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TDS Telephone And Data Systems

Filed: 6 May 21, 4:16pm

Exhibit 99.1   NEWS RELEASE

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As previously announced, TDS will hold a teleconference May 7, 2021, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.  
 FOR IMMEDIATE RELEASE
TDS reports first quarter 2021 results
UScellular raises 2021 guidance with strong first quarter performance;
TDS Telecom hits 500,000 broadband connections


CHICAGO (May 6, 2021) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,318 million for the first quarter of 2021, versus $1,261 million for the same period one year ago. Net income attributable to TDS common shareholders and related diluted earnings per share were $57 million and $0.48, respectively, for the first quarter of 2021 compared to $69 million and $0.59, respectively, in the same period one year ago.
“The TDS Family of Businesses made a strong start to 2021 and are well-positioned to achieve their strategic priorities," said LeRoy T. Carlson, Jr., TDS President and CEO. “UScellular and TDS Telecom produced impressive financial results and continued to provide essential communications, including high-quality data, video and voice services to our customers and communities. We are implementing our financing strategies to maintain a strong, yet flexible, financial foundation to fund our attractive investment opportunities, while also working to lower the cost of our balance sheet.
“UScellular increased service revenues, showing the positive effect of higher ARPU. Operational and cost discipline throughout the quarter also contributed to strong financial performance. Our attractive promotions are resonating with customers, and postpaid and prepaid handset additions strengthened compared to the same period a year ago. Investments in 5G and network modernization programs are on track reflecting UScellular’s commitment to continue to meet customers’ expectations for speed and reliability.

“TDS Telecom achieved excellent growth in residential customer connections and strong financial performance, driven by higher operating revenue in the first quarter. With the acceleration of its broadband strategy, 500,000 total customers are now taking broadband services, and more than half of all our customers now have 1Gig service available to them. This year, TDS Telecom has plans to double the number of service addresses that it built fiber to last year, building on the success of the program to-date.”
1


2021 Estimated Results

TDS’ current estimates of full-year 2021 results for UScellular and TDS Telecom are shown below. Such estimates represent management’s view as of May 6, 2021 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.
 
2021 Estimated Results
UScellularPreviousCurrent
(Dollars in millions)  
Service revenues$3,025-$3,125$3,050-$3,150
Adjusted OIBDA1
$800-$950$850-$950
Adjusted EBITDA1
$975-$1,125$1,025-$1,125
Capital expenditures$775-$875Unchanged
TDS TelecomPreviousCurrent
(Dollars in millions)  
Total operating revenues$975-$1,025Unchanged
Adjusted OIBDA1
$290-$320Unchanged
Adjusted EBITDA1
$290-$320Unchanged
Capital expenditures$425-$475Unchanged

The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2021 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.
 2021 Estimated Results
UScellularTDS Telecom
(Dollars in millions)  
Net income (GAAP)N/AN/A
Add back:  
Income tax expenseN/AN/A
Income before income taxes (GAAP)$175-$275$80-$110
Add back:  
Interest expense150 — 
Depreciation, amortization and accretion expense680 210 
EBITDA (Non-GAAP)1
$1,005-$1,105$290-$320
Add back or deduct:  
(Gain) loss on asset disposals, net20 — 
Adjusted EBITDA (Non-GAAP)1
$1,025-$1,125$290-$320
Deduct:  
Equity in earnings of unconsolidated entities170 — 
Interest and dividend income— 
Adjusted OIBDA (Non-GAAP)1
$850-$950$290-$320
2


 Actual Results
 Three Months Ended
March 31, 2021
Year Ended
December 31, 2020
 UScellularTDS
Telecom
UScellular
TDS
Telecom
(Dollars in millions)    
Net income (GAAP)$62 $24 $233 $100 
Add back:    
Income tax expense27 8 17 18 
Income before income taxes (GAAP)$89 $33 $250 $117 
Add back:    
Interest expense39 (1)112 (4)
Depreciation, amortization and accretion expense170 49 683 203 
EBITDA (Non-GAAP)1
$298 $80 $1,045 $316 
Add back or deduct:    
(Gain) loss on asset disposals, net5  25 
(Gain) loss on sale of business and other exit costs, net(1) — — 
(Gain) loss on license sales and exchanges, net  (5)— 
(Gain) loss on investments  (2)— 
Adjusted EBITDA (Non-GAAP)1
$302 $81 $1,063 $317 
Deduct:    
Equity in earnings of unconsolidated entities42  179 — 
Interest and dividend income2  
Other, net  — (1)
Adjusted OIBDA (Non-GAAP)1
$258 $81 $876 $314 
Numbers may not foot due to rounding.
1EBITDA, 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 March 31, 2021, can be found on TDS' website at investors.tdsinc.com.
3


