Attached files
| file | filename |
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| EX-99.2 - EX-99.2 - TELEPHONE & DATA SYSTEMS INC /DE/ | tdsexhibit992.htm |
| 8-K - 8-K - TELEPHONE & DATA SYSTEMS INC /DE/ | tds8k.htm |
As previously announced, TDS will hold a teleconference November 8, 2017, at 9:30 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.
FOR IMMEDIATE RELEASE
TDS reports third quarter 2017 results
U.S. Cellular expands customer base and raises guidance;
Sixth consecutive quarter of double digit cable broadband connection growth
CHICAGO, (November 8, 2017) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,251 million for the third quarter of 2017, versus $1,314 million for the same period one year ago. Net loss available to TDS common shareholders and related diluted loss per share were $181 million and $1.64, respectively, as a result of a $262 million ($190 million, net of tax and noncontrolling interests impacts) non-cash charge related to goodwill impairment recorded during the three months ended September 30, 2017. This compares to Net income available to TDS common shareholders and related diluted earnings per share of $13 million and $0.11, respectively, in the same period one year ago. Excluding this goodwill impairment charge and other non-controlling interest impacts associated with this charge, Net income available to TDS common shareholders and related diluted earnings per share were $9 million and $0.08, respectively, for the three months ended September 30, 2017.
“TDS' businesses continue on a solid path of achieving their priorities for 2017,” said LeRoy T. Carlson Jr., TDS president and CEO. “U.S. Cellular grew its customer base while successfully reducing expenses. TDS Telecom expanded its wireline and cable segments while implementing its long-term broadband strategy of providing the best broadband connection in each market.
“U.S. Cellular added postpaid handset customers and continued to drive an exceptionally low level of postpaid handset churn. This shows that effective promotions and pricing through Total Plan packages, which include unlimited data offerings, are well received by both new and current customers. U.S. Cellular effectively managed cost reductions including lowering expenses in system operations, despite increased data traffic. Reflecting these positive results, U.S. Cellular raised its guidance on profitability.
“Wireline revenues and profitability increased at TDS Telecom, through higher revenues from fiber investments and through support from the Alternative Connect America Cost Model (A-CAM). TDS Telecom's Cable segment continued to see a rise in broadband connections and together with an increase in demand for higher data speeds, generated higher revenues and margin expansion. TDS Telecom recently completed its purchase agreements for Crestview Communications in Central Oregon, and K2 Communications in Mead, Colorado. These acquisitions provide excellent clustering opportunities as we continue to build broadband penetration in these target markets. OneNeck IT Solutions reported lower revenues due to less equipment sales to existing customers. Growing sales continues to be their top priority.”
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Current estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below. Such estimates represent management’s view as of November 8, 2017. Such forward-looking statements should not be assumed to be current as of any future date. TDS 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.
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2017 Estimated Results |
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U.S. Cellular |
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TDS Telecom |
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TDS(3) |
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Current |
Previous |
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Current |
Previous |
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Current |
Previous |
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(Dollars in millions) |
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Total operating revenues (1) |
$3,850-$3,950 |
$3,800-$4,000 |
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$1,125-$1,150 |
$1,200-$1,250 |
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$4,990-$5,115 |
$5,015-$5,265 |
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Adjusted OIBDA (1)(2)(4) |
$600-$700 |
$550-$650 |
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$310-$330 |
$300-$340 |
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$910-$1,030 |
$855-$955 |
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Adjusted EBITDA (2) |
$740-$840 |
$700-$800 |
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$310-$330 |
$300-$340 |
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$1,050-$1,170 |
$1,005-$1,145 |
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Capital expenditures (Approximately) |
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$500 |
Unchanged |
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$225 |
Unchanged |
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$735 |
Unchanged |
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The following tables provide reconciliations of Net income (loss) to Adjusted OIBDA and Adjusted EBITDA for 2017 estimated results, actual results for the nine months ended September 30, 2017, and actual results for the year ended December 31, 2016. In providing 2017 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.
