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WKN: A1JS1Q | ISIN: US8794338298 | Ticker-Symbol:
NASDAQ
24.05.24
21:59 Uhr
18,765 US-Dollar
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(1)

Telephone and Data Systems, Inc.: TDS reports fourth quarter and full year 2023 results

Investing in our networks; Provides 2024 guidance

CHICAGO, Feb. 16, 2024 /PRNewswire/ --

As previously announced, TDS will hold a teleconference on February 16, 2024 at 9:00 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

Telephone and Data Systems, Inc. (NYSE: TDS) reported total operating revenues of $1,313 million for the fourth quarter of 2023, versus $1,357 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(523) million and $(4.64), respectively, for the fourth quarter of 2023 compared to $(43) million and $(0.38), respectively, in the same period one year ago.

Excluding a $547 million ($511 million, net of tax impacts) non-cash charge related to goodwill impairment recorded at TDS Telecom during the fourth quarter of 2023, net income (loss) available to TDS common shareholders and related diluted earnings (loss) per share for the fourth quarter of 2023 were $(12) million and $(0.11), respectively.

TDS reported total operating revenues of $5,160 million and $5,413 million for the years ended 2023 and 2022, respectively. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(569) million and $(5.06), respectively, for the year ended 2023 compared to $(7) million and $(0.07), respectively, for the year ended 2022.

Excluding a $547 million ($511 million, net of tax impacts) non-cash charge related to goodwill impairment recorded at TDS Telecom during the fourth quarter of 2023, net income (loss) available to TDS common shareholders and related diluted earnings (loss) per share for the year ended 2023 were $(58) million and $(0.53), respectively.

Full year 2023 Highlights*

UScellular

  • Postpaid ARPU grew 2%
  • Delivering on growth initiatives
    • Fixed wireless customers grew 46% to 114,000
    • Tower rental revenues grew 8% to $100 million
  • Increased profitability
    • Net income, Adjusted OIBDA and Adjusted EBITDA up
  • Generated positive free cash flow and increased cash flows from operating activities
  • Began launching 5G mid-band network - providing low latency and faster speeds

TDS Telecom

  • Exceeded full year 2023 fiber address goal
    • Delivered 217,000 fiber service addresses
  • Executing on fiber broadband strategy
    • Expanded its footprint 12% - increased total service addresses to 1.7 million
    • Residential broadband connections grew 6% and Residential revenue per connection grew 4%
    • Total Wireline expansion residential revenues grew to $75 million

*Comparisons are Year Ended December 31, 2023 to Year Ended December 31, 2022

"In 2023, the TDS Family of Companies continued to make substantial investments in our businesses in order to improve our competitiveness," said LeRoy T. Carlson, Jr., TDS President and CEO. "UScellular made significant progress on its 5G network, while TDS Telecom ended the year with all of its fiber expansion communities initially launched.

"UScellular increased Postpaid ARPU 2% and drove strong results in fixed wireless in 2023. It was a challenging year from a mobility subscriber standpoint as the environment remains competitive. UScellular's goal was to balance subscriber objectives with financial goals, which led to increased profitability year over year.

"In 2024, UScellular plans to continue focusing on improving customer results, growth in fixed wireless and towers, and maintaining financial discipline as we advance the network through mid-band deployment.

"In 2023, TDS Telecom delivered 217,000 marketable fiber service addresses, up 24% from the initial 2023 target. Residential broadband connections increased 6%, while residential revenue per connection grew 4%. With all markets launched, the team plans to focus on increasing broadband penetration and revenues across the fiber footprint. We expect this to result in improved profitability in 2024."

Recent Development: On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular. The process is still ongoing.

2024 Estimated Results

TDS' current estimates of full-year 2024 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of February 16, 2024 and should not be assumed to be current as of any future date. TDS undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.





UScellular

2024 Estimated
Results


Actual Results for

the Year Ended

December 31, 2023

(Dollars in millions)




Service revenues

$2,950-$3,050


$3,044

Adjusted OIBDA1, 2

$750-$850


$818

Adjusted EBITDA1, 2

$920-$1,020


$986

Capital expenditures

$550-$650


$611





TDS Telecom

2024 Estimated
Results


Actual Results for
the Year Ended
December 31, 2023

(Dollars in millions)




Total operating revenues

$1,070-$1,100


$1,028

Adjusted OIBDA1

$310-$340


$279

Adjusted EBITDA1

$310-$340


$285

Capital expenditures

$310-$340


$577

The following tables reconcile EBITDA, Adjusted EBITDA, and Adjusted OIBDA to the corresponding GAAP measures, Net income (loss) or Income (loss) before income taxes. In providing 2024 estimated results, TDS has not completed the below reconciliation to Net income (loss) because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.


