Slide 1: Second Quarter 2011 Results and 2011 Guidance
August 8, 2011 Second Quarter 2011 Results and 2011 Guidance
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, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates and expectati
Slide 3: Second Quarter 2011
Second Quarter 2011 • Ongoing efforts to reduce interest expense • U.S. Cellular sold $342 M of 6.95% debt in May • U.S. Cellular redeemed $330 M of 7.5% debt in June • Stock repurchases • TDS Special common – 340,965 shares for $9.9 M • U.S. Cellular common – 918,942 shares for $45 M • Low effectiv
Slide 4: Regulatory Developments
Regulatory Developments • Spectrum legislation • Competitive issues • Device interoperability • Handset exclusivity • USF and Intercarrier Compensation 4
Slide 5: U.S. Cellular
K US. Cellular
Slide 6: Q2 2011 Highlights
Q2 2011 Highlights • Profitability • Lower subscriber activity • Higher inbound roaming revenue • More balanced LOE • Smartphones driving growth in postpaid ARPU • More than 2.3 million Belief Plan customers • Postpaid churn remained low at 1.4 percent • Gross additions still challenging 6
Slide 7: Customer Activity
Customer Activity Q2 ‘11 Q2 ‘10 Retail gross additions 226,000 307,000 Postpaid net additions (losses) (41,000) (22,000) Prepaid net additions (losses) (17,000) 29,000 Retail net additions (losses) (58,000) 7,000 Total customers 5,968,000 6,144,000 7
Slide 8: Postpaid Churn Rate
Postpaid Churn Rate 1.8% 1.6% 1.43% 1.38% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Q1 Q2 Q3 Q4 2009 2010 2011 8
Slide 9: Smartphone Penetration
Smartphone Penetration Smartphones Sold Smartphone % of (% of total devices sold) Customers 25% (% of postpaid base) 45% 40% 20% 35% 30% 15% 25% 20% 10% 15% 10% 5% 5% 0% 0% Q2 Q3 Q4 Q1 2Q Q2 Q3 Q4 Q1 Q2 '10 '10 '10 '11 '11 '10 '10 '10 '11 '11 9
Slide 10: Financial Performance
Financial Performance ($ in millions) Q2 ‘11 Q2 ‘10 Service revenues $ 1,002.0 $ 972.6 Roaming 82.8 60.9 ETC 36.2 34.9 System operations expense 227.8 213.5 Loss on equipment 94.5 104.6 SG&A expenses 426.2 445.2 Adjusted OIBDA (1) $ 253.6 $ 209.2 (1) Adjusted OIBDA is defined as operating income exc
Slide 11: Postpaid Average Monthly Revenue Per Customer
Postpaid Average Monthly Revenue Per Customer $52.00 $51.84 $51.75 $51.50 $51.25 $51.00 $50.75 $50.55 $50.50 $50.25 $50.00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '09 '09 '09 '10 '10 '10 '10 '11 '11 11
Slide 12: Loss on Equipment (LOE)
Loss on Equipment (LOE) $250 LOE Millions $200 $150 $100 $50 $0 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Equipment Revenues Cost of Equipment Sold 12
Slide 13: Financial Performance – continued
Financial Performance – continued ($ in millions, except per share amounts) Q2 ‘11 Q2 ‘10 Total investment and other income (expense) $ 11.6 $ 10.6 Net income attributable to U.S. Cellular shareholders 73.9 40.8 Diluted earnings per share attributable to $0.87 $0.47 U.S. Cellular shareholders Cash f
Slide 14: 2011 Guidance – as of 8/8/11
2011 Guidance – as of 8/8/11 Service revenues $4,000 - $4,100 million Operating income (1)(2) $210 - $285 million Depreciation, amortization and accretion expenses, and losses on asset disposals and impairment of assets (1) Approx. $590 million Adjusted OIBDA (1)(3) $800 - $875 million Capital expen
Slide 15: Slide 15
Slide 16: Q2 2011 Highlights
Q2 2011 Highlights • ILEC data revenue growth • Customer acquisition and retention programs • Bundling • Increasing HSD speeds • Promotions • Cost control initiatives 16
Slide 17: TDS Telecom Revenues
TDS Telecom Revenues ($ in millions) Q2 ‘11 Q2 ‘10 Change ILEC $156.0 $154.3 1% CLEC 45.6 47.3 (4%) Total (1) $198.9 $199.2 --- (1) Reflects intercompany eliminations 17
Slide 18: ILEC Data Growth
ILEC Data Growth Data Revenues Penetration of High Speed Data $40 70% $35 60% Millions $30 50% $25 $20 40% $15 30% $10 20% $5 10% $0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 '09 '09 '09 '10 '10 '10 '10 '11 '11 ILEC HMS Total Residential 18
Slide 19: Customer Activity: Voice Star Packages
Customer Activity: Voice 900 200 Star Packages Thousands Thousands 800 180 700 160 600 140 120 500 100 400 80 300 60 200 40 100 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 Access Lines Access Line
Slide 20: Penetration of Bundled Plans
Penetration of Bundled Plans (As of percent of ILEC residential customers) 70% 60% 50% 40% 30% 20% 10% 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '09 '09 '09 '10 '10 '10 '10 '11 '11 Double Play Triple Play 20
Slide 21: managedIP Growth
managedIP Growth 40,000 Stations 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 '09 '09 '09 '10 '10 '10 '10 '11 '11 21
Slide 22: Financial Performance
Financial Performance ($ in millions) Q2 ‘11 Q2 ‘10 Change Revenues $ 198.9 $ 199.2 --- Expenses 128.8 131.6 (2%) Adjusted OIBDA (1) $70.1 $67.6 4% (1) Adjusted OIBDA is defined as operating income excluding the effects of: depreciation, amortization and accretion (OIBDA); the net gain or loss on as
Slide 23: Hosted and Managed Services
Hosted and Managed Services • OneNeck® IT Services Corporation – acquired July 2011 • Hosted application management and managed IT hosting services • TEAM Technologies – acquired December 2010 • Data center, disaster recovery and data security • VISI – acquired March 2010 • Managed hosting, colocati
Slide 24: 2011 Guidance (ILEC/CLEC) – as of 8/8/11
2011 Guidance (ILEC/CLEC) – as of 8/8/11 Operating revenues $800 - $830 million Operating income (1) $85 - $115 million Depreciation, amortization and accretion expenses, and Approx. $185 million losses on asset disposals and impairment of assets (1) Adjusted OIBDA (2) $270 - $300 million Capital ex
Slide 25: OIBDA Reconciliation
OIBDA Reconciliation Consolidated Three Months Ended June 30, 2011 U.S. Cellular TDS Telecom (1) All Other (2) Total Operating revenues $ 1,076,182 $ 198,896 $ 4,562 $ 1,279,640 Deduct: U.S. Cellular equipment sales revenue 74,152 Service revenues 1,002,030 Operating income (loss) 102,390 25,890 (2,
Slide 26: Second Quarter 2011 Results and 2011 Guidance
Second Quarter 2011 Results and 2011 Guidance