Telephone and Data Systems (TDS) Q4 2024 earnings summary

Executive summary

• Announced sale of UScellular wireless operations and select spectrum assets to T-Mobile for $4.4 billion, plus additional spectrum sales to Verizon ($1 billion) and AT&T ($1.018 billion), monetizing 70% of spectrum holdings as of 12/31/24.

• 2024 marked a transformative year with strategic portfolio optimization, including divestitures of OneNeck IT Solutions, copper ILECs, and cable companies, and a focus on fiber and 5G investments.

• Strengthened financial position and improved shareholder returns through cost reduction, margin expansion, and improved free cash flow, with UScellular paying down over $200 million in debt.

• 2025 priorities include closing the T-Mobile transaction, positioning the tower business, expanding fiber, and optimizing post-transaction capital structure.

• TDS Telecom exceeded its 2024 fiber address goal, delivering 129,000 new marketable fiber service addresses and expanding its footprint by 6%.

Financial highlights

• Consolidated capital expenditures were $884 million in 2024, down from $1,211 million in 2023, driving increased free cash flow.

• Adjusted EBITDA for UScellular was $1.018 billion for 2024 (up 3% year-over-year); TDS Telecom full-year adjusted EBITDA was $350 million, up 23% year-over-year.

• UScellular’s free cash flow reached $280 million, up $88 million from 2023, due to profitability improvements, lower capex, and higher equity investment distributions.

• TDS Telecom’s residential revenues grew 6%, and Adjusted EBITDA increased 23% year-over-year, driven by fiber investments and cost management.

• Cash flows from operating activities increased to $1,145 million in 2024 from $1,142 million in 2023; free cash flow improved to $194 million from $(135) million.

Outlook and guidance

• TDS Telecom 2025 guidance: operating revenues of $1.03–$1.07 billion, adjusted OIBDA of $310–$350 million, adjusted EBITDA of $320–$360 million, and capital expenditures of $375–$425 million.

• TDS Telecom targets 1.8 million marketable fiber service addresses, 80% fiber coverage, and gig speeds to 95% of its footprint.

• 2025 priorities include delivering 150,000 new marketable fiber addresses and growing broadband net adds.

• No 2025 financial guidance for UScellular due to pending transactions.