TDS reports second quarter 2024 results

Rhea-AI Summary

TDS reported Q2 2024 results with total operating revenues of $1,238 million, down from $1,267 million in Q2 2023. Net loss attributable to TDS common shareholders improved to $(14) million from $(19) million year-over-year. Key highlights include:

- UScellular announced sale of wireless operations and select spectrum assets to T-Mobile
- UScellular's postpaid ARPU grew 2% while service revenues decreased 2%
- TDS Telecom grew total service address footprint by 10% year-over-year
- TDS Telecom's operating revenues increased 4% with 7% residential revenue growth
- TDS updated 2024 guidance for TDS Telecom, raising Adjusted OIBDA and Adjusted EBITDA estimates to $330-$360 million

Positive

• UScellular's postpaid ARPU grew 2% year-over-year
• TDS Telecom's total service address footprint grew 10% year-over-year
• TDS Telecom's operating revenues increased 4% with 7% residential revenue growth
• TDS Telecom raised 2024 Adjusted OIBDA and Adjusted EBITDA guidance to $330-$360 million
• UScellular's fixed wireless customers grew 40% to 134,000

Negative

• Total operating revenues decreased to $1,238 million from $1,267 million year-over-year
• Net loss of $14 million for Q2 2024, though improved from $19 million loss in Q2 2023
• UScellular's service revenues decreased 2% year-over-year
• UScellular experienced postpaid net losses, though improved sequentially

Insights

Financial Analyst

TDS's Q2 2024 results present a mixed picture with some positive developments amid ongoing challenges. The company reported total operating revenues of $1,238 million, down from $1,267 million in the same period last year. However, the net loss attributable to TDS common shareholders narrowed to $14 million ($0.13 per share) from $19 million ($0.17 per share) year-over-year.

Key points to consider:

• UScellular's sale of wireless operations and select spectrum assets to T-Mobile, expected to close in mid-2025, could significantly reshape TDS's business model.
• TDS Telecom showed promising growth, with total operating revenues up 4% and residential revenue growth of 7%.
• The company's focus on fiber expansion is paying off, with a 10% year-over-year increase in service address footprint and 5% growth in residential broadband connections.
• UScellular faced challenges in postpaid subscribers but saw growth in prepaid and fixed wireless segments.

The company's strategic shift towards fiber and the potential monetization of UScellular's remaining assets could provide new growth avenues. However, investors should closely monitor the execution of these strategies and their impact on long-term profitability.

Telecom Industry Expert

TDS's Q2 results reflect the ongoing transformation in the telecom industry. The company's strategic decisions, particularly the sale of UScellular's wireless operations to T-Mobile, align with broader industry trends of consolidation and focus on core competencies.

Notable observations:

• UScellular's retention of its tower assets and significant spectrum holdings positions it well in the evolving 5G landscape.
• The 40% growth in fixed wireless customers to 134,000 underscores the increasing importance of this technology in bridging the digital divide.
• TDS Telecom's fiber expansion strategy, aiming for 1.2 million marketable fiber service addresses, reflects the industry's shift towards high-speed, reliable broadband infrastructure.
• The 5% growth in residential ARPU due to price increases suggests a focus on value over volume, a common strategy in maturing markets.

While the company faces challenges in the competitive wireless market, its pivot towards fiber and fixed wireless could provide more stable, long-term growth opportunities. The success of this strategy will depend on execution and the ability to capitalize on the increasing demand for high-speed connectivity in both urban and rural areas.

Market Research Analyst

TDS's Q2 2024 results and strategic moves offer insights into changing consumer preferences and market dynamics in the telecom sector. Key trends to note:

• The growth in fixed wireless customers (40% increase) indicates a rising demand for alternative broadband solutions, particularly in underserved areas.
• The 5% increase in residential broadband connections, coupled with a 5% growth in ARPU, suggests consumers are willing to pay more for higher-quality internet services.
• The decline in postpaid wireless subscribers, contrasted with growth in prepaid, may reflect shifting consumer preferences towards more flexible, cost-effective mobile plans.
• The focus on fiber expansion aligns with increasing consumer demand for high-speed, reliable internet for remote work, streaming and other bandwidth-intensive activities.