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2017 Estimated Results |
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U.S. Cellular |
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TDS Telecom |
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TDS(3) |
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(Dollars in millions) |
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Net income (loss) (GAAP) |
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N/A |
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N/A |
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N/A |
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Add back: |
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Income tax expense (benefit) |
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N/A |
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N/A |
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N/A |
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Income (loss) before income taxes (GAAP) |
$ |
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$ |
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$ |
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Add back: |
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Interest expense |
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Depreciation, amortization and accretion expense |
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EBITDA (Non-GAAP) |
$ |
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$ |
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$ |
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Add back: |
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Loss on impairment of goodwill |
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(Gain) loss on sale of business and other exit costs, net |
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(Gain) loss on license sales and exchanges, net |
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(Gain) loss on asset disposals, net |
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Adjusted EBITDA (Non-GAAP) (2) |
$ |
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$ |
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$ |
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Deduct: |
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Equity in earnings of unconsolidated entities |
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Interest and dividend income(1) |
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Adjusted OIBDA (Non-GAAP)(1)(2)(4) |
$ |
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$ |
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$ |
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Actual Results |
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Nine Months Ended September 30, 2017 |
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Year ended December 31, 2016 |
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U.S. Cellular |
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TDS Telecom |
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TDS (3) |
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U.S. Cellular |
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TDS Telecom |
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TDS (3) |
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(Dollars in millions) |
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Net income (loss) (GAAP) |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Add back: |
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Income tax expense (benefit) |
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Income (loss) before income taxes |
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(GAAP) |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Add back: |
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Interest expense |
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Depreciation, amortization and |
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accretion expense |
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EBITDA (Non-GAAP) |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Add back: |
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Loss on impairment of goodwill |
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(Gain) loss on sale of business and |
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other exit costs, net |
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(Gain) loss on license sales and |
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exchanges, net |
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(Gain) loss on asset disposals, net |
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Adjusted EBITDA (Non-GAAP) (2) |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Deduct: |
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Equity in earnings of unconsolidated |
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entities |
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Interest and dividend income(1) |
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Other, net |
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Adjusted OIBDA (Non-GAAP) (1)(2)(4) |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Note: Totals may not foot due to rounding differences. |
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(1) |
Equipment installment plan interest income is reflected as a component of Service revenues consistent with an accounting policy change effective January 1, 2017. All prior period numbers have been recast to conform to this accounting change. |
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(2) |
Adjusted EBITDA is defined as net income adjusted for the items set forth in the reconciliation above. Adjusted OIBDA is defined as net income adjusted for the items set forth in the reconciliation above. 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 Adjusted EBITDA and Adjusted OIBDA flow to the corresponding GAAP measure, Net income or Income before income taxes. |
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(3) |
The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above. |
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(4) |
A reconciliation of Adjusted OIBDA (Non-GAAP) to Operating income (GAAP) for September 30, 2017 actual results can be found on TDS' website at investors.tdsinc.com. |
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TDS will hold a conference call on November 8, 2017 at 9:30 a.m. Central Time.
- Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://www.webcaster4.com/Webcast/Page/1145/23219.
- 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.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; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and BendBroadband. Founded in 1969 and headquartered in Chicago, TDS employed 9,900 people as of September 30, 2017.
Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.
Contacts
Jane W. McCahon, Senior Vice President - Corporate Relations and Corporate Secretary
312-592-5379
jane.mccahon@tdsinc.com
Julie D. Mathews, IRC, Director - Investor Relations
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 TDS’ business strategy; uncertainties in TDS’ future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and 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 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 of TDS and 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 services and products offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission, which are incorporated by reference herein.
For more information about TDS and its subsidiaries, visit:
TDS: www.tdsinc.com
U.S. Cellular: www.uscellular.com
TDS Telecom: www.tdstelecom.com
OneNeck IT Solutions: www.oneneck.com
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Summary Operating Data (Unaudited) |
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As of or for the Quarter Ended |
9/30/2017 |
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6/30/2017 |
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3/31/2017 |
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12/31/2016 |
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9/30/2016 |
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Retail Connections |
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Postpaid |
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Total at end of period |
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Gross additions |
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Feature phones |
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Smartphones |
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Connected devices |
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Net additions (losses) |
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Feature phones |
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Smartphones |
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Connected devices |
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ARPU (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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ABPU (Non-GAAP)(2) |
$ |
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$ |
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$ |
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$ |
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$ |
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ARPA (3) |
$ |
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$ |
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$ |
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$ |
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$ |
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ABPA (Non-GAAP)(4) |
$ |
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$ |
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$ |
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$ |
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$ |
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Churn rate (5) |
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1.16% |
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1.13% |
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1.29% |
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1.41% |
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1.34% |
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Handsets |
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0.96% |
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0.91% |
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1.08% |
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1.23% |
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1.22% |
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Connected devices |
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2.33% |
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2.35% |
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2.55% |
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2.49% |
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2.04% |
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Prepaid |
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Total at end of period |
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Gross additions |
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Net additions (losses) |
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ARPU (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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Churn rate (5) |
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4.75% |
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4.93% |
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5.69% |
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5.44% |
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4.84% |
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Total connections at end of period (6) |
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Market penetration at end of period |
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Consolidated operating population |
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Consolidated operating penetration (7) |
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16% |
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16% |
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16% |
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16% |
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16% |
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Capital expenditures (millions) |
$ |
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$ |
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$ |
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$ |
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$ |
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Total cell sites in service |
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Owned towers |
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(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: |
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Postpaid ARPU consists of total postpaid service revenues and postpaid connections. |
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Prepaid ARPU consists of total prepaid service revenues and prepaid connections. |
