Exhibit 99.1   NEWS RELEASE

As previously announced, U.S. Cellular will hold a teleconference Nov. 4, 2016, at 9:30 a.m. CDT.  Listen to the live call via the Events & Presentations page of investors.uscellular.com.

 

FOR IMMEDIATE RELEASE

U.S. Cellular reports third quarter 2016 results

Net retail connections up 61,000 on prepaid growth;

2016 guidance reaffirmed

 

CHICAGO, (Nov. 4, 2016) — United States Cellular Corporation (NYSE:USM) reported total operating revenues of $1,010 million for the third quarter of 2016, versus $1,069 million for the same period one year ago. Net income attributable to U.S. Cellular shareholders and related diluted earnings per share were $17 million and $0.20, respectively, for the third quarter of 2016, compared to $64 million and $0.75, respectively, in the same period one year ago. 

Note: In the third quarter of 2016, U.S. Cellular terminated a naming rights agreement and recognized a charge of $13 million while, in the third quarter of 2015, it discontinued its loyalty rewards program and recognized $58 million in service revenues.

“U.S. Cellular stayed focused on achieving its long-term objectives throughout the quarter, despite an extremely competitive climate.  While the year over year comparison of financial results is impacted by a couple of items, when I look past those items, I am pleased with the Company’s financial performance,” said Kenneth R. Meyers, U.S. Cellular president and CEO.  “We continue to differentiate ourselves through an unwavering commitment to an exceptional customer experience, including a high-quality network and outstanding customer service.

“Customer loyalty remained strong as evidenced by low churn, and we drove prepaid customer growth significantly as we introduced more attractive promotions.  We are pleased to see continued smartphone adoption and connected device sales which strengthen the demand for data. We had the highest pre-sales in U.S. Cellular history with the iPhone 7 launch, although supply constraints limited sales in the quarter. We also saw greater adoption of equipment installment plans (EIP), which generated growth in equipment revenue and reduced loss on equipment.

“To meet the growing demand for data, we continue to enhance our high-quality network by investing in technology like Voice over LTE (VoLTE). We are pleased to report that our buildout is on schedule as our network team is working toward our first commercial deployment of VoLTE early next year.”

2016 Estimated Results

U.S. Cellular’s current estimates of full-year 2016 results, which are unchanged from the previous estimates, are shown below.  Such estimates represent management’s view as of November 4, 2016.  Such forward‑looking statements should not be assumed to be current as of any future date.  U.S. Cellular undertakes no duty to update such information, whether as a result of new information, future events or otherwise.  There can be no assurance that final results will not differ materially from such estimated results.

		2016 Estimated Results
		Current			Previous
(Dollars in millions)
Total operating revenues		$3,900-$4,100			Unchanged
Operating cash flow (1)		$525-$650			Unchanged
Adjusted EBITDA (1)		$725-$850			Unchanged
Capital expenditures		Approx. $	500		Unchanged

The following table provides a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2016 estimated results, and actual results for the nine months ended September 30, 2016 and year ended December 31, 2015.  In providing 2016 estimated results, U.S. Cellular has not completed the below reconciliation to net income because it does not provide guidance for income taxes.  Although potentially significant, U.S. Cellular believes that the impact of income taxes cannot be reasonably predicted; therefore, U.S. Cellular is unable to provide such guidance.

 

								Actual Results
					2016 Estimated Results			Nine Months Ended September 30, 2016			Year Ended December 31, 2015*
(Dollars in millions)
Net income (GAAP)					N/A		$	54		$	247
Add back:
	Income tax expense (benefit)				N/A			39			156
Income (loss) before income taxes
	(GAAP)			$	(5)-120		$	93		$	404
Add back:
	Interest expense				110			84			86
	Depreciation, amortization and
		accretion expense			615			462			606
EBITDA (Non-GAAP)				$	720-845		$	639		$	1,096
Add back (deduct):
	(Gain) loss on sale of business and
		other exit costs, net			–			–			(114)
	(Gain) loss on license sales and
		exchanges, net			(15)			(16)			(147)
	(Gain) loss on assets disposals, net				20			16			16
Adjusted EBITDA (Non-GAAP) (1)				$	725-850		$	639		$	852
Deduct:
	Equity in earnings of unconsolidated
		entities			140			110			140
	Interest and dividend income				60			41			37
Operating cash flow (Non-GAAP) (1)(2)				$	525-650		$	488		$	675
* Includes $58 million of revenue related to termination of the rewards points program.
Note: Totals may not foot due to rounding differences.

