Telephone and Data Systems, Inc. · NYSE:TDS
Telephone and Data Systems — Q1 2015 Earnings Presentation
27 slides from Telephone and Data Systems's earnings presentation, May 1, 2015
Slide 1: First Quarter 2015 Results
First Quarter 2015 Results May 1, 2015
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: Important Information: proxy solicitation
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 di
Slide 4: US Cellular
K US. Cellular
Slide 5: First quarter highlights
First quarter highlights • Postpaid churn of 1.5% reflecting improved levels of customer satisfaction • Strong connected device sales driven by successful tablet promotion • Steady adoption of Equipment Installment Plans helping to manage subsidy expense • Total revenue growth of 4% • Strong growth
Slide 6: Customer results
Customer results Q1 ‘15 Q1 ’14 Postpaid gross additions 200,000 197,000 Postpaid churn 1.5% 2.3% Postpaid net additions (losses) 9,000 (93,000) Prepaid net additions 12,000 13,000 Retail net additions (losses) 21,000 (80,000) Total retail customers 4,667,000 4,530,000 Basic Connected Phones Smartpho
Slide 7: Monthly postpaid churn rate
Monthly postpaid churn rate 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 7
Slide 8: Smartphone sales and penetration
Smartphone sales and penetration Smartphones Sold Smartphones Customers (% of handsets sold) (% of postpaid handsets) 100% 68% 90% 66% 80% 70% 64% 60% 62% 50% 60% 40% 58% 30% 56% 20% 54% 10% 52% 0% 50% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 8
Slide 9: Postpaid service revenue
Postpaid service revenue Average Revenue Per User Average Revenue Per Account $60.00 $57.59 $140.00 $136.13 $134.94 $56.82 $56.37 $56.51 $132.03 $131.95 $132.99 $54.87 $120.00 $50.00 $100.00 $40.00 $80.00 $30.00 $60.00 $20.00 $40.00 $10.00 $20.00 $0.00 $0.00 Q1 '14 Q2 '14 Q3' 14 Q4 '14 Q1 '15 Q1 '14
Slide 10: Equipment Installment Plans (EIP)
Equipment Installment Plans (EIP) ($ in millions) Q1 ‘15 Q1 ‘14 Number of transactions 182,000 6,000 EIP sales as a % of total device sales 39% 1% EIP equipment revenue $68 $3 EIP accounts receivable at end of period (ST & LT), net $219 $3 EIP bad debts expense $5 --- 10
Slide 11: Total operating revenues
Total operating revenues ($ in millions) Q1 ‘15 Q1 ‘14 % Change Service revenues $828 $854 (3%) Retail service 746 765 (2%) Roaming 40 50 (20%) Tower rentals 14 13 9% Other 28 26 7% Equipment sales revenues 137 72 90% Total operating revenues $965 $926 4% 11
Slide 12: Operating cash flow
Operating cash flow ($ in millions) Q1 ‘15 Q1 ‘14 % Change Service revenues $828 $854 (3%) Equipment sales revenues 137 72 90% Total operating revenues 965 926 4% System operations expense 191 181 6% Cost of equipment sold 238 270 (12%) SG&A expenses 369 396 (7%) Total cash expenses 798 847 (6%) Ope
Slide 13: Adjusted EBITDA
Adjusted EBITDA ($ in millions) Q1 ‘15 Q1 ‘14 % Change Operating cash flow(1) $167 $79 >100% Equity in earnings of unconsolidated 34 37 (7%) entities Other, net 8 1 >100% Adjusted EBITDA(1) $209 $117 79% (1) Operating cash flow and Adjusted EBITDA are non-GAAP financial measures that are defined in
Slide 14: 2015 guidance
2015 guidance(1) 2015 (as of 5/1/15) 2015 Estimates Estimates 2014 (in millions) (Current) (Previous) Actual Total operating revenues $4,000 - $4,200 Unchanged $3,893 Operating cash flow(2) $400 - $500 $350 - $450 $338 Adjusted EBITDA(2) $580 - $680 $530 - $630 $480 Capital expenditures $600 Unchang
Slide 15: TDS Telecom: Broadband, bendbroadband, OneNeck IT Solutions
a ©) OneNeck Broadband bendbroadband iT SOLUTIONS
