Telephone And Data Systems, Inc. · NYSE:TDS
Telephone And Data Systems — Q2 2023 Earnings Presentation
26 slides from Telephone And Data Systems's earnings presentation, Aug 4, 2023
Slide 1: Second Quarter 2023 Results
Second Quarter 2023 Results August 4, 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 • TDS and UScellular launching a strategic review of UScellular • Access to liquidity as June 30, 2023 ($M) TDS USM Cash $ 65 $186 Available undrawn borrowing capacity 274 625 Total available liquidity $339 $811 • Business units are making key investments: ◦ UScellular - deploying 5
Slide 4: UScellular
3 uscellular
Slide 5: Multi-pronged growth strategies
Multi-pronged growth strategies Focus on Growth 5
Slide 6: Quarterly highlights
Quarterly highlights Focused on improving Continuing Ongoing Cost Executing on subscriber trajectory: 5G network Discipline Growth Initiatives Reduced Postpaid Churn in Q2 investment Fixed Wireless Connections & Tower Rental Revenues 6
Slide 7: New Branding Campaign rollout
New Branding Campaign rollout New Masterbrand Campaign focused on genuine Receiving positive NPS results compared to Peers connection versus constant connection 7
Slide 8: Results of campaign are encouraging
Results of campaign are encouraging Impact of Let's Find US campaign Positive brand awareness Represents my values +14.9 ppts Best days ahead +30 ppts Cares about me +15.6 ppts Buzz / excitement +26 ppts Brand I trust +12.7 ppts Consideration +15 ppts Company impact +12.6 ppts Familiarity +9 ppts Im
Slide 9: Valuable towers
Valuable towers Opportunity to grow tenancy rate Increasing tower rental revenue through annual escalators and new co-locators Expect ongoing technology investments to drive additional revenues Diversified third-party customer base Strong contribution margins Opportunity to offer additional services
Slide 10: Tower revenues
Tower revenues 4,341 Tower rental revenue ($M) Owned Towers $24.7 $25.2 $24.4 $23.6 2,458 $22.9 Number of Colocations (Up 8% Y/Y) 1.55 Tower Tenancy Rate (Up 2% Y/Y) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 10
Slide 11: Postpaid operating metrics
Postpaid operating metrics Gross Additions (K) Net Additions (K) 44 49 44 1 1 34 42 3 107 105 (20) (25) 94 93 (22) (29) 83 (31) (9) (9) 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Handsets Connected Devices Handsets Connected devices Fixed Wireless Subscribers (K) Churn 1.42% 96 1.35
Slide 12: Prepaid operating metrics
Prepaid operating metrics Gross Additions (K) Net Additions (K) 0 2 — (4) (8) 62 61 56 50 (23) 43 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 12
Slide 13: Financial summary
Financial summary Operating Revenue ($M) Postpaid ARPU $1,083 $1,027 $1,048 $986 $50.21 $50.60 $50.66 $50.64 $957 $50.07 1% $302 $274 $244 $219 $197 Y/Y Growth $783 $781 $774 $767 $760 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Service revenue Equipment sales 13
Slide 14: UScellular operating performance
UScellular operating performance ($M) Q2'23 Q2'22 % Change Service revenues $ 760 $ 783 (3)% Equipment sales 197 244 (20)% Total operating revenues 957 1,027 (7)% System operations expense 190 192 (1)% Cost of equipment sold 228 275 (17)% SG&A expenses 341 339 1% Total cash expenses (1) 759 806 (6)%
Slide 15: 2023 guidance
The numbers contained within these slides do not reflect any anticipated costs, expenses or results of the strategic review. 2023 guidance * ($M) As of August 4, 2023 2022 Actual 2023 Previous Estimates 2023 Current Estimates Service revenues $3,125 $3,050-$3,150 $3,025-$3,075 Adjusted OIBDA (1) $79
Slide 16: Slide 16
Slide 17: Our strategy is built on five priorities
Our strategy is built on five priorities that we expect will continue to transform our business Grow Grow Scale Revenue Optimize Improve Platform Cost Customer Structure Experience Transform our Workforce 17
Slide 18: Progress on our 2026 goals
Progress on our 2026 goals — On track Deployed 41,000 marketable fiber service addresses in 2Q'23 and 66,000 YTD 2026 Goal: 2026 Goal: 2026 Goal: 1.2 million 60% 80% marketable of service of service fiber service addresses to be addresses with addresses served by fiber speeds of 1 Gig+ Where are we
Slide 19: Investments are driving footprint expansion and faster speeds
Investments are driving footprint expansion and faster speeds — on track for 2023 goal Total Service Address Mix Residential Broadband Connections by Speed 1.4M 1.6M 100% 100% 9% 13% 8% 8% 34% Service 41% Addresses 75% 75% 68% 1 Gig+ 9% 51% 50% 53% 50% 29% 27% Y/Y growth 16% 25% 15% 25% 32% 21% 26%
Slide 20: Strategy drives residential broadband growth
Strategy drives residential broadband growth - broadband growth offsetting legacy revenue declines Residential Broadband Residential Revenue per Operating Revenues ($M) Connections Connection 600,000 $65.00 $300 $256 $257 500,000 $61.97 $12 $18 400,000 $59.67 $200 $88 $89 $60.00 5% 4% 4% 300,000 $68
Slide 21: TDS Telecom operating performance
TDS Telecom operating performance ($M) Q2’23 Q2’22 % Change Total operating revenues $ 257 $ 256 1% Cash expenses (1) 189 180 5% Adjusted EBITDA (1) $ 70 $ 76 (9)% Capital expenditures $ 132 $ 120 10 % 21 (1) - See appendix for explanation.
Slide 22: 2023 TDS Telecom guidance
2023 TDS Telecom guidance* ($M) 2023 Previous 2023 Current As of August 4, 2023 2022 Actual Estimates Estimates Total operating revenues $1,020 $1,030-$1,060 Unchanged (1) Adjusted OIBDA $288 $260-$290 $270-$300 Adjusted EBITDA (1) $291 $260-$290 $270-$300 Capital expenditures $556 $500-$550 $475-$5
Slide 23: Appendix
Appendix
Slide 24: Adjusted OIBDA and Adjusted EBITDA Reconciliation
Adjusted OIBDA and Adjusted EBITDA Reconciliation Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 ($M) UScellular TDS Telecom TDS* UScellular TDS Telecom TDS* Net income (GAAP) $5 $7 $— $22 $19 $39 Add back: Income tax expense 19 3 15 18 7 27 Income before income taxes (GAAP) $24 $
Slide 25: 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 26: Cash Expenses and non-GAAP 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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