Stock Repurchase
During the first quarter of 2021, TDS repurchased 162,500 Common Shares for $3 million and UScellular repurchased 54,900 Common Shares for $2 million.
Conference Call Information
TDS will hold a conference call on May 7, 2021 at 9:00 a.m. Central Time.
Access the live call on the Events & Presentations page of investors.tdsinc.com or at
https://event.on24.com/wcc/r/3155155/0CD2FBCBA421B063439060A77D169D23
Access the call by phone at (833) 968-2187, conference ID: 2661419. 

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 March 31, 2021.
Visit investors.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
jane.mccahon@tdsinc.com
 
Julie D. Mathews, IRC, Director - Investor Relations
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 obtain or maintain roaming arrangements with other carriers on acceptable terms; 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; 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; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; the impact, duration and severity of public health emergencies, such as the COVID-19 pandemic. 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
4


United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended3/31/202112/31/20209/30/20206/30/20203/31/2020
Retail Connections     
Postpaid     
Total at end of period4,406,000 4,412,000 4,401,000 4,372,000 4,359,000 
Gross additions143,000 171,000 168,000 129,000 132,000 
Feature phones3,000 2,000 4,000 3,000 2,000 
Smartphones101,000 117,000 98,000 82,000 88,000 
Connected devices39,000 52,000 66,000 44,000 42,000 
Net additions (losses)(6,000)11,000 28,000 12,000 (26,000)
Feature phones(9,000)(9,000)(8,000)(8,000)(10,000)
Smartphones6,000 12,000 8,000 11,000 (10,000)
Connected devices(3,000)8,000 28,000 9,000 (6,000)
ARPU1
$47.65 $47.51 $47.10 $46.24 $47.23 
ARPA2
$125.25 $124.87 $123.27 $120.70 $122.92 
Churn rate3
1.12 %1.21 %1.06 %0.89 %1.21 %
Handsets0.92 %1.01 %0.88 %0.71 %0.95 %
Connected devices2.53 %2.64 %2.35 %2.24 %3.11 %
Prepaid
Total at end of period496,000 499,000 506,000 496,000 494,000 
Gross additions62,000 56,000 65,000 62,000 57,000 
Net additions (losses)(3,000)(8,000)11,000 2,000 (12,000)
ARPU1
$35.25 $35.15 $35.45 $34.89 $34.07 
Churn rate3
4.37 %4.24 %3.59 %4.05 %4.67 %
Total connections at end of period4
4,961,000 4,968,000 4,962,000 4,919,000 4,903,000 
Market penetration at end of period
Consolidated operating population31,493,000 31,314,000 31,314,000 31,292,000 31,292,000 
Consolidated operating penetration5
16 %16 %16 %16 %16 %
Capital expenditures (millions)$125 $320 $216 $168 $236 
Total cell sites in service6,802 6,797 6,758 6,673 6,629 
Owned towers4,270 4,271 4,246 4,208 4,184 
1Average 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.
2Average 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.
3Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.
4Includes reseller and other connections.
5Market 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.
5