TDS's strategic pivot, including the sale of UScellular's wireless operations, appears to be a response to these market trends. The company is positioning itself to capitalize on the growing demand for advanced broadband services while potentially reducing exposure to the highly competitive wireless market. This strategy could resonate well with consumers seeking robust home internet solutions, but its success will depend on effective execution and the ability to differentiate in an increasingly crowded broadband market.

CHICAGO, Aug. 2, 2024 /PRNewswire/ --

As previously announced, TDS will hold a teleconference on August 2, 2024, at 9:00 a.m. CDT. 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 $1,238 million for the second quarter of 2024, versus $1,267 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(14) million and $(0.13), respectively, for the second quarter of 2024 compared to $(19) million and $(0.17), respectively, in the same period one year ago.

2Q 2024 Highlights*

UScellular

• Announced sale of wireless operations and select spectrum assets
• Now reporting Wireless and Towers segments
  • Wireless
    • Sequential improvement in postpaid gross additions and postpaid net losses
    • Postpaid ARPU grew 2%; service revenues decreased 2%
  • Towers
    • Third-party tower revenues increased 1%
• Fixed wireless customers grew 40% to 134,000
• Strong cost management led to increased operating income, net income and Adjusted OIBDA

TDS Telecom

• Making progress on goal to deliver 125,000 fiber service addresses in 2024
  • Grew total year over year service address footprint 10%
  • Delivered 27,000 fiber services addresses in Q2
• Operating revenues grew 4%; residential revenue growth of 7%
  • Residential broadband connections grew 5% due to broadband investments
  • Residential ARPU grew 5% due to price increases
• Strong net income and Adjusted EBITDA growth
  • Good expense discipline

* Comparisons are 2Q'23 to 2Q'24 unless otherwise noted

"TDS is working to optimize our portfolio of businesses to position the Company for future success," said LeRoy T. Carlson, Jr., TDS President and CEO. "During the second quarter, we announced transactions regarding both UScellular and OneNeck IT Solutions that we anticipate will accelerate achievement of our strategic objectives. We remain focused on effectively operating all our businesses and serving our customers with high-quality communications services, while we work towards successfully closing these transactions and enhancing the performance of our ongoing businesses.

"In Q2, UScellular remained focused on balancing subscriber growth with financial discipline and reported solid ARPU growth, good expense discipline, and improved profitability - all combining to generate higher free cash flow. While postpaid handset subscribers declined in the quarter, UScellular saw a return to subscriber growth in prepaid and steady growth in fixed wireless.

"TDS Telecom reported another quarter of notable growth in revenue and profitability as a result of its broadband investments. TDS Telecom added an additional 27,000 marketable fiber service addresses and is making good progress on its long-term goal of 1.2 million marketable fiber service addresses."  

Announced Transaction and Exploration of Strategic Alternatives for UScellular
On May 28, 2024, Telephone and Data Systems, Inc. (TDS) and UScellular announced that they have entered into a definitive agreement to sell UScellular's wireless operations and select spectrum assets to T-Mobile. The transaction is expected to close in mid-2025, subject to regulatory approvals and the satisfaction of customary closing conditions.

UScellular retains its nearly 4,400 owned towers, its equity method investments, and approximately 70% of its spectrum assets. The strategic alternatives review process is ongoing as UScellular seeks to opportunistically monetize its spectrum assets that are not subject to the T-Mobile transaction.  

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 August 2, 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.

2024 Estimated Results
UScellular	Previous	Current
(Dollars in millions)
Service revenues	$2,950-$3,050	Unchanged
Adjusted OIBDA1, 2	$750-$850	Unchanged
Adjusted EBITDA1, 2	$920-$1,020	Unchanged
Capital expenditures	$550-$650	Unchanged
TDS Telecom	Previous	Current
(Dollars in millions)
Total operating revenues	$1,070-$1,100	$1,050-$1,080
Adjusted OIBDA1	$310-$340	$330-$360
Adjusted EBITDA1	$310-$340	$330-$360
Capital expenditures	$310-$340	Unchanged

 

The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2024 estimated results, TDS has not completed the below reconciliation to Net income 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.

