Exhibit 99.1   NEWS RELEASE

 

 

As previously announced, TDS will hold a teleconference February 24, 2017 at 9:30 a.m. CST. Interested parties may listen to the call live via the Events & Presentations page of investors.tdsinc.com.   

FOR IMMEDIATE RELEASE

 TDS reports fourth quarter and full year 2016 results

Provides 2017 guidance

 

CHICAGO, (Feb. 24, 2017) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,278 million for the fourth quarter of 2016, versus $1,274 million for the comparable period one year ago. Net loss attributable to TDS shareholders and related diluted loss per share was $5 million and $0.05, respectively, for the fourth quarter of 2016, compared to $1 million and $0.01, respectively, in the comparable period one year ago. 

TDS reported total operating revenues of $5,104 million and $5,176 million for the years ended 2016 and 2015, respectively.  Net income attributable to TDS shareholders and related diluted earnings per share were $43 million and $0.39, respectively, for the year ended 2016, compared to $219 million and $1.98, respectively, for the year ended 2015.

"In 2016, the TDS family of companies continued to execute on our long-term strategic goals," said LeRoy T. Carlson, Jr., TDS President and CEO. "U.S. Cellular worked to strengthen its competitive advantages through network enhancements and other improvements to increase customer satisfaction. TDS Telecom successfully completed two substantial projects to support its broadband strategy: fiber deployment and cable analog reclamation.

"U.S. Cellular continued to invest in its high-quality network by beginning a multi-year roll-out of Voice over LTE technology, and is on track to launch its first commercial deployment early this year. We also made a significant transition by implementing 4G LTE roaming agreements that improve the quality of roaming experiences for U.S. Cellular customers and that lower our costs. U.S. Cellular’s commitment to outstanding customer service drove consistently low smartphone churn throughout the year. Increased smartphone adoption and increased per customer data usage helped to offset some of the competitive pricing pressures. In the fourth quarter, as was the case through 2016, we strove to balance customer growth with profitability, which resulted in fewer new customers, and delivered on our earnings targets.

"TDS Telecom successfully completed its planned fiber deployments for 2016, enabling fiber to reach 22 percent of our service addresses. We grew our IPTV connections significantly and, combined with a greater demand for increased data speeds, we increased residential wireline revenues. Recently, we announced that TDS Telecom accepted funding through the FCC’s Alternative Connect America Cost Model (A-CAM), funds that will enable us to expand and improve broadband service to nearly 160,000 locations.  In our cable business, we transitioned analog cable markets to all-digital video services to improve customer experience and to reclaim spectrum that enables higher broadband speeds. Cable revenues increased 13 percent in the fourth quarter, compared to the prior year, showing that our cable broadband strategy is working. OneNeck IT Solutions continues to focus on its strategy of growing recurring service revenues through delivering IT cloud, colocation and other services tailored to mid-market businesses.

"TDS continues to return value to shareholders.  During 2016, TDS paid $65 million in regular quarterly cash dividends, and this morning we announced our 43rd consecutive year of increasing cash dividend payments, with a 5 percent increase in our annual dividend."

 

 

2017 Estimated Results

Estimates of full-year 2017 results for U.S. Cellular, TDS Telecom, and TDS are shown below.  Such estimates represent management’s view as of February 24, 2017.  Such forward-looking statements should not be assumed to be current as of any future date.  TDS undertakes no duty to update such information, whether as a result of new information, future events, or otherwise.  There can be no assurance that final results will not differ materially from such estimated results.

		2017 Estimated Results and Actual Results for the Year Ended December 31, 2016
		U.S. Cellular					TDS Telecom					TDS(3)
		Estimate			Actual		Estimate			Actual		Estimate			Actual
(Dollars in millions)