Telephone and Data Systems, Inc. (TDS) Bundle
A Brief History of Telephone and Data Systems, Inc. (TDS)
Telephone and Data Systems, Inc. (TDS) has undergone significant transformations leading up to 2024, navigating a challenging telecommunications landscape. Founded in 1968, TDS has evolved from a local telephone company into a diversified telecommunications provider, offering wireless, broadband, and cable services through its subsidiaries, including UScellular. As of 2024, TDS operates in a highly competitive environment, marked by technological advancements and strategic shifts.
Recent Financial Performance
As of September 30, 2024, TDS reported a net loss attributable to TDS common shareholders of $83 million compared to a net loss of $17 million for the same period in 2023. The diluted earnings per share were $(0.73), down from $(0.16) in the prior year.
Operating Revenues
TDS's total operating revenues for the nine months ended September 30, 2024, were $3,724 million, a decrease from $3,724 million reported in the same period of 2023. The breakdown of revenues is as follows:
| Revenue Source | 2024 (in millions) | 2023 (in millions) | Change (%) |
|---|---|---|---|
| Service Revenues | $2,245 | $2,245 | 0% |
| Equipment and Product Sales | $619 | $619 | 0% |
| Total Operating Revenues | $3,724 | $3,724 | 0% |
Capital Expenditures
TDS's capital expenditures for the nine months ended September 30, 2024, were $655 million, compared to $906 million in the same period of 2023. For the full year 2024, capital expenditures are expected to be between $550 million and $600 million.
Debt and Financing
As of September 30, 2024, TDS had outstanding borrowings of $4.169 billion. In May 2024, TDS entered into a $375 million unsecured term loan credit agreement, with $300 million drawn at closing. The interest rate on this loan is based on the Secured Overnight Financing Rate (SOFR) plus 7.00%.
UScellular Operations
UScellular, a significant subsidiary of TDS, reported a net loss of $37 million for the nine months ended September 30, 2024. UScellular serves approximately 4.5 million retail connections, with 4.0 million postpaid and 0.5 million prepaid connections. The company operates in 21 states and employs around 4,200 associates.
Strategic Developments
On May 28, 2024, UScellular announced plans to sell its wireless operations and select spectrum assets to T-Mobile for a purchase price of $4.4 billion, which includes the assumption of up to $2 billion in debt. This strategic move aims to streamline operations and focus on core competencies amid increasing competition in the telecommunications sector.
Market Position and Challenges
The company is experiencing increased competition, leading to challenges in customer retention and revenue generation. As of September 30, 2024, TDS reported a total churn rate of 1.25%, slightly improved from 1.30% in the prior year. The average revenue per user (ARPU) for postpaid services increased to $52.04, reflecting a 2% growth year-over-year.
Conclusion
As TDS moves into 2024, its focus remains on managing operational efficiency, reducing debt, and enhancing customer service to remain competitive in the evolving telecommunications landscape.
A Who Owns Telephone and Data Systems, Inc. (TDS)
Major Shareholders
As of 2024, the ownership structure of Telephone and Data Systems, Inc. (TDS) is represented by a combination of institutional investors, individual shareholders, and company insiders. The following table summarizes the major shareholders of TDS along with their respective ownership percentages:
| Shareholder Type | Shareholder Name | Ownership Percentage |
|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 11.5% |
| Institutional Investor | BlackRock, Inc. | 8.3% |
| Institutional Investor | Wellington Management Group, LLP | 6.7% |
| Individual Shareholder | LeRoy T. Carlson, Jr. (Chairman) | 4.2% |
| Individual Shareholder | Other Individual Insiders | 3.5% |
| Other Investors | Various Retail Investors | 66.8% |
Shareholder Composition
The shareholder composition reflects a diverse mix of institutional and retail investors, with institutional investors holding a significant portion of the shares. The majority of shares are held by individual retail investors, indicating a strong public interest in TDS.
Recent Financial Performance
As of September 30, 2024, TDS reported a net loss attributable to common shareholders of $83 million, compared to a net loss of $17 million during the same period in 2023. The basic earnings per share (EPS) for TDS common shareholders was $(0.73) for Q3 2024.
Equity and Shareholder Equity
The total equity attributable to TDS shareholders as of September 30, 2024, was approximately $5,873 million, which includes retained earnings of $1,865 million and accumulated other comprehensive income of $11 million.
Debt Structure
TDS has a long-term debt obligation totaling approximately $4,208 million as of September 30, 2024. The weighted average interest rate on these obligations is approximately 6.9%.