UScellular


TDS Telecom


2024 Estimated
Results2


Actual Results for

the Year Ended

December 31, 2023


2024 Estimated
Results2


Actual Results for

the Year Ended

December 31, 2023

(Dollars in millions)








Net income (loss) (GAAP)

N/A


$58


N/A


($483)

Add back:








Income tax expense

N/A


53


N/A


(26)

Income (loss) before income taxes (GAAP)

$40-$140


$111


$40-$70


($509)

Add back:








Interest expense

195


196


-


(8)

Depreciation, amortization and accretion expense

665


656


270


245

EBITDA (Non-GAAP)1

$900-$1,000


$963


$310-$340


($272)

Add back or deduct:








Expenses related to strategic alternatives review

-


8


-


-

Loss on impairment of goodwill

-


-


-


547

(Gain) loss on asset disposals, net

20


17


-


10

(Gain) loss on license sales and exchanges, net

-


(2)


-


-

Adjusted EBITDA (Non-GAAP)1

$920-$1,020


$986


$310-$340


$285

Deduct:








Equity in earnings of unconsolidated entities

160


158


-


-

Interest and dividend income

10


10


-


4

Other, net

-


-


-


2

Adjusted OIBDA (Non-GAAP)1

$750-$850


$818


$310-$340


$279


Numbers may not foot due to rounding.





1

EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS' operating results before significant recurring non-cash charges, nonrecurring expenses, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS' financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management's evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, gains and losses, and expenses related to the strategic alternatives review of UScellular while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income (loss) or Income (loss) before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for December 31, 2023, can be found on TDS' website at investors.tdsinc.com.


2

2024 Estimated Results do not reflect any anticipated costs, expenses or results of the strategic alternatives review referenced above.

Conference Call Information
TDS will hold a conference call on February 16, 2024 at 9:00 a.m. Central Time.

  • Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://events.q4inc.com/attendee/105947395
  • Access the call by phone at (888) 330-2384 (US/ Canada), passcode: 1328528

Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com.

About TDS
Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed 8,800 people as of December 31, 2023.

Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, 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 estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: whether any strategic alternatives for UScellular will be successfully identified or completed; whether any such strategic alternative will result in additional value for TDS or its shareholders and whether the process will have an adverse impact on TDS' businesses; intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the ability to attract people of outstanding talent throughout all levels of the organization; TDS' smaller scale relative to larger competitors; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS' businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which TDS does business; uncertainties in TDS' future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and UScellular indebtedness or comply with the terms of debt covenants; the effect on TDS' business if the collateral securing its secured term loan is foreclosed upon; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment; pending and future litigation; cyber-attacks or other breaches of network or information technology security; control by the TDS Voting Trust; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; and the impact, duration and severity of public health emergencies. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under "Risk Factors" in the most recent filing of TDS' Form 10-K.

For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
UScellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation

Summary Operating Data (Unaudited)


As of or for the Quarter Ended

12/31/2023


9/30/2023


6/30/2023


3/31/2023


12/31/2022

Retail Connections










Postpaid










Total at end of period

4,106,000


4,159,000


4,194,000


4,223,000


4,247,000

Gross additions

129,000


128,000


125,000


137,000


154,000

Handsets

80,000


84,000


83,000


93,000


105,000

Connected devices

49,000


44,000


42,000


44,000


49,000

Net additions (losses)

(50,000)


(35,000)


(28,000)


(24,000)


(17,000)

Handsets

(53,000)


(38,000)


(29,000)


(25,000)


(20,000)

Connected devices

3,000


3,000


1,000


1,000


3,000

ARPU1

$ 51.61


$ 51.11


$ 50.64


$ 50.66


$ 50.60

ARPA2

$ 131.63


$ 130.91


$ 130.19


$ 130.77


$ 130.97

Handset upgrade rate3

5.8 %


4.5 %


4.8 %


4.9 %


7.0 %

Churn rate4

1.44 %


1.30 %


1.21 %


1.27 %


1.35 %

Handsets

1.22 %


1.11 %


1.01 %


1.06 %


1.12 %

Connected devices

3.03 %


2.64 %


2.65 %


2.78 %


2.99 %

Prepaid










Total at end of period

451,000


462,000


462,000


470,000


493,000

Gross additions

43,000


52,000


50,000


43,000


61,000

Net additions (losses)

