Group 1 - Telephone and Data Systems, Inc. (TDS) will webcast its 2025 Annual Meeting of Shareholders on May 22, 2025, at 9:00 a.m. Central time [1] - The meeting will be available both live and on-demand, with a recommendation to register at least 15 minutes prior to the start [1] Group 2 - TDS provides wireless, broadband, video, and voice services to approximately 5.5 million connections nationwide through its subsidiaries, UScellular and TDS Telecom [2] - The company was founded in 1969 and is headquartered in Chicago, employing approximately 7,800 associates as of March 31, 2025 [2]

Financial Performance - Telephone and Data Systems, Inc. (TDS) reported a net loss of $10 million or 9 cents per share for Q1 2025, compared to a net income of $12 million or 10 cents in the same quarter last year, missing the Zacks Consensus Estimate by 7 cents [2] - Total revenues were $1.15 billion, down from $1.26 billion year-over-year, missing the Zacks Consensus Estimate by $39 million [2] - U.S. Cellular revenues decreased by 6% year-over-year to $891 million, impacted by a reduction in postpaid retail and prepaid connections, and also missed revenue estimates of $920.5 million [3] Operating Metrics - TDS reported an operating income of $41 million, down from $51 million in the prior-year quarter, with total operating expenses at $1.11 billion, down 6% year-over-year [4][7] - Adjusted EBITDA for TDS Telecom was $76 million, a decrease of 20% year-over-year, while U.S. Cellular's adjusted EBITDA decreased by 7% to $254 million [7] Customer Metrics - Total residential connections decreased to 931,400 from 956,100 year-over-year, while residential revenues per connection increased to $65.67 from $64.58 [5] - The company saw an increase in broadband expansion, with total connections at 1,119,000 compared to 1,162,200 in the year-ago quarter [6] Cash Flow and Liquidity - TDS generated $186 million of net cash from operating activities in Q1 2025, down from $224 million in the prior-year quarter, with cash and cash equivalents at $348 million and long-term debt at $4.04 billion as of March 31, 2025 [8] Outlook - For 2025, management expects total operating revenues for TDS Telecom to be in the range of $1.03-$1.07 billion, with adjusted EBITDA estimated between $320-$360 million and capital expenditures expected to be $375-$425 million [10]

Financial Performance - For the quarter ended March 2025, Telephone & Data Systems (TDS) reported revenue of $1.15 billion, down 8.6% year-over-year [1] - EPS came in at -$0.09, compared to $0.10 in the year-ago quarter, representing a significant decline [1] - The reported revenue was a surprise of -3.24% compared to the Zacks Consensus Estimate of $1.19 billion, and the EPS surprise was -350.00% against the consensus estimate of -$0.02 [1] Key Metrics - US Cellular Postpaid ARPU was $52.06, slightly below the estimated $52.37 [4] - US Cellular Retail Connections Prepaid reported a net loss of 17 thousand, worse than the estimated loss of 13.5 thousand [4] - US Cellular Postpaid Churn rate was 1.2%, matching the average estimate [4] - Total Retail Connections Postpaid at the end of the period was 3.95 million, in line with the average estimate [4] Revenue Breakdown - Operating Revenues for U.S. Cellular were $891 million, below the average estimate of $923.79 million, reflecting a year-over-year change of -6.2% [4] - Operating Revenues for TDS Telecom were $257 million, slightly below the estimated $262.13 million, representing a -3.4% change year-over-year [4] - TDS Telecom Service- Wholesale revenues were $39 million, compared to the average estimate of $42.79 million, indicating an -11.4% year-over-year change [4] - TDS Telecom Service revenues were $256 million, below the estimated $261.09 million, with a -3.9% change year-over-year [4] - Operating Revenues from all other sources were $6 million, significantly below the estimated $10.03 million, representing an -87% change year-over-year [4] - TDS Telecom Service Residential - Wireline, Expansion revenues were $34 million, exceeding the average estimate of $32.20 million, with a year-over-year change of +30.8% [4] - TDS Telecom Service Residential - Cable revenues were $64 million, slightly below the estimated $64.63 million, reflecting an -8.6% change year-over-year [4] - U.S. Cellular Equipment and product sales were $150 million, significantly below the estimated $197.91 million, representing a -23.7% change year-over-year [4] Stock Performance - Shares of TDS have returned -0.6% over the past month, compared to the Zacks S&P 500 composite's -0.