TDS reports fourth quarter and full year 2024 results

Investing in our networks; TDS Telecom provides 2025 guidance , /PRNewswire/ -- As previously announced, TDS will hold a teleconference on February 21, 2025 at 9:00 a.m. CST. Listen to the call live via the Events & Presentations page of investors.tdsinc.com. Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,240 million for the fourth quarter of 2024, versus $1,313 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(11) million and $(0.10), respectively, for the fourth quarter of 2024 compared to $(523) million and $(4.64), respectively, in the same period one year ago. Net income (loss) attributable to TDS common shareholders excluding a fourth quarter 2023 TDS Telecom non-cash charge related to goodwill impairment (Non-GAAP) of $547 million ($511 million, net of tax) and related diluted earnings (loss) per share excluding a fourth quarter 2023 TDS Telecom non-cash charge related to goodwill impairment (Non-GAAP) were $(12) million and $(0.11), respectively, for the fourth quarter of 2023. TDS reported total operating revenues of $4,964 million and $5,160 million for the years ended 2024 and 2023, respectively. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(97) million and $(0.85), respectively, for the year ended 2024 compared to $(569) million and $(5.06), respectively, for the year ended 2023. Net income attributable to TDS common shareholders excluding 2024 impairment losses (non-GAAP) of $137 million ($103 million, net of tax) and related diluted earnings (loss) per share excluding 2024 impairment losses (non-GAAP) were $(12) million and $(0.11), respectively, for the year ended 2024. Substantially all of the UScellular impairment loss was related to the retained high-band spectrum unit of accounting which includes the 28 GHz, 37GHz and 38 GHz frequency bands. Net income (loss) attributable to TDS common shareholders excluding a fourth quarter 2023 TDS Telecom non-cash charge related to goodwill impairment (Non-GAAP) of $547 million ($511 million, net of tax) and related diluted earnings (loss) per share excluding a fourth quarter 2023 TDS Telecom non-cash charge related to goodwill impairment (Non-GAAP) were $(58) million and $(0.53), respectively, for the year ended 2023. Full year 2024 Highlights* UScellular Announced multiple transactions related to the strategic alternatives review Transaction with T-Mobile and four spectrum transactions with various mobile network operators Improved wireless operating results Postpaid and prepaid net losses improved Postpaid and prepaid churn improved Fixed wireless customers grew 27% Cash flows from operating activities and free cash flow up year over year Ongoing 5G mid-band network deployment — providing additional capacity and faster speeds for our customers TDS Telecom Exceeded full year 2024 fiber address goal Delivered 129,000 marketable fiber service addresses Executing on fiber broadband strategy Expanded footprint 6% — increased total service addresses to 1.8 million Residential broadband connections grew 2% and Residential revenue per connection grew 5% Total Wireline expansion residential revenues grew to $114 million, up from $75 million *Comparisons are Year Ended December 31, 2024 to Year Ended December 31, 2023 "During 2024, we made significant progress on the strategic review of alternatives at UScellular," said Walter C. D. Carlson, TDS President and CEO. "And as part of our mission to provide outstanding communication services to our customers, both business units invested in their high-quality networks. UScellular continued to deploy its mid-band spectrum to enhance speed and capacity while TDS Telecom grew its footprint and delivered 129,000 new marketable fiber service addresses. "In 2025, TDS Telecom will continue its ongoing fiber expansion and the FCC's Enhanced Alternative Connect America Cost Model program and intends to bring a fiber-rich network to over 150,000 new marketable service addresses throughout the country. And while UScellular works toward a