Fourth Quarter 2018 Results 2018 Accomplishments 2019 Strategic Priorities and Guidance February 22, 2019
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 All information set forth in this presentation, 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 afforded 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 products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in documents furnished to the Securities and Exchange Commission. 2
Upcoming conferences 3/5/19 - Raymond James 40th Annual Institutional Investors Conference (Orlando, Florida) • From management: Ken Meyers, Vicki Villacrez and Jane McCahon 3/27/19 - 3/28/19 - B. Riley FBR Non-Deal Roadshow (Los Angeles, San Francisco) • From management: Jane McCahon 3
TDS Corporate • Capital Allocation - since plan announced in 2013, $673 million invested back into our businesses and Annual Dividends Per TDS Share* $404 million returned to shareholders, primarily through dividends $0.70 ◦ Executing wireline fiber projects $0.60 both in and out of territory $0.50 ◦ Continue to look for cable $0.40 acquisitions $0.30 $0.20 ◦ 2019 dividend increasing 3% and is the 45 th consecutive year of $0.10 2001 2010 2011 2012 2013 2014 2015 2016 2017 2018 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 dividend increases • Adopted ASC 842, Leases ◦ Using modified retrospective method on January 1, 2019 ◦ Adding approx. $1 billion in assets and liabilities ◦ Expecting no impact to the income statement * Retroactively adjusted for the effect of 2005 stock dividend. 4
5
2018 key accomplishments • Protected and grew our subscriber base ◦ Postpaid handset churn of 0.98% ◦ Added 23,000 postpaid handset customers • Drove revenue growth ◦ Increase in Postpaid ARPU ◦ Inbound roaming revenue increased 20% • Continued to drive improvements in cost structure ◦ Contained cash expenses despite increasing data usage • 17% increases in Adjusted OIBDA and Adjusted EBITDA • Made network enhancements ◦ Data capacity ◦ VoLTE ◦ 5G trials 6
Total postpaid connections Gross Additions Net Additions 200,000 40,000 30,000 150,000 20,000 10,000 6,000 5,000 (1,000) 100,000 0 179,000 177,000 172,000 (13,000) -10,000 146,000 129,000 (37,000) 50,000 -20,000 -30,000 0 -40,000 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 7
Postpaid handsets connections Gross Additions Net Additions 150,000 40,000 30,000 125,000 20,000 100,000 10,000 20,000 18,000 15,000 5,000 75,000 0 136,000 133,000 133,000 (16,000) -10,000 111,000 50,000 96,000 -20,000 25,000 -30,000 0 -40,000 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 8
Postpaid churn rate 3.50% 3.20% 3.04% 3.00% 2.85% 2.84% 2.79% 2.50% 2.00% 1.50% 1.02% 1.00% 1.00% 0.97% 0.92% 1.00% 0.50% 0.00% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Handsets Connected Devices 9
Total operating revenues (1) (in millions) $1,200 $1,051 $1,029 $1,001 $974 $1,000 $942 $297 $274 $242 $233 $218 $800 $100 $91 $106 $89 $75 $600 $400 $663 $652 $659 $649 $649 $200 $0 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Retail service Other service Equipment sales (1) - See slide 32 for explanation 10
Postpaid revenue (1) Average Billings Per Account (ABPA) (4) Average Billings Per User (ABPU) (4) $70 $180 $158.66 $156.57 $60.46 $160 $59.41 $153.03 $151.68 $152.26 $60 $57.75 $57.10 $56.69 $140 $39.06 $37.15 $14.88 $34.46 $14.10 $33.63 $34.04 $13.01 $12.76 $12.57 $50 $120 $40 $100 $80 $30 $60 $119.42 $119.60 $45.31 $45.58 $118.05 $118.22 $118.57 $44.74 $44.12 $44.34 $20 $40 $10 $20 $0 $0 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Average Revenue Per User Average Revenue Per Account EIP Billings EIP Billings (1), (4) - See slide 32 for explanation 11
Adjusted OIBDA Q4'18 (1) ($ in millions) Q4'17 % Change Total operating revenues $ 1,051 $ 1,029 2 % System operations expense 193 183 5 % Cost of equipment sold 315 322 (2)% SG&A expenses 373 372 – Total cash expenses (2) 881 877 – Adjusted OIBDA (3) $ 170 $ 152 12 % (1), (2), (3) - See slide 32 for explanations 12
Adjusted EBITDA Q4'18 (1) ($ in millions) Q4'17 % Change Adjusted OIBDA (3) $ 170 $ 152 12% Equity in earnings of unconsolidated entities 39 36 9% Interest and dividend income 4 2 N/M Adjusted EBITDA (3) $ 213 190 13% N/M - Percentage change not meaningful (1), (3) - See slide 32 for explanations 13
Annual financial results (1) % 2018 (1) 2017 ($ in millions) Change Total operating revenues $ 3,967 $ 3,890 2 % System operations expense 758 732 4 % Cost of equipment sold 1,031 1,071 (4)% SG&A expenses 1,388 1,412 (2)% Total cash expenses (2) 3,177 3,215 (1)% Adjusted OIBDA (3) 790 675 17 % Equity in earnings of unconsolidated entities 159 137 16 % Interest and dividend income 15 8 83 % Other, net (1) $ — N/M Adjusted EBITDA (3) $ 963 $ 820 17 % (1), (2), (3) - See slide 32 for explanations 14
2019 strategic priorities • Attract new customers and protect our base • Drive revenue growth • Continue to drive improvements in cost structure • Invest in network • Continued investment to meet growth in data • Additional VoLTE market launches • Deployment of 5G technology beginning in 2019 15
2019 guidance * ($ in millions) As of February 22, 2019 2018 Estimates (1) 2018 Actual (1) 2019 Estimates Total operating revenues $3,950-$4,000 $3,967 $4,100-$4,300 Adjusted OIBDA (3) $760-$810 $790 $725-$875 Adjusted EBITDA (3) $925-$1,000 $963 $900-$1,050 Capital expenditures Approx. $500 $515 $625-$725 (1), (3) - See slide 32 for explanations 16 * There can be no assurance that final results will not differ materially from such estimated results.
17
2018 wireline accomplishments • Investments in fiber ◦ Completed construction in Sun Prairie, Wisc., adding 10,000 service addresses ◦ Began out-of-territory fiber deployment, targeting 20,000 service addresses ◦ Expanded fiber and other broadband technologies to 40,000 in- territory service addresses • Progress under A-CAM and State Broadband construction programs • Advocated for full funding of A-CAM program Service Addresses at Dec. 31, 2018 (774,400) Copper Un-Upgraded Bonded or Fiber A-CAM Copper Vectored 21% 25% 28% 26% No Cable Cable Competition Competition (80%) (20%) 18
2018 cable accomplishments • Continue to enable and offer faster broadband data speeds ◦ Increased broadband connections • Launched 1 Gig in Mesquite, Nev., as the first phase of GPON • 12% revenue growth • 29% increase in Adjusted EBITDA; increased margin by 410 basis points 19
2019 strategic priorities Wireline and Cable • Drive new revenue growth • Improve the customer experience • TDS TV+ (a next generation video platform) • Increase operational effectiveness • Cost management • Wireline • Continue executing fiber program both in and out-of-territory • Rural Broadband Deployment • A-CAM • State Broadband Grants • Cable • Further increase broadband penetration and ARPU • Continue to evaluate potential acquisitions 20
TDS Telecom operating performance ($ in millions) % Q4’18 (1) Q4’17 Change Wireline $ 173 $ 176 (2)% Cable 60 54 11 % Total operating revenues * 232 229 1 % Cash expenses (2) 159 151 5 % Adjusted EBITDA (3) $ 77 $ 80 (3)% Capital expenditures $ 91 $ 74 23 % * Includes intercompany eliminations (1), (2), (3) - See slide 32 for explanations 21
Recommend
More recommend