(11,000)


-


(8,000)


(23,000)


-

ARPU1, 5

$ 32.32


$ 33.44


$ 33.86


$ 33.19


$ 33.34

Churn rate4

3.87 %


3.68 %


4.18 %


4.63 %


4.11 %

Market penetration at end of period










Consolidated operating population

32,350,000


32,350,000


32,350,000


32,350,000


32,370,000

Consolidated operating penetration6

15 %


15 %


15 %


15 %


15 %

Capital expenditures (millions)

$ 148


$ 111


$ 143


$ 208


$ 176

Total cell sites in service

7,000


6,973


6,952


6,950


6,945

Owned towers

4,373


4,356


4,341


4,338


4,336




Due to rounding, the sum of quarterly results may not equal the total for the year.



1

Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below:

  • Postpaid ARPU consists of total postpaid service revenues and postpaid connections.
  • Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

2

Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

3

Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections.

4

Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.

5

Fourth quarter 2023 Prepaid ARPU excludes a $6 million reduction of prepaid revenue related to an adjustment to correct a prior period error recorded in the fourth quarter of 2023.

6

Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets.

TDS Telecom

Summary Operating Data (Unaudited)


As of or for the Quarter Ended

12/31/2023


9/30/2023


6/30/2023


3/31/2023


12/31/2022

Residential connections










Broadband










Wireline, Incumbent

244,800


248,800


249,200


247,900


249,100

Wireline, Expansion

92,200


79,400


70,200


62,800


56,100

Cable

202,900


204,400


204,200


204,700


204,800

Total Broadband

539,800


532,600


523,600


515,400


510,000

Video

131,500


132,400


132,300


132,600


135,300

Voice

281,600


284,000


288,200


289,200


291,600

Total Residential connections

952,900


949,000


944,100


937,200


936,900

Commercial connections

210,200


217,400


223,300


229,800


236,000

Total connections

1,163,100


1,166,400


1,167,400


1,167,000


1,173,000











Residential revenue per connection1

$ 62.74


$ 62.15


$ 61.97


$ 60.24


$ 59.91











Capital expenditures (millions)

$ 143


$ 172


$ 132


$ 130


$ 165



Numbers may not foot due to rounding.

1

Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.

Telephone and Data Systems, Inc.

Consolidated Statement of Operations Highlights

(Unaudited)



Three Months Ended

December 31,


Year Ended

December 31,


2023


2022


2023

vs. 2022


2023


2022


2023

vs. 2022

(Dollars and shares in millions, except per share amounts)












Operating revenues












UScellular

$ 1,000


$ 1,048


(5) %


$ 3,906


$ 4,169


(6) %

TDS Telecom

261


257


2 %


1,028


1,020


1 %

All Other1

52


52


(1) %


226


224


1 %


1,313


1,357


(3) %


5,160


5,413


(5) %

Operating expenses












UScellular












Expenses excluding depreciation, amortization and accretion

812


885


(8) %


3,096


3,379


(8) %

Depreciation, amortization and accretion

166


179


(8) %


656


700


(6) %

Loss on impairment of licenses

-


-


-


-


3


N/M

(Gain) loss on asset disposals, net

3


11


(67) %


17


19


(9) %

(Gain) loss on sale of business and other exit costs, net

-


-


N/M


-


(1)


N/M

(Gain) loss on license sales and exchanges, net

(2)


-


N/M


(2)


-


N/M


979


1,075


(9) %


3,767


4,100


(8) %

TDS Telecom












Expenses excluding depreciation, amortization and accretion

186


192


(4) %


749


732


2 %

Depreciation, amortization and accretion

65


56


17 %


245


215


14 %

Loss on impairment of goodwill

547


-


N/M


547


-


N/M

(Gain) loss on asset disposals, net

1


3


(59) %


10


7


31 %


799


252


N/M


1,551


954


63 %

All Other1












Expenses excluding depreciation and amortization

56


52


8 %


242


222


9 %

Depreciation and amortization

3


3


(6) %


14


14


(2) %

(Gain) loss on asset disposals, net

-


-


N/M


-


1


(95) %


59


56


7 %


256


237


8 %

Total operating expenses

1,837


1,383


33 %


5,574


5,291


5 %

Operating income (loss)












