Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q3 2020 Earnings Presentation
27 slides from Telephone And Data Systems's earnings presentation, Nov 6, 2020
Slide 1: Third Quarter 2020 Results
Third Quarter 2020 Results November 6, 2020
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 statem
Slide 3: Upcoming investor relations calendar
Upcoming investor relations calendar • 11/12/20 - 11/13/20 - Raymond James SMID Cap Company Showcase (Virtual) ◦ From management: Pete Sereda, Doug Chambers, Vicki Villacrez, and Jane McCahon • 12/8/2020 - UBS Global TMT Conference (Virtual) ◦ From management: Ted Carlson, Doug Chambers, Vicki Villa
Slide 4: Our balance sheet is strong
Our balance sheet is strong • Continue to maintain a strong balance sheet with ample liquidity • Employ a conservative financing strategy with long-dated repayment obligations (2) $2.2 Billion of Potential Sources: Long-term debt obligations (1) Available Sources Sept. 30, 2020 Sept. 30, 2020 700 ($
Slide 5: UScellular
3% uscellular
Slide 6: UScellular - Q3: Executing on 2020 strategic priorities
UScellular - Q3 Executing on 2020 strategic priorities • Strong subscriber and financial results • Postpaid churn remains low at 1.06% • Strong growth in connected devices • Continued expense discipline • Adjusted EBITDA up 10% • 5G mmWave milestone: completed an extended range 5G millimeter wave da
Slide 7: Postpaid connections
Postpaid connections Gross Additions Net Additions Smartphone Connections (in thousands) (in thousands) (in thousands) 175 30 3,500 25 150 40 20 39 3,475 66 15 125 28 10 42 9 44 100 5 3,450 2 3 0 — (2) 75 3,483 3,486 -5 130 (14) 3,425 3,472 124 3,468 -10 (17) (20) 50 102 90 85 -15 3,441 25 -20 3,400
Slide 8: Postpaid churn rate
Postpaid churn rate 1.60% 1.38% 1.38% 1.40% 1.21% 1.20% 1.09% 1.11% 1.06% 1.00% 0.95% 0.89% 0.88% 0.80% 0.71% 0.60% 0.40% 0.20% 0.00% Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Handsets Total Postpaid 8
Slide 9: Total operating revenues
Total operating revenues ($ in millions) $1,052 $1,031 $1,027 $963 $973 $900 $257 $289 $252 $201 $220 $57 $55 $54 $59 $54 $54 $42 $37 $42 $41 $600 $663 $666 $671 $658 $674 $300 $0 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Retail service Roaming Other service Equipment sales 9
Slide 10: Postpaid revenue
Postpaid revenue Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) $48 $125 $120 $46 $115 $44 $47.23 $122.92 $123.27 $47.10 $46.57 $120.99 $120.70 $46.16 $46.24 $110 $119.87 $42 $105 $40 $100 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 10
Slide 11: Towers: Building value
Towers: Building value • Ownership of towers provides enhanced operational flexibility • Third-party marketing agreement and focus on leasing activities have resulted in steady growth of tower rental revenues • Towers provide a potential financing alternative which is evaluated regularly and compare
Slide 12: Adjusted OIBDA
Adjusted OIBDA ($ in millions) Q3'20 Q3'19 % Change Total operating revenues $ 1,027 $ 1,031 – System operations expense 203 199 2 % Cost of equipment sold 257 266 (4)% SG&A expenses 335 358 (6)% (3) Total cash expenses 795 823 (3)% (4) Adjusted OIBDA $ 232 $ 208 12 % (3), (4) - See slide 27 for exp
Slide 13: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q3'20 Q3'19 % Change (4) Adjusted OIBDA $ 232 $ 208 12 % Equity in earnings of unconsolidated entities 48 44 10 % Interest and dividend income 2 4 (59)% (4) Adjusted EBITDA $ 282 $ 256 10 % (4) - See slide 27 for explanation 13
Slide 14: 2020 guidance
2020 guidance * ($ in millions) 2020 Previous 2020 Current As of November 6, 2020 2019 Actual Estimates Estimates Service revenues $3,035 $3,000-$3,100 $3,025-$3,075 (4) Adjusted OIBDA $832 $725-$850 $800-$875 (4) Adjusted EBITDA $1,015 $900-$1,025 $975-$1,050 Capital expenditures $710 $850-$950 Unc