successful close on the sale of its wireless operations and spectrum transactions, UScellular remains focused on its operational priorities and growing its tower business." Announced Transactions On May 24, 2024, TDS and UScellular entered into a Securities Purchase Agreement to sell UScellular's wireless operations and select spectrum assets to T-Mobile US, Inc. (T-Mobile). The transaction is expected to close in mid-2025, subject to regulatory approval and the satisfaction of customary closing conditions. On October 17, 2024, UScellular, and certain subsidiaries of UScellular, entered into a License Purchase Agreement with Verizon Communications, Inc. (Verizon) to sell certain AWS, Cellular and PCS wireless spectrum licenses, subject to receipt of regulatory approvals, and agreed to grant Verizon certain rights to lease such licenses prior to the transaction close. Additionally, UScellular also entered into agreements with Nsight Spectrum, LLC and Nex-Tech Wireless, LLC for the sale of select spectrum licenses. On November 6, 2024, UScellular, and certain subsidiaries of UScellular, entered into a License Purchase Agreement with New Cingular Wireless PCS, LLC (AT&T), a subsidiary of AT&T, Inc. to sell certain 3.45 GHz and 700 MHz wireless spectrum licenses, subject to receipt of regulatory approvals, and agreed to grant AT&T certain rights to lease and sub-lease such licenses prior to the transaction close. Due to the pending transaction with T-Mobile, UScellular is not providing 2025 financial guidance. 2025 Estimated Results TDS' current estimates of full-year 2025 results for TDS Telecom are shown below. Such estimates represent management's view as of February 21, 2025 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. TDS Telecom 2025 Estimated Results Actual Results forthe Year EndedDecember 31, 2024 (Dollars in millions) Total operating revenues $1,030-$1,070 $1,061 Adjusted OIBDA1 (Non-GAAP) $310-$350 $340 Adjusted EBITDA1 (Non-GAAP) $320-$360 $350 Capital expenditures $375-$425 $324 The following tables reconcile EBITDA, Adjusted EBITDA, and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2025 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. TDS Telecom 2025 Estimated Results Actual Results for the Year Ended December 31, 2024 (Dollars in millions) Net income (GAAP) N/A $85 Add back: Income tax expense N/A 35 Income before income taxes (GAAP) $20-$60 $120 Add back: Interest expense — (5) Depreciation, amortization and accretion 300 271 EBITDA (Non-GAAP)1 $320-$360 $385 Add back or deduct: Loss on impairment of intangible assets — 1 (Gain) loss on asset disposals, net — 12 (Gain) loss on sale of business and other exit costs, net — (49) Adjusted EBITDA (Non-GAAP)1 $320-$360 $350 Deduct: Interest and dividend income 5 5 Other, net 5 4 Adjusted OIBDA (Non-GAAP)1 $310-$350 $340 Numbers may not foot due to rounding. 1 EBITDA, 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 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, nonrecurring expenses, 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, 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 December 31, 2024, can be found on TDS' website at investors.tdsinc.com. Conference Call Information TDS will hold a conference call on February 21, 2025 at 9:00 a.m. Central Time. Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://events.q4inc.com/attendee/548841993 Access the call by phone at (888) 330-2384 (US/Canada), passcode: 1328528 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 TDSTelephone and Data Systems, Inc. (TDS) provides wireless, broadband, video, and voice to approximately 5.5 million connections nationwide through its businesses, UScellular and TDS Telecom. Founded in 1969 and headquartered in Chicago, TDS employed approximately 7,900 associates as of December 31, 2024. Visit investors.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more. 