Telephone and Data Systems (TDS) Q2 2024 earnings summary

Executive summary

• Announced a definitive agreement to sell UScellular wireless operations and select spectrum assets to T-Mobile for $4.4 billion, retaining nearly 4,400 towers and about 70% of spectrum assets, with closing expected mid-2025 and plans to monetize remaining spectrum.

• Entered agreements to sell OneNeck IT Solutions and certain TDS Telecom incumbent markets, with proceeds supporting fiber expansion.

• Both UScellular and TDS Telecom reported strong double-digit Adjusted EBITDA growth, driven by network investments and cost efficiencies.

• Net loss attributable to common shareholders improved to $(14) million for Q2 2024 from $(19) million in Q2 2023.

• Restructured reporting segments to present UScellular Wireless, UScellular Towers, and TDS Telecom separately.

Financial highlights

• Q2 2024 consolidated operating revenues were $1,238 million, down 2% year-over-year; Adjusted EBITDA was $357 million, up 16% year-over-year.

• UScellular Q2 revenues declined 3% to $927 million; Adjusted OIBDA up 14% to $227 million; free cash flow for the first half of 2024 was $226 million.

• TDS Telecom Q2 revenues grew 4% to $267 million; Adjusted EBITDA up 32% to $91 million; capital expenditures for Q2 were $78 million, down 41% year-over-year.

• Free cash flow for Q2 was $176 million, up from $159 million in Q2 2023.

• Capital expenditures for the first half of 2024 were $464 million, down from $621 million in the prior year.

Outlook and guidance

• 2024 guidance unchanged: UScellular service revenues $2,950–$3,050 million, Adjusted OIBDA $750–$850 million, Adjusted EBITDA $920–$1,020 million, capex $550–$650 million.

• TDS Telecom 2024 guidance: total operating revenues $1,050–$1,080 million, Adjusted OIBDA/EBITDA $330–$360 million, capex $310–$340 million.

• TDS reset its dividend policy, reducing dividends to 20% of previous levels to free up capital for fiber expansion.

• Anticipates higher free cash flow than originally expected due to increased Adjusted EBITDA and unchanged capital spending.

• Strategic alternatives review for UScellular's remaining spectrum assets is ongoing.