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a free cash flow of $79 million in Q1 2025, an increase of $18 million compared to the same quarter last year [16] - Total operating revenues decreased by 3% year over year, impacted by divestitures and declines in commercial and wholesale revenue [49] - Cash expenses increased by 6% or $11 million in the quarter compared to the prior year, with part of this increase attributed to a non-cash adjustment to stock-based compensation [49] Business Line Data and Key Metrics Changes - The company saw a 6% increase in third-party tower revenue due to new co-locations and escalators on renewed leases [15] - Fiber service addresses grew by 6% year over year, with 14,000 new addresses delivered in the quarter [39] - Residential broadband net additions were 2,800, with 8,300 coming from fiber markets, lower than prior quarters due to timing of service address delivery [40] Market Data and Key Metrics Changes - The company is experiencing competitive pressures in the broadband market, with aggressive pricing and promotional offers from competitors [17] - The demand for higher broadband speeds remains strong, with 82% of residential broadband customers taking 100 meg or higher [47] Company Strategy and Development Direction - The company is focused on completing the transaction with T-Mobile and repositioning the remaining business for future success [12] - There is an ongoing effort to expand the fiber program, which has increased the footprint by over 30% in the last three years [13] - The company plans to declare a special dividend to shareholders following the closing of the T-Mobile transaction, subject to board approval [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased uncertainties in the broader economy and markets but remains optimistic about the long-term potential of the tower business [15] - The company is focused on cost optimization and expects capital expenditures to decline in 2025 as planned 5G coverage builds are largely completed [16] - Management expressed confidence in achieving $100 million in annual cost savings by the end of 2028 through transformation efforts [41] Other Important Information - The company does not plan to redeem Series UU and Series BV preferred stock, viewing them as foundational capital [74] - The expected cash outflow related to severance obligations for employees not retained by T-Mobile is estimated to be between $60 million to $80 million [30] Q&A Session Summary Question: What is the timeline for the designated entity spectrum approval? - The timing is uncertain and dependent on regulatory approval by the FCC, but there is optimism for a positive outcome [60] Question: How should free cash flow be viewed going forward? - The reported free cash flow of $79 million is not necessarily a run rate, but capital expenditures are expected to be down in 2025, which is positive for free cash flow [62] Question: What are the expectations for the tower company reporting post-closing? - The company anticipates providing tower company reporting including AFFO and related metrics in the first quarter after the close [65] Question: How is the door-to-door sales effort performing? - The company has strengthened its sales teams and expects net adds to improve as fiber address delivery ramps up [68] Question: Why does US Cellular need to remain a public entity? - The incremental cost to operate as a public company is minimal, and there are no significant incentives to collapse the structure at this time [112]

Financial Data and Key Metrics Changes - Total operating revenues decreased by 3% year over year, impacted by divestitures and declines in commercial and wholesale revenue, as well as decreases in residential video and voice connections [47] - Cash expenses increased by 6% or $11 million compared to the prior year, with $4 million of this increase attributed to a cumulative non-cash adjustment to stock-based compensation [47] - Free cash flow for the first quarter was $79 million, an increase of $18 million over the same quarter last year [14] Business Line Data and Key Metrics Changes - Postpaid handset results showed year-over-year improvements, while third-party tower revenue increased by 6% due to new co-locations and escalators on renewed leases [13] - Fiber service addresses grew by 6% year over year, with 14,000 new addresses delivered in the quarter [45] - Residential broadband net additions were 2,800, with 8,300 coming from fiber markets, lower than prior quarters due to timing of service address delivery [36][62] Market Data and Key Metrics Changes - The company continues to face aggressive promotional competition in the wireless market, with competitors offering multi-year price locks and aggressive pricing [15] - Demand for higher broadband speeds remains strong, with 82% of residential broadband customers taking 100 megabits or higher and 24% taking one gig or higher at