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: whether the announced transactions whereby UScellular has agreed to sell its wireless operations and selected spectrum assets will be successfully completed or whether UScellular will be able to find buyers at mutually agreeable prices for its remaining spectrum assets; whether any such strategic alternative will result in additional value for TDS or its shareholders and whether the process will have an adverse impact on TDS' businesses; if the announced transactions are not successfully completed there may be substantial changes in which the wireless business is conducted; if the announced transactions are successfully completed, substantial costs will be triggered and changes required in the manner in which UScellular's remaining business is conducted; strategic decisions regarding the tower business; intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; 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' lack of 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 with which TDS does business; 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; the effect on TDS' business if the collateral securing its secured term loan is foreclosed upon; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment, including changes in regulatory support received and the ability to pass through certain regulatory fees to customers; pending and future litigation; cyber-attacks or other breaches of network or information technology security; control by the TDS Voting Trust; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; and the impact, duration and severity of public health emergencies. 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. For more information about TDS and its subsidiaries, visit:TDS: www.tdsinc.comUScellular: www.uscellular.comTDS Telecom: www.tdstelecom.com United States Cellular Corporation Summary Operating Data (Unaudited) As of or for the Quarter Ended 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Retail Connections Postpaid Total at end of period1 3,985,000 3,999,000 4,027,000 4,051,000 4,106,000 Gross additions 140,000 123,000 117,000 106,000 129,000 Handsets 93,000 84,000 73,000 63,000 80,000 Connected devices 47,000 39,000 44,000 43,000 49,000 Net additions (losses)1 (14,000) (28,000) (24,000) (44,000) (50,000) Handsets (19,000) (28,000) (29,000) (47,000) (53,000) Connected devices 5,000 — 5,000 3,000 3,000 ARPU2 $ 51.73 $ 52.04 $ 51.45 $ 51.96 $ 51.61 ARPA3 $ 131.10 $ 131.81 $ 130.41 $ 132.00 $ 131.63 Handset upgrade rate4 4.8 % 3.5 % 4.1 % 4.5 % 5.8 % Churn rate5 1.29 % 1.25 % 1.16 % 1.22 % 1.44 % Handsets 1.08 % 1.07 % 0.97 % 1.03 % 1.22 % Connected devices 2.67 % 2.47 % 2.47 % 2.52 % 3.03 % Prepaid Total at end of period1 448,000 452,000 439,000 436,000 451,000 Gross additions 46,000 57,000 50,000 41,000 43,000 Net additions (losses)1 (4,000) 13,000 3,000 (13,000) (11,000) ARPU2, 6 $ 30.59 $ 32.01 $ 32.37 $ 32.25 $ 32.32 Churn rate5 3.70 % 3.30 % 3.60 % 4.06 % 3.87 % Market penetration at end of period Consolidated operating population 32,550,000 32,550,000 32,550,000 32,550,000 32,350,000 Consolidated operating penetration7 15 % 15 % 15 % 14 % 15 % Capital expenditures (millions) $ 162 $ 120 $ 165 $ 131 $ 148 Total cell sites in service 7,010 7,007 6,990 6,995 7,000 Owned towers 4,409 4,407 4,388 4,382 4,373 Number of colocations8 2,444 2,418 2,392 2,397 2,390 Tower tenancy rate9 1.55 1.55 1.55 1.55 1.55 Due to rounding, the sum of quarterly results may not equal the total for the year. 1 First quarter 2024 connections were adjusted to remove subscribers that could no longer access the UScellular network due to the CDMA shutdown. This resulted in 11,000 and 2,000 subscribers removed from the postpaid and prepaid base, respectively, that are not included in Net additions (losses) for the quarter. 2 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. 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 Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections. 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 Fourth quarter 2023 Prepaid ARPU excludes a $6 million reduction of prepaid revenue related to an adjustment to correct a prior period error recorded in the fourth quarter of 2023. 