Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q2 2019 Earnings Presentation
27 slides from Telephone And Data Systems's earnings presentation, Aug 2, 2019
Slide 1: Second Quarter 2019 Results
Second Quarter 2019 Results August 2, 2019
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: Upcoming investor relations calendar
Upcoming investor relations calendar • 8/8/19 - Morgan Stanley Media and Communications Corporate Access Day (New York) ◦ From management: Jane McCahon • 9/9/19 - B. Riley FBR - Investor field trip visit (Madison) • 9/23/19 - 9/27/19 - Europe ◦ From management: Ted Carlson and Jane McCahon • 11/13/1
Slide 4: U.S. Cellular
K US. Cellular
Slide 5: Executing on 2019 strategic priorities
Executing on 2019 strategic priorities • Attract new customers and strengthen our base • Postpaid handset churn remains low at 0.97% • Plans in place to improve gross additions • Drive revenue growth • Service revenues up 2% ▪ Average revenue per user up 3% ▪ Inbound roaming revenues up 13% • Equipm
Slide 6: Spectrum actions to advance 5G strategy
Spectrum actions to advance 5G strategy Cost Average Depth (in markets purchased) Auction 101 - 28 GHz $129 million 451 MHz Auction 102 - 24 GHz $127 million 277 MHz • Together, the auctions provide at least 300 MHz of spectrum in markets that serve 97% of customer base • Our 5G network strategy env
Slide 7: Network modernization update
Network modernization update • J.D. Power Award - "Highest Network Quality Performance among Wireless Phone users in North Central Region" ◦ Received J. D. Power award for the 22nd time since 2006 • Voice over LTE (VoLTE) ◦ Deploying VoLTE in New England and Mid-Atlantic ◦ Existing VoLTE markets (Io
Slide 8: Postpaid handsets connections
Postpaid handsets connections Gross Additions Net Additions Smartphone Connections 150,000 25,000 3,450,000 20,000 125,000 3,400,000 15,000 100,000 10,000 20,000 15,000 3,350,000 5,000 75,000 5,000 133,000 136,000 0 3,419,000 3,409,000 3,300,000 3,397,000 111,000 50,000 102,000 102,000 -5,000 (11,00
Slide 9: Postpaid churn rate
Postpaid churn rate 1.6% 1.4% 1.29% 1.29% 1.26% 1.23% 1.19% 1.2% 1.02% 1.00% 0.99% 0.97% 1.0% 0.92% 0.8% 0.6% 0.4% 0.2% 0.0% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Handsets Total Postpaid 9
Slide 10: Total operating revenues
Total operating revenues (in millions) $1,200 $1,051 $1,001 $1,000 $974 $966 $973 $242 $297 $233 $225 $216 $800 $50 $50 $53 $48 $51 $39 $50 $38 $34 $44 $600 $400 $652 $659 $663 $659 $662 $200 $0 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Retail service Roaming Other service Equipment sales 10
Slide 11: Postpaid revenue
Postpaid revenue Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) $46.25 $120.00 $119.75 $46.00 $119.50 $119.25 $45.75 $119.00 $45.50 $118.75 $118.50 $45.25 $119.60 $45.90 $118.25 $119.42 $119.46 $118.00 $45.58 $118.84 $45.00 $45.44 $117.75 $118.57 $45.31 $117.50 $44.75 $44.74 $117
Slide 12: Adjusted OIBDA
Adjusted OIBDA ($ in millions) Q2'19 Q2'18 % Change Total operating revenues $ 973 $ 974 – System operations expense 193 187 3 % Cost of equipment sold 224 240 (6)% SG&A expenses 344 342 1 % Total cash expenses (1) 761 769 (1)% Adjusted OIBDA (2) $ 212 $ 205 4 % (1), (2) - See slide 27 for explanati
Slide 13: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q2'19 Q2'18 % Change Adjusted OIBDA (2) $ 212 $ 205 4% Equity in earnings of unconsolidated entities 40 40 1% Interest and dividend income 5 3 63% Adjusted EBITDA (2) $ 257 $ 248 3% (2) - See slide 27 for explanation 13
Slide 14: 2019 guidance
2019 guidance * ($ in millions) 2019 Previous 2019 Current As of August 1, 2019 2018 Actual Estimates Estimates Total operating revenues $3,967 $4,000-$4,200 $3,900-$4,100** Adjusted OIBDA (2) $790 $725-$875 Unchanged Adjusted EBITDA (2) $963 $900-$1,050 Unchanged Capital expenditures $515 $625-$725