the end of the quarter [45] Company Strategy and Development Direction - The company is focused on closing the proposed transaction with T-Mobile and repositioning the remaining business for future success, including a potential special dividend to shareholders [10][18] - The fiber program has expanded the company's footprint by over 30% in the last three years, with further opportunities for growth [11] - The company is evaluating its portfolio to minimize exposure to copper markets without an economic path to fiber [97] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased uncertainties in the broader economy and markets but remains optimistic about the long-term potential of the tower business [13][17] - The anticipated closing of the T-Mobile transaction is expected to provide better competitive choices and connectivity experiences for customers [16] - Management expects to incur cash income tax obligations related to the gain on the sale of spectrum in the Verizon and AT&T transactions, estimated between $325 million to $375 million [33] Other Important Information - The company does not plan to redeem Series UU and Series BV preferred stock, viewing them as foundational capital going forward [69] - The company expects to incur severance obligations for employees not retained by T-Mobile, estimated between $60 million to $80 million [28] Q&A Session Summary Question: Timeline for designated entity spectrum approval - The timing is uncertain and dependent on regulatory approval by the FCC, but there is optimism for a successful outcome [56] Question: Free cash flow run rate - The $79 million in free cash flow is not necessarily a run rate, but capital expenditures are expected to be down in 2025, which is positive for free cash flow [58] Question: Debt exchange offer impact - The impact of the debt exchange offer on the purchase price is uncertain, but there is interest in retaining attractive debt [60] Question: Fiber net adds and sales efforts - Fiber net adds were lower due to timing of address delivery, but as construction ramps up, net adds are expected to follow [62] Question: Divestiture strategy for wireline and cable portfolio - The company is focused on divesting non-core assets, particularly isolated copper markets without an economic path to fiber [97]

Group 1 - TDS reported a quarterly loss of $0.09 per share, missing the Zacks Consensus Estimate of a loss of $0.02, and compared to earnings of $0.10 per share a year ago, representing an earnings surprise of -350% [1] - The company posted revenues of $1.15 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.24%, and down from $1.26 billion year-over-year [2] - TDS shares have increased by approximately 10.4% since the beginning of the year, contrasting with the S&P 500's decline of -4.7% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $1.18 billion, and for the current fiscal year, it is -$0.35 on revenues of $4.76 billion [7] - The Zacks Industry Rank for Wireline - National is in the top 38% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]

Financial Performance - Total operating revenues decreased by 9% to $1,154 million in Q1 2025 compared to $1,262 million in Q1 2024 [25]. - UScellular's operating revenues fell by 6% to $891 million, while TDS Telecom's revenues decreased by 3% to $257 million [25]. - Net income attributable to TDS shareholders dropped by 74% to $7 million, with a net loss attributable to TDS common shareholders of $10 million [25]. - Adjusted EBITDA decreased by 9% to $333 million, down from $366 million in the previous year [25]. - Total operating revenues for TDS Telecom decreased by 3% to $257 million for the three months ended March 31, 2025, compared to $266 million in the same period last year [78]. - Net income for TDS Telecom dropped by 85% to $4 million for the three months ended March 31, 2025, down from $24 million in the prior year [78]. - TDS reported a net income of $12 million for Q1 2025, a decrease of 68.4% compared to $38 million in Q1 2024 [136]. - UScellular's net income for Q1 2025 was $20 million, down 16.7% from $24 million in Q1 2024 [137]. - TDS's adjusted EBITDA for Q1 2025 was $333 million, a decline of 9.0% from $366 million in Q1 2024 [136]. - TDS reported a net loss of $10 million for the three months ended March 31, 2025, compared to a net income of $12 million for the same period in 2024 [198]. Capital Expenditures - Capital expenditures significantly reduced by 49% to $112 million compared to $219 million in Q1 2024 [25]. - Capital expenditures for TDS Telecom decreased by 32% to $59 million for the three months ended March 31, 2025, compared to $87 million in the same period last year [78]. - Capital expenditures for UScellular decreased by $78 million or 