Dividends
TDS common and Series A Common shareholders received dividends of $0.270 per share during the third quarter of 2024. Preferred shareholders received dividends of $1,242 per Series UU share and $1,125 per Series VV share.
Market Capitalization
As of the end of Q3 2024, TDS had a market capitalization of approximately $1.2 billion.
Recent Developments
On May 28, 2024, TDS announced the execution of a Securities Purchase Agreement with T-Mobile US, Inc., for the sale of UScellular's wireless operations and select spectrum assets for a purchase price of $4.4 billion.
Telephone and Data Systems, Inc. (TDS) Mission Statement
Corporate Overview
Telephone and Data Systems, Inc. (TDS) operates in the telecommunications sector, primarily through its subsidiary, UScellular. TDS focuses on providing high-quality telecommunications services, including broadband, wireless, and voice services across various markets.
Mission Statement
As of 2024, TDS's mission is to connect people by providing innovative and reliable telecommunications solutions while maintaining a commitment to exceptional customer service. The company emphasizes the importance of community engagement and aims to enhance the quality of life through advanced communications technology.
Financial Performance Metrics
The following table outlines key financial performance metrics for TDS as of September 30, 2024:
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Operating Revenues | $1,224 million | $1,278 million | $3,724 million | $3,848 million |
| Operating Income (Loss) | $(80) million | $48 million | $27 million | $110 million |
| Net Income (Loss) | $(79) million | $4 million | $(34) million | $16 million |
| Adjusted EBITDA | $349 million | $328 million | $1,073 million | $956 million |
| Capital Expenditures | $199 million | $285 million | $663 million | $906 million |
Operational Highlights
As of September 30, 2024, TDS reported the following operational metrics:
| Operational Metric | Value |
|---|---|
| Total Service Connections | 1.1 million |
| Number of Employees | Approximately 3,400 |
| Residential Broadband Customers | 552,700 |
| Owned Wireless Towers | 4,407 |
| Number of Colocations | 2,418 |
Strategic Focus Areas
- Innovation: TDS aims to lead in telecommunications technology to enhance service delivery.
- Customer Experience: The company prioritizes customer satisfaction through improved service offerings and support.
- Sustainability: TDS is committed to sustainable practices in its operations to minimize environmental impact.
- Community Engagement: The company actively participates in community development initiatives to foster local relationships.
Recent Developments
In 2024, TDS initiated a strategic review of its wireless operations, leading to the planned divestiture of UScellular to T-Mobile for a purchase price of $4.4 billion, which is expected to close in mid-2025.
How Telephone and Data Systems, Inc. (TDS) Works
Business Overview
Telephone and Data Systems, Inc. (TDS) operates primarily through its subsidiaries, including UScellular and TDS Telecom. TDS Telecom provides broadband, video, and voice communication services to residential, commercial, and wholesale customers across the United States.
Financial Performance
As of September 30, 2024, TDS reported total operating revenues of $3.724 billion, a decrease from $3.848 billion for the same period in 2023.
| Financial Metrics | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Total Operating Revenues | $3.724 billion | $3.848 billion |
| Net Income (Loss) | $(34) million | $16 million |
| Operating Income (Loss) | $27 million | $110 million |
| Basic Earnings (Loss) per Share | $(0.75) | $(0.41) |
| Capital Expenditures | $663 million | $906 million |
Revenue Breakdown
For the nine months ending September 30, 2024, the revenue breakdown was as follows:
| Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Service Revenues | $3.105 billion | $3.128 billion |
| Equipment and Product Sales | $619 million | $720 million |
Operating Expenses
Total operating expenses for the nine months ended September 30, 2024, were $3.697 billion, compared to $3.738 billion in 2023.
| Expense Type | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Cost of Services | $890 million | $933 million |
| Cost of Equipment and Products | $681 million | $794 million |
| Selling, General, and Administrative | $1.271 billion | $1.308 billion |
| Depreciation, Amortization, and Accretion | $704 million | $681 million |
UScellular Operations
UScellular, a subsidiary of TDS, reported operating revenues of $2.799 billion for the nine months ended September 30, 2024, down from $2.906 billion in 2023.
| UScellular Revenue Breakdown | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Service Revenue | $2.245 billion | $2.289 billion |
| Equipment and Product Sales | $554 million | $617 million |
Key Operational Metrics
As of September 30, 2024, TDS Telecom serves approximately 1.1 million connections across 32 states and employs around 3,400 associates.
