Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q3 2023 Earnings Presentation
23 slides from Telephone And Data Systems's earnings presentation, Nov 3, 2023
Slide 1: Third Quarter 2023 Results
Third Quarter 2023 Results November 3, 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: Corporate Update
Corporate Update • Strategic alternatives review of UScellular announced on August 4, 2023 • Business units are continuing to make key investments ◦ UScellular - deploying 5G mid-band spectrum ◦ TDS Telecom - growing its fiber footprint • Q3 treasury activity supporting the business units ◦ Renewed
Slide 4: UScellular
3 uscellular
Slide 5: Quarterly highlights
Quarterly highlights Financial Executing on Continuing 5G Postpaid ARPU Discipline Growth Initiatives network investment grew 2% (Fixed Wireless Access & Towers) 5
Slide 6: Postpaid operating metrics
Postpaid operating metrics Gross Additions (K) Net Additions (K) 44 49 1 1 44 3 3 42 44 107 105 (25) 93 (22) (20) (29) 83 84 (38) (9) 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Handsets Connected Devices Handsets Connected devices Fixed Wireless Subscribers (K) Churn 1.42% 1.35% 106
Slide 7: Prepaid operating metrics
Prepaid operating metrics Gross Additions (K) Net Additions (K) 0 0 2 — — (8) 62 61 50 52 (23) 43 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 7
Slide 8: Financial summary
Financial summary Operating Revenue ($M) Postpaid ARPU $1,083 $1,048 $51.11 $986 $50.21 $50.60 $50.66 $50.64 $957 $963 2% $302 $274 $219 $197 $201 Y/Y Growth $781 $774 $767 $760 $762 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Service revenue Equipment sales 8
Slide 9: Tower revenues
Tower revenues 4,356 $24.7 $25.2 $25.4 $24.4 Owned Towers $23.6 13.6% 13.5% 10.8% 10.0% 2,406 7.8% Number of Colocations (Up 2% Y/Y) 1.54 Tower Tenancy Rate Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 (Up 1% Y/Y) Tower rental revenues YoY Tower Rent Revenue Growth 9
Slide 10: Diversified third-party customer base
Diversified third-party customer base UScellular Owned Towers Tower Revenue Distribution - 3Q'23 12% 34% 29% 25% AT&T Verizon T-Mobile Other 10
Slide 11: UScellular operating performance
UScellular operating performance ($M) Q3'23 Q3'22 % Change Service revenues $ 762 $ 781 (2)% Equipment sales 201 302 (33)% Total operating revenues 963 1,083 (11)% System operations expense 185 197 (6)% Cost of equipment sold 228 354 (36)% (1) SG&A expenses 333 369 (10)% Total cash expenses (2) 746
Slide 12: 2023 UScellular guidance
2023 UScellular guidance * ($M) As of November 3, 2023 2022 Actual 2023 Previous Estimates 2023 Current Estimates Service revenues $3,125 $3,025-$3,075 Unchanged Adjusted OIBDA (1) $790 $750-$850 $770-$830 Adjusted EBITDA (1) $956 $925-$1,025 $945-$1,005 Capital expenditures $717 $600-$700 Unchanged
Slide 13: TDS Telecom
Slide 14: Quarterly highlights
Quarterly highlights Deployed 61K fiber Accepted E-ACAM support service addresses in Q3 (127K YTD) Where are we Ten additional years of support Increased 2023 goal to 200K, up from 175K % to bring 100/20 Mbps speeds to approximately 270K locations 14
Slide 15: Progress on our 2026 goals
Progress on our 2026 goals 2026 Goal: 2026 Goal: 2026 Goal: 1.2 million 60% 80% marketable of service of service fiber service addresses to be addresses with addresses served by fiber speeds of 1 Gig+ Where are we Where are we Where are we 709,000 44% 69% 15 * Marketable service addresses includes s
Slide 16: Growing fiber footprint driving faster speeds
Growing fiber footprint driving faster speeds Total Service Address Mix Residential Broadband Connections by Speed 1.5M 1.6M 100% 100% 10% 14% 8% 9% 36% Service 44% 75% Addresses 75% 69% 1 Gig+ 11% 51% 50% 52% 50% 29% 26% Y/Y growth 16% 25% 25% 14% 31% 25% 19% 16% —% —% Q3'22 Q3'23 Q3'22 Q3'23 Coppe
Slide 17: Strategy drives residential broadband growth
Strategy drives residential broadband growth Residential Broadband Residential Revenue per Operating Revenues ($M) Connections Connection 600,000 $65.00 $300 $256 $256 $62.15 500,000 $13 $20 $60.32 400,000 $200 $89 $60.00 $89 5% 3% 4% 300,000 $68 $68 Y/Y growth Y/Y growth Residential $100 200,000 $5
Slide 18: TDS Telecom operating performance
TDS Telecom operating performance ($M) Q3’23 Q3’22 % Change Total operating revenues $ 256 $ 256 — Cash expenses (1) 189 190 (1)% Adjusted EBITDA (1) $ 68 $ 66 3% Capital expenditures $ 172 $ 166 3% 18 (1) - See appendix for explanation.
Slide 19: 2023 TDS Telecom guidance
2023 TDS Telecom guidance* ($M) 2023 Previous 2023 Current As of November 3, 2023 2022 Actual Estimates Estimates Total operating revenues $1,020 $1,030-$1,060 Unchanged (1) Adjusted OIBDA $288 $270-$300 Unchanged Adjusted EBITDA (1) $291 $270-$300 Unchanged Capital expenditures $556 $475-$525 Appro
Slide 20: Appendix
Appendix
Slide 21: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 ($M) UScellular TDS Telecom TDS* UScellular TDS Telecom TDS* Net income (GAAP) $23 $4 $4 ($12) $10 ($10) Add back: Income tax expense 27 — 27 (3) 3 (3) Income before income t
Slide 22: 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 23: Cash Expenses; EBITDA, Adjusted EBITDA and Adjusted OIBDA definitions
Cash Expenses 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. EBITDA, Adjusted EBITDA and Adjusted OIBDA EBITDA, Adjusted EBI
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