60% year-over-year, totaling $53 million for the three months ended March 31, 2025 [110][111]. - TDS expects full-year capital expenditures for 2025 to be between $375 million and $425 million, primarily financed through operating cash flows and existing cash balances [112]. Strategic Transactions - The company announced a strategic agreement for UScellular to sell its wireless operations and select spectrum assets to T-Mobile for a total purchase price of $4,400 million, expected to close in mid-2025 [15]. - UScellular's book value of wireless spectrum licenses to be sold in the Verizon transaction is $586 million, with total proceeds expected to be $1,000 million [17]. - The strategic review process for UScellular is ongoing, with a focus on closing multiple transactions signed during 2024 [20]. - TDS is exploring strategic alternatives for UScellular while seeking to monetize spectrum assets not subject to existing agreements [20]. - UScellular is actively seeking to monetize spectrum assets not subject to existing purchase agreements [202]. Revenue and Customer Metrics - Average Revenue Per User (ARPU) for postpaid increased slightly to $52.06, while Average Revenue Per Account (ARPA) remained stable at $132.25 [44]. - Total gross additions for postpaid handsets were 68,000, an 8% increase from 63,000 in Q1 2024 [42]. - The churn rate for postpaid handsets remained stable at 1.03% [42]. - Total service addresses for TDS Telecom increased by 6% to 1.8 million as of March 31, 2025, with 44% served by fiber [70]. - Total residential connections decreased by 3% to 931,400, primarily due to declines in legacy voice and video services [71]. Debt and Financing - TDS has unsecured term loan agreements with a maximum borrowing capacity of $875 million, with outstanding borrowings of $783 million as of March 31, 2025 [100]. - UScellular has fully utilized its $800 million unsecured term loan agreements, with outstanding borrowings of $718 million as of March 31, 2025 [101]. - TDS's long-term debt obligations total $4,157 million as of March 31, 2025, with a weighted average interest rate of 6.6% [153]. - Approximately 50% of TDS' long-term debt is in fixed-rate senior notes, while the other 50% is variable-rate debt, exposing the company to interest rate fluctuations [152]. Cash Flow and Liquidity - TDS's net cash provided by operating activities was $186 million for the three months ended March 31, 2025, compared to $224 million in 2024 [122][125]. - TDS's cash flows from operating activities decreased to $186 million in Q1 2025 from $224 million in Q1 2024 [139]. - The company experienced a net cash outflow of $76 million from financing activities in Q1 2025, compared to a net inflow of $30 million in Q1 2024 [159]. - TDS's cash, cash equivalents, and restricted cash decreased to $371 million at the end of Q1 2025 from $384 million at the beginning of the period [159]. Risks and Challenges - TDS continues to monitor potential tariff increases on imported goods, which may impact operational costs and financial results [22]. - The company faces risks related to cyber-attacks and disruptions in credit markets, which could adversely affect its financial condition and operations [150]. Shareholder Returns - TDS paid quarterly dividends of $0.04 per share in Q1 2025, down from $0.19 in Q1 2024 [118]. - TDS reported a net income attributable to shareholders of $2,023 million for the year ended December 31, 2023, compared to $1,074 million in the previous year, reflecting a significant increase [171]. - The total equity for TDS shareholders as of December 31, 2023, was $5,996 million, up from $5,202 million in the prior year, indicating a growth of approximately 15.2% [171].

Financial Performance - TDS reported total operating revenues of $1,154 million for Q1 2025, a decrease of 8.6% from $1,262 million in Q1 2024[4] - Net income attributable to TDS common shareholders was $(10) million, resulting in a diluted loss per share of $(0.09), compared to a net income of $12 million and earnings per share of $0.10 in the same period last year[4] - UScellular reported operating revenues of $891 million for Q1 2025, a decrease of 6% compared to $950 million in Q1 2024[28] - TDS Telecom's operating revenues were $257 million in Q1 2025, down 3% from $266 million in Q1 2024[28] - Net income for the three months ended March 31, 2025, was $12 million, a decrease of 68.4% compared to $38 million in the same period of 2024[31] - Total operating revenues for UScellular decreased by 6% to $891 million in Q1 2025, down from $950 million in Q1 2024[39] - Adjusted EBITDA for UScellular was $254 million, reflecting a 7% decline from $272 million in the previous year[39] - TDS Telecom's net income for Q1 2025 was $4 million, significantly