7 Market 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. 8 Represents instances where a third-party wireless carrier rents or leases space on a company-owned tower. 9 Average number of tenants that lease space on company-owned towers, measured on a per-tower basis. TDS Telecom Summary Operating Data (Unaudited) As of or for the Quarter Ended 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Residential connections Broadband Incumbent Fiber 118,500 115,900 113,100 109,800 110,100 Incumbent Copper 116,900 125,600 130,600 135,300 134,700 Expansion Fiber 126,100 115,300 107,800 100,400 92,200 Cable 191,500 195,900 198,500 202,400 202,900 Total Broadband1 553,000 552,700 550,000 547,900 539,800 Video 121,000 122,100 124,800 128,800 131,500 Voice 261,600 271,300 275,600 279,400 281,600 Total Residential connections 935,600 946,100 950,400 956,100 952,900 Commercial connections 190,500 197,200 201,500 206,200 210,200 Total connections2 1,126,100 1,143,300 1,152,000 1,162,200 1,163,100 Residential revenue per connection3 $ 64.72 $ 65.41 $ 65.26 $ 64.58 $ 62.74 Capital expenditures (millions) $ 82 $ 78 $ 78 $ 87 $ 143 Numbers may not foot due to rounding. 1 Total residential broadband connections increased by 8,100 during the three months ended March 31, 2024, due primarily to net additions of 6,400 as well as certain other adjustments. 2 Divestitures in the fourth quarter of 2024 resulted in a decrease of 15,700 connections. 3 Total 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. Telephone and Data Systems, Inc. Consolidated Statement of Operations Highlights (Unaudited) Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2023 (Dollars and shares in millions, except per share amounts) Operating revenues UScellular $ 970 $ 1,000 (3) % $ 3,770 $ 3,906 (3) % TDS Telecom 264 261 1 % 1,061 1,028 3 % All Other1 6 52 (90) % 133 226 (41) % 1,240 1,313 (6) % 4,964 5,160 (4) % Operating expenses UScellular Expenses excluding depreciation, amortization and accretion 811 812 — 2,960 3,096 (4) % Depreciation, amortization and accretion 165 166 — 665 656 1 % Loss on impairment of licenses — — — 136 — N/M (Gain) loss on asset disposals, net 4 3 3 % 18 17 3 % (Gain) loss on license sales and exchanges, net (1) (2) 59 % 3 (2) N/M 979 979 — 3,782 3,767 — TDS Telecom Expenses excluding depreciation, amortization and accretion 187 186 1 % 721 749 (4) % Depreciation, amortization and accretion 72 65 10 % 271 245 10 % Loss on impairment of intangible assets 1 547 (100) % 1 547 (100) % (Gain) loss on asset disposals, net 4 1 N/M 12 10 28 % (Gain) loss on sale of business and other exit costs, net (49) — N/M (49) — N/M 215 799 (73) % 956 1,551 (38) % All Other1 Expenses excluding depreciation and amortization 16 56 (73) % 175 242 (28) % Depreciation and amortization 1 3 (71) % 7 14 (47) % (Gain) loss on sale of business and other exit costs, net (8) — N/M (19) — N/M Total operating expenses 9 59 (85) % 163 256 (36) % 1,203 1,837 (35) % 4,901 5,574 (12) % Operating income (loss) UScellular (9) 21 N/M (12) 139 N/M TDS Telecom 49 (538) N/M 105 (523) N/M All Other1 (4) (7) 53 % (30) (30) (1) % 37 (524) N/M 63 (414) N/M Investment and other income (expense) Equity in earnings of unconsolidated entities 39 37 3 % 164 159 3 % Interest and dividend income 7 4 80 % 27 20 36 % Interest expense (72) (66) (9) % (279) (244) (15) % Other, net 2 1 N/M 5 2 N/M Total investment and other income (expense) (24) (24) (1) % (83) (63) (33) % Income (loss) before income taxes 13 (548) N/M (20) (477) 96 % Income tax expense (benefit) 6 (45) N/M 6 10 (34) % Net income (loss) 7 (503) N/M (26) (487) 95 % Less: Net income attributable to noncontrolling interests, net of tax 1 3 (53) % 2 13 (90) % Net income (loss) attributable to TDS shareholders 6 (506) N/M (28) (500) 94 % TDS Preferred Share dividends 17 17 — 69 69 — Net income (loss) attributable to TDS common shareholders $ (11) $ (523) 98 % $ (97) $ (569) 83 % Basic weighted average shares outstanding 114 113 1 % 114 113 1 % Basic earnings (loss) per share attributable to TDS common shareholders $ (0.10) $ (4.64) 98 % $ (0.85) $ (5.05) 83 % Diluted weighted average shares outstanding 114 113 1 % 114 113 1 % Diluted earnings (loss) per share attributable to TDS common shareholders $ (0.10) $ (4.64) 98 % $ (0.85) $ (5.06) 83 % N/M - Percentage change not meaningful. Numbers may not foot due to rounding. 