Fourth Quarter 2019 Results 2019 Accomplishments 2020 Strategic Priorities and Guidance February 21, 2020
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 • 3/2/20 - Raymond James 41th Annual Institutional Investors Conference (Orlando, Florida) ◦ From management: Ken Meyers, Vicki Villacrez and Jane McCahon • 3/5/20 - Morgan Stanley Technology, Media & Telecom Conference (San Francisco) ◦ From management: Ted Carlson, Doug Chambers, Vicki Villacrez and Jane McCahon • 3/6/20 - Strategas Securities Non Deal Roadshow (Portland, Oregon) ◦ From management: Jane McCahon 3
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Building a stronger, more competitive customer-centric wireless carrier Over the past few years: Adjusted EBITDA (3) 3 Year Adjusted EBITDA CAGR=7.5% • Investments in the customer experience $1,200 • Unlimited Plans $1,015 $963 $1,000 • Brand refresh $820 ($ in millions) $800 • Website $600 • Roaming $400 • Investments in culture $200 • Focus on our associates and their $0 development, driving exceptionally 2017 2018 2019 high engagement scores, low Total System Usage (MBs in Millions) Data Usage turnover and customer satisfaction • Investments in network – capacity, 300 speed, security 250 • Spectrum, VoLTE, 4G network 200 modernization/speed, 5G 150 100 50 0 2017 2018 2019 (3) - See slide 38 for explanations 5
2019 goals and accomplishments • Attract new customers and strengthen our Service Revenues (1) base • Postpaid handset churn of 1.04% $3,500 • Added 71,000 smartphone connections $3,035 $2,978 $2,978 $3,000 • Drive revenue growth $2,500 • Increase in Postpaid and Prepaid ARPU ($ in millions) • Inbound roaming revenue increased $2,000 13% $1,500 • Continue to focus on cost structure $1,000 • Invest in network $500 ◦ Spectrum, speed, data capacity, dynamic network management, VoLTE, $0 network modernization, 5G 2017 2018 2019 Retail service Roaming Other service (1) - See slide 38 for explanations 6
Postpaid handsets Gross Additions Net Additions Smartphone Connections 150,000 25,000 3,480,000 3,468,000 20,000 125,000 3,460,000 15,000 100,000 10,000 20,000 3,441,000 3,440,000 5,000 75,000 2,000 136,000 0 130,000 (2,000) 3,419,000 124,000 3,420,000 102,000 102,000 50,000 -5,000 (11,000) 3,409,000 (14,000) -10,000 3,397,000 3,400,000 25,000 -15,000 0 -20,000 3,380,000 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 7
Postpaid churn rate 1.60% 1.38% 1.38% 1.40% 1.29% 1.26% 1.23% 1.20% 1.11% 1.09% 1.00% 0.99% 0.97% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Handsets Total Postpaid 8
Total operating revenues ($ in millions) $1,200 $1,051 $1,052 $1,031 $973 $966 $1,000 $289 $297 $257 $216 $225 $800 $57 $51 $55 $53 $48 $54 $42 $38 $44 $34 $600 $400 $663 $662 $663 $666 $659 $200 $0 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Retail service Roaming Other service Equipment sales 9
Postpaid revenue Average Revenue Per User (ARPU) Average Revenue Per Account (ARPA) $48 $125 $120 $46 $115 $44 $120.99 $46.57 $110 $119.87 $119.60 $119.46 $46.16 $118.84 $45.90 $45.58 $45.44 $42 $105 $40 $100 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 10
Adjusted OIBDA ($ in millions) Q4'19 Q4'18 % Change Total operating revenues $ 1,052 $ 1,051 – System operations expense 188 193 (2)% Cost of equipment sold 305 315 (3)% SG&A expenses 378 373 1 % Total cash expenses (2) 871 881 (1)% Adjusted OIBDA (3) $ 181 $ 170 6 % (2), (3) - See slide 38 for explanations 11
Adjusted EBITDA ($ in millions) Q4'19 Q4'18 % Change Adjusted OIBDA (3) $ 181 $ 170 6 % Equity in earnings of unconsolidated entities 38 39 (2)% Interest and dividend income 3 4 (38)% Adjusted EBITDA (3) $ 222 $ 213 4 % (3) - See slide 38 for explanations 12
Annual financial results 2019 2018 ($ in millions) % Change Total operating revenues $ 4,022 $ 3,967 1% System operations expense 756 758 – Cost of equipment sold 1,028 1,031 – SG&A expenses 1,406 1,388 1% Total cash expenses (2) 3,190 3,177 – Adjusted OIBDA (3) 832 790 5% Equity in earnings of unconsolidated entities 166 159 5% Interest and dividend income 17 15 17% Other, net — (1) N/M Adjusted EBITDA (3) $ 1,015 $ 963 5% N/M - Percentage change not meaningful 13 (2), (3) - See slide 38 for explanations
2020 strategic priorities Elevate Brand Relevance • Expand addressable market • Structure targeted promotions • Website evolution and E- commerce roadmap Focus on Customer Engagement • Lifecycle management • Personalization • Digitalization • Retail channel optimization Grow Revenue • Postpaid/Prepaid/B&G • Roaming • Fixed Wireless • Device protection plans • Accessories 14
2020 strategic priorities Leverage Associate Engagement • Cultural strength • Recruitment and retention in tight labor markets • Competitive advantage Maintain Expense Discipline • Continue to execute on cost savings opportunities Advance the Network • Continue to enhance customer experience on and off network • Network modernization • Continue VoLTE market launches • Deployment of 5G 15
2020 guidance * ($ in millions) As of February 20, 2020 2019 Estimates 2019 Actual 2020 Estimates Service revenues N/A** $3,035 $3,000-$3,100 Adjusted OIBDA (3) $750-$850 $832 $775-$900 Adjusted EBITDA (3) $925-$1,025 $1,015 $950-$1,075 Capital expenditures $625-$725 $710 $850-$950 2019 Actual 2020 Estimated Capital expenditures Capital expenditures 5G (mmWave) 5G VoLTE Capacity 5G (600 MHz) Network Operations Sales/IS/ Facilities (3) - See slide 38 for explanations * There can be no assurance that final results will not differ materially from such estimated results. 16 **2019 guidance was provided for Total operating revenues.
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Transforming TDS Telecom into a premier broadband company Over the past five years: • Invested in fiber-to-the-home (FTTH) within ILEC footprint • Piloted and launched out-of-territory (OOT) fiber program – opportunity to drive growth and long-term value creation • Secured A-CAM and state broadband funding to address rural needs • Acquired cable companies – driving revenue and margin expansion ◦ Cable Adjusted EBITDA margin increased from 24% to 33% Where we were (2015) Where we are (2019) Revenues of $876 million Revenues of $930 million Regulatory & Regulatory & Wholesale Wholesale 21% 20% Broadband 40% & Video 53% Broadband 13% CLEC 19% & Video CLEC 14% 20% Certain Voice Uncertain Voice 18
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