UScellular

21


(27)


N/M


139


69


N/M

TDS Telecom

(538)


5


N/M


(523)


66


N/M

All Other1

(7)


(4)


N/M


(30)


(13)


N/M


(524)


(26)


N/M


(414)


122


N/M

Investment and other income (expense)












Equity in earnings of unconsolidated entities

37


36


4 %


159


159


-

Interest and dividend income

4


7


(41) %


20


17


19 %

Interest expense

(66)


(55)


(20) %


(244)


(174)


(40) %

Other, net

1


-


N/M


2


1


94 %

Total investment and other income (expense)

(24)


(12)


(96) %


(63)


3


N/M

Income (loss) before income taxes

(548)


(38)


N/M


(477)


125


N/M

Income tax expense (benefit)

(45)


(8)


N/M


10


53


(81) %

Net income (loss)

(503)


(30)


N/M


(487)


72


N/M

Less: Net income (loss) attributable to noncontrolling interests, net of tax

3


(4)


N/M


13


10


28 %

Net income (loss) attributable to TDS shareholders

(506)


(26)


N/M


(500)


62


N/M

TDS Preferred Share dividends

17


17


-


69


69


-

Net loss attributable to TDS common shareholders

$ (523)


$ (43)


N/M


$ (569)


$ (7)


N/M













Basic weighted average shares outstanding

113


113


-


113


114


(1) %

Basic earnings (loss) per share attributable to TDS common shareholders

$ (4.64)


$ (0.38)


N/M


$ (5.05)


$ (0.07)


N/M













Diluted weighted average shares outstanding

113


113


-


113


114


(1) %

Diluted earnings (loss) per share attributable to TDS common shareholders

$ (4.64)


$ (0.38)


N/M


$ (5.06)


$ (0.07)


N/M

N/M - Percentage change not meaningful.












Numbers may not foot due to rounding.














1

Consists of TDS corporate, intercompany eliminations and other business operations not included in UScellular and TDS Telecom segments.

Telephone and Data Systems, Inc.

Consolidated Statement of Cash Flows

(Unaudited)


Year Ended December 31,

2023


2022

(Dollars in millions)




Cash flows from operating activities




Net income (loss)

$ (487)


$ 72

Add (deduct) adjustments to reconcile net income (loss) to net cash flows from operating activities




Depreciation, amortization and accretion

915


929

Bad debts expense

111


138

Stock-based compensation expense

41


42

Deferred income taxes, net

8


47

Equity in earnings of unconsolidated entities

(159)


(159)

Distributions from unconsolidated entities

150


145

Loss on impairment of intangible assets

547


3

(Gain) loss on asset disposals, net

27


27

(Gain) loss on sale of business and other exit costs, net

-


(1)

(Gain) loss on license sales and exchanges, net

(2)


-

Other operating activities

8


10

Changes in assets and liabilities from operations




Accounts receivable

2


(69)

Equipment installment plans receivable

(20)


(199)

Inventory

61


(90)

Accounts payable

(99)


32

Customer deposits and deferred revenues

(8)


48

Accrued taxes

50


127

Other assets and liabilities

(3)


53

Net cash provided by operating activities

1,142


1,155





Cash flows from investing activities




Cash paid for additions to property, plant and equipment

(1,211)


(1,161)

Cash paid for licenses and other intangible assets

(130)


(614)

Other investing activities

14


(8)

Net cash used in investing activities

(1,327)


(1,783)





Cash flows from financing activities




Issuance of long-term debt

1,081


1,154

Repayment of long-term debt

(723)


(332)

Issuance of short-term debt

-


110

Repayment of short-term debt

(60)


(50)

TDS Common Shares reissued for benefit plans, net of tax payments

(3)


(4)

UScellular Common Shares reissued for benefit plans, net of tax payments

(6)


(5)

Repurchase of TDS Common Shares

(6)


(40)

Repurchase of UScellular Common Shares

-


(43)

Dividends paid to TDS shareholders

(153)


(151)

Payment of debt and equity issuance costs

(5)


(2)

Distributions to noncontrolling interests

(3)