1 Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments. Telephone and Data Systems, Inc. Consolidated Statement of Cash Flows (Unaudited) Year Ended December 31, 2024 2023 (Dollars in millions) Cash flows from operating activities Net income (loss) $ (26) $ (487) Add (deduct) adjustments to reconcile net income (loss) to net cash flows from operating activities Depreciation, amortization and accretion 943 915 Bad debts expense 106 111 Stock-based compensation expense 71 41 Deferred income taxes, net 3 8 Equity in earnings of unconsolidated entities (164) (159) Distributions from unconsolidated entities 169 150 Loss on impairment of intangible assets 137 547 (Gain) loss on asset disposals, net 30 27 (Gain) loss on sale of business and other exit costs, net (68) — (Gain) loss on license sales and exchanges, net 3 (2) Other operating activities 9 8 Changes in assets and liabilities from operations Accounts receivable (10) 2 Equipment installment plans receivable (37) (20) Inventory 20 61 Accounts payable (40) (99) Customer deposits and deferred revenues 9 (8) Accrued taxes (4) 50 Other assets and liabilities (6) (3) Net cash provided by operating activities 1,145 1,142 Cash flows from investing activities Cash paid for additions to property, plant and equipment (884) (1,211) Cash paid for licenses (20) (130) Cash received from divestitures 147 1 Other investing activities 3 13 Net cash used in investing activities (754) (1,327) Cash flows from financing activities Issuance of long-term debt 440 1,081 Repayment of long-term debt (456) (723) Repayment of short-term debt — (60) TDS Common Shares reissued for stock-based compensation awards, net of tax payments (2) (3) UScellular Common Shares reissued for stock-based compensation awards, net of tax payments (11) (6) Repurchase of TDS Common Shares — (6) Repurchase of UScellular Common Shares (54) — Dividends paid to TDS shareholders (104) (153) Payment of debt issuance costs (16) (5) Distributions to noncontrolling interests (5) (3) Cash paid for software license agreements (67) (66) Other financing activities (2) — Net cash provided by (used in) financing activities (277) 56 Net increase (decrease) in cash, cash equivalents and restricted cash 114 (129) Cash, cash equivalents and restricted cash Beginning of period 270 399 End of period $ 384 $ 270 Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited) ASSETS December 31, 2024 2023 (Dollars in millions) Current assets Cash and cash equivalents $ 364 $ 236 Accounts receivable, net 1,041 1,074 Inventory, net 183 208 Prepaid expenses 72 86 Income taxes receivable 2 4 Other current assets 33 52 Total current assets 1,695 1,660 Assets held for sale — 15 Licenses 4,588 4,702 Other intangible assets, net 161 183 Investments in unconsolidated entities 500 505 Property, plant and equipment, net 4,994 5,062 Operating lease right-of-use assets 982 987 Other assets and deferred charges 762 807 Total assets $ 13,682 $ 13,921 Telephone and Data Systems, Inc. Consolidated Balance Sheet Highlights (Unaudited) LIABILITIES AND EQUITY December 31, 2024 2023 (Dollars in millions, except per share amounts) Current liabilities Current portion of long-term debt $ 31 $ 26 Accounts payable 280 360 Customer deposits and deferred revenues 283 277 Accrued interest 16 12 Accrued taxes 39 43 Accrued compensation 150 149 Short-term operating lease liabilities 153 147 Other current liabilities 138 170 Total current liabilities 1,090 1,184 Deferred liabilities and credits Deferred income tax liability, net 981 975 Long-term operating lease liabilities 867 890 Other deferred liabilities and credits 809 784 Long-term debt, net 4,051 4,080 Noncontrolling