| Operational Metrics | 2024 |
|---|---|
| Total Service Addresses | 1.8 million |
| Residential Broadband Connections | 552,700 |
| Gigabit Service Availability | 74% |
Debt Obligations
TDS has total long-term debt obligations of $4.208 billion as of September 30, 2024, with weighted average interest rates of 6.9%.
| Debt Obligations by Year | Amount (in millions) | Weighted Avg. Interest Rate |
|---|---|---|
| Remainder of 2024 | $7 | 7.3% |
| 2025 | $29 | 7.3% |
| 2026 | $579 | 6.8% |
| 2027 | $322 | 6.7% |
| 2028 | $485 | 7.0% |
| Thereafter | $2,786 | 6.9% |
Dividends
TDS declared dividends of $83 million to shareholders in the nine months ended September 30, 2024, down from $114 million in the same period of 2023.
Market Strategy and Future Outlook
With the planned divestiture of UScellular's wireless operations to T-Mobile for $4.4 billion, TDS is positioning itself for strategic growth and operational efficiency. This transaction is anticipated to close by mid-2025, pending regulatory approvals.
How Telephone and Data Systems, Inc. (TDS) Makes Money
Revenue Sources
Telephone and Data Systems, Inc. (TDS) generates revenue through various segments, primarily from its subsidiary UScellular and TDS Telecom. The following table illustrates the breakdown of revenues for the nine months ended September 30, 2024:
| Type of Service | UScellular | TDS Telecom | Corporate, Eliminations and Other | Total |
|---|---|---|---|---|
| Retail Service | $2,014 million | $0 million | $0 million | $2,014 million |
| Residential | $0 million | $558 million | $0 million | $558 million |
| Commercial | $0 million | $110 million | $0 million | $110 million |
| Wholesale | $126 million | $0 million | $0 million | $126 million |
| Other Service | $154 million | $49 million | $203 million | $203 million |
| Equipment and Product Sales | $554 million | $1 million | $64 million | $619 million |
| Operating Lease Income | $77 million | $2 million | $15 million | $94 million |
| Total Operating Revenues | $2,799 million | $797 million | $128 million | $3,724 million |
UScellular Segment
The UScellular segment primarily offers wireless services, contributing significantly to TDS's revenue. For the nine months ended September 30, 2024, UScellular reported:
- Total operating revenues of $2,799 million.
- Service revenues of $2,168 million from retail, commercial, and wholesale services.
- Equipment and product sales amounting to $554 million.
TDS Telecom Segment
TDS Telecom focuses on broadband, video, and voice services, targeting residential and business customers. Key financials for TDS Telecom for the same period include:
- Total operating revenues of $797 million.
- Service revenues from contracts with customers totaling $794 million.
- Equipment and product sales of $1 million.
Cost Structure
TDS's operational expenses are a critical aspect of its financial performance. For the nine months ended September 30, 2024, the company reported the following costs:
| Expense Type | Amount (in millions) |
|---|---|
| Cost of Services (Excluding Depreciation) | $890 million |
| Cost of Equipment and Products | $681 million |
| Selling, General and Administrative Expenses | $1,271 million |
| Depreciation, Amortization, and Accretion | $704 million |
| Total Operating Expenses | $3,697 million |
Net Income and Earnings
TDS reported a net loss for the nine months ended September 30, 2024, amounting to $(34) million. This resulted in a basic loss per share attributable to TDS common shareholders of $(0.75).
Investments and Other Income
The company also generates income from investments in unconsolidated entities, contributing $125 million for the nine months ended September 30, 2024. Interest and dividend income amounted to $20 million, while interest expense was $(208) million.
Capital Expenditures
For the same period, TDS's capital expenditures totaled $663 million, reflecting the company's ongoing investments in infrastructure and technology to support its service offerings.
Overall Financial Performance
For the nine months ended September 30, 2024, TDS reported total operating revenues of $3,724 million, a decrease from $3,848 million in the previous year. The decrease is primarily attributed to declines in equipment sales and service revenues from UScellular.
Future Outlook
As TDS progresses through 2024, it is expected to adapt its strategies in response to market dynamics, including the planned sale of UScellular's wireless operations to T-Mobile for a purchase price of $4,400 million, expected to close in mid-2025.
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Article updated on 8 Nov 2024
Resources:
- Telephone and Data Systems, Inc. (TDS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Telephone and Data Systems, Inc. (TDS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Telephone and Data Systems, Inc. (TDS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.