Slide 16: 2015 strategic priorities
2015 strategic priorities • Wireline • Continue targeted fiber deployment; increase broadband and IPTV penetration in existing markets • Cable • Improve residential and commercial broadband customer penetrations • Leverage wireline capabilities to create additional synergies • Continue to evaluate p
Slide 17: TDS Telecom operating performance
TDS Telecom operating performance ($ in millions) Q1 ‘15 Q1 ‘14 % Change Wireline $176.1 $177.5 (1%) Cable 43.6 22.5 94% HMS 61.0 63.1 (3%) Total operating revenues(1) 280.0 262.4 7% Expenses(1)(2) 200.5 190.3 5% Adjusted EBITDA(3) $ 79.9 $ 72.9 10% (1) Reflects intercompany eliminations. (2) Repres
Slide 18: Wireline operating performance
Wireline operating performance ($ in millions) Q1 ’15 Q1 ’14 % Change Residential $ 74.7 $ 72.5 3% Commercial 55.8 58.0 (4%) Wholesale 45.2 46.4 (3%) Total service revenues 175.7 176.9 (1%) Expenses(1) 108.7 111.4 (2%) Adjusted EBITDA(2) $ 67.9 $ 66.7 2% (1) Represents cost of products and services
Slide 19: Broadband speeds, IPTV and managedIP driving wireline revenue growth
Broadband speeds, IPTV and managedIP driving wireline revenue growth ILEC Residential Customers by Broadband Speeds managedIP Connections 160,000 3/31/15 3/31/14 140,000 > 5 Mb 83% 79% 120,000 > 10 Mb 42% 36% 100,000 80,000 > 25 Mb 12% 7% 60,000 40,000 IPTV Connections 20,000 0 3/31/15 3/31/14 Q1 '1
Slide 20: Cable snapshot
Cable snapshot Connections Operating Performance % 3/31/15 3/31/14 ($ in millions) Q1 ‘15 Q1 ‘14 Change Video 109,700 68,700 Total operating $43.6 $22.5 94% Broadband 112,200 63,000 revenues Voice 49,100 17,700 Expenses(1) 32.6 17.3 88% Total cable 271,000 149,400 Adjusted EBITDA(2) $10.9 $ 5.2 >100
Slide 21: Hosted and Managed Services operating performance
Hosted and Managed Services operating performance ($ in millions) Q1 ’15 Q1 ’14 % Change Service revenues $ 28.4 $ 27.4 4% Equipment revenues 32.5 35.7 (9%) Total operating revenues 61.0 63.1 (3%) Expenses(1) 59.8 62.2 (4%) Adjusted EBITDA(2) $ 1.0 $ 1.0 --- (1) Represents cost of products and servi
Slide 22: 2015 TDS Telecom guidance
2015 TDS Telecom guidance(1) Unchanged from previous estimates (as of 5/1/15) 2015 Estimates 2014 Actual (Current) ($ in millions) Total operating revenues $1,130 - $1,180 $1,088 Operating cash flow(2) $280 - $310 $296 Adjusted EBITDA(2) $280 - $310 $298 Capital expenditures $220 $208 (1) There can
Slide 23: Appendix
Appendix 23
Slide 24: Operating Cash Flow and Adjusted EBITDA Reconciliation - Q1 2015 and Q1 2014 Actual Results
Operating Cash Flow and Adjusted EBITDA Reconciliation - Q1 2015 and Q1 2014 Actual Results Actual Results Three months ended March 31, 2015 Three months ended March 31, 2014 U.S. Total TDS U.S. Total TDS Cellular Wireline Cable HMS Telecom TDS (2) Cellular Wireline Cable HMS Telecom TDS (2) (Dollar
Slide 25: Operating Cash Flow and Adjusted EBITDA Reconciliation
Operating Cash Flow and Adjusted EBITDA Reconciliation 2015 Estimated Results (1) Actual Results Year ended December 31, 2014 TDS U.S. Cellular TDS Telecom TDS(2) U.S. Cellular Telecom TDS (2) (Dollars in millions) Net income (loss) (GAAP) N/A N/A N/A ($47) ($24) ($147) Add back: Income tax expense
Slide 26: Reconciliation footnotes and definitions
(l) In providing 2015 Estimated Results, TDS has not completed the above reconciliation to net income because it does not provide guidance for income taxes. TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, the company is unable to provide such guidance. Accordi
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