Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q4 2024 Earnings Presentation
33 slides from Telephone And Data Systems's earnings presentation, Jan 21, 2025
Slide 1: Fourth Quarter 2024 Results
Fourth Quarter 2024 Results 2024 Accomplishments 2025 Strategic Priorities 2025 Guidance February 21, 2025
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 stateme
Slide 3: Corporate Update - 2024 Accomplishments
Corporate Update - 2024 Accomplishments Positioning the company for long-term success • Optimized portfolio of businesses • Focused investments where we can win Strengthened financial position across enterprise Supported our businesses as they made key investments Improved shareholder returns 3
Slide 4: Corporate Update - 2025 Priorities
Corporate Update - 2025 Priorities Successfully closing the T-Mobile transaction Position tower company for success Investing in fiber expansion at TDS Telecom Optimize post-transaction capital structure Ensure culture remains strong 4
Slide 5: UScellular
3 uscellular
Slide 6: Significant progress on strategic alternatives review
Significant progress on strategic alternatives review • Announced 3 major agreements and 2 smaller transactions Wireless business and select spectrum assets to T-Mobile Spectrum to Verizon and two other carriers Spectrum to AT&T • Collectively, the announced agreements are expected to monetize 70% o
Slide 7: UScellular - "What is Expected to Remain"
UScellular - "What is Expected to Remain" Strengthened tower company – at 12/31/24: 4,409 towers with 2,444 colocators • T-Mobile to become a long-term tenant on a minimum of 2,015 incremental towers • T-Mobile extending tenancy on ~600 towers where T-Mobile is a tenant today Equity method investmen
Slide 8: Organization remains focused on its priorities
Organization remains focused on its priorities 2024 • Year-over-year improvement in retail subscriber results - reduced net losses • Full year improvement in free cash flow - disciplined cost management continues 2025 • Focused on successfully closing transactions • Investing in our customers, brand
Slide 9: Wireless - postpaid operating metrics
Wireless - postpaid operating metrics Gross Additions (in thousands) Net Additions (in thousands) 47 3 3 5 — 5 49 39 44 43 (19) 93 (28) 80 84 (29) 73 63 (47) (53) 4Q'23 1Q'24 2Q'24 3Q'24 4Q'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Handsets Connected Devices Handsets Connected devices Churn Fixed Wireless Su
Slide 10: Wireless - prepaid operating metrics
Wireless - prepaid operating metrics Gross Additions (in thousands) Net Additions (in thousands) Prepaid Churn Rate 75 15 10 5 50 3 13 0 4.06% (4) -5 (11) 3.87% (13) 57 -10 25 50 46 43 41 3.70% -15 3.60% -20 3.30% 0 -25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3
Slide 11: Towers - operating metrics
Towers - operating metrics(1) Tower Revenue Distribution (4Q'24) 4,409 Owned Towers 14% 34% 2,444 25% Number of Colocations 27% 1.55 AT&T Verizon T-Mobile Other Tower Tenancy Rate 11 (1) At 12/31/24
Slide 12: UScellular Total - operating performance
UScellular Total - operating performance ($M) Q4'24 Q4'23 % Change 2024 2023 % Change Service revenues $ 742 $ 755 (2)% $ 2,987 $ 3,044 (2)% Equipment sales 228 245 (7)% 783 862 (9)% Total operating revenues 970 1,000 (3)% 3,770 3,906 (3)% System operations expense 182 183 (1)% 724 740 (2)% Cost of
Slide 13: Wireless - operating performance
Wireless - operating performance ($M), except Postpaid ARPU Q4'24 Q4'23 % Change 2024 2023 % Change Retail service $ 661 $ 678 (3)% $ 2,674 $ 2,742 (2)% Other 55 52 7% 210 201 5% Service revenues 716 730 (2)% 2,884 2,943 (2)% Equipment sales 228 245 (7)% 783 862 (9)% Total operating revenues 944 975
Slide 14: Towers - operating performance
Towers - operating performance ($M) Q4'24 Q4'23 % Change 2024 2023 % Change Third-party revenues $ 26 $ 25 4% $ 103 $ 101 2% Intra-company revenues 33 32 3% 131 127 3% Total tower revenues 59 57 3% 234 228 3% System operations expense 20 18 11 % 78 73 6% SG&A expenses (1) 9 9 2% 32 34 (5)% (2) Total
Slide 15: $4.4 Billion – sale of wireless operations & select spectrum assets to T-Mobile
$4.4 Billion – sale of wireless operations & select spectrum assets to T-Mobile (1) Significant items expected to affect net proceeds (2) Included in $4.4 Billion Satisfaction of certain financial and Contingent on UScellular achieving certain operating and financial targets prior to close, up to $1
Slide 16: Spectrum sales to Verizon and AT&T
Spectrum sales to Verizon and AT&T (1) Significant items expected to impact net proceeds (2) Verizon (3) – purchase price $1 B AT&T – purchase price $1.018 B Included in $2.018 Billion Designated entity spectrum licenses $232 M of purchase price separately requires UScellular's completion, which is
Slide 17: Other post close factors
Other post close factors • Identification of which towers that T-Mobile elects to collocate on • Length of T-Mobile’s interim leases • Disposition of certain naked towers and related decommissioning costs where applicable • Capital structure to support business strategy • Ability to execute, timing,