	2024 Estimated Results2
	UScellular		TDS Telecom
(Dollars in millions)
Net income (GAAP)	N/A		N/A
Add back:
Income tax expense	N/A		N/A
Income before income taxes (GAAP)	$60-$160		$60-$90
Add back:
Interest expense	185		—
Depreciation, amortization and accretion expense	660		270
EBITDA (Non-GAAP)1	$905-$1,005		$330-$360
Add back or deduct:
(Gain) loss on asset disposals, net	15		—
Adjusted EBITDA (Non-GAAP)1	$920-$1,020		$330-$360
Deduct:
Equity in earnings of unconsolidated entities	155		—
Interest and dividend income	15		—
Adjusted OIBDA (Non-GAAP)1	$750-$850		$330-$360

 

	Actual Results
	Six Months Ended June 30, 2024				Year Ended December 31, 2023
	UScellular		TDS Telecom		UScellular		TDS Telecom
(Dollars in millions)
Net income (loss) (GAAP)	$             42		$             42		$             58		$         (483)
Add back:
Income tax expense (benefit)	41		10		53		(26)
Income (loss) before income taxes (GAAP)	$             83		$             52		$           111		$         (509)
Add back:
Interest expense	91		(2)		196		(8)
Depreciation, amortization and accretion expense	329		131		656		245
EBITDA (Non-GAAP)1	$           503		$           181		$           963		$         (272)
Add back or deduct:
Expenses related to strategic alternatives review	21		—		8		—
Loss on impairment of goodwill	—		—		—		547
(Gain) loss on asset disposals, net	11		6		17		10
(Gain) loss on license sales and exchanges, net	7		—		(2)		—
Adjusted EBITDA (Non-GAAP)1	$           542		$           187		$           986		$           285
Deduct:
Equity in earnings of unconsolidated entities	80		—		158		—
Interest and dividend income	6		2		10		4
Other, net	—		2		—		2
Adjusted OIBDA (Non-GAAP)1	$           456		$           183		$           818		$           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 or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for June 30, 2024, 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 August 2, 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/870908711
• Access the call by phone at (888)330-2384, conference ID: 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) 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 approximately 8,500 associates as of June 30, 2024.

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 the announced transaction whereby UScellular has agreed to sell its wireless operations and selected spectrum assets to T-Mobile will be successfully completed or whether UScellular will be able to find buyers at mutually agreeable prices for its spectrum assets that are not subject to the agreement with T-Mobile; 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; strategic decisions regarding the tower business; 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, including changes in regulatory support received and the ability to pass through certain regulatory fees to customers; 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, as updated by any TDS Form 10-Q filed subsequent to such 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	6/30/2024		3/31/2024		12/31/2023		9/30/2023		6/30/2023
Retail Connections
Postpaid
Total at end of period1	4,027,000		4,051,000		4,106,000		4,159,000		4,194,000
Gross additions	117,000		106,000		129,000		128,000		125,000
Handsets	73,000		63,000		80,000		84,000		83,000
Connected devices	44,000		43,000		49,000		44,000		42,000
Net additions (losses)1	(24,000)		(44,000)		(50,000)		(35,000)		(28,000)
Handsets	(29,000)		(47,000)		(53,000)		(38,000)		(29,000)
Connected devices	5,000		3,000		3,000		3,000		1,000
ARPU2	$        51.45		$        51.96		$        51.61		$        51.11		$        50.64
ARPA3	$      130.41		$      132.00		$      131.63		$      130.91		$      130.19
Handset upgrade rate4	4.1 %		4.5 %		5.8 %		4.5 %		4.8 %
Churn rate5	1.16 %		1.22 %		1.44 %		1.30 %		1.21 %
Handsets	0.97 %		1.03 %		1.22 %		1.11 %		1.01 %
Connected devices	2.47 %		2.52 %		3.03 %		2.64 %		2.65 %
Prepaid
Total at end of period1	439,000		436,000		451,000		462,000		462,000
Gross additions	50,000		41,000		43,000		52,000		50,000
Net additions (losses)1	3,000		(13,000)		(11,000)		—		(8,000)
ARPU2, 6	$        32.37		$        32.25		$        32.32		$        33.44		$        33.86
Churn rate5	3.60 %		4.06 %		3.87 %		3.68 %		4.18 %
Market penetration at end of period
Consolidated operating population	32,550,000		32,550,000		32,350,000		32,350,000		32,350,000
Consolidated operating penetration7	15 %		14 %		15 %		15 %		15 %
Capital expenditures (millions)	$           165		$           131		$           148		$           111		$           143
Total cell sites in service	6,990		6,995		7,000		6,973		6,952
Owned towers	4,388		4,382		4,373		4,356		4,341

