Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Raymond James 29th Annual Institutional Investors Conference (March 2008)
34 slides from Telephone And Data Systems's conference presentation, Mar 4, 2008
Slide 1: Raymond James 29th Annual Institutional Investors Conference
Steven T. Campbell Executive Vice President - Finance, CFO and Treasurer Raymond James 29th Annual Institutional Investors Conference March 4, 2008
Slide 2: Safe Harbor
Safe Harbor 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,
Slide 3: TDS - 12/31/07
TDS - 12/31/07 • Diversified telecommunications company with 7.3 million customers in 36 states – U.S. Cellular (81% owned) – wireless … principally postpay* – TDS Telecom (100% owned) – wireline…focused on broadband – ILEC and CLEC operations • Strong balance sheet…investment grade • Paid 127 conse
Slide 4: U.S. Cellular coverage map
- US. Cellular We connect with you: 1s
Slide 5: U.S. Cellular Growth Strategy
U.S. Cellular Growth Strategy • Focus on the postpay customer • Differentiate with high customer satisfaction: ¾ Quality network ¾ Broad distribution ¾ Excellent customer service • National, wide-area and family plans • Competitive product and data offerings • Strategically strengthen competitive fo
Slide 6: Customer Satisfaction
Customer Satisfaction • J.D. Power and Associates – “Highest Call Quality Performance Among Wireless Cell Phone Users in North Central Region” • 2006 volumes 1 and 2 • 2007 volume 1 and 2 – “Highest Overall Satisfaction Among Wireless Telephone Users in North Central Region in a Tie” – TDS Telecom #
Slide 7: Postpay Churn < 2%
Postpay Churn < 2% 10- year track record… and still strong 2.0% 1.9% 1.9% 1.9% 1.9% 1.8% 1.8% 1.7% 1.8% 1.7% * 1.6% * 1.6%* 1.6% 1.6% * 1.5% 1.5% * 1.4% 1.4% 1.3% 1.2% 1.1% 1.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 * retail postpay
Slide 8: U.S. Cellular 4th Quarter Highlights
U.S. Cellular 4th Quarter Highlights 4Q, ‘07 4Q, ’06 Service revenues $ 958 M $ 832 M +15% Data revenues $ 108 M $ 65 M +65% Operating income $ 63 M * $ 64 M * OCF $ 253 M * $ 209 M * +21% OCF margin 26.4 25.2 120 bps ARPU $ 52.46 $ 48.15 + 9% * Includes loss on asset disposals/exchanges
Slide 9: U.S. Cellular Full Year Highlights
U.S. Cellular Full Year Highlights 2007 2006 Service revenues $ 3,679 M $ 3,214 M +15% Data revenues $ 368 M $ 217 M +69% Operating income $ 396 M * $ 290 M * +37% OCF $ 1,033 M * $ 865 M * +19% OCF margin 28.1 26.9 120 bps ARPU $ 51.13 $ 47.23 + 8% * Includes loss on asset disposals/exchanges
Slide 10: New Calling Plans
New Calling Plans • National, wide area and family plans … but ~95% MOU are on-net • More value to customers • Higher ARPU • Simplicity – one portfolio of plans across all markets
Slide 11: Strong Growth in Data Revenues
Strong Growth in Data Revenues (In Millions) 400 367.6 350 300 250 217 200 131 150 100 68 50 0 2004 2005 2006 2007
Slide 12: Focused on Postpay
Focused on Postpay ≈95% of Retail Customers are Postpay Retail Prepay Reseller Retail Post pay Total Customers
Slide 13: Strengthening the Footprint
Strengthening the Footprint • Sprint Exchange – 12/07 • FCC Auction 66 – 4/07 • Iowa RSA 15 – 2/07 • Tennessee RSA 3 – 4/06 • FCC Auction 58 – 1/06 • Exchanged properties with Alltel – 12/05 • Launched St. Louis market – 7/05
Slide 14: EVDO Trials
EVDO Trials • 2005: Rev. 0 technical trials • 2006: Rev. 0 market launch in Milwaukee • 2007: Rev. A equipment availability • U.S. Cellular wants to ensure that: ¾EVDO delivers services customers want and value ¾IT and customer service fully support the new services
Slide 15: Sources of Income
Sources of Income 2007 2006 ETC $ 98.0 M $ 67.9 M Roaming 206.6 158.2 LA market 71.2 62.3
Slide 16: Financial Guidance for the Year Ended December 31, 2008
Financial Guidance for the Year Ended December 31, 2008 As of 2/29/08 Net Retail Customer Additions 250,000 - 325,000 Service Revenues $3.9 - $4.0 billion Operating Income $460 - $535 million Dep., Amort. & Accretion Approx. $615 million Capital Expenditures $590 - $640 million * Includes losses on