(3)

Cash paid for software license agreements

(66)


(23)

Other financing activities

-


2

Net cash provided by financing activities

56


613





Net decrease in cash, cash equivalents and restricted cash

(129)


(15)





Cash, cash equivalents and restricted cash




Beginning of period

399


414

End of period

$ 270


$ 399

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)

ASSETS


December 31,

2023


2022

(Dollars in millions)




Current assets




Cash and cash equivalents

$ 236


$ 360

Accounts receivable, net

1,074


1,181

Inventory, net

208


268

Prepaid expenses

86


102

Income taxes receivable

4


59

Other current assets

52


58

Total current assets

1,660


2,028





Assets held for sale

15


26





Licenses

4,702


4,699





Goodwill

-


547





Other intangible assets, net

183


204





Investments in unconsolidated entities

505


495





Property, plant andequipment, net

5,062


4,760





Operating lease right-of-use assets

987


995





Other assets and deferred charges

807


796





Total assets

$ 13,921


$ 14,550

Telephone and Data Systems, Inc.

Consolidated Balance Sheet Highlights

(Unaudited)

LIABILITIES AND EQUITY


December 31,

2023


2022

(Dollars in millions, except per share amounts)




Current liabilities




Current portion of long-term debt

$ 26


$ 19

Accounts payable

360


506

Customer deposits and deferred revenues

277


285

Accrued interest

12


12

Accrued taxes

43


46

Accrued compensation

149


144

Short-term operating lease liabilities

147


146

Other current liabilities

170


356

Total current liabilities

1,184


1,514





Deferred liabilities and credits




Deferred income tax liability, net

975


969

Long-term operating lease liabilities

890


908

Other deferred liabilities and credits

784


813





Long-term debt, net

4,080


3,731





Noncontrolling interests with redemption features

12


12





Equity




TDS shareholders' equity




Series A Common and Common Shares, par value $0.01 per share

1


1

Capital in excess of par value

2,558


2,551

Preferred Shares, par value $0.01 per share

1,074


1,074

Treasury shares, at cost

(465)


(481)

Accumulated other comprehensive income

11


5

Retained earnings

2,023


2,699

Total TDS shareholders' equity

5,202


5,849





Noncontrolling interests

794


754





Total equity

5,996


6,603





Total liabilities and equity

$ 13,921


$ 14,550

Balance Sheet Highlights

(Unaudited)



December 31, 2023


UScellular


TDS

Telecom


TDS Corporate

& Other


Intercompany

Eliminations


TDS

Consolidated

(Dollars in millions)










Cash and cash equivalents

$ 150


$ 37


$ 90


$ (41)


$ 236











Licenses and other intangible assets

$ 4,693


$ 187


$ 5


$ -


$ 4,885

Investment in unconsolidated entities

461


4


48


(8)


505


$ 5,154


$ 191


$ 53


$ (8)


$ 5,390











Property, plant and equipment, net

$ 2,576


$ 2,402


$ 84


$ -


$ 5,062











Long-term debt, net:










Current portion

$ 20


$ -


$ 6


$ -


$ 26

Non-current portion

3,044


3


1,033


-


4,080


$ 3,064


$ 3


$ 1,039


$ -


$ 4,106

TDS Telecom Highlights

(Unaudited)



Three Months Ended

December 31,


Year Ended

December 31,


2023


2022


2023 vs. 2022


2023


2022


2023 vs. 2022

(Dollars in millions)












Operating revenues












Residential












Wireline, Incumbent

$ 88


$ 87


1 %


$ 352


$ 350


1 %

Wireline, Expansion

23


14


61 %


75


49


53 %

Cable

69


67


2 %


273


270


1 %

Total residential

179


168


6 %


700


669


5 %

Commercial

37


43


(13) %


155


173


(10) %

Wholesale

45


45


(1) %


172


177


(3) %

Total service revenues

261


256


2 %


1,027


1,019


1 %

Equipment revenues

-


-


(22) %


1


1


(12) %

Total operating revenues

261


257


2 %


1,028


1,020


1 %













Cost of services

104


110


(5) %


423


418


1 %

Cost of equipment and products

-


-


N/M


-


1


(26) %

Selling, general and administrative expenses

82


83


(1) %


326


313


4 %

Depreciation, amortization and accretion

65


56


17 %


245


215


14 %

Loss on impairment of goodwill

547


-


N/M


547


-


N/M

(Gain) loss on asset disposals, net

1


3


(59) %


10


7


31 %

Total operating expenses

799


252


N/M


1,551


954


63 %













Operating income (loss)