 

1. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) is defined as net income adjusted for the items set forth in the reconciliation above.  Operating cash flow is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA and Operating cash flow 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 measure 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 Operating cash flow as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed appropriate.  Management believes Adjusted EBITDA and Operating cash flow are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented below 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 Operating cash flow 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 Adjusted EBITDA and Operating cash flow to the corresponding GAAP measure, Net income or Income (loss) before income taxes.
2. A reconciliation of Operating cash flow (Non-GAAP) to Operating income (GAAP) for September 30, 2016 actual results can be found on the company's website at investors.uscellular.com.

 

Conference Call Information

U.S. Cellular will hold a conference call on November 4, 2016 at 9:30 a.m. Central Time.

 

• Access the live call on the Events & Presentations page of investors.uscellular.com or at  https://www.webcaster4.com/Webcast/Page/1145/17986.
• Access the call by phone at 877/407-8029 (US/Canada), no pass code required.

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

About U.S. Cellular

United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 5 million connections in 23 states. The Chicago-based company had 6,300 full- and part-time associates as of September 30, 2016. At the end of the third quarter of 2016, Telephone and Data Systems, Inc. owned 83 percent of U.S. Cellular. For more information about U.S. Cellular, visit uscellular.com.

Contacts

Jane McCahon, Senior Vice President, Corporate Relations and Corporate Secretary of TDS

312-592-5379

jane.mccahon@tdsinc.com

 

Julie Mathews, IRC, Investor Relations Director of TDS

312-592-5341

julie.mathews@tdsinc.com

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: intense competition; the ability to execute U.S. Cellular’s business strategy; uncertainties in U.S. Cellular’s future cash flows and liquidity and access to the capital markets; the ability to make payments on U.S. Cellular indebtedness or comply with the terms of debt covenants; impacts of any pending acquisitions/divestitures/exchanges of properties and/or licenses,  including, but not limited to, the ability to obtain regulatory approvals, successfully complete the transactions and the financial impacts of such transactions; the ability of the company to successfully manage and grow its markets; the overall economy; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; pending and future litigation; changes in income tax rates, laws, regulations or rulings; changes in customer growth rates, average monthly revenue per user, churn rates, roaming revenue and terms, the availability of wireless devices, or the mix of products and services offered by U.S. Cellular. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by U.S. Cellular to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.   

 

For more information about U.S. Cellular, visit:

U.S. Cellular: www.uscellular.com

United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended						9/30/2016			6/30/2016			3/31/2016				12/31/2015			9/30/2015
Retail Connections
	Postpaid
		Total at end of period					4,484,000			4,490,000			4,454,000			4,409,000			4,341,000
		Gross additions					174,000			197,000			215,000			240,000			200,000
			Feature phones				10,000			8,000			9,000			10,000			14,000
			Smartphones				105,000			107,000			124,000			132,000			119,000
			Connected devices				59,000			82,000			82,000			98,000			67,000
		Net additions (losses)					(6,000)			36,000			45,000			68,000			17,000
			Feature phones				(20,000)			(21,000)			(25,000)			(25,000)			(28,000)
			Smartphones				(7,000)			8,000			20,000			23,000			6,000
			Connected devices				21,000			49,000			50,000			70,000			39,000
		ARPU (1)(8)				$	47.08		$	47.37		$	48.13		$	51.46		$	58.12
		ABPU (Non-GAAP)(2)(8)				$	56.79		$	56.09		$	56.06		$	58.57		$	63.88
		ARPA (3)(8)				$	125.31		$	124.91		$	125.36		$	131.96		$	147.00
		ABPA (Non-GAAP)(4)(8)				$	151.16		$	147.90		$	145.99		$	150.19		$	161.57
		Churn rate (5)					1.34%			1.20%			1.28%			1.31%			1.41%
			Handsets				1.22%			1.10%			1.18%			1.23%			1.33%
			Connected devices				2.04%			1.84%			2.01%			1.95%			2.20%
		Smartphone penetration (6)					78%			77%			75%			74%			72%
	Prepaid
		Total at end of period					480,000			413,000			399,000			387,000			380,000
		Gross additions					132,000			73,000			75,000			69,000			71,000
		Net additions (losses)					67,000			14,000			12,000			7,000			12,000
		ARPU (1)				$	34.39		$	34.58		$	35.51		$	35.54		$	35.64
		Churn rate (5)					4.84%			4.86%			5.37%			5.40%			5.24%
Total connections at end of period (9)							5,030,000			4,973,000			4,926,000			4,876,000			4,807,000
Smartphones sold as a percent of total
	handsets sold						92%			91%			92%			91%			87%
Market penetration at end of period
	Consolidated operating population						31,994,000			31,994,000			31,994,000			31,967,000			31,814,000
	Consolidated operating penetration (7)						16%			16%			15%			15%			15%
Capital expenditures (millions)						$	103		$	93		$	79		$	198		$	135
Total cell sites in service							6,374			6,324			6,306			6,297			6,246
Owned towers							4,015			3,988			3,989			3,978			3,957
(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 Billings Per User (“ABPU”) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.
(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)		Average Billings Per Account (“ABPA”) - non-GAAP metric is calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.
(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)		Smartphone penetration is calculated by dividing postpaid smartphone connections by postpaid handset connections.
(7)		Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.
(8)		The quarter ended September 30, 2015 results include the recognition of $58 million in revenue due to the discontinuation of the loyalty rewards points program.  The discontinuation had the effect of increasing ARPU/ABPU and ARPA/ABPA by $4.48 and $11.34 for the three months ended September 2015, respectively.
(9)		Includes reseller and other connections.

United States Cellular Corporation
Consolidated Statement of Operations Highlights
(Unaudited)
			Three Months Ended September 30,
			2016			2015			2016 vs. 2015
									Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
	Service		$	771		$	896		$	(125)		(14)%
	Equipment sales			239			173			66		38%
		Total operating revenues		1,010			1,069			(59)		(6)%
Operating expenses
	System operations (excluding Depreciation, amortization    and accretion reported below)			196			199			(3)		(1)%
	Cost of equipment sold			280			287			(7)		(2)%
	Selling, general and administrative			370			375			(5)		(1)%
	Depreciation, amortization and accretion			155			152			3		2%
	(Gain) loss on asset disposals, net			7			3			4		>100%
	(Gain) loss on sale of business and other exit costs, net			–			(1)			1		N/M
	(Gain) loss on license sales and exchanges, net			(7)			(24)			17		70%
		Total operating expenses		1,001			991			10		1%
Operating income				9			78			(69)		(88)%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities			38			40			(2)		(5)%
	Interest and dividend income			14			9			5		51%
	Interest expense			(28)			(21)			(7)		(32)%
	Other, net			–			–			–		20%
		Total investment and other income		24			28			(4)		(14)%
Income before income taxes				33			106			(73)		(69)%
	Income tax expense			15			41			(26)		(63)%
Net income				18			65			(47)		(73)%
	Less: Net income attributable to noncontrolling    interests, net of tax			1			1			–		(53)%
Net income attributable to U.S. Cellular shareholders			$	17		$	64		$	(47)		(73)%
Basic weighted average shares outstanding				85			84			1		1%
Basic earnings per share attributable to    U.S. Cellular shareholders			$	0.20		$	0.75		$	(0.55)		(73)%
Diluted weighted average shares outstanding				85			85			–		-
Diluted earnings per share attributable to    U.S. Cellular shareholders			$	0.20		$	0.75		$	(0.55)		(73)%