TDS Telecom
Summary Operating Data (Unaudited)
As of or for the Quarter Ended3/31/202112/31/20209/30/20206/30/20203/31/2020
Residential connections     
Broadband1
Wireline, Incumbent243,700 242,500 243,400 240,400 230,400 
Wireline, Expansion24,100 20,400 17,300 14,700 12,300 
Cable199,500 196,400 193,300 191,000 184,100 
Total Broadband467,300 459,300 454,000 446,000 426,800 
Video2
Wireline63,000 63,000 62,300 61,400 59,000 
Cable79,600 81,400 82,300 83,200 84,600 
Total Video142,700 144,400 144,500 144,600 143,600 
Voice3
Wireline255,000 256,900 260,000 261,800 259,100 
Cable53,700 53,900 54,400 55,300 54,800 
Total Voice308,700 310,800 314,400 317,100 313,900 
Total Residential connections918,700 914,400 913,000 907,800 884,300 
Commercial connections
Broadband1
34,400 34,000 33,700 33,400 33,200 
Video2
19,400 19,700 19,700 20,300 20,600 
Voice3
116,500 119,700 122,700 126,100 128,600 
ManagedIP4
108,500 113,300 116,700 117,300 119,800 
Total Commercial connections278,800 286,700 292,900 297,200 302,200 
Total connections1,197,400 1,201,100 1,205,900 1,205,000 1,186,400 
Residential revenue per connection5
$56.97 $55.66 $55.66 $53.82 $54.30 
Capital expenditures (millions)$70 $147 $92 $75 $54 
Numbers may not foot due to rounding.
1The individual customers provided high-speed internet access through various transmission technologies, including fiber, DSL, dedicated internet circuit technologies or cable modem service.
2The individual customers provided video services.
3The individual circuits connecting a customer to TDS' central office facilities that provide voice services or the billable number of lines into a building for voice services.
4The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.
5Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.
6


Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
 Three Months Ended
March 31,
 202120202021
vs. 2020
(Dollars and shares in millions, except per share amounts)   
Operating revenues   
UScellular$1,023 $963 %
TDS Telecom249 240 %
All Other1
46 58 (21)%
 1,318 1,261 %
Operating expenses   
UScellular   
Expenses excluding depreciation, amortization and accretion765 732 %
Depreciation, amortization and accretion170 177 (4)%
(Gain) loss on asset disposals, net5 39 %
(Gain) loss on sale of business and other exit costs, net(1)— N/M
 939 913 %
TDS Telecom   
Expenses excluding depreciation, amortization and accretion168 160 %
Depreciation, amortization and accretion49 52 (5)%
 217 212 %
All Other1
   
Expenses excluding depreciation and amortization47 58 (19)%
Depreciation and amortization5 (17)%
 52 64 (19)%
Total operating expenses1,208 1,189 %
Operating income (loss)   
UScellular84 50 67 %
TDS Telecom32 28 12 %
All Other1
(6)(6)%
 110 72 52 %
Investment and other income (expense)
Equity in earnings of unconsolidated entities42 45 (7)%
Interest and dividend income3 (44)%
Interest expense(53)(37)(45)%
Total investment and other income(8)14 N/M
Income before income taxes102 86 18 %
Income tax expense31 N/M
Net income71 83 (14)%
Less: Net income attributable to noncontrolling interests, net of tax12 14 (9)%
Net income attributable to TDS shareholders59 69 (15)%
TDS Preferred dividend requirement2 — N/M
Net income attributable to TDS common shareholders$57 $69 (18)%
Basic weighted average shares outstanding114 115 
Basic earnings per share attributable to TDS common shareholders$0.49 $0.60 (18)%
Diluted weighted average shares outstanding116 116 
Diluted earnings per share attributable to TDS common shareholders$0.48 $0.59 (18)%
N/M - Percentage change not meaningful.
Numbers may not foot due to rounding.
1Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.
7


Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
 20212020
(Dollars in millions)  
Cash flows from operating activities
Net income$71 $83 
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion224 235 
Bad debts expense8 34 
Stock-based compensation expense10 11 
Deferred income taxes, net27 75 
Equity in earnings of unconsolidated entities(42)(45)
Distributions from unconsolidated entities23 25 
(Gain) loss on asset disposals, net5 
(Gain) loss on sale of business and other exit costs, net(1)— 
Other operating activities(1)— 
Changes in assets and liabilities from operations
Accounts receivable17 43 
Equipment installment plans receivable(18)23 
Inventory8 (52)
Accounts payable(115)87 
Customer deposits and deferred revenues9 (9)
Accrued taxes (74)
Accrued interest9 
Other assets and liabilities(69)(82)
Net cash provided by operating activities165 367 
   
Cash flows from investing activities
Cash paid for additions to property, plant and equipment(220)(377)
Cash paid for intangible assets(1,261)(26)
Cash paid for investments (1)
Cash received from divestitures and exchanges1 — 
Net cash used in investing activities(1,480)(404)
   