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Slide 16: Wireline and cable strategy
Wireline and cable strategy Wireline and cable strategic priorities remain intact. Target new markets where our formula wins: • Attractive demographics and competitive landscape • Target build cost per household passed • Hyper-localized marketing and sales 16
Slide 17: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q3'20 Q3'19 % Change Wireline $ 173 $ 169 2 % Cable 74 62 19 % * Total operating revenues 247 231 7 % (3) Cash expenses 169 162 4 % (4) Adjusted EBITDA 78 73 8 % Capital expenditures $ 92 $ 81 14 % * Includes intercompany eliminations (3), (4) - See
Slide 18: Wireline highlights and trends
Wireline highlights and trends • Residential revenue per connection grew 5% due to: ◦ Growth in the number of video and broadband connections ◦ Increase in broadband speeds ◦ Price increases • Growth from fiber investments and A-CAM support helps to offset legacy revenue declines Residential Revenue
Slide 19: Fiber highlights and trends
Fiber highlights and trends • Fiber-to-the-Home to 280,000 or 34% of Wireline Service Addresses (SA)* • Total Wireline SAs increased 5% to 823,000 with expansion into new markets • Construction Watch Points: ◦ Municipalities slowing permitting processes ◦ Electric utilities slowing pole preparation
Slide 20: Wireline operating performance
Wireline operating performance ($ in millions) Q3'20 Q3'19 % Change Residential $ 90 $ 83 8 % Commercial 38 41 (8)% Wholesale 45 45 1 % Total operating revenues 173 169 2 % (3) Cash expenses 120 120 – (4) Adjusted EBITDA 53 52 3 % Capital expenditures $ 74 $ 61 22 % (3), (4) - See slide 27 for expla
Slide 21: Cable highlights and trends
Cable highlights and trends • Cable connections grew 12% due to an increase in broadband connections and the acquisition of Continuum ◦ Continuum added 15,800 broadband connections; 9,400 video connections; 5,800 voice connections • Revenues increased 19%; Adjusted EBITDA increased 20% Connections R
Slide 22: Cable operating performance
Cable operating performance ($ in millions) Q3'20 Q3'19 % Change Residential $ 62 $ 52 21 % Commercial 12 10 13 % Total operating revenues 74 62 19 % (3) Cash expenses 49 42 18 % (4) Adjusted EBITDA 25 21 20 % Capital expenditures $ 18 $ 20 (8)% (3), (4) - See slide 27 for explanations 22
Slide 23: 2020 TDS Telecom guidance
* 2020 TDS Telecom guidance ($ in millions) 2020 Previous 2020 Current As of November 6, 2020 2019 Actual Estimates Estimates Total operating revenues $930 $950-$1,000 Unchanged (4) Adjusted OIBDA $300 $280-$310 $300-$320 (4) Adjusted EBITDA $313 $290-$320 $305-$325 Capital expenditures $316 $300-$3
Slide 24: Appendix
Appendix 24
Slide 25: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Total Total TDS (5) TDS (5) ($ in millions) UScellular Wireline Cable Telecom TDS UScellular Wireline Cable Telecom TDS Net income (GAAP) $85 N/A N/A $25 $93 $24 N/A N/A $18
Slide 26: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2020 Estimated and 2019 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2020 Estimated and 2019 Full Year In providing 2020 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 explanations
1) In October 2020 UScellular increased the amount of their EIP securitization facility from $200 million to $300 million. The chart does not include the additional $100 million. 2) The chart does not include the $125 million outstanding borrowing on the UScellular EIP securitization facility; altho
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