ITTI(TDS) - 2024 Q4 - Annual Report

Financial Performance - TDS reported a net loss attributable to common shareholders of $97 million for the year ended December 31, 2024, compared to a net loss of$569 million in 2023[204]. - The company incurred a non-cash charge of $136 million related to the impairment of certain wireless spectrum licenses in 2024, while the 2023 loss included a$547 million goodwill impairment[204]. - Total operating revenues decreased by 4% to $4,964 million in 2024 from$5,160 million in 2023, with UScellular revenues down 3% and TDS Telecom revenues up 3%[208]. - Total operating expenses decreased by 12% to $4,901 million in 2024 from$5,574 million in 2023, primarily due to a significant reduction in TDS Telecom expenses by 38%[208]. - Net income attributable to TDS common shareholders improved by 83% to a loss of $97 million in 2024 compared to a loss of$569 million in 2023[208]. - Adjusted EBITDA increased by 7% to $1,360 million in 2024 from$1,267 million in 2023, driven by lower operating expenses[208]. - The company reported a significant reduction in total operating expenses, down 38% to $956 million in 2024, compared to$1,551 million in 2023[282]. - Adjusted EBITDA increased by 23% to $350 million in 2024, up from$285 million in 2023[282]. - Net income improved to $85 million in 2024, a significant recovery from a net loss of$483 million in 2023[282]. - Operating income for 2024 was $105 million, up from a loss of$523 million in 2023[382]. Revenue and Connections - TDS provides services to approximately 5.5 million connections nationwide, including wireless, broadband, video, and voice services[192]. - UScellular served 4.4 million retail connections as of December 31, 2024, including 4.0 million postpaid and 0.4 million prepaid connections[218]. - Total operating revenues for 2024 were $3,667 million, a decrease of 4$554 million, reflecting a reduction in the number of owned towers placed into service[233]. Capital Expenditures and Investments - Capital expenditures decreased by 24% to $906 million in 2024 from$1,197 million in 2023, reflecting a strategic focus on cost management[208]. - TDS Telecom's capital expenditures for 2024 were $324 million, compared to$577 million in 2023 and $556 million in 2022[320]. - TDS expects capital expenditures for 2025 to be between$375 million and $425 million[320]. - Cash flows used for investing activities in 2024 were$754 million, primarily due to payments for property, plant, and equipment of $884 million[334]. - Cash paid for additions to property, plant and equipment decreased to$884 million in 2024 from $1,211 million in 2023, indicating improved capital efficiency[384]. Debt and Liquidity - The total long-term debt obligation as of December 31, 2024, was$4,164 million, with a weighted average interest rate of 6.6%[373]. - TDS's total debt repayments in 2024 included $200 million on the revolving credit agreement and$188 million on the receivables securitization agreement[335]. - TDS Telecom's liquidity is supported by $474 million in available undrawn borrowing capacity as of December 31, 2024[299]. - TDS's cash, cash equivalents, and restricted cash increased by$114 million in 2024, with net cash provided by operating activities amounting to $1,145 million[332]. Strategic Transactions - UScellular agreed to sell its wireless operations and select spectrum assets to T-Mobile for a purchase price of$4,400 million, expected to close in mid-2025[198]. - UScellular entered into a License Purchase Agreement with Verizon for total proceeds of $1,000 million, with a book value of the licenses at$586 million as of December 31, 2024[200]. - A separate License Purchase Agreement with AT&T was signed for total proceeds of $1,018 million, with a book value of$859 million for the licenses involved[201]. - The strategic alternatives review process is ongoing as UScellular seeks to close transactions signed during 2024 and monetize additional spectrum assets[202]. - TDS and UScellular entered into agreements to sell wireless operations and spectrum assets to T-Mobile, Verizon, and AT&T, with potential significant impacts on financial condition[364]. Impairments and Charges - Loss on impairment of licenses increased to $136 million in 2024 due to a wireless spectrum license impairment charge recorded in Q3 2024[233]. - TDS incurred a loss on impairment of intangible assets amounting to$137 million in 2024, compared to $547 million in 2023[380]. - The impairment loss of$136 million was primarily related to the retained high-band spectrum unit, which had a carrying value of $161 million post-impairment[347]. Market and Regulatory Environment - The FCC's 5G Fund for Rural America will distribute up to$9 billion over ten years to enhance 5G connectivity in rural areas[354]. - The FCC adopted new rules for the 5G Fund auction process, but the auction start date has not been announced[355]. - TDS must assess the likelihood of realizing deferred income tax assets based on future taxable income, which involves significant management judgment[351]. - The company faces risks related to intense competition, operational challenges, and potential changes in regulatory support that could adversely affect financial performance[364]. Other Financial Metrics - Free cash flow for 2024 was $194 million, a recovery from a negative cash flow of$135 million in 2023[384]. - Interest expense increased by 15% to $279 million in 2024 due to higher borrowings under term loan agreements[210]. - TDS's credit ratings as of December 31, 2024, were Ba1 from Moody's, BB from Standard & Poor's, and BB+ from Fitch Ratings, indicating sub-investment grade status[315].