Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q3 2024 Earnings Presentation
25 slides from Telephone And Data Systems's earnings presentation, Nov 1, 2024
Slide 1: Third Quarter 2024 Results
Third Quarter 2024 Results November 1, 2024
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
Corporate Update Focused on execution of strategic priorities UScellular announced transactions to monetize portions of retained spectrum; $1 billion in proceeds Closed on sale of OneNeck IT Solutions in September Both business units making key investments while maintaining rigorous cost discipline
Slide 4: UScellular
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Slide 5: Quarterly highlights
Quarterly highlights* Improving subscriber trajectory • Postpaid handset net losses improved 10,000; Prepaid net additions increased 13,000 • Improved postpaid and prepaid churn Continued expense management • Narrowing and raising 2024 Adjusted OIBDA and Adjusted EBITDA guidance Advancing the networ
Slide 6: Opportunistically monetizing spectrum
Opportunistically monetizing spectrum • Announced a definitive agreement to monetize a portion of the Company's retained spectrum licenses • Total consideration $1 billion • Verizon and two other mobile network operators will benefit from proposed sale 3,442 mm MHz POPs (3) • UScellular will continu
Slide 7: Wireless - postpaid operating metrics
Wireless - postpaid operating metrics Gross Additions (in thousands) Net Additions (in thousands) 3 3 3 5 0 44 49 39 44 43 84 80 84 (29) (28) 73 63 (38) (47) (53) Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Handsets Connected Devices Handsets Connected devices Fixed Wireless Subscrib
Slide 8: Wireless - prepaid operating metrics
Wireless - prepaid operating metrics Gross Additions Net Additions Prepaid Churn Rate (in thousands) (in thousands) 13 0 3 4.06% 0 3.87% 57 (11) (13) 3.68% 52 50 43 41 3.60% 3.30% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 8
Slide 9: Towers - Q3 2024 operating metrics
Towers - Q3 2024 operating metrics Tower Revenue Distribution 4,407 Owned Towers 14% 2,418 35% Number of Colocations 25% 1.55 26% Tower Tenancy Rate AT&T Verizon T-Mobile Other 9
Slide 10: UScellular Total - operating performance
UScellular Total - operating performance ($M) Q3'24 Q3'23 % Change Service revenues $ 747 $ 762 (2)% Equipment sales 175 201 (13)% Total operating revenues 922 963 (4)% System operations expense 180 185 (2)% Cost of equipment sold 203 228 (11)% (1) SG&A expenses 324 333 (3)% Total cash expenses (2)
Slide 11: Wireless - operating performance
Wireless - operating performance ($M), except Postpaid ARPU Q3'24 Q3'23 % Change Retail service $ 669 $ 687 (3)% Other 52 50 5% Service revenues 721 737 (2)% Equipment sales 175 201 (13)% Total operating revenues 896 938 (4)% System operations expense (1) 193 199 (3)% Cost of equipment sold 203 228
Slide 12: Towers - operating performance
Towers - operating performance ($M) Q3'24 Q3'23 % Change Third-party revenues $ 26 $ 25 1% Intra-company revenues 33 32 3% Total tower revenues 59 57 2% System operations expense 20 18 10 % SG&A expenses 8 9 (14)% Total cash expenses (1) 28 27 2% Adjusted OIBDA (1) (Non-GAAP) 31 30 3% Capital expend
Slide 13: 2024 UScellular guidance
2024 UScellular guidance * ($M) As of November 1, 2024 2023 Actual 2024 Previous Estimates 2024 Current Estimates Service revenues $3,044 $2,950-$3,050 $2,950-$3,000 Adjusted OIBDA (1)(Non-GAAP) $818 $750-$850 $800-$875 Adjusted EBITDA (1) (Non-GAAP) $986 $920-$1,020 $970-$1,045 Capital expenditures
Slide 14: TDS Telecom
Slide 15: Quarterly Highlights
Quarterly Highlights Expanding footprint • Network expansion increased service addresses 9% • Deployed 32,000 new marketable fiber addresses; 87,000 YTD • Key Milestone - 50% of service addresses are fiber Fiber strategy delivering good results • Residential broadband connections up 4% • Fiber is he
Slide 16: Progress on our long-term fiber program
Progress on our long-term fiber program* Deployed 32,000 marketable fiber service addresses in 3Q'24 Goal: Goal: Goal: 1.2 million 60% 80% marketable of service service addresses fiber service addresses to be with speeds of 1 addresses** served by fiber Gig+ Where are we: Where are we: Where are we:
Slide 17: Growing fiber footprint driving faster speeds
Growing fiber footprint driving faster speeds Total Service Address Mix Residential Broadband Connections by Speed 1.6M 1.8M 100% 100% 14% 20% 9% Service 44% 75% 10% Addresses 75% 50% 74% 1 Gig+ 9% 50% 52% 50% 49% 26% Y/Y growth 24% 25% 25% 14% 14% 25% 21% 16% 12% —% —% Q3'23 Q3'24 Q3'23 Q3'24 Coppe
Slide 18: Strong residential revenue growth
Strong residential revenue growth Total residential broadband connections grew 4% Y/Y Residential Broadband Net Residential Revenue per Operating Revenues ($M) Additions Connection 15,000 $70.00 $300 9,000 $256 $263 12,500 2,700 $65.41 $20 $29 10,000 $65.00 7,500 $200 $62.15 $89 $90 5,000 5% 2,500 5
Slide 19: TDS Telecom operating performance
TDS Telecom operating performance ($M) Q3’24 Q3’23 % Change Total operating revenues $ 263 $ 256 2% Cash expenses (1) 182 189 (4)% Adjusted EBITDA (1) (Non-GAAP) $ 83 $ 68 21 % Capital expenditures $ 78 $ 172 (55)% 19 (1) See appendix for explanation.
Slide 20: 2024 TDS Telecom guidance
2024 TDS Telecom guidance* ($M) As of November 1, 2024 2023 Actual 2024 Previous Estimates 2024 Current Estimates Total operating revenues $1,028 $1,050-$1,080 Unchanged Adjusted OIBDA (1) (Non-GAAP) $279 $330-$360 Unchanged Adjusted EBITDA (1) (Non-GAAP) $285 $330-$360 Unchanged Capital expenditure
Slide 21: Appendix
Appendix
Slide 22: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 ($M) UScellular TDS Telecom TDS* UScellular TDS Telecom TDS* Net income (loss) (GAAP) ($78) $9 ($79) $23 $4 $4 Add back: Income tax expense (benefit) (14) 4 (25) 27 — 27 Inco
Slide 23: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended Three Months Ended September 30, 2024 September 30, 2023 UScellular UScellular UScellular UScellular ($M) Wireless Towers Wireless Towers EBITDA (Non-GAAP) (1) $46 $31 $186 $30 Add back or deduct: Expenses related to strategic alte
Slide 24: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2024 Estimated and 2023 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2024 Estimated and 2023 Full Year In providing 2024 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 25: Cash Expenses; EBITDA, Adjusted EBITDA and Adjusted OIBDA 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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