PR Newswire
CHICAGO, Aug. 4, 2023
CHICAGO, Aug. 4, 2023 /PRNewswire/ --
As previously announced, TDS will hold a teleconference on August 4, 2023, 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, Financial) reported total operating revenues of $1,267 million for the second quarter of 2023, versus $1,349 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(19) million and $(0.17), respectively, for the second quarter of 2023 compared to $18 million and $0.15, respectively, in the same period one year ago.
2Q 2023 Highlights*
UScellular
- Focused on improving subscriber trajectory to reduce postpaid losses - made progress in reducing postpaid churn
- Executing on growth initiatives
- Fixed Wireless customers grew 66% to 96,000
- Tower rental revenues grew 10%
- Reduced debt balance by $150 million in 2Q'23
- Launching 5G Mid-Band network - providing low latency and faster speeds
- Ended June with availability in parts of Illinois, Iowa, Wisconsin, Maine, Missouri, Nebraska, Oklahoma, Oregon, Virginia and Washington
TDS Telecom
- Delivered 66,000 fiber service addresses through June; remain on track to deliver 175,000 fiber addresses by end of 2023
- Broadband investments driving positive results
- Residential broadband connections grew 5%
- Residential broadband revenues grew 8%
- Residential revenue per connection grew 4%
- Increased full-year Adjusted EBITDA and Adjusted OIBDA guidance due to disciplined spending
- Modestly reduced full-year capital expenditures guidance
* Comparisons are 2Q'22 to 2Q'23 unless otherwise noted
"The TDS Family of Companies continues to execute on its multi-year strategies, while focusing intensely on cost containment," said LeRoy T. Carlson, Jr., TDS President and CEO. "UScellular has begun deploying mid-band 5G spectrum, and TDS Telecom is making solid progress on its fiber program.
"At UScellular, postpaid handset subscriber trends improved slightly year-over-year driven by improvements in churn, however, subscriber results remained challenged overall as gross additions declined. Two of UScellular's growth areas, fixed wireless and the tower portfolio, produced year-over-year double-digit increases in gross additions and revenues, respectively. In July, UScellular surpassed 100,000 fixed wireless customers – a key milestone as momentum for the product continues.
"TDS Telecom grew its residential revenue per connection and increased total residential broadband connections for the quarter. TDS Telecom continues to execute its broadband growth strategy through its multi-year fiber expansion program."
Recent Development: On August 4, 2023, TDS and UScellular announced a process to explore a range of strategic alternatives for UScellular.
2023 Estimated Results
TDS' current estimates of full-year 2023 results for UScellular and TDS Telecom are shown below. Such estimates represent management's view as of August 4, 2023 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.
The 2023 Estimated Results shown below do not reflect any anticipated costs, expenses or results of the strategic review referenced above.
2023 Estimated Results | ||
UScellular | Previous | Current |
(Dollars in millions) | ||
Service revenues | $3,050-$3,150 | $3,025-$3,075 |
Adjusted OIBDA1 | $725-$875 | $750-$850 |
Adjusted EBITDA1 | $875-$1,025 | $925-$1,025 |
Capital expenditures | $600-$700 | Unchanged |
TDS Telecom | Previous | Current |
(Dollars in millions) | ||
Total operating revenues | $1,030-$1,060 | Unchanged |
Adjusted OIBDA1 | $260-$290 | $270-$300 |
Adjusted EBITDA1 | $260-$290 | $270-$300 |
Capital expenditures | $500-$550 | $475-$525 |
The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2023 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.