Slide 17: Excellent Prospects
Excellent Prospects • Proven strategy • Quality network and sales distribution • Excellent customer service • Competitive service/product offerings • Financially strong • Capable and committed people • Positive momentum
Slide 18: Kenneth R. Meyers
Kenneth R. Meyers Executive Vice President and CFO
Slide 19: TDS Telecom
TDS Telecom : % Bea ee I ‘ >)
Slide 20: TDS Telecom
TDS Telecom Largest Equivalent Access Line States 12/31/07 % of total Wisconsin 382,500 32% Michigan 148,300 12% Minnesota 137,300 12% Tennessee 113,800 10% Georgia 62,300 5% New Hampshire 41,300 4% Indiana 37,300 3% 78%
Slide 21: TDS Telecom's Strategy
TDS Telecom’s Strategy A Broadband Communications Company • Provide outstanding customer satisfaction • Be the preferred broadband provider • Bundle aggressively – bigger the bundle the less the churn
Slide 22: DSL – Primarily Consumer
DSL – Primarily Consumer • 187,000 customers (ILEC & CLEC) • 86% of ILEC lines DSL equipped • ILEC DSL Penetration = 25% 12/31/07 12/31/06 DSL 3 Mbs + 37% 20% DSL 1.5 – 2.99 Mbs 35% 43% DSL < 1.5 Mbs 28% 37%
Slide 23: Growth in DSL
Growth in DSL 200,000 180,000 160,000 140,000 120,000 100,000 CLEC 80,000 ILEC 60,000 40,000 20,000 0 2002 2003 2004 2005 2006 2007
Slide 24: Initiatives
Initiatives • Bundled Service Offerings • DISH/Triple Play Campaign • Churn tools • WIMAX
Slide 25: 4th Quarter Financial Highlights
4th Quarter Financial Highlights TDS Telecom 4Q, ‘07 4Q, ‘06 Revenues $ 211.7 M $218.3 M (3)% Operating Income 34.6 25.9 + 34% OCF 75.2 66.4 + 13% OCF margin 35.6 30.4 +520 bps
Slide 26: TDS Telecom Full Year Highlights
TDS Telecom Full Year Highlights 2007 2006 Revenues $ 860.2 M $875.9 M (1.8)% Operating Income 141.2 128.9 + 10% OCF 298.7 288.5 + 4% OCF margin 34.7 33 +170 bps
Slide 27: Financial Guidance for the Year Ended December 31, 2008
Financial Guidance for the Year Ended December 31, 2008 TDS Telecom – as of 2/29/08 Operating Revenues $815 - $855 million Operating Income $110 - $140 million Dep., Amort. & Accretion Approx. $160 million Capital Expenditures $130 - $160 million (1) Operating Cash Flow as used above represents oper
Slide 28: Stock Repurchases
Stock Repurchases U.S. Cellular ¾ 1,006,000 shares repurchased through various ASR’s in 2007 TDS ¾$250 million of special common shares authorized ¾Repurchased ~2.1 million shares for $126.7 million
Slide 29: Marketable Securities 12/31/07
Marketable Securities 12/31/07 No. Shares Owned: TDS USM Deutsche Telekom 85,969,689 --- (DT) Rural Cellular 348,514 370,882 (RCCC)
Slide 30: Debt Credit Ratings
Debt Credit Ratings TDS USM Outlook Moody’s Baa3 Baa3 Stable Standard & Poor’s BB+ BB+ Developing Fitch BBB+ BBB+ Stable •Redeemed $200 M 7% Senior Notes (Aug. ‘06) •Redeemed $35 M Medium Term Notes (Jan/Feb ‘06)
Slide 31: Liquidity
Liquidity Dec. 31, 2007 • Cash $1,174 M • Available credit facilities 1,321 M Total: $2,495 M • Q4 OCF $ 330 M • 3,700 owned cell sites
Slide 32: Reconciliation of Additional Disclosures - 4Q '07
Reconciliation of Additional Disclosures - 4 Q ‘07 TDS Telecom Quarter Ended at Dec. 31, 2007 U.S. Cellular ILEC CLEC All Other (1) Total Operating cash flow: Operating income (loss) as reported 63,265 30,872 3,723 (1,203) 96,657 Add: Depreciation, amortization and accretion 142,279 34,528 6,111 3,6
Slide 33: Reconciliation of Additional Disclosures - 2007
Reconciliation of Additional Disclosures - 2007 TDS Telecom Year Ended at Dec. 31, 2007 U.S. Cellular ILEC CLEC All Other (1) Total Operating cash flow: Operating income (loss) as reported 396,199 127,390 13,812 (9,503) 527,898 Add: Depreciation, amortization and accretion 582,269 133,440 24,022 12,
Slide 34: Excellent Prospects
Excellent Prospects • Successful wireless and wireline operations delivering customer satisfaction • Profitable revenue growth and cash flow growth • Strong business units • Well positioned in existing markets • Proven business strategies focused on network quality, customer service and competitive