Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q3 2022 Earnings Presentation
26 slides from Telephone And Data Systems's earnings presentation, Nov 4, 2022
Slide 1: Third Quarter 2022 Results
Third Quarter 2022 Results November 4, 2022
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 12/7/22 - Raymond James Technology Investors Conference (NY) – From management: LT Therivel, Michelle Brukwicki and Colleen Thompson 1/5/23 - Citi Communications, Media & Entertainment Conference (Scottsdale) – From management: Ted Carlson, Doug Chambers and Colleen Thomp
Slide 4: Well positioned for long-term sustainable growth
Well positioned for long-term sustainable growth Continued demand for broadband Connectivity, whether fixed or mobile, is a necessity to remote education, health care and work Maintaining a sound financial foundation for the enterprise so that each of our businesses can take advantage of growth oppo
Slide 5: UScellular
3 uscellular
Slide 6: Key strategic priorities
re m Key strategic priorities 3 uscellular @ Advance Our Mission @ Continued Focus on Growth @ Expand Return on Capital @ Leverage Infrastructure Programs @ Advance the Network @ Invest in our Team a TDS
Slide 7: Multi-pronged growth strategies
Multi-pronged growth strategies Focus on Growth 7
Slide 8: Postpaid connections
Postpaid connections Gross Additions* Net Additions* 10 175 5 0 (2) 150 (5) 40 -5 44 (3) (10) 125 40 -10 (22) 35 34 -15 100 (31) -20 (36) 75 -25 (9) 125 -30 50 105 107 -35 91 94 (9) -40 (8) 25 -45 0 -50 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Handsets Handsets Connected devices C
Slide 9: Postpaid churn rate
Postpaid churn rate 1.60% 1.42% 1.40% 1.35% 1.30% 1.30% 1.20% 1.15% 1.15% 1.10% 1.10% 1.10% 1.00% 0.95% 0.80% 0.60% 0.40% 0.20% 0.00% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Handsets Total Postpaid 9
Slide 10: Prepaid connections
Prepaid connections Gross Additions* Net Additions* 15 75 10 5 11 50 2 0 74 (5) (4) 63 62 -5 55 56 25 (18) -10 -15 0 -20 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 10 *In thousands
Slide 11: Total operating revenues
Total operating revenues ($ in millions) $1,200 $1,068 $1,083 $1,016 $1,010 $1,027 $900 $286 $244 $302 $228 $223 $61 $65 $64 $65 $68 $30 $24 $21 $18 $17 $600 $697 $693 $702 $700 $696 $300 $0 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Retail service Roaming Other service Equipment sales Note: Q3'21 retail service
Slide 12: Postpaid ARPU & ARPA
Postpaid ARPU & ARPA Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) 4% Y/Y Growth 3% Y/Y Growth $52 $132 $128 $50 $124 $48 $120 $46 $116 $129.93 $130.43 $130.27 $50.07 $50.21 $127.14 $49.71 $125.99 $48.62 $112 $44 $48.12 $108 $42 $104 $40 $100 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'21
Slide 13: Tower revenues
Tower revenues • 4,329 owned towers (63% of total cell sites) • 2,351 colocators Tower rental revenue ($ in millions) 14% Y/Y Growth $24 $23.6 $22.9 $22.3 $21 $21.5 $20.7 $18 $15 $12 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 13
Slide 14: UScellular operating performance
UScellular operating performance ($ in millions) Q3'22 Q3'21 % Change Service revenues* $ 781 $ 788 (1)% Equipment sales 302 228 32 % Total operating revenues 1,083 1,016 7% System operations expense 197 205 (4)% Cost of equipment sold 354 252 40 % SG&A expenses 369 346 7% Total cash expenses (1) 92
Slide 15: 2022 guidance
2022 guidance * ($ in millions) As of November 3, 2022 2021 Actual 2022 Previous Estimates 2022 Current Estimates Service revenues $3,115 $3,100-$3,200 $3,100-$3,150 Adjusted OIBDA (2) $869 $750-$900 $750-$825 Adjusted EBITDA (2) $1,054 $925-$1,075 $925-$1,000 Capital expenditures $780 $700-$800 Unc
Slide 16: Slide 16
Slide 17: Our strategy is built on five pillars that will continue to transform our business
Our strategy is built on five pillars that will continue to transform our business Expand footprint through fiber Increase top line through average deployments in new markets Grow Grow revenue per connection growth, and consider acquisitions Scale Revenue broadband penetration growth, and continued
Slide 18: Investments are driving footprint expansion
Investments are driving footprint expansion Quarterly Highlights Total Service Address Mix • Fiber Expansion Service 1.4M 1.5M • Launched markets in Billings, MT and Green Bay, WI Addresses • Deployed 33K marketable fiber service addresses in 26% 7% the quarter (72K YTD) 36% (Y/Y growth) • Operation
Slide 19: Strategy continues to drive residential broadband growth
Strategy continues to drive residential broadband growth • 69% of customers are taking 100 Mbps or greater vs. 65% in prior year • Residential broadband revenues grew 10% Residential Broadband Connections Residential Broadband Connections by Speed 600,000 100% 8% 10% 6% 500,000 8% 4% 400,000 (Y/Y gr
Slide 20: Broadband growth is offsetting legacy revenue declines
Broadband growth is offsetting legacy revenue declines Operating Revenues Residential Revenue per Connection $300 ($ in millions) $252 $256 $9 $13 $60.32 $60.00 $200 $87 $89 $57.75 5% 4% $66 $68 Residential $100 $55.00 (Y/Y growth) Revenue Y/Y $45 $43 growth $44 $43 $0 Q3'21 Q3'22 $50.00 Wholesale C
Slide 21: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q3’22 Q3’21 % Change Total operating revenues $ 256 $ 252 2% Cash expenses (1) 190 175 9% Adjusted EBITDA (2) $ 66 $ 77 (13)% Capital expenditures $ 166 $ 91 82 % 21 (1) (2) -See final slide for explanations
Slide 22: 2022 TDS Telecom guidance
2022 TDS Telecom guidance* ($ in millions) As of November 3, 2022 2021 Actual 2022 Previous Estimates 2022 Current Estimates Total operating revenues $1,006 $1,010-$1,040 Unchanged (2) Adjusted OIBDA $310 $260-$290 $270-$290 (2) Adjusted EBITDA $310 $260-$290 $270-$290 Capital expenditures $411 $500
Slide 23: Appendix
Appendix
Slide 24: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 ($ in millions) UScellular TDS Telecom TDS (3) UScellular TDS Telecom TDS (3) Net income (loss) (GAAP) ($12) $10 ($10) $35 $21 $47 Add back: Income tax expense (benefit) (3)
Slide 25: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2022 Estimated and 2021 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2022 Estimated and 2021 Full Year In providing 2022 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 26: Footnotes: total cash expenses and non-GAAP measure definitions
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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