interests with redemption features 16 12 Equity TDS shareholders' equity Series A Common and Common Shares, par value $0.01 per share 1 1 Capital in excess of par value 2,574 2,558 Preferred Shares, par value $0.01 per share 1,074 1,074 Treasury shares, at cost (425) (465) Accumulated other comprehensive income 18 11 Retained earnings 1,849 2,023 Total TDS shareholders' equity 5,091 5,202 Noncontrolling interests 777 794 Total equity 5,868 5,996 Total liabilities and equity $ 13,682 $ 13,921 Balance Sheet Highlights (Unaudited) December 31, 2024 UScellular TDS Telecom TDS Corporate & Other Intercompany Eliminations TDS Consolidated (Dollars in millions) Cash and cash equivalents $ 144 $ 142 $ 218 $ (140) $ 364 Licenses and other intangible assets $ 4,579 $ 164 $ 6 $ — $ 4,749 Investment in unconsolidated entities 454 4 50 (8) 500 $ 5,033 $ 168 $ 56 $ (8) $ 5,249 Property, plant and equipment, net $ 2,502 $ 2,475 $ 17 $ — $ 4,994 Long-term debt, net: Current portion $ 22 $ — $ 9 $ — $ 31 Non-current portion 2,837 3 1,211 — 4,051 $ 2,859 $ 3 $ 1,220 $ — $ 4,082 United States Cellular Corporation Segment Results (Unaudited) Three Months Ended December 31, Year EndedDecember 31, UScellular 2024 2023 2024vs. 2023 2024 2023 2024 vs. 2023 (Dollars in millions) Operating Revenues Wireless $ 944 $ 975 (3) % $ 3,667 $ 3,805 (4) % Towers 59 57 3 % 234 228 3 % Intra-company eliminations (33) (32) (3) % (131) (127) (3) % Total operating revenues 970 1,000 (3) % 3,770 3,906 (3) % Operating expenses Wireless 971 975 — 3,757 3,743 — Towers 41 36 12 % 156 151 3 % Intra-company eliminations (33) (32) (3) % (131) (127) (3) % Total operating expenses 979 979 — 3,782 3,767 — Operating income (loss) $ (9) $ 21 N/M $ (12) $ 139 N/M Adjusted OIBDA (Non-GAAP) $ 167 $ 194 (14) % $ 845 $ 818 3 % Adjusted EBITDA (Non-GAAP) $ 208 $ 233 (11) % $ 1,018 $ 986 3 % Capital expenditures $ 162 $ 148 9 % $ 577 $ 611 (6) % N/M - Percentage change not meaningful United States Cellular Corporation Segment Results (Unaudited) Three Months Ended December 31, Year EndedDecember 31, UScellular Wireless 2024 2023 2024vs. 2023 2024 2023 2024 vs. 2023 (Dollars in millions) Retail service $ 661 $ 678 (3) % $ 2,674 $ 2,742 (2) % Other 55 52 7 % 210 201 5 % Service revenues 716 730 (2) % 2,884 2,943 (2) % Equipment sales 228 245 (7) % 783 862 (9) % Total operating revenues 944 975 (3) % 3,667 3,805 (4) % System operations (excluding Depreciation, amortization and accretion reported below) 195 197 (1) % 777 794 (2) % Cost of equipment sold 276 280 (1) % 906 988 (8) % Selling, general and administrative 344 340 1 % 1,298 1,334 (3) % Depreciation, amortization and accretion 153 155 — 620 610 1 % Loss on impairment of licenses — — — 136 — N/M (Gain) loss on asset disposals, net 4 5 (37) % 17 19 (11) % (Gain) loss on license sales and exchanges, net (1) (2) 59 % 3 (2) N/M Total operating expenses 971 975 — 3,757 3,743 — Operating income (loss) $ (27) $ — N/M $ (90) $ 62 N/M Adjusted OIBDA (Non-GAAP) $ 137 $ 164 (16) % $ 719 $ 697 3 % Adjusted EBITDA (Non-GAAP) $ 137 $ 164 (16) % $ 719 $ 697 3 % Capital expenditures $ 154 $ 127 21 % $ 554 $ 580 (5) % Three Months Ended December 31, Year EndedDecember 31, UScellular Towers 2024 2023 2024vs. 2023 2024 2023 2024 vs. 2023 (Dollars in millions) Third-party revenues $ 26 $ 25 4 % $ 103 $ 101 2 % Intra-company revenues 33 32 3 % 131 127 3 % Total tower revenues 59 57 3 % 234 228 3 % System operations (excluding Depreciation, amortization and accretion reported below) 20 18 11 % 78 73 6 % Selling, general and administrative 9 9 2 % 32 34 (5) % Depreciation, amortization and accretion 12 11 — 45 46 (1) % (Gain) loss on asset disposals, net — (2) N/M 1 (2) N/M Total operating expenses 41 36 12 % 156 151 3 % Operating income $ 18 $ 21 (11) % $ 78 $ 77 2 % Adjusted OIBDA (Non-GAAP) $ 30 $ 30 — $ 126 $ 121 4 % Adjusted EBITDA (Non-GAAP) $ 30 $ 30 — $ 126 $ 121 4 % Capital expenditures $ 8 $ 21 (62) % $ 23 $ 31 (24) % N/M - Percentage change not meaningful TDS Telecom Highlights (Unaudited) Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 vs. 2023 2024 2023 2024 vs. 2022 (Dollars in millions) Operating revenues Residential Incumbent $ 86 $ 88 (2) % $ 355 $ 352 1 % Expansion 31 23 39 % 114 75 52 % Cable 65 69 (5) % 270 273 (1) % Total residential 182 179 2 % 740 700 6 % Commercial 37 37 — 148 155 (5) % Wholesale 44 45 — 173 172 — Total service revenues 264 261 1 % 1,060 1,027 3 % Equipment revenues — — 19 % 1 1 (3) % Total operating revenues 264 261 1 % 1,061 1,028 3 % Cost of services 103 104 (1) % 400 423 (5) % Cost of equipment and products — — N/M 1 — 58 % Selling, general and administrative expenses 84 82 2 % 320 326 (2) % Depreciation, amortization and accretion 72 65 10 % 271 245 10 % Loss on impairment of intangible assets 1 547 (100) % 1 547 (100) % (Gain) loss on asset disposals, net 4 1 N/M 12 10 28 % (Gain) loss on sale of business and other exit costs, net (49) — N/M (49) — N/M Total operating expenses 215 799 (73) % 956 1,551 (38) % Operating income (loss) $ 49 $ (538) N/M $ 105 $ (523) N/M Adjusted OIBDA (Non-GAAP) $ 77 $ 76 2 % $ 340 $ 279 22 % Adjusted EBITDA (Non-GAAP) $ 80 $ 78 3 % $ 350 $ 285 23 % Capital expenditures $ 82 $ 143 (43) % $ 324 $ 577 (44) % N/M - Percentage change not meaningful. Numbers may not foot due to rounding. Telephone and Data Systems, Inc. Financial Measures (Unaudited) Free Cash Flow Three Months Ended December 31, Year Ended December 31, TDS Consolidated 2024 2023 2024 2023 (Dollars in millions) Cash flows from operating activities (GAAP) $ 213 $ 218 $ 1,145 $ 1,142 Cash paid for additions to property, plant and equipment (230) (304) (884) (1,211) Cash paid for software license agreements (35) (37) (67) (66) Free cash flow (Non-GAAP)1 $ (52) $ (123) $ 194 $ (135) Three Months Ended December 31, Year Ended December 31, UScellular 2024 2023 2024 2023 (Dollars in millions) Cash flows from operating activities (GAAP) $ 121 $ 148 $ 883 $ 866 Cash paid for additions to property, plant and equipment (139) (155) (537) (608) Cash paid for software license agreements (35) (37) (66) (66) Free cash flow (Non-GAAP)1 $ (53) $ (44) $ 280 $ 192 1 Free 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 and Cash paid for software license agreements. Intangible assets impairment, net of tax The following non-GAAP financial measure isolates the total effects on net income of the Loss on impairment of intangible assets at TDS Telecom and UScellular, including tax impacts. TDS believes this measure may be useful to investors and other users of its financial information to assist in comparing financial results with periods that were not impacted by impairment charges. Three Months EndedDecember 31, Year EndedDecember 31, 2024 2023 2024 2023 (Dollars in millions) Net income (loss) attributable to TDS common shareholders (GAAP) $ (11) $ (523) $ (97) $ (569) Adjustments: Loss on impairment of intangible assets 1 547 137 547 Deferred tax benefit on the tax-amortizable portion of the impaired intangible assets — (36) (34) (36) UScellular noncontrolling public shareholders' portion of the intangible assets — — (18) — Subtotal of Non-GAAP adjustments 1 511 85 511 Net income (loss) attributable to TDS common shareholders excluding intangible assets impairment charge (Non-GAAP) (10) (12) (12) (58) Noncontrolling interest adjustment to compute diluted earnings (loss) per share — — — (1) Net income (loss) attributable to TDS common shareholders excluding intangible assets impairment charge used in diluted earnings (loss) per share (Non-GAAP) $ (10) $ (12) $ (12) $ (59) Diluted weighted average shares outstanding used for diluted earnings (loss) per share attributable to TDS common shareholders 114 113 114 113 Diluted weighted average shares outstanding used for diluted earnings (loss) per share attributable to TDS common shareholders excluding intangible assets impairment charge 114 113 114 113 Diluted earnings (loss) per share attributable to TDS common shareholders (GAAP) $ (0.10) $ (4.64) $ (0.85) $ (5.06) Adjustments: Loss on impairment of intangible assets 0.01 4.85 1.20 4.85 