1	First quarter 2024 connections were adjusted to remove subscribers that could no longer access the UScellular network due to the CDMA shutdown. This resulted in 11,000 and 2,000 subscribers removed from the postpaid and prepaid base, respectively, that are not included in Net additions (losses) for the quarter.
2	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.
3	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.
4	Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections.
5	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.
6	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.
7	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	6/30/2024		3/31/2024		12/31/2023		9/30/2023		6/30/2023
Residential connections
Broadband
Incumbent	243,700		245,100		244,800		248,800		249,200
Expansion	107,800		100,400		92,200		79,400		70,200
Cable	198,500		202,400		202,900		204,400		204,200
Total Broadband1	550,000		547,900		539,800		532,600		523,600
Video	124,800		128,800		131,500		132,400		132,300
Voice	275,600		279,400		281,600		284,000		288,200
Total Residential connections	950,400		956,100		952,900		949,000		944,100
Commercial connections	201,500		206,200		210,200		217,400		223,300
Total connections	1,152,000		1,162,200		1,163,100		1,166,400		1,167,400
Residential revenue per connection2	$           65.26		$           64.58		$           62.74		$           62.15		$           61.97
Capital expenditures (millions)	$                 78		$                 87		$               143		$               172		$               132

Numbers may not foot due to rounding.
1	Total residential broadband connections increased by 8,100 during the three months ended March 31, 2024, due primarily to net additions of 6,400 as well as certain other adjustments.
2	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 June 30,						Six Months Ended June 30,
	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
(Dollars and shares in millions, except per share amounts)
Operating revenues
UScellular	$      927		$    957		(3) %		$   1,877		$ 1,942		(3) %
TDS Telecom	267		257		4 %		534		510		5 %
All Other1	44		53		(19) %		89		118		(24) %
	1,238		1,267		(2) %		2,500		2,570		(3) %
Operating expenses
UScellular
Expenses excluding depreciation, amortization and accretion	713		759		(6) %		1,442		1,538		(6) %
Depreciation, amortization and accretion	165		161		2 %		329		330		—
(Gain) loss on asset disposals, net	5		3		49 %		11		13		(19) %
(Gain) loss on license sales and exchanges, net	8		—		N/M		7		—		N/M
	891		923		(3) %		1,789		1,881		(5) %
TDS Telecom
Expenses excluding depreciation, amortization and accretion	178		189		(6) %		351		374		(6) %
Depreciation, amortization and accretion	67		60		11 %		131		119		10 %
(Gain) loss on asset disposals, net	4		2		N/M		6		3		N/M
	248		251		(1) %		488		496		(1) %
All Other1
Expenses excluding depreciation and amortization	58		56		—		111		124		(11) %
Depreciation and amortization	1		4		(34) %		7		7		(24) %
(Gain) loss on asset disposals, net	—		—		(95) %		(1)		—		N/M
	60		60		(2) %		117		131		(11) %
Total operating expenses	1,199		1,234		(3) %		2,394		2,508		(5) %
Operating income (loss)
UScellular	36		34		6 %		88		61		44 %
TDS Telecom	19		7		N/M		46		15		N/M
All Other1	(16)		(8)		N/M		(28)		(14)		N/M
	39		33		17 %		106		62		72 %
Investment and other income (expense)
Equity in earnings of unconsolidated entities	39		38		3 %		82		82		—
Interest and dividend income	7		6		28 %		12		11		13 %
Interest expense	(73)		(62)		(18) %		(131)		(116)		(14) %
Other, net	1		—		N/M		2		1		N/M
Total investment and other expense	(26)		(18)		(42) %		(35)		(22)		(62) %
Income before income taxes	13		15		(13) %		71		40		77 %
Income tax expense	6		15		(57) %		26		28		(8) %
Net income	7		—		N/M		45		12		N/M
Less: Net income attributable to noncontrolling interests, net of tax	4		2		N/M		13		6		N/M
Net income (loss) attributable to TDS shareholders	3		(2)		N/M		32		6		N/M
TDS Preferred Share dividends	17		17		—		35		35		—
Net income (loss) attributable to TDS common shareholders	$      (14)		$    (19)		24 %		$        (3)		$    (29)		91 %
Basic weighted average shares outstanding	114		113		1 %		113		113		1 %
Basic earnings (loss) per share attributable to TDS common shareholders	$   (0.13)		$ (0.17)		25 %		$   (0.02)		$ (0.25)		91 %
Diluted weighted average shares outstanding	114		113		1 %		113		113		1 %
Diluted earnings (loss) per share attributable to TDS common shareholders	$   (0.13)		$ (0.17)		23 %		$   (0.03)		$ (0.25)		89 %

