Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q1 2024 Earnings Presentation
23 slides from Telephone And Data Systems's earnings presentation, May 3, 2024
Slide 1: First Quarter 2024 Results
First Quarter 2024 Results May 3, 2024
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 ◦ Remains active and on-going • Improved profitability ◦ TDS Telecom's multi-year fiber investments now producing both top and bottom-line growth ◦ UScellular's ARPU growth coupled with disciplined spending de
Slide 4: UScellular
3 uscellular
Slide 5: Quarterly highlights
Quarterly highlights Focus on balancing subscribers and financials • Competitive environment remains aggressive - continued postpaid handset challenges • Grew postpaid ARPU 3% • Fixed wireless connections grew 42% • B2B use cases Financial discipline • Cost management drives 11% increase in Adjusted
Slide 6: Postpaid operating metrics
Postpaid operating metrics Gross Additions (in thousands) Net Additions (in thousands) 1 1 3 3 3 44 49 42 44 43 (38) 93 83 84 80 (25) (29) (53) (47) 63 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Handsets Connected Devices Handsets Connected devices Fixed Wireless Subscribers (in tho
Slide 7: Prepaid operating metrics
Prepaid operating metrics Gross Additions (in thousands) Net Additions (in thousands) 0 — (8) (11) (13) 50 52 43 43 41 (23) Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 7
Slide 8: Financial summary
Financial summary Operating Revenue ($M) Postpaid ARPU $51.61 $51.96 $50.66 $50.64 $51.11 $986 $1,000 $957 $963 $950 3% $219 $197 $201 $245 $196 Y/Y Growth $767 $760 $762 $755 $754 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Service revenue Equipment sales 8
Slide 9: Tower revenues
Tower revenues 4,382 $24.7 $25.2 $25.4 $25.1 $25.4 Owned Towers 2,397 Number of Colocations 1.55 Tower Tenancy Rate Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Tower rental revenues 9
Slide 10: Diversified third-party customer base
Diversified third-party customer base UScellular Owned Towers Tower Revenue Distribution - 1Q'24 12% 34% 28% 26% AT&T Verizon T-Mobile Other 10
Slide 11: UScellular operating performance
UScellular operating performance ($M) Q1'24 Q1'23 % Change Service revenues $ 754 $ 767 (2)% Equipment sales 196 219 (10)% Total operating revenues 950 986 (4)% System operations expense 182 182 — Cost of equipment sold 216 253 (14)% (1) SG&A expenses 331 345 (4)% Total cash expenses (2) 729 780 (7)
Slide 12: 2024 UScellular guidance
2024 UScellular guidance * ($M) As of May 3, 2024 2023 Actual 2024 Previous Estimates 2024 Current Estimates Service revenues $3,044 $2,950-$3,050 Unchanged Adjusted OIBDA (1) $818 $750-$850 Unchanged Adjusted EBITDA (1) $986 $920-$1,020 Unchanged Capital expenditures $611 $550-$650 Unchanged (1) Se
Slide 13: TDS Telecom
Slide 14: Quarterly Highlights
Quarterly Highlights Grew revenues and profitability • Revenues up 5% • Adjusted EBITDA (1) up 38% • Pacing capital spend, in line with profitability Expanded fiber program • Deployed 28,000 new marketable fiber addresses • Expansion markets exceeded 100,000 broadband connections Residential fiber b
Slide 15: Progress on our long-term fiber program
Progress on our long-term fiber program Deployed 28,000 marketable fiber service addresses in 1Q'24 Goal: Goal: Goal: 1.2 million 60% 80% marketable of service service addresses fiber service addresses to be with speeds of 1 addresses served by fiber Gig+ Where are we: Where are we: Where are we: 82
Slide 16: Growing fiber footprint driving faster speeds
Growing fiber footprint driving faster speeds Total Service Address Mix Residential Broadband Connections by Speed 1.5M 1.7M 100% 100% 11% 17% 8% Service 9% 40% 75% Addresses 75% 49% 73% 1 Gig+ 12% 53% 50% 50% 52% 27% Y/Y growth 25% 25% 25% 16% 14% 28% 22% 17% 12% —% —% Q1'23 Q1'24 Q1'23 Q1'24 Coppe
Slide 17: Strong residential revenue growth
Strong residential revenue growth Total residential broadband connections grew 6% Y/Y Residential Broadband Net Residential Revenue per Operating Revenues ($M) Additions Connection $65.00 $64.58 15,000 $300 $266 12,500 6,400 $253 $26 $15 10,000 5,400 $60.24 7,500 $200 $86 $90 $60.00 5,000 10% 7% 2,5
Slide 18: TDS Telecom operating performance
TDS Telecom operating performance ($M) Q1’24 Q1’23 % Change Total operating revenues $ 266 $ 253 5% Cash expenses (1) 173 185 (6)% Adjusted EBITDA (1) $ 95 $ 69 38 % Capital expenditures $ 87 $ 130 (33)% 18 (1) See appendix for explanation.
Slide 19: 2024 TDS Telecom guidance
2024 TDS Telecom guidance* ($M) As of May 3, 2024 2023 Actual 2024 Previous Estimates 2024 Current Estimates Total operating revenues $1,028 $1,070-$1,100 Unchanged Adjusted OIBDA (1) $279 $310-$340 Unchanged Adjusted EBITDA (1) $285 $310-$340 Unchanged Capital expenditures $577 $310-$340 Unchanged
Slide 20: Appendix
Appendix
Slide 21: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 ($M) UScellular TDS Telecom TDS* UScellular TDS Telecom TDS* Net income (GAAP) $24 $24 $38 $14 $8 $12 Add back: Income tax expense 28 7 20 11 3 13 Income before income taxes (GAAP) $
Slide 22: Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2024 Estimated and 2023 Full Year
Adjusted OIBDA and Adjusted EBITDA Reconciliation – 2024 Estimated and 2023 Full Year In providing 2024 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
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
Telephone and Data Systems — Q1 2024 Earnings Presentation on 6ix