Deferred tax benefit on the tax-amortizable portion of the impaired intangible assets — (0.32) (0.30) (0.32) UScellular noncontrolling public shareholders' portion of the impaired intangible assets — — (0.16) — Diluted earnings (loss) per share attributable to TDS common shareholders excluding intangible assets impairment charge (Non-GAAP) $ (0.09) $ (0.11) $ (0.11) $ (0.53) Telephone and Data Systems, Inc. EBITDA, Adjusted EBITDA and Adjusted OIBDA (Unaudited) The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income (loss) and Income (loss) before income taxes. Income and expense items below Operating income (loss) are not provided at the individual segment level for UScellular Wireless and UScellular Towers; therefore, the reconciliations begin with EBITDA and the most directly comparable GAAP measure is Operating income (loss) rather than Net income (loss) at the segment level. Three Months Ended December 31, Year Ended December 31, UScellular 2024 2023 2024 2023 (Dollars in millions) Net income (loss) (GAAP) $ 5 $ 15 $ (32) $ 58 Add back or deduct: Income tax expense (benefit) (19) (4) 10 53 Income (loss) before income taxes (GAAP) (14) 11 (22) 111 Add back: Interest expense 46 49 183 196 Depreciation, amortization and accretion expense 165 166 665 656 EBITDA (Non-GAAP) 197 226 826 963 Add back or deduct: Expenses related to strategic alternatives review 8 6 35 8 Loss on impairment of licenses — — 136 — (Gain) loss on asset disposals, net 4 3 18 17 (Gain) loss on license sales and exchanges, net (1) (2) 3 (2) Adjusted EBITDA (Non-GAAP) 208 233 1,018 986 Deduct: Equity in earnings of unconsolidated entities 38 37 161 158 Interest and dividend income 3 2 12 10 Adjusted OIBDA (Non-GAAP) $ 167 $ 194 $ 845 $ 818 Three Months Ended December 31, Year Ended December 31, UScellular Wireless 2024 2023 2024 2023 (Dollars in millions) EBITDA (Non-GAAP) $ 126 $ 155 $ 530 $ 672 Add back or deduct: Expenses related to strategic alternatives review 8 6 33 8 Loss on impairment of licenses — — 136 — (Gain) loss on asset disposals, net 4 5 17 19 (Gain) loss on license sales and exchanges, net (1) (2) 3 (2) Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) 137 164 719 697 Deduct: Depreciation, amortization and accretion 153 155 620 610 Expenses related to strategic alternatives review 8 6 33 8 Loss on impairment of licenses — — 136 — (Gain) loss on asset disposals, net 4 5 17 19 (Gain) loss on license sales and exchanges, net (1) (2) 3 (2) Operating income (loss) (GAAP) $ (27) $ — $ (90) $ 62 Three Months Ended December 31, Year Ended December 31, UScellular Towers 2024 2023 2024 2023 (Dollars in millions) EBITDA (Non-GAAP) $ 30 $ 32 $ 123 $ 123 Add back or deduct: Expenses related to strategic alternatives review — — 2 — (Gain) loss on asset disposals, net — (2) 1 (2) Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) 30 30 126 121 Deduct: Depreciation, amortization and accretion 12 11 45 46 Expenses related to strategic alternatives review — — 2 — (Gain) loss on asset disposals, net — (2) 1 (2) Operating income (GAAP) $ 18 $ 21 $ 78 $ 77 Three Months Ended December 31, Year Ended December 31, TDS Telecom 2024 2023 2024 2023 (Dollars in millions) Net income (loss) (GAAP) $ 34 $ (503) $ 85 $ (483) Add back or deduct: Income tax expense (benefit) 20 (31) 35 (26) Income (loss) before income taxes (GAAP) 54 (534) 120 (509) Add back: Interest expense (2) (2) (5) (8) Depreciation, amortization and accretion expense 72 65 271 245 EBITDA (Non-GAAP) 124 (470) 385 (272) Add back or deduct: Loss on impairment of intangible assets 1 547 1 547 (Gain) loss on asset disposals, net 4 1 12 10 (Gain) loss on sale of business and other exit costs, net (49) — (49) — Adjusted EBITDA (Non-GAAP) 80 78 350 285 Deduct: Interest and dividend income 2 1 5 4 Other, net 1 1 4 2 Adjusted OIBDA (Non-GAAP) $ 77 $ 76 $ 340 $ 279 SOURCE Telephone and Data Systems, Inc. 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TDS reports fourth quarter and full year 2024 results

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