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(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. |
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(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. |
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(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. |
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(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. |
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(6) |
Includes reseller and other connections. |
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(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. |
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Summary Operating Data (Unaudited) |
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As of or for the Quarter Ended |
9/30/2017 |
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6/30/2017 |
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3/31/2017 |
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12/31/2016 |
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9/30/2016 |
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TDS Telecom |
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Wireline |
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Residential connections |
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Voice (1) |
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Broadband (2) |
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IPTV (3) |
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Wireline residential connections |
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Total residential revenue per connection (4) |
$ |
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$ |
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$ |
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$ |
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$ |
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Commercial connections |
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Voice (1) |
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Broadband (2) |
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managedIP (5) |
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Wireline commercial connections |
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Total Wireline connections |
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Cable |
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Cable Connections |
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Broadband (6) |
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Video (7) |
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Voice (8) |
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Cable connections |
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Numbers may not foot due to rounding. |
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(1) |
The individual circuits connecting a customer to Wireline’s central office facilities. |
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(2) |
The number of Wireline customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies. |
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(3) |
The number of Wireline customers provided video services using IP networking technology. |
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(4) |
Total residential revenue per connection is calculated by dividing total Wireline residential revenue by the average number of Wireline residential connections and by the number of months in the period. |
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(5) |
The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology. |
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(6) |
Billable number of lines into a building for high-speed data services. |
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(7) |
Generally, a home or business receiving video programming counts as one video connection. In counting bulk residential or commercial connections, such as an apartment building or hotel, connections are counted based on the number of units/rooms within the building receiving service. |
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(8) |
Billable number of lines into a building for voice services. |
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Capital Expenditures (Unaudited) |
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Quarter Ended |
9/30/2017 |
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6/30/2017 |
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3/31/2017 |
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12/31/2016 |
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9/30/2016 |
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(Dollars in millions) |
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Wireline |
$ |
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$ |
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$ |
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$ |
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$ |
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Cable |
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HMS |
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$ |
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$ |
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$ |
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$ |
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$ |
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Numbers may not foot due to rounding. |
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Consolidated Statement of Operations Highlights |
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(Unaudited) |
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Three Months Ended September 30, |
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2017 |
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2016 |
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2017 vs. 2016 |
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Increase (Decrease) |
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(Dollars and shares in millions, except per share amounts) |
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Operating revenues |
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U.S. Cellular (1) |
$ |
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$ |
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$ |
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(6)% |
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TDS Telecom |
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(1)% |
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All Other (2) |
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- |
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(5)% |
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Operating expenses |
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U.S. Cellular |
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Expenses excluding depreciation, amortization and accretion |
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(6)% |
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Depreciation, amortization and accretion |
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(2)% |
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Loss on impairment of goodwill |
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N/M |
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(Gain) loss on asset disposals, net |
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(26)% |
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(Gain) loss on sale of business and other exit costs, net |
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N/M |
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(Gain) loss on license sales and exchanges, net |
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100% |
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32% |
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TDS Telecom |
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Expenses excluding depreciation, amortization and accretion |
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(5)% |
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Depreciation, amortization and accretion |
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(2)% |
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Loss on impairment of goodwill |
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N/M |
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(Gain) loss on asset disposals, net |
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(51)% |
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8% |
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All Other (2) |
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Expenses excluding depreciation and amortization |
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64% |
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Depreciation and amortization |
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(9)% |
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Loss on impairment of goodwill(3) |
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N/M |
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(Gain) loss on asset disposals, net |
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(100)% |
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(100)% |
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Total operating expenses |
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16% |
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Operating income (loss) |
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U.S. Cellular (1) |
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>(100)% |
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TDS Telecom |
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>(100)% |
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All Other (2) |
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>100% |
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>(100)% |
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Investment and other income (expense) |
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Equity in earnings of unconsolidated entities |
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(6)% |
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Interest and dividend income (1) |
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>100% |
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Interest expense |
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(2)% |
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Other, net |
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>100% |
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Total investment and other income (expense)(1) |
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(38)% |
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Income (loss) before income taxes |
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>(100)% |
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Income tax expense (benefit) |
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>(100)% |
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Net income (loss) |
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>(100)% |
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Less: Net income (loss) attributable to noncontrolling |
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interests, net of tax |
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>(100)% |
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Net income (loss) attributable to TDS shareholders |
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>(100)% |
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TDS Preferred dividend requirement |
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- |
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Net income (loss) available to TDS common shareholders |
$ |
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$ |
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$ |
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>(100)% |
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Basic weighted average shares outstanding |
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1% |
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Basic earnings (loss) per share available to TDS common shareholders |
$ |
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$ |
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$ |
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N/M |
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Diluted weighted average shares outstanding |
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(1)% |
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Diluted earnings (loss) per share available to TDS common shareholders |
$ |
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$ |
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$ |
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>(100)% |
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N/M - Percentage change not meaningful |
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Numbers may not foot due to rounding. |
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End Notes (1) (2) (3) ̶ Explained on page 11 of the release |
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