44 slides from Telephone And Data Systems's proxy contest presentation, May 4, 2015
Slide 1: TDS Annual Meeting of Shareholders
May 1, 2015 7 TDS Annual Meeting of Shareholders
Slide 2: Safe Harbor Statement
Pa Safe Harbor Statement TDS : 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 expectations. These statements are based on current estimat
Slide 3: Important Information
aa IMPORTANT INFORMATION: TDS and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of TDS in connection with the TDS 2015 annual meeting of shareholders. Information regarding TDS
Slide 4: Current TDS director slate ensures continued execution on strategic actions
Current TDS director slate ensures continued aS. execution on strategic actions TDS * TDS is a controlled company, operating in attractive, yet challenging industries. * The TDS Board believes that: * Members have been very active in urging meaningful action and setting strategic priorities for sust
Slide 5: Summary of TDS Nominee Qualifications
Summary of TDS Nominee Qualifications * The TDS slate of nominees bring valuable and relevant experience and skills, including: © Significant public company board experience, including financial expert status * Meaningful experience in companies of many sizes and industries in critical functions suc
Slide 6: Clarence A. Davis
Clarence A. Davis TDS: Significant leadership and operational experience in multiple industries, including technology (CEO—Nestor, Inc.), accounting (CFO, COO--American Institute of Certified Public Accountants), manufacturing, media/broadcasting, agriculture ‘Substantial expertise in management, op
Slide 7: George W. Off
George W. Off TDS: Substantial executive management and operational experience for marketing services firm (Co- founder and CEO, Catalina Marketing Corporation) and multinational manufacturer (CEO, Checkpoint Systems) Business Expertise + Significant business expertise in marketing, operations, reta
Slide 8: Mitchell H. Saranow
Mitchell H. Saranow TDS: Significant leadership experience in manufacturing (Founder--Fluid Management, SureTint Technologies), cable (Co-founder, Mid-Atlantic CATV), food service distribution (CFS Continental), corporate finance (Warburg, Paribas, Becker), and consulting (Co-CEO, Navigant Consultin
Slide 9: Gary L. Sugarman
Gary L. Sugarman aa TDS: Management Experience Board Experience + More than 25 years of management + Current board member of OTELCO and experience, including traditional telcos LICT. Former member of multiple (Co-founder and CEO, Mid-Maine telecommunications and technology Communications; various op
Slide 10: TDS Board Philosophy and Highlights
aS. TDS Board Philosophy and Highlights TDS J Board Structure The TDS Board seeks to optimize performance by assembling a diverse group of directors with significant experience and expertise in a broad array of industries relevant to its businesses and across multiple business disciplines. It is exp
Slide 11: Structured Refreshment Process
Structured Refreshment Process * The Corporate Governance and Nominating Committee develops list of desired skills, backgrounds, and characteristics for potential new board members. In its annual board assessment, the full board provides feedback on that list and also considers its composition and c
Slide 12: TDS Board - Active Engagement Driving Improving Performance
TDS Board - Active Engagement Driving ~ Improving Performance TDS * The TDS Board rigorously reviews and assesses performance of all company businesses * The TDS Board has overseen execution of TDS Capital Allocation Strategy designed to: * Invest in our business to improve returns * Oversight of ca
Slide 13: Improving Performance at U.S. Cellular
TDS Board - Active Engagement Driving K US.Cellular Improving Performance at U.S. Cellular Investments and strategic initiatives have generated improving performance at U.S. Cellular: * To focus on core suburban and rural markets, divested Chicago/St. Louis markets; paid $5.75 per share dividend in
Slide 14: Improving Performance at U.S. Cellular
TDS Board - Active Engagement Driving K US.Cellular Improving Performance at U.S. Cellular * Company expects enhanced competitive position and improved operating efficiencies will drive revenue growth and improved profitability in 2015 Net Postpaid Additions (Losses) ~ {in thousands) =| 2° 0} 52 : |
Slide 15: Improving Performance at TDS Telecom
TDS Board - Active Engagement Driving 10s Improving Performance at TDS Telecom Investments and strategic initiatives have generated improving performance at TDS Telecom: * To address the wireline segment’s secular decline, the Company has identified and entered into adjacent lines of business that l
Slide 16: Improving Performance at TDS Telecom
TDS Board - Active Engagement Driving 10s Improving Performance at TDS Telecom * Strategic investments and aggressive cost control have strengthened and diversified revenue growth and improved profitability at TDS Telecom: xponding Into New Segments Improved Wireline Profitabiity teense mins) (opera
Slide 17: Corporate governance highlights
aS. Corporate governance highlights TDS J * Established Technology Advisory Group and Board Technology Education Program to enhance knowledge of rapidly-changing technological advances in telecommunications, including cyber security and information privacy * Initiated corporate governance outreach p
Slide 18: Business Review
van TDS: Business Review 18
Slide 19: Our mission
Our mission TDS To provide outstanding communications services to our customers and meet the needs of our shareholders, our people, and our communities.