Slide 15: BendBroadband
@ bendbroadband 15
Slide 16: Executing on 2019 strategic priorities
Executing on 2019 strategic priorities Wireline and Cable • Intense focus on increasing broadband penetration • Attractive bundles to lower churn • Deploy Cloud TV platform - TDS TV+ • Wireline • Execute fiber program both in and Service Addresses at June 30, 2019 (784,700) out of the current ILEC f
Slide 17: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) % Q2'19 Q2'18 Change Wireline $ 172 $ 174 (1)% Cable 62 57 9 % Total operating revenues * 233 230 1 % Cash expenses (1) 155 158 (2)% Adjusted EBITDA (2) 82 75 9 % Capital expenditures $ 70 $ 46 51 % * Includes intercompany eliminations (1), (2) - See
Slide 18: Second quarter Wireline highlights
Second quarter Wireline highlights • Growth in residential video and broadband driving an increase in residential revenue per connection • Demand for higher speeds is strong • Growth from fiber investments and A-CAM support helps to offset legacy revenue declines Residential Revenue Per ILEC Broadba
Slide 19: Second quarter fiber program update
Second quarter fiber program update • Investing over $150 million in 2019 to deploy fiber in attractive markets • Q2 Fiber-to-the-Home to 27% of Service Addresses (SA) • Driving residential revenue growth In ILEC Footprint Out-of-Territory ● Investing $50 million in 2019 for ● Trial market (Sun Prai
Slide 20: Wireline operating performance
Wireline operating performance ($ in millions) % Q2'19 Q2'18 Change Residential $ 81 $ 80 1 % Commercial 42 46 (8)% Wholesale 49 46 5 % Total operating revenues 172 174 (1)% Cash expenses (1) 114 117 (3)% Adjusted EBITDA (2) 62 59 4 % Capital expenditures $ 55 $ 33 64 % (1), (2) - See slide 27 for e
Slide 21: Second quarter Cable highlights
Second quarter Cable highlights • Broadband connections increase 8% • Revenues increase 9% • Adjusted EBITDA increases 29% Residential Revenue Per Steady Growth in Connections Connection Broadband Penetration 175,000 5% 2% 45% 150,000 $57.50 $57.24 44% Total 125,000 (Y/Y) 44% connections (Y/Y growth
Slide 22: Cable operating performance
Cable operating performance ($ in millions) % Q2'19 Q2'18 Change Residential $ 51 $ 47 8% Commercial 11 10 9% Total operating revenues 62 57 9% Cash expenses (1) 42 41 2% Adjusted EBITDA (2) 20 16 29% Capital expenditures $ 15 $ 13 17% (1), (2) - See slide 27 for explanations 22
Slide 23: 2019 TDS Telecom guidance
* 2019 TDS Telecom guidance ($ in millions) 2019 Previous 2019 Current As of August 1, 2019 2018 Actual Estimates Estimates Total operating revenues $927 $900-$950 Unchanged Adjusted OIBDA (2) $303 $280-$310 Unchanged Adjusted EBITDA (2) $313 $290-$320 Unchanged Capital expenditures $232 $300-$350 U
Slide 24: Appendix
Appendix 24
Slide 25: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation* Three Months Ended June 30, 2019 Three Months Ended June 30, 2018 Total Total U.S. TDS U.S. TDS ($ in millions) Cellular Wireline Cable Telecom TDS (3) Cellular Wireline Cable Telecom TDS (3) Net income (GAAP) $32 N/A N/A $25 $39 $52 N/A N/A $16 $44
Slide 26: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2019 Estimated and 2018 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2019 Estimated and 2018 Full Year In providing 2019 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 27: Footnotes and definitions of non-GAAP measures
1) Total cash expenses represent total operating expenses as shown in the Consolidated Statement of Operations Highlights in the TDS and U.S. Cellular SEC Forms 8-K, less depreciation, amortization and accretion and gain/losses. 2) EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income
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