N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
1	Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.

 

Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
	Six Months Ended June 30,
	2024		2023
(Dollars in millions)
Cash flows from operating activities
Net income	$                 45		$                 12
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion	467		456
Bad debts expense	51		53
Stock-based compensation expense	29		14
Deferred income taxes, net	16		22
Equity in earnings of unconsolidated entities	(82)		(82)
Distributions from unconsolidated entities	80		78
(Gain) loss on asset disposals, net	16		16
(Gain) loss on license sales and exchanges, net	7		—
Other operating activities	5		4
Changes in assets and liabilities from operations
Accounts receivable	6		19
Equipment installment plans receivable	5		7
Inventory	54		52
Accounts payable	(14)		(124)
Customer deposits and deferred revenues	7		(9)
Accrued taxes	7		56
Accrued interest	5		(1)
Other assets and liabilities	(78)		(59)
Net cash provided by operating activities	626		514
Cash flows from investing activities
Cash paid for additions to property, plant and equipment	(451)		(629)
Cash paid for intangible assets	(15)		(8)
Other investing activities	1		8
Net cash used in investing activities	(465)		(629)
Cash flows from financing activities
Issuance of long-term debt	440		391
Repayment of long-term debt	(401)		(209)
Repayment of short-term debt	—		(60)
Tax payments for TDS stock-based compensation awards	(10)		(3)
Tax payments for UScellular stock-based compensation awards	(12)		(6)
Repurchase of TDS Common Shares	—		(6)
Dividends paid to TDS shareholders	(61)		(76)
Payment of debt issuance costs	(16)		—
Distributions to noncontrolling interests	(3)		(2)
Cash paid for software license agreements	(21)		(20)
Other financing activities	(1)		—
Net cash provided by (used in) financing activities	(85)		9
Net increase (decrease) in cash, cash equivalents and restricted cash	76		(106)
Cash, cash equivalents and restricted cash
Beginning of period	270		399
End of period	$               346		$               293

 

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
	June 30, 2024		December 31, 2023
(Dollars in millions)
Current assets
Cash and cash equivalents	$                                322		$                                236
Accounts receivable, net	1,037		1,074
Inventory, net	148		208
Prepaid expenses	88		86
Income taxes receivable	4		4
Other current assets	42		52
Total current assets	1,641		1,660
Assets held for sale	120		15
Licenses	4,724		4,702
Other intangible assets, net	173		183
Investments in unconsolidated entities	507		505
Property, plant and equipment, net	4,988		5,062
Operating lease right-of-use assets	966		987
Other assets and deferred charges	753		807
Total assets	$                          13,872		$                          13,921

 

Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
	June 30, 2024		December 31, 2023
(Dollars in millions, except per share amounts)
Current liabilities
Current portion of long-term debt	$                                  29		$                                  26
Accounts payable	327		360
Customer deposits and deferred revenues	282		277
Accrued interest	17		12
Accrued taxes	43		43
Accrued compensation	94		149
Short-term operating lease liabilities	145		147
Other current liabilities	149		170
Total current liabilities	1,086		1,184
Liabilities held for sale	34		—
Deferred liabilities and credits
Deferred income tax liability, net	992		975
Long-term operating lease liabilities	873		890
Other deferred liabilities and credits	786		784
Long-term debt, net	4,103		4,080
Noncontrolling interests with redemption features	16		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	2,542		2,558
Preferred Shares, par value $0.01 per share	1,074		1,074
Treasury shares, at cost	(437)		(465)
Accumulated other comprehensive income	11		11
Retained earnings	1,957		2,023
Total TDS shareholders' equity	5,148		5,202
Noncontrolling interests	834		794
Total equity	5,982		5,996
Total liabilities and equity	$                          13,872		$                          13,921

 

Balance Sheet Highlights
(Unaudited)
	June 30, 2024
			TDS		TDS Corporate		Intercompany		TDS
	UScellular		Telecom		& Other		Eliminations		Consolidated
(Dollars in millions)
Cash and cash equivalents	$                 195		$                    58		$                  125		$                  (56)		$                 322
Licenses and other intangible assets	$              4,715		$                  177		$                      5		$                    —		$              4,897
Investment in unconsolidated entities	461		4		49		(7)		507
	$              5,176		$                  181		$                    54		$                    (7)		$              5,404
Property, plant and equipment, net	$              2,540		$               2,429		$                    19		$                    —		$              4,988
Long-term debt, net:
Current portion	$                    20		$                    —		$                      9		$                    —		$                   29
Non-current portion	2,887		3		1,213		—		4,103
	$               2,907		$                      3		$               1,222		$                    —		$              4,132

 

United States Cellular Corporation Segment Results (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
UScellular	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
(Dollars in millions)
Operating Revenues
Wireless	$       902		$       932		(3) %		$   1,826		$   1,892		(3) %
Towers	58		57		3 %		116		113		3 %
Intra-company eliminations	(33)		(32)		(4) %		(65)		(63)		(3) %
Total operating revenues	927		957		(3) %		1,877		1,942		(3) %
Operating expenses
Wireless	885		916		(3) %		1,779		1,868		(5) %
Towers	39		39		1 %		75		76		(1) %
Intra-company eliminations	(33)		(32)		(4) %		(65)		(63)		(3) %
Total operating expenses	891		923		(3) %		1,789		1,881		(5) %
Operating income	$         36		$         34		6 %		$         88		$         61		44 %
Adjusted OIBDA (Non-GAAP)	$       227		$       198		14 %		$       456		$       404		13 %
Adjusted EBITDA (Non-GAAP)	$       268		$       239		13 %		$       542		$       491		10 %
Capital expenditures	$       165		$       143		15 %		$       295		$       351		(16) %

 

	Three Months Ended June 30,						Six Months Ended June 30,
UScellular Wireless	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
(Dollars in millions)
Retail service	$       666		$       686		(3) %		$   1,344		$   1,378		(2) %
Other	52		49		7 %		102		99		3 %
Service revenues	718		735		(2) %		1,446		1,477		(2) %
Equipment sales	184		197		(6) %		380		415		(9) %
Total operating revenues	902		932		(3) %		1,826		1,892		(3) %
System operations (excluding Depreciation, amortization and accretion reported below)	194		203		(4) %		390		398		(2) %
Cost of equipment sold	211		228		(7) %		427		480		(11) %
Selling, general and administrative	313		333		(6) %		637		670		(5) %
Depreciation, amortization and accretion	154		149		3 %		308		307		—
(Gain) loss on asset disposals, net	5		3		40 %		10		13		(23) %
(Gain) loss on license sales and exchanges, net	8		—		N/M		7		—		N/M
Total operating expenses	885		916		(3) %		1,779		1,868		(5) %
Operating income	$         17		$         16		5 %		$         47		$         24		97 %
Adjusted OIBDA (Non-GAAP)	$       196		$       168		16 %		$       392		$       344		14 %
Adjusted EBITDA (Non-GAAP)	$       196		$       168		16 %		$       392		$       344		14 %
Capital expenditures	$       160		$       140		13 %		$       286		$       346		(17) %