United States Cellular Corporation
Consolidated Statement of Operations Highlights
(Unaudited)
			Nine Months Ended September 30,
			2016			2015			2016 vs. 2015
									Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
	Service		$	2,293		$	2,549		$	(256)		(10)%
	Equipment sales			655			461			194		42%
		Total operating revenues		2,948			3,010			(62)		(2)%
Operating expenses
	System operations (excluding Depreciation, amortization
		and accretion reported below)		572			586			(14)		(2)%
	Cost of equipment sold			799			779			20		2%
	Selling, general and administrative			1,089			1,107			(18)		(2)%
	Depreciation, amortization and accretion			462			450			12		3%
	(Gain) loss on asset disposals, net			16			12			4		33%
	(Gain) loss on sale of business and other exit costs, net			–			(114)			114		100%
	(Gain) loss on license sales and exchanges, net			(16)			(147)			131		89%
		Total operating expenses		2,922			2,673			249		9%
Operating income				26			337			(311)		(92)%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities			110			110			–		-
	Interest and dividend income			41			26			15		59%
	Interest expense			(84)			(61)			(23)		(37)%
	Other, net			–			(1)			1		26%
		Total investment and other income		67			74			(7)		(10)%
Income before income taxes				93			411			(318)		(77)%
	Income tax expense			39			161			(122)		(76)%
Net income				54			250			(196)		(78)%
	Less: Net income attributable to noncontrolling    interests, net of tax			1			7			(6)		(84)%
Net income attributable to U.S. Cellular shareholders			$	53		$	243		$	(190)		(78)%
Basic weighted average shares outstanding				85			84			1		1%
Basic earnings per share attributable to
	U.S. Cellular shareholders		$	0.63		$	2.89		$	(2.26)		(78)%
Diluted weighted average shares outstanding				85			85			–		-
Diluted earnings per share attributable to
	U.S. Cellular shareholders		$	0.63		$	2.86		$	(2.23)		(78)%

 

United States Cellular Corporation
Consolidated Statement of Cash Flows
(Unaudited)
					Nine Months Ended September 30,
					2016			2015
(Dollars in millions)
Cash flows from operating activities
	Net income				$	54		$	250
	Add (deduct) adjustments to reconcile net income to cash flows from operating activities
			Depreciation, amortization and accretion			462			450
			Bad debts expense			69			78
			Stock-based compensation expense			19			18
			Deferred income taxes, net			11			(20)
			Equity in earnings of unconsolidated entities			(110)			(110)
			Distributions from unconsolidated entities			55			45
			(Gain) loss on asset disposals, net			16			12
			(Gain) loss on sale of business and other exit costs, net			–			(114)
			(Gain) loss on license sales and exchanges, net			(16)			(147)
			Noncash interest expense			1			1
			Other operating activities			(2)			–
	Changes in assets and liabilities from operations
			Accounts receivable			1			(54)
			Equipment installment plans receivable			(160)			(96)
			Inventory			2			91
			Accounts payable			45			117
			Customer deposits and deferred revenues			(41)			(51)
			Accrued taxes			38			161
			Accrued interest			7			11
			Other assets and liabilities			(36)			(87)
				Net cash provided by operating activities		415			555
Cash flows from investing activities
	Cash paid for additions to property, plant and equipment					(280)			(407)
	Cash paid for acquisitions and licenses					(46)			(286)
	Cash received from divestitures and exchanges					20			314
	Federal Communications Commission deposit					(143)			–
	Other investing activities					–			2
				Net cash used in investing activities		(449)			(377)
Cash flows from financing activities
	Issuance of long-term debt					–			225
	Repayment of long-term debt					(8)			–
	Common shares reissued for benefit plans, net of tax payments					4			(1)
	Common shares repurchased					(2)			(4)
	Payment of debt issuance costs					(2)			(3)
	Acquisition of assets in common control transaction					–			(2)
	Distributions to noncontrolling interests					(1)			(6)
	Other financing activities					2			(2)
				Net cash provided by (used in) financing activities		(7)			207
Net increase (decrease) in cash and cash equivalents						(41)			385
Cash and cash equivalents
	Beginning of period					715			212
	End of period				$	674		$	597