$ (538)


$ 5


N/M


$ (523)


$ 66


N/M


N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations


Free Cash Flow



Three Months Ended

December 31,


Year Ended

December 31,

TDS Consolidated

2023


2022


2023


2022

(Dollars in millions)








Cash flows from operating activities (GAAP)

$ 218


$ 255


$ 1,142


$ 1,155

Cash paid for additions to property, plant and equipment

(304)


(367)


(1,211)


(1,161)

Cash paid for software license agreements

(37)


(18)


(66)


(23)

Free cash flow (Non-GAAP)1

$ (123)


$ (130)


$ (135)


$ (29)



Three Months Ended

December 31,


Year Ended

December 31,

UScellular

2023


2022


2023


2022

(Dollars in millions)








Cash flows from operating activities (GAAP)

$ 148


$ 180


$ 866


$ 832

Cash paid for additions to property, plant and equipment

(155)


(192)


(608)


(602)

Cash paid for software license agreements

(37)


(17)


(66)


(22)

Free cash flow (Non-GAAP)1

$ (44)


$ (29)


$ 192


$ 208



1

Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements.

EBITDA, Adjusted EBITDA and Adjusted OIBDA

The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income and Income before income taxes.



Year Ended December 31,

UScellular

2023


2022

(Dollars in millions)




Net income (GAAP)

$ 58


$ 35

Add back or deduct:




Income tax benefit

53


37

Income before income taxes (GAAP)

111


72

Add back:




Interest expense

196


163

Depreciation, amortization and accretion expense

656


700

EBITDA (Non-GAAP)

963


935

Add back or deduct:




Expenses related to strategic alternatives review

8


-

Loss on impairment of licenses

-


3

(Gain) loss on asset disposals, net

17


19

(Gain) loss on sale of business and other exit costs, net

-


(1)

(Gain) loss on license sales and exchanges, net

(2)


-

Adjusted EBITDA (Non-GAAP)

986


956

Deduct:




Equity in earnings of unconsolidated entities

158


158

Interest and dividend income

10


8

Adjusted OIBDA (Non-GAAP)

$ 818


$ 790

Net income excluding Goodwill impairment charge

The following non-GAAP financial measures present certain information in the table below excluding the effect of the goodwill impairment charge at TDS Telecom and related tax impacts. The goodwill impairment charge, which occurred in the fourth quarter of 2023, is being excluded in this presentation, as it is not related to the current operations of TDS. TDS believes these measures may be useful to investors and other users of its financial information when comparing the current period financial results with periods that were not impacted by such a charge.


Three Months Ended

December 31,


Year Ended

December 31,


2023


2022


2023


2022

(Dollars in millions)








Net loss attributable to TDS common shareholders (GAAP)

$ (523)


$ (43)


$ (569)


$ (7)

Adjustments:








Loss on impairment of goodwill

547


-


547


-

Deferred tax benefit on the tax-amortizable portion of the impaired Goodwill

(36)


-


(36)


-

Subtotal of Non-GAAP adjustments

511


-


511


-

Net loss attributable to TDS common shareholders excluding goodwill impairment
charge (Non-GAAP)

(12)


(43)


(58)


(7)

Noncontrolling interest adjustment to compute earnings (loss)

-


-


(1)


(1)

Net loss attributable to TDS common shareholders excluding goodwill impairment
charge used in diluted earnings (loss) per share (Non-GAAP)

$ (12)


$ (43)


$ (59)


$ (8)









Diluted weighted average shares outstanding

113


113


113


114









Diluted earnings (loss) per share attributable to TDS common shareholders (GAAP)

$ (4.64)


$ (0.38)


$ (5.06)


$ (0.07)

Adjustments:








Loss on impairment of goodwill

4.85


-


4.85


-

Deferred tax benefit on the tax-amortizable portion of the impaired Goodwill

(0.32)


-


(0.32)


-

Diluted earnings (loss) per share attributable to TDS common shareholders excluding
impairment of goodwill charge (Non-GAAP)

$ (0.11)


$ (0.38)


$ (0.53)


$ (0.07)

SOURCE Telephone and Data Systems, Inc.

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