down from $24 million in Q1 2024[50] - UScellular's net income for Q1 2025 was $20 million, a decrease from $24 million in Q1 2024[48] Customer Metrics - TDS Telecom added 14,000 marketable fiber service addresses in Q1 2025, contributing to ongoing fiber deployment efforts[5] - The company reported 2,800 residential broadband net additions in Q1 2025, with 8,300 coming from fiber markets[10] - Total residential connections decreased to 931,400 in Q1 2025 from 956,100 in Q1 2024, reflecting a decline in broadband and voice connections[25] - Total broadband connections increased slightly to 555,800 in Q1 2025, compared to 547,900 in Q1 2024[25] - The churn rate for residential fiber connections was 0.9% in Q1 2025, an improvement from 1.0% in Q4 2024[25] - Average Revenue Per User (ARPU) for postpaid customers increased to $52.06 in Q1 2025, up from $51.96 in Q1 2024[23] Capital Expenditures and Cash Flow - Capital expenditures for UScellular were $53 million in Q1 2025, significantly lower than $162 million in Q4 2024[25] - Capital expenditures for UScellular dropped significantly by 60% to $53 million in Q1 2025, compared to $131 million in Q1 2024[39] - TDS consolidated free cash flow for Q1 2025 was $47 million, compared to a negative $20 million in Q1 2024[45] - UScellular's free cash flow increased to $79 million in Q1 2025 from $61 million in Q1 2024[45] - TDS consolidated cash flows from operating activities were $186 million in Q1 2025, down from $224 million in Q1 2024[45] Strategic Initiatives and Changes - TDS is undergoing foundational changes in its remaining businesses, focusing on enhancing customer experience and improving margins over time[5] - UScellular is not providing financial guidance for 2025 due to the pending transaction with T-Mobile[9] - The expected closing of the sale of UScellular's wireless operations to T-Mobile is anticipated in mid-2025, pending regulatory approval[6] - TDS is focusing on strategic alternatives, with expenses related to this review amounting to $10 million for UScellular in Q1 2025, up from $7 million in Q1 2024[48] Assets and Liabilities - Total assets as of March 31, 2025, were $13,536 million, a decrease from $13,682 million at the end of 2024[33] - Total current liabilities decreased to $960 million as of March 31, 2025, from $1,090 million at the end of 2024[35] - TDS shareholders' equity decreased to $5,078 million as of March 31, 2025, from $5,091 million at the end of 2024[35]

Core Insights - TDS reported total operating revenues of $1,154 million for Q1 2025, a decrease of 9% from $1,262 million in Q1 2024 [1][27] - The net loss attributable to TDS common shareholders was $(10) million, translating to a diluted loss per share of $(0.09), compared to a net income of $12 million and diluted earnings of $0.10 in the same period last year [1][27] Group 1: Financial Performance - UScellular's operating revenues decreased by 6% to $891 million in Q1 2025 from $950 million in Q1 2024 [27] - TDS Telecom's revenues also fell by 3% to $257 million from $266 million year-over-year [27] - Total operating expenses for TDS decreased by 6% to $1,119 million from $1,195 million in the previous year [27] Group 2: Strategic Developments - TDS is in the process of selling its wireless operations to T-Mobile, with the transaction expected to close in mid-2025, pending regulatory approval [3] - TDS Telecom is focusing on fiber deployment, adding 14,000 marketable fiber service addresses in Q1 2025 [2] - The tower business is experiencing growth, with third-party tower revenues increasing by 6% in the quarter [2] Group 3: Operational Metrics - Postpaid handset gross additions increased, while net losses improved, indicating a positive trend in customer retention [8] - TDS Telecom added 2,800 residential broadband net additions, with a total of 555,800 broadband connections as of March 31, 2025 [23] - The average revenue per user (ARPU) for postpaid customers was $52.06, showing a slight increase from $51.73 in the previous quarter [16]

Company Overview - Telephone and Data Systems, Inc. (TDS) provides wireless, broadband, video, and voice services to approximately 5.5 million connections nationwide through its businesses, UScellular and TDS Telecom [2] - TDS was founded in 1969 and is headquartered in Chicago, employing approximately 7,900 associates as of December 31, 2024 [2] Upcoming Financial Results - TDS and UScellular will webcast their first quarter operating results conference call on May 2, 2025, at 9:00 a.m. Central Time [1] - The companies will release their financial results on the same day, May 2, 2025 [1] - The webcast will be available both live and on-demand, and it is recommended to register at least 15 minutes before the presentation [1]