and triple play • 10G regional fiber transport network – provides more capacity, lower costs, and enhanced reliability through redundancy; – allows company to roll out new services quickly • Roll out managedIP 21
Slide 22: managedIP
managedIP • Full integration of voice and data • Rich call management features • Reliability… carrier-grade failover capability • No upfront CAPX… pay as you go • No obsolescence • Well-received by small medium businesses 22
Slide 23: ILEC Clustered Acquisitions
ILEC Clustered Acquisitions Price Equiv. DSL Access Lines 11/30/08 State Long $27 M 11,500 2,200 Distance Co. (Wisc) 5/31/08 Mosinee Tel Co. $17.4 M 5,800 1,200 (Wisc) 2/13/08 West Point Tel. $6.8 M * 1,100 300 Co. (Indiana) * Includes some wireless assets and cash 23
Slide 24: First Quarter 2009
First Quarter 2009 Q1 ’09 Q1 ‘08 Operating revenues $ 199 M $ 206 M (3%) ILEC data revenues $ 25 M $ 21 M +18% ILEC high-speed data customers 188,100 155,000 +21% 24
Slide 25: TDS Telecom 2009 Guidance (as of May 6, 2009)
TDS Telecom® 2009 Guidance (as of May 6, 2009) (ILEC and CLEC combined) Operating revenues $780 - 820 million Operating income $100 - 130 million Depreciation, amortization, Approx. $160 million and accretion Capital expenditures Approx. $130 million 25
Slide 26: Liquidity
Liquidity As of 3/31/09 Cash and liquid investments $ 810.0 M Available credit facilities 1,321.3 M Total: $2,131.3 M 4,000 owned towers Los Angeles minority position at USM 26
Slide 27: "Simple" Free Cash Flow
“Simple” Free Cash Flow* $700 ■ US Cellular $635 ■ TDS Corporate $582 $600 $500 $468 $428 $429 (000,000s) $400 $307 $285 $300 $196 $200 $120 $100 $18 $0 2004 2005 2006 2007 2008 * Operating Income plus Depreciation and Amortization Less Capital Expenditures 27
Slide 28: Stock Repurchases
Stock Repurchases 2008 $250M Authorization Used $88M ($162M remaining) as of 3/31/09 to repurchase: – 1.6 million TDS special common shares – 1.6 million TDS common shares 2007 $250M Authorization Completed October 2008 5,225,895 TDS special common shares 28
Slide 29: Investment-Grade Credit Ratings
Investment-Grade Credit Ratings TDS USM Outlook Moody’s Baa2 Baa2 Stable Standard & Poor’s BBB- BBB- Positive Fitch BBB+ BBB+ Stable 29
Slide 30: Why Buy TDS
Why Buy TDS™ • Compelling value - attractive valuation • High quality, defensible businesses • Proven track record • Free cash flow-positive • Strong balance sheet • Buying stock What we don’t have • Union representation (less than 1%) • Unfunded pensions…defined contribution plans • Off-balance she
Slide 31: TDS: Excellent Prospects
TDS™: Excellent Prospects • Financially strong • Well-positioned in existing markets • Strategies focused on network quality, customer service and competitive service offerings • Experienced management teams • A Fortune 500® company 31
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