2023 Estimated Results | |||
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) | $50-$150 | $40-$70 | |
Add back: | |||
Interest expense | 200 | — | |
Depreciation, amortization and accretion expense | 655 | 230 | |
EBITDA (Non-GAAP)1 | $905-$1,005 | $270-$300 | |
Add back or deduct: | |||
(Gain) loss on asset disposals, net | 20 | — | |
Adjusted EBITDA (Non-GAAP)1 | $925-$1,025 | $270-$300 | |
Deduct: | |||
Equity in earnings of unconsolidated entities | 160 | — | |
Interest and dividend income | 15 | — | |
Adjusted OIBDA (Non-GAAP)1 | $750-$850 | $270-$300 | |
Actual Results | |||||||
Six Months Ended June 30, 2023 | Year Ended December 31, 2022 | ||||||
UScellular | TDS Telecom | UScellular | TDS Telecom | ||||
(Dollars in millions) | |||||||
Net income (GAAP) | $ 20 | $ 15 | $ 35 | $ 53 | |||
Add back: | |||||||
Income tax expense | 29 | 5 | 37 | 23 | |||
Income before income taxes (GAAP) | $ 49 | $ 21 | $ 72 | $ 76 | |||
Add back: | |||||||
Interest expense | 99 | (4) | 163 | (7) | |||
Depreciation, amortization and accretion expense | 330 | 119 | 700 | 215 | |||
EBITDA (Non-GAAP)1 | $ 478 | $ 136 | $ 935 | $ 284 | |||
Add back or deduct: | |||||||
Loss on impairment of licenses | — | — | 3 | — | |||
(Gain) loss on asset disposals, net | 13 | 3 | 19 | 7 | |||
(Gain) loss on sale of business and other exit costs, net | — | — | (1) | — | |||
Adjusted EBITDA (Non-GAAP)1 | $ 491 | $ 139 | $ 956 | $ 291 | |||
Deduct: | |||||||
Equity in earnings of unconsolidated entities | 82 | — | 158 | — | |||
Interest and dividend income | 5 | 2 | 8 | 2 | |||
Other, net | — | 1 | — | 1 | |||
Adjusted OIBDA (Non-GAAP)1 | $ 404 | $ 136 | $ 790 | $ 288 | |||
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 non-recurring, 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, 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, and gains and losses, 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, 2023, can be found on TDS' website at investors.tdsinc.com. |
Stock Repurchase
During the second quarter of 2023, TDS repurchased 255,090 of its Common Shares for $3 million.
Conference Call Information
TDS will hold a conference call on August 4, 2023 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/745533112
- 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), 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 approximately 9,100 associates as of June 30, 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; 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, 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 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | ||||
Retail Connections | |||||||||
Postpaid | |||||||||
Total at end of period | 4,194,000 | 4,223,000 | 4,247,000 | 4,264,000 | 4,296,000 | ||||
Gross additions | 125,000 | 137,000 | 154,000 | 151,000 | 128,000 | ||||
Handsets | 83,000 | 93,000 | 105,000 | 107,000 | 94,000 | ||||
Connected devices | 42,000 | 44,000 | 49,000 | 44,000 | 34,000 | ||||
Net additions (losses) | (28,000) | (24,000) | (17,000) | (31,000) | (40,000) | ||||
Handsets | (29,000) | (25,000) | (20,000) | (22,000) | (31,000) | ||||
Connected devices | 1,000 | 1,000 | 3,000 | (9,000) | (9,000) | ||||
ARPU1 | $ 50.64 | $ 50.66 | $ 50.60 | $ 50.21 | $ 50.07 | ||||
ARPA2 | $ 130.19 | $ 130.77 | $ 130.97 | $ 130.27 | $ 130.43 | ||||
Handset upgrade rate3 | 4.8 % | 4.9 % | 7.0 % | 8.1 % | 6.0 % | ||||
Churn rate4 | 1.21 % | 1.27 % | 1.35 % | 1.42 % | 1.30 % | ||||
Handsets | 1.01 % | 1.06 % | 1.12 % | 1.15 % | 1.10 % | ||||
Connected devices | 2.65 % | 2.78 % | 2.99 % | 3.40 % | 2.73 % | ||||
Prepaid | |||||||||
Total at end of period | 462,000 | 470,000 | 493,000 | 493,000 | 490,000 | ||||
Gross additions | 50,000 | 43,000 | 61,000 | 62,000 | 56,000 | ||||
Net additions (losses) | (8,000) | (23,000) | — | 2,000 | (4,000) | ||||
ARPU1 | $ 33.86 | $ 33.19 | $ 33.34 | $ 35.04 | $ 35.25 | ||||
Churn rate4 | 4.18 % | 4.63 % | 4.11 % | 4.07 % | 4.07 % | ||||
Market penetration at end of period | |||||||||
Consolidated operating population | 32,350,000 | 32,350,000 | 32,370,000 | 32,370,000 | 32,370,000 | ||||
Consolidated operating penetration5 | 15 % | 15 % | 15 % | 15 % | 15 % | ||||
Capital expenditures (millions) | $ 143 | $ 208 | $ 176 | $ 136 | $ 268 | ||||
Total cell sites in service | 6,952 | 6,950 | 6,945 | 6,933 | 6,916 | ||||
Owned towers | 4,341 | 4,338 | 4,336 | 4,329 | 4,323 | ||||
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: |
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 | 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 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | ||||
Residential connections | |||||||||
Broadband | |||||||||
Wireline, Incumbent | 249,200 | 247,900 | 249,100 | 252,600 | 252,700 | ||||
Wireline, Expansion | 70,200 | 62,800 | 56,100 | 49,400 | 44,100 | ||||
Cable | 204,200 | 204,700 | 204,800 | 204,500 | 204,000 | ||||
Total Broadband | 523,600 | 515,400 | 510,000 | 506, | |||||