Slide 18: Slide 18
Slide 19: 2024 Highlights
2024 Highlights Deployed 129,000 new marketable fiber addresses - 52% of footprint now served by fiber Grew residential revenue 6% YoY Strong Adjusted EBITDA growth - up 23% YoY Completed planning and engineering for multi-year E-ACAM build program 19
Slide 20: Positive momentum in fiber net adds
Positive momentum in fiber net adds Residential Broadband Net Additions 20,000 7,200 15,000 7,900 6,400 2,100 2,700 10,000 5,000 0 (5,000) (10,000) Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Expansion Incumbent Fiber Cable Incumbent Copper 21% 20
Slide 21: Growing fiber footprint driving faster speeds
Growing fiber footprint driving faster speeds Total Service Address Mix Residential Broadband Connections by Speed 1.7M 1.8M 100% 100% 16% 22% Service 9% 47% Addresses 75% 75% 52% 11% 74% 1 Gig+ 6% 50% 50% 51% Y/Y growth 48% 25% 22% 25% 25% 13% 14% 24% 19% 15% 12% 0% 0% Q4'23 Q4'24 Q4'23 Q4'24 Fiber
Slide 22: Strong residential revenue growth
Strong residential revenue growth Residential Revenue per Connection Operating Revenues ($M) $68.00 $1,250 $1,061 $1,028 $64.99 $1,000 $75 $114 $64.00 $750 $352 $355 6% 5% $61.78 Residential Revenue Y/Y Y/Y growth growth $500 $273 $270 $60.00 $250 $155 $148 $172 $173 $56.00 $— 2023 2024 2023 2024 Re
Slide 23: TDS Telecom operating performance
TDS Telecom operating performance % % ($ in millions) Q4’24 Q4’23 Change 2024 2023 Change Total operating revenues $ 264 $ 261 1% $ 1,061 $ 1,028 3% Cash expenses (1) 187 186 1% 721 749 (4)% Adjusted EBITDA (2) $ 80 $ 78 3% $ 350 $ 285 23 % Capital expenditures $ 82 $ 143 (43)% $ 324 $ 577 (44)% 23
Slide 24: Updated long-term fiber goals due to E-ACAM
Updated long-term fiber goals due to E-ACAM Only 5% of addresses expected to be served by copper Goal: Goal: Goal: Service Address Mix 1.8 million 80% 95% 15% marketable fiber of service addresses of service addresses 22% service addresses** to be served by fiber with speeds of 1 5% Gig+ Current 52%
Slide 25: 2025 Priorities
2025 Priorities Deliver 150,000 marketable fiber service addresses Grow 100% Fiber Revenue Grow Scale 100% Fiber Grow broadband net adds 16% Fiber Reduce Improve 16% Fiber Platform Cost 100% Fiber Customer Structure Experience Execute on business transformation plan 43% Fiber 43% Fiber 25
Slide 26: TDS Telecom 2025 guidance
TDS Telecom 2025 guidance (1) ($ in millions) 2024 Previous 2025 As of February 21, 2025 Estimates 2024 Actual Estimates Total operating revenues $1,050-$1,080 $1,061 $1,030-$1,070 Adjusted EBITDA (2) $330-$360 $350 $320-$360 Adjusted OIBDA (2) $330-$360 $341 $310-$350 Capital expenditures $310-$340
Slide 27: Appendix
Appendix Pam
Slide 28: Adjusted OIBDA and Adjusted EBITDA reconciliation
Adjusted OIBDA and Adjusted EBITDA reconciliation Three Months Ended December 31, 2024 Three Months Ended December 31, 2023 TDS TDS ($ in millions) UScellular Telecom TDS* UScellular Telecom TDS* Net income (loss) (GAAP) $5 $34 $7 $15 ($503) ($503) Add back: Income tax expense (benefit) (19) 20 6 (4
Slide 29: Adjusted OIBDA and Adjusted EBITDA reconciliation
Adjusted OIBDA and Adjusted EBITDA reconciliation Year Ended December 31, 2024 Year Ended December 31, 2023 TDS TDS ($ in millions) UScellular Telecom TDS* UScellular Telecom TDS* Net income (loss) (GAAP) $(32) $85 $(26) $58 ($483) ($487) Add back: Income tax expense (benefit) 10 35 6 53 (26) 10 Inc
Slide 30: Adjusted OIBDA and Adjusted EBITDA Reconciliation - UScellular Segment Results
Adjusted OIBDA and Adjusted EBITDA Reconciliation - UScellular Segment Results Three Months Ended December 31, 2024 Three Months Ended December 31, 2023 UScellular UScellular UScellular UScellular ($ in millions) Wireless Towers Wireless Towers EBITDA (Non-GAAP) (1) $126 $30 $155 $32 Add back or ded
Slide 31: Adjusted OIBDA and Adjusted EBITDA Reconciliation - UScellular Segment Results
Adjusted OIBDA and Adjusted EBITDA Reconciliation - UScellular Segment Results Year Ended December 31, 2024 Year Ended December 31, 2023 UScellular UScellular UScellular UScellular ($ in millions) Wireless Towers Wireless Towers EBITDA (Non-GAAP) (1) $530 $123 $672 $123 Add back or deduct: Expenses
Slide 32: Adjusted OIBDA and Adjusted EBITDA reconciliation – Estimated Results
Adjusted OIBDA and Adjusted EBITDA reconciliation – Estimated Results In providing 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 reasonably predicted; there
Slide 33: Cash expenses and non-GAAP definitions
Cash expenses Total cash expenses represent total operating expenses as shown in the Consolidated Statement of Operations Highlights in the TDS and UScellular SEC Forms 8-K, less depreciation, amortization and accretion and gain/losses. EBITDA, Adjusted EBITDA and Adjusted OIBDA EBITDA, Adjusted EBI
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