N/M - Percentage change not meaningful

 

United States Cellular Corporation Segment Results (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
UScellular Towers	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
(Dollars in millions)
Third-party revenues	$         25		$         25		1 %		$         51		$         50		2 %
Intra-company revenues	33		32		4 %		65		63		3 %
Total tower revenues	58		57		3 %		116		113		3 %
System operations (excluding Depreciation, amortization and accretion reported below)	19		19		(1) %		37		37		1 %
Selling, general and administrative	9		8		8 %		16		16		(3) %
Depreciation, amortization and accretion	11		12		(5) %		21		23		(5) %
(Gain) loss on asset disposals, net	—		—		N/M		1		—		N/M
Total operating expenses	39		39		1 %		75		76		(1) %
Operating income	$         19		$         18		7 %		$         41		$         37		10 %
Adjusted OIBDA (Non-GAAP)	$         31		$         30		6 %		$         64		$         60		7 %
Adjusted EBITDA (Non-GAAP)	$         31		$         30		6 %		$         64		$         60		7 %
Capital expenditures	$           5		$           3		N/M		$           9		$           5		89 %

N/M - Percentage change not meaningful

 

TDS Telecom Highlights
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
(Dollars in millions)
Operating revenues
Residential
Incumbent	$         90		$         89		1 %		$       180		$       175		3 %
Expansion	28		18		60 %		54		33		65 %
Cable	69		68		1 %		138		136		2 %
Total residential	186		175		7 %		372		344		8 %
Commercial	37		39		(6) %		74		80		(8) %
Wholesale	44		43		2 %		88		86		2 %
Total service revenues	267		257		4 %		534		510		5 %
Equipment revenues	—		—		19 %		—		—		(12) %
Total operating revenues	267		257		4 %		534		510		5 %
Cost of services	98		108		(9) %		196		212		(8) %
Cost of equipment and products	—		—		(28) %		—		—		(7) %
Selling, general and administrative expenses	80		81		(2) %		155		162		(4) %
Depreciation, amortization and accretion	67		60		11 %		131		119		10 %
(Gain) loss on asset disposals, net	4		2		N/M		6		3		N/M
Total operating expenses	248		251		(1) %		488		496		(1) %
Operating income	$         19		$           7		N/M		$         46		$         15		N/M

N/M - Percentage change not meaningful

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc. Free Cash Flow (Unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
TDS - CONSOLIDATED	2024		2023		2024		2023
(Dollars in millions)
Cash flows from operating activities (GAAP)	$                 403		$                 469		$                 626		$                 514
Cash paid for additions to property, plant and equipment	(216)		(298)		(451)		(629)
Cash paid for software license agreements	(11)		(12)		(21)		(20)
Free cash flow (Non-GAAP)1	$                 176		$                 159		$                 154		$               (135)
	Three Months Ended June 30,				Six Months Ended June 30,
UScellular	2024		2023		2024		2023
(Dollars in millions)
Cash flows from operating activities (GAAP)	$                 313		$                 349		$                 516		$                 390
Cash paid for additions to property, plant and equipment	(137)		(155)		(270)		(351)
Cash paid for software license agreements	(11)		(12)		(20)		(19)
Free cash flow (Non-GAAP)1	$                 165		$                 182		$                 226		$                   20

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.

 

Telephone and Data Systems, Inc. EBITDA, Adjusted EBITDA and Adjusted OIBDA (Unaudited)
The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income, Income before income taxes and/or Operating income. Income and expense items below Operating income are not provided at the individual segment level for UScellular Wireless and UScellular Towers; therefore, the reconciliations begin with EBITDA and the most comparable GAAP measure is Operating income rather than Net income at the segment level.
	Three Months Ended June 30,
TDS - CONSOLIDATED	2024		2023
(Dollars in millions)
Net income (GAAP)	$                    7		$                  —
Add back:
Income tax expense	6		15
Income before income taxes (GAAP)	13		15
Add back:
Interest expense	73		62
Depreciation, amortization and accretion	233		225
EBITDA (Non-GAAP)	319		302
Add back or deduct:
Expenses related to strategic alternatives review	21		—
(Gain) loss on asset disposals, net	9		5
(Gain) loss on license sales and exchanges, net	8		—
Adjusted EBITDA (Non-GAAP)	357		307
Deduct:
Equity in earnings of unconsolidated entities	39		38
Interest and dividend income	7		6
Other, net	1		—
Adjusted OIBDA (Non-GAAP)	$                310		$               263