Slide 20: Diversified Communications Company
aS. Diversified Communications Company TDS J * Two principal business units * U.S. Cellular (84%-owned) - wireless; 92% of retail customers are postpaid (NYSE:USM) * TDS Telecom (wholly owned) - broadband, TV and voice; hosted and managed services 6 million customers nationwide Fortune® 1000 member
Slide 21: Operations
Operations aS
Slide 22: Capital structure
Pa Capital structure TDS z * Since the IPO in 1981 until 2012, the Series A Common Shares have had 10 votes per share and the Common Shares have had one vote per share. * In 2012, shareholders approved a recapitalization, and the aggregate voting power of the Series A Common Shares was capped at 56.
Slide 23: Transparent and Balanced Capital Allocation Strategy
aS. Transparent and Balanced Capital Allocation Strategy “TDS * Balanced capital allocation strategy * Invest in the business (M&A) - 75% of available resources * Return value to shareholders - 25% of available resources * 41 consecutive years of dividend increases $250 million TDS stock repurchase
Slide 24: No short term debt maturities
No short term debt maturities Strong Financial Foundation TDS ve ‘esr rorntog) eter. neem TDS 7% $ 300M TDS 6.625% 116M TDS 5.875% 195 TDS 6.875% 225 USM 6.7% saa Mm USM 6.95% 342M USM 7.25% 25M $28 Cat options on most company debt securities give the company the flewbilty to repay or refinance its
Slide 25: Liquidity
mY Liquidity TDS” Liquidity available to TDS as of March 31, 2015 ($ in millions) Cash and cash equivalents $635 Available credit facilities 682 Term loan facility 225 Total $1,542 Other actual or potential sources of liquidity Non-strategic spectrum 3,955 owned towers (if monetized) 5.5% ownership
Slide 26: U.S. Cellular
K US. Cellular
Slide 27: Positioning U.S. Cellular for success
4K US Cellular Positioning U.S. Cellular for success * Postpaid subscriber growth in 2014 * Stabilized billing system; improving speed to market for new plans and product offerings and increasing operational efficiencies * Expanded Equipment Installment Plan offerings to meet customers’ needs * Intr
Slide 28: Strategic priorities for 2015
4K US Cellular Strategic priorities for 2015 * Drive subscriber growth Differentiate * Increase revenue through through our value subscriber growth, smartphone proposition adoption and data monetization * Reduce unit costs * Increase margin * Maintain network quality while managing investment levels
Slide 29: Drive subscriber growth
4K US Cellular Drive subscriber growth Increase gross additions with high-quality network, strong device portfolio, higher penetration of connected devices, product and pricing initiatives, win-back programs Reduce churn through device portfolio, including Apple devices, membership experience, custo
Slide 30: Drive revenue growth
4K US Cellular Drive revenue growth * Grow subscriber base * Increase smartphone penetration * Launch new products and services that increase usage of data network * Connected devices * Connected home * Continue penetration of Shared Connect plans and increase number of devices per account * Build e
Slide 31: Focus on margin improvement
4K US Cellular Focus on margin improvement * Manage subsidies * Continued aggressive adoption of EIPs * Offer attractive lower-cost devices, including used devices Manage upgrade cycle * Manage costs * Focused on reducing unit costs Leverage revenue growth and LOE/cost reduction to drive margin impr
