Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q1 2023 Earnings Presentation
25 slides from Telephone And Data Systems's earnings presentation, May 5, 2023
Slide 1: First Quarter 2023 Results
First Quarter 2023 Results May 5, 2023
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: Investor relations calendar
Investor relations calendar 5/23/23 - J.P. Morgan's 51st Annual TMT Conference (Boston) From management: Ted Carlson, Vicki Villacrez and Colleen Thompson 6/22/23 - New York Stock Exchange's Investor Access Conference (Virtual) From management: Vicki Villacrez, Michelle Brukwicki and Colleen Thompso
Slide 4: Sources of Liquidity
Sources of Liquidity Available Sources of Liquidity ~$1.1 B as of 3/31/23 $714M • We have a window of opportunity to invest in fiber and 5G $404M • We have sources of liquidity along with access to debt capital markets TDS UScellular Cash Revolver EIP Facilities 4
Slide 5: UScellular
3 uscellular
Slide 6: Multi-pronged growth strategies
Multi-pronged growth strategies Focus on Growth 6
Slide 7: Quarterly highlights
Quarterly highlights Improving Churn Continuing Ongoing Cost Executing on Postpaid Reduction 5G network Discipline Growth Initiatives Customer momentum investment Fixed Wireless Connections & Results Tower Rental Revenues 7
Slide 8: Postpaid operating metrics
Postpaid operating metrics Gross Additions (K) Net Additions (K) 44 49 3 1 44 35 34 107 105 (22) (20) (25) 91 94 93 (31) (9) (36) (9) (8) 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Handsets Connected Devices Handsets Connected devices Fixed Wireless Subscribers (K) Churn 1.42% 1.30%
Slide 9: Prepaid operating metrics
Prepaid operating metrics Gross Additions (K) Net Additions (K) 0 2 — (4) 62 61 (18) 55 56 (23) 43 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 9
Slide 10: Financial summary
Financial summary Operating Revenue ($M) ARPU $1,083 $50.00 $1,027 $1,048 $49.71 $50.07 $50.21 $50.60 $50.66 $1,010 $986 $302 $274 $223 $244 $40.00 $219 $30.00 5% 4% 4% 4% $787 $783 $781 $774 $767 $20.00 2% $10.00 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 $— Service revenue Equipment sales ARPU ARPU Growth 10
Slide 11: Tower revenues
Tower revenues 4,338 ($M) Tower rental revenue Owned Towers $24.4 $24.7 $23.6 2,420 $22.9 $22.3 Number of Colocations (Up 8% Y/Y) 1.55 Tower Tenancy Rate (Up 3% Y/Y) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 11
Slide 12: UScellular operating performance
UScellular operating performance ($M) Q1'23 Q1'22 % Change Service revenues $ 767 $ 787 (3)% Equipment sales 219 223 (2)% Total operating revenues 986 1,010 (2)% System operations expense 182 185 (2)% Cost of equipment sold 253 257 (2)% SG&A expenses 345 325 6% Total cash expenses (1)(2) 780 767 2%
Slide 13: 2023 guidance
2023 guidance * ($M) As of May 4, 2023 2022 Actual 2023 Previous Estimates 2023 Current Estimates Service revenues $3,125 $3,050-$3,150 Unchanged Adjusted OIBDA (1) $790 $725-$875 Unchanged Adjusted EBITDA (1) $956 $875-$1,025 Unchanged Capital expenditures $717 $600-$700 Unchanged 13 (1) -See appen
Slide 14: Slide 14
Slide 15: Our strategy is built on five priorities that will continue to transform our business
Our strategy is built on five priorities that will continue to transform our business Grow Grow Scale Revenue Optimize Improve Platform Cost Customer Structure Experience Transform our Workforce 15
Slide 16: Progress on our 2026 goals — On track
Progress on our 2026 goals — On track Deployed 25,000 marketable fiber service addresses in 1Q'23 2026 Goal: 2026 Goal: 2026 Goal: 1.2 million 60% 80% marketable of service of service fiber service addresses to be addresses with addresses served by fiber speeds of 1 Gig+ Where are we Where are we Wh
Slide 17: Investments are driving footprint expansion and faster speeds
Investments are driving footprint expansion and faster speeds — on track for 2023 goal Marketable Fiber Service Addresses* Total Service Address Mix • Added 25,000 service addresses in Q1 1.4M 1.5M • Ended Q1 at 607K 100% 1,300,000 ~1.2M Service Addresses 33% 40% 75% 8% 975,000 67% 1 Gig+ 50% 30% Y/
Slide 18: Strategy drives residential broadband growth
Strategy drives residential broadband growth • 72% of customers are taking 100 Mbps or greater vs. 67% in prior year • Residential broadband revenues grew 8% Residential Broadband Connections Residential Broadband Connections by Speed 600,000 100% 9% 11% 500,000 7% 8% 4% 75% 400,000 Y/Y growth 51% 5
Slide 19: Broadband growth offsetting legacy revenue declines
Broadband growth offsetting legacy revenue declines Operating Revenues ($M) Residential Revenue per Connection $300 $65.00 $251 $253 $10 $15 $200 $85 $86 $60.24 $60.00 4% $57.95 4% $67 $68 Residential $100 Y/Y growth Revenue Y/Y $44 $41 growth $55.00 $44 $43 $— Q1'22 Q1'23 $50.00 Wholesale Commercia
Slide 20: TDS Telecom operating performance
TDS Telecom operating performance ($M) Q1’23 Q1’22 % Change Total operating revenues $ 253 $ 251 1% Cash expenses (1) 185 169 10 % Adjusted EBITDA (1) $ 69 $ 83 (17)% Capital expenditures $ 130 $ 105 24 % 20 (1) - See appendix for explanation.
Slide 21: 2023 TDS Telecom guidance
2023 TDS Telecom guidance* ($M) 2023 Previous 2023 Current As of May 4, 2023 2022 Actual Estimates Estimates Total operating revenues $1,020 $1,030-$1,060 Unchanged (1) Adjusted OIBDA $288 $260-$290 Unchanged Adjusted EBITDA (1) $291 $260-$290 Unchanged Capital expenditures $556 $500-$550 Unchanged
Slide 22: Appendix
Appendix
Slide 23: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 ($M) UScellular TDS Telecom TDS (1) UScellular TDS Telecom TDS (1) Net income (GAAP) $14 $8 $12 $52 $23 $72 Add back: Income tax expense 11 3 13 32 8 37 Income before income taxes (G
Slide 24: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2023 Estimated and 2022 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2023 Estimated and 2022 Full Year In providing 2023 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: Non-GAAP definitions and footnotes
1) 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. 2) EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income ad
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