 

EBITDA, Adjusted EBITDA and Adjusted OIBDA
	Three Months Ended June 30,
UScellular	2024		2023
(Dollars in millions)
Net income (GAAP)	$                 18		$                   5
Add back:
Income tax expense	14		19
Income before income taxes (GAAP)	32		24
Add back:
Interest expense	45		51
Depreciation, amortization and accretion	165		161
EBITDA (Non-GAAP)	242		236
Add back or deduct:
Expenses related to strategic alternatives review	13		—
(Gain) loss on asset disposals, net	5		3
(Gain) loss on license sales and exchanges, net	8		—
Adjusted EBITDA (Non-GAAP)	268		239
Deduct:
Equity in earnings of unconsolidated entities	38		38
Interest and dividend income	3		3
Adjusted OIBDA (Non-GAAP)	$               227		$               198

 

	Three Months Ended June 30,
UScellular Wireless	2024		2023
(Dollars in millions)
EBITDA (Non-GAAP)	$               171		$               165
Add back or deduct:
Expenses related to strategic alternatives review	12		—
(Gain) loss on asset disposals, net	5		3
(Gain) loss on license sales and exchanges, net	8		—
Adjusted EBITDA and Adjusted OIBDA (Non-GAAP)	196		168
Deduct:
Depreciation, amortization and accretion	154		149
Expenses related to strategic alternatives review	12		—
(Gain) loss on asset disposals, net	5		3
(Gain) loss on license sales and exchanges, net	8		—
Operating income (GAAP)	$                 17		$                 16

 

	Three Months Ended June 30,
UScellular Towers	2024		2023
(Dollars in millions)
EBITDA (Non-GAAP)	$                 30		$                 30
Add back or deduct:
Expenses related to strategic alternatives review	1		—
Adjusted EBITDA and Adjusted OIBDA (Non-GAAP)	31		30
Deduct:
Depreciation, amortization and accretion	11		12
Expenses related to strategic alternatives review	1		—
Operating income (GAAP)	$                 19		$                 18

 

EBITDA, Adjusted EBITDA and Adjusted OIBDA
	Three Months Ended June 30,
TDS TELECOM	2024		2023
(Dollars in millions)
Net income (GAAP)	$                 18		$                    7
Add back:
Income tax expense	3		3
Income before income taxes (GAAP)	21		10
Add back:
Interest expense	—		(2)
Depreciation, amortization and accretion	67		60
EBITDA (Non-GAAP)	88		68
Add back or deduct:
(Gain) loss on asset disposals, net	4		2
Adjusted EBITDA (Non-GAAP)	91		70
Deduct:
Interest and dividend income	1		1
Other, net	1		—
Adjusted OIBDA (Non-GAAP)	$                 89		$                  68

Numbers may not foot due to rounding.

 

View original content:https://www.prnewswire.com/news-releases/tds-reports-second-quarter-2024-results-302213208.html

SOURCE Telephone and Data Systems, Inc.

FAQ

What were TDS's Q2 2024 total operating revenues?

TDS reported total operating revenues of $1,238 million for Q2 2024, compared to $1,267 million in Q2 2023.

How did UScellular's postpaid ARPU perform in Q2 2024?

UScellular's postpaid ARPU grew 2% year-over-year in Q2 2024.

What was TDS Telecom's year-over-year service address footprint growth?

TDS Telecom grew its total service address footprint by 10% year-over-year in Q2 2024.

How many fiber service addresses did TDS Telecom deliver in Q2 2024?

TDS Telecom delivered 27,000 fiber service addresses in Q2 2024.

What is TDS's updated 2024 Adjusted OIBDA guidance for TDS Telecom?

TDS raised its 2024 Adjusted OIBDA guidance for TDS Telecom to $330-$360 million.