Slide 32: Smartphone sales and penetration
4K US Cellular Smartphone sales and penetration™ Smartphones Sold ‘Smartphones Customers ( of handsets sold) (% of postpaid handsets) 20% ak om _ 60% 40% 50% oon 56% 10% so | om . 30% . 114 @2'16 Q3"14 Q'18 115 Qu'14 Q2'4s a3 14 Qe1s OES
Slide 33: Postpaid service revenue
7K US.Cellular Postpaid service revenue Average Revense Per User Average Revenue Per Account cory arte janie | ars rie [aria aria | Qess aris Sexiee $0.00 [soa $137" [e208 "S450 $000, $025 |sa42) | 47a2) $1108 —_ iN. Ss
Slide 34: TDS Telecom
TDS Telecom mS Q@oneNeck bendbroadband™ Trego Bhi
Slide 35: 2014 accomplishments
2014 accomplishments MSF * Wireline * Fiber/IPTV results encouraging, TDS TV in 18 markets * 43 out of 44 broadband stimulus projects completed * Cost reductions drove profitability improvement * Cable * Broadband penetration increasing * Integration of acquisitions proceeding smoothly * Realizing s
Slide 36: Strategic priorities for 2015
Strategic priorities for 2015 Me * Wireline * Continue targeted fiber deployment; build penetration in existing markets * Continue to grow IP-based products and services that leverage high speed data network * Cable * Improve residential and commercial broadband customer penetrations * Leverage wire
Slide 37: Broadband speeds, IPTV driving wireline residential revenue growth
Broadband speeds, IPTV driving 10s wireline residential revenue growth ILEC Residential Customers Wireline Residential Average by Broadband Speeds Revenue Per Connection 3/31/15 3/31/14 31/15 3/31/14 >5 Mb 83% 79% $42.32 $40.79 > 10 Mb 42% 36% > 25 Mb 12% 7% IPTV Connections 3/31/15 3/31/14 IPTV 25,
Slide 38: Cable Acquisitions Support Profitable Growth
Cable Acquisitions Support Profitable Growth Ms + Natural extension to existing businesses + ARPU growth potential in bundling, high-margin data, add-on services + Operating synergies through existing platform, technologies, and expertise + Significant SMB commercial growth potential in underserved
Slide 39: Growing Hosted and Managed Services
Growing Hosted and Managed Services + Comprehensive suite of IT outsourcing services aimed at mid-market companies + Sales force has end-to-end IT services to cross sell and drive recurring revenues Private Clouds Managed Databases mcrosonte in eMC” Ftchbug, wt ‘nei code Managed Wet Infor wagers ||
Slide 40: Current TDS director slate ensures continued execution on strategic actions
Current TDS director slate ensures continued ~ execution on strategic actions TDS * TDS is a controlled company undergoing significant change * The TDS Board believes that: * Members have been very active in urging meaningful action and setting strategic priorities for sustainable, profitable future
Slide 41: Appendix
Appendix
Slide 42: Operating Cash Flow and Adjusted EBITDA Reconciliation
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Slide 43: Reconciliation notes
(1) In providing 2015 Estimated Results, U.S. Cellular has not completed the above reconciliation to net income because it does not provide guidance for income taxes. U.S. Cellular believes that the impact of Income taxes cannot be reasonably predicted; therefore, the company is unable to provide su
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