Slide 1: Third Quarter 2011 Results and 2011 Guidance
November 4, 2011 Third Quarter 2011 Results and 2011 Guidance
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: Third Quarter 2011
Third Quarter 2011 • Unusual items • Share Consolidation update • Strong balance sheet 3
Slide 4: Regulatory Developments – Wireless
Regulatory Developments – Wireless CAF Mobility Fund • Phase 1 ‐ One‐time distribution of $300 M in 2012 • Phase 2 ‐ $500 M per year beginning in 2013 • 20% annual stepdown in legacy support beginning July 2012 • Stepdown stops at 60% if Phase 2 not implemented by June 2014 • Potential benefit from
Slide 5: Regulatory Developments – Wireline
Regulatory Developments ‐ Wireline • Establishes basic framework, but leaves key questions to be answered in Further Notice of Proposed Rulemaking • Extended adjustment period for rate‐of‐return carrier access rates • Recovery mechanism to replace much of lost access revenue and provide stability an
Slide 6: U.S. Cellular
K US. Cellular
Slide 7: Q3 2011 Highlights
Q3 2011 Highlights • Increased profitability • ARPU growth • Increased smartphone penetration • Nearly 2.8 million Belief Plan customers • Improved churn; strong overall satisfaction scores • Higher inbound roaming revenue • Cost reductions • Gross additions still challenging • Targeted advertising
Slide 8: Customer Activity
Customer Activity Q3 ‘11 Q3 ‘10 Retail gross additions 284,000 301,000 Postpaid net additions (losses) (34,000) (25,000) Prepaid net additions 11,000 ‐‐‐‐‐ Retail net additions (losses) (23,000) (25,000) Total customers 5,932,000 6,103,000 8
Slide 9: Postpaid Churn Rate
K US. Cellular Postpaid Churn Rate 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Q2 Q3 m2009 62010 =wm2011 ae 9
Slide 10: Smartphone Penetration
K US. Cellular Smartphone Penetration Smartphones Sold Smartphone Customers Postpaid Average Monthly (% of total devices) (% of postpaid base) Revenue Per Customer 45% 30% $52.50 $52.41 40% $52.25 25% 35% . $52.00 _— 50% $51.75 $51.50 25% 509 15% $51.25 ‘Oo $51.00 650.82 15% 10% $50.75 10% 5% $50.50
Slide 11: Financial Performance
Financial Performance ($ in millions) Q3 ‘11 Q3 ‘10 Service revenues $1,036.6 $ 983.5 Roaming 107.8 72.9 ETC 42.7 30.7 System operations expense 241.9 218.0 Loss on equipment 119.7 112.0 SG&A expenses 441.5 446.9 Adjusted OIBDA (1) $ 233.6 $ 206.5 (1) Adjusted OIBDA is defined as operating income ex
Slide 12: Financial Performance – continued
Financial Performance – continued ($ in millions, except per share amounts) Q3 ‘11 Q3 ‘10 Total investment and other income $ 11.2 $ 8.5 Net income attributable to U.S. Cellular shareholders 62.1 38.3 Diluted earnings per share attributable to $0.73 $0.44 U.S. Cellular shareholders Cash flow from op
Slide 13: 2011 Guidance – as of 11/4/11
2011 Guidance – as of 11/4/11 Service revenues $4,000 ‐ $4,100 million Operating income (1)(2) $230 ‐ $305 million Depreciation, amortization and accretion expenses, and losses on asset disposals and impairment of assets (1) Approx. $590 million Adjusted OIBDA (1)(3) $820 ‐ $895 million Capital expe
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Slide 15: Q3 2011 Highlights
Q3 2011 Highlights • ILEC data revenue growth • HMS acquisitions • Customer acquisition and retention programs • Bundling keeps churn low • Promotions • Cost control initiatives 15
Slide 16: TDS Telecom Revenues
TDS Telecom Revenues ($ in millions) Q3 ‘11 Q3 ‘10 Change ILEC $168.3 $157.4 7% CLEC 45.0 47.0 (4%) Total (1) $210.8 $202.0 4% (1) Reflects intercompany eliminations 16
Slide 17: ILEC Data Growth
ILEC Data Growth Data Revenues Penetration of High‐Speed Data $ Millions 17
Slide 18: Customer Activity: Voice
Customer Activity: Voice 2 2 Star Packages & 800 @ 180 3 3 160 & 700 Q a F 140 600 120 500 100 400 80 300 60 200 40 100 aR OR tot 0 Q3 Q4 Q1 Q2 Q3 Q4 Al Q2 Q3 Q3 O4 Q1 Q2 Q3 O4 Q1 Q2 03 09 09 ‘10 ‘10 ‘10 ‘10 "11 ‘11 ‘11 '099 '09 '10 '10 '10 '10 ‘11 ‘11 ‘11 ——Access Lines ——Access Line Equivalents ee
Slide 19: Penetration of Bundled Plans
Penetration of Bundled Plans (As a percent of ILEC residential customers) 19
Slide 20: managedIP Growth
managedIP Growth Stations 20
Slide 21: Financial Performance
Financial Performance ($ in millions) Q3 ‘11 Q3 ‘10 Change Revenues $210.8 $202.0 4% Cash expenses 139.6 133.4 5% Adjusted OIBDA (1) $71.2 $68.6 4% (1) Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on as
Slide 22: Hosted and Managed Services Offerings Leverage Strengths
Hosted and Managed Services Offerings Leverage Strengths • Expertise in network management and transport • High‐reliability service culture • Deep customer relationships and local presence in our operating markets 22
Slide 23: 2011 Guidance (ILEC/CLEC) – as of 11/4/11
2011 Guidance (ILEC/CLEC) – as of 11/4/11 Operating revenues $800 ‐ $830 million Operating income (1) $85 ‐ $115 million Depreciation, amortization and accretion expenses, and Approx. $185 million losses on asset disposals and impairment of assets (1) Adjusted OIBDA (2) $270 ‐ $300 million Capital e
Slide 24: OIBDA Reconciliation
OIBDA Reconciliation Consolidated Three Months Ended September 30, 2011 U.S. Cellular TDS Telecom (1) All Other (2) Total Operating revenues $ 1,110,439 $ 210,806 $ 4,178 $ 1,325,423 Deduct: U.S. Cellular equipment sales revenue 73,830 Service revenues 1,036,609 Operating income (loss) 101,620 25,18
Slide 25: Third Quarter 2011 Results and 2011 Guidance
Third Quarter 2011 Results and 2011 Guidance