Cash flows from financing activities
Issuance of long-term debt567 50 
Repayment of long-term debt (2)
Issuance of TDS Preferred Shares420 — 
TDS Common Shares reissued for benefit plans, net of tax payments(1)(1)
UScellular Common Shares reissued for benefit plans, net of tax payments(1)— 
Repurchase of TDS Common Shares(3)(6)
Repurchase of UScellular Common Shares(2)(21)
Dividends paid to TDS shareholders(20)(19)
Payment of debt and equity issuance costs(14)(3)
Distributions to noncontrolling interests(1)(1)
Other financing activities(3)— 
Net cash provided by (used in) financing activities942 (3)
Net decrease in cash, cash equivalents and restricted cash(373)(40)
Cash, cash equivalents and restricted cash
Beginning of period1,452 474 
End of period$1,079 $434 
8


Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
ASSETS
 
 March 31, 2021December 31, 2020
(Dollars in millions)  
Current assets  
Cash and cash equivalents$1,042 $1,429 
Short-term investments3 
Accounts receivable, net1,097 1,112 
Inventory, net145 154 
Prepaid expenses114 105 
Income taxes receivable188 187 
Other current assets53 36 
Total current assets2,642 3,026 
Assets held for sale1 
Licenses3,924 2,638 
Goodwill547 547 
Other intangible assets, net213 213 
Investments in unconsolidated entities497 477 
Property, plant and equipment, net
3,951 3,972 
Operating lease right-of-use assets1,005 998 
Other assets and deferred charges627 652 
Total assets$13,407 $12,525 
9


Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)
LIABILITIES AND EQUITY
 March 31, 2021December 31, 2020
(Dollars in millions, except per share amounts)  
Current liabilities  
Current portion of long-term debt$6 $
Accounts payable360 508 
Customer deposits and deferred revenues202 193 
Accrued interest25 16 
Accrued taxes67 69 
Accrued compensation73 132 
Short-term operating lease liabilities134 129 
Other current liabilities96 101 
Total current liabilities963 1,153 
Liabilities held for sale 
Deferred liabilities and credits  
Deferred income tax liability, net890 863 
Long-term operating lease liabilities941 940 
Other deferred liabilities and credits558 541 
Long-term debt, net3,991 3,424 
Noncontrolling interests with redemption features10 10 
Equity  
TDS shareholders' equity  
Series A Common and Common Shares, par value $0.01 per share1 
Capital in excess of par value2,488 2,482 
Preferred Shares, par value $0.01 per share408 — 
Treasury shares, at cost(472)(477)
Accumulated other comprehensive loss(3)(4)
Retained earnings2,830 2,802 
Total TDS shareholders' equity5,252 4,804 
Noncontrolling interests802 789 
Total equity6,054 5,593 
Total liabilities and equity$13,407 $12,525 
10


Balance Sheet Highlights
(Unaudited)
 March 31, 2021
 TDSTDS CorporateIntercompanyTDS
 UScellularTelecom& OtherEliminationsConsolidated
(Dollars in millions)     
Cash and cash equivalents$479 $177 $564 $(178)$1,042 
Licenses, goodwill and other intangible assets$3,915 $761 $$— $4,684 
Investment in unconsolidated entities455 45 (7)497 
 $4,370 $765 $53 $(7)$5,181 
Property, plant and equipment, net$2,419 $1,435 $97 $— $3,951 
Long-term debt, net:
Current portion$$— $$— $
Non-current portion2,981 1,006 — 3,991 
 $2,983 $$1,010 $— $3,997 
11


TDS Telecom Highlights
(Unaudited)
 Three Months Ended
March 31,
 202120202021
vs. 2020
(Dollars in millions)   
Operating revenues   
Residential
Wireline, Incumbent$85 $81 %
Wireline, Expansion7 80 %
Cable65 60 %
Total residential157 144 %
Commercial47 49 (6)%
Wholesale45 47 (3)%
Total service revenues249 240 %
Equipment revenues — %
Total operating revenues249 240 %
Cost of services97 95 %
Cost of equipment and products — (1)%
Selling, general and administrative expenses70 65 %
Depreciation, amortization and accretion49 52 (5)%
(Gain) loss on asset disposals, net — N/M
Total operating expenses217 212 %
 
Operating income$32 $28 12 %
N/M - Percentage change not meaningful
Numbers may not foot due to rounding.
12


Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited)
Free Cash Flow
 Three Months Ended
March 31,
 20212020
(Dollars in millions)  
Cash flows from operating activities (GAAP)$165 $367 
Less: Cash paid for additions to property, plant and equipment220 377 
Free cash flow (Non-GAAP)1
$(55)$(10)
1Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment.
13