Telephone and Data Systems (TDS) Q1 2025 earnings summary

Executive summary

• TDS and UScellular are progressing toward the $4.4 billion sale of UScellular's wireless operations and select spectrum assets to T-Mobile, expected to close mid-2025, with additional spectrum sales to Verizon ($1 billion) and AT&T ($1.018 billion) pending regulatory approval.

• TDS Telecom continues to expand its fiber footprint, deploying 14,000 new addresses in Q1 2025 and targeting 150,000 for the year, with a 30% footprint increase planned over three years.

• A special dividend is anticipated for UScellular shareholders upon transaction close, with TDS using its share to repay nearly all outstanding bank debt.

• Strategic alternatives review for UScellular is ongoing, and significant work is underway to ensure a smooth transition, including separation, integration, and transition activities.

• Focus remains on optimizing capital structure and allocation post-transaction, with plans for opportunistic monetization of remaining spectrum and tower assets.

Financial highlights

• Q1 2025 consolidated operating revenues were $1,154 million, down 9% year-over-year, with UScellular revenues at $891 million (down 6%) and TDS Telecom at $257 million (down 3%).

• Adjusted EBITDA was $333 million, down 9% year-over-year; Adjusted OIBDA was $287 million, down 10%.

• Free cash flow improved to $47 million from negative $20 million in Q1 2024, driven by lower capital expenditures.

• Capital expenditures dropped 49% to $112 million, with TDS Telecom spending $59 million in Q1 2025, down 32% year-over-year.

• Average residential revenue per connection at TDS Telecom rose to $65.67 in Q1 2025, up from $64.58 a year ago.

Outlook and guidance

• Sale of UScellular wireless operations to T-Mobile is expected to close mid-2025, with significant cash and non-cash obligations post-close.

• TDS Telecom 2025 full-year guidance unchanged: operating revenues $1,030–$1,070 million, Adjusted EBITDA $320–$360 million, Adjusted OIBDA $310–$350 million, and capital expenditures $375–$425 million.

• TDS Telecom targets 150,000 new fiber addresses in 2025 and aims for 1.8 million marketable fiber service addresses long-term.

• No 2025 financial guidance is provided for UScellular due to the pending sale.

• Business Transformation program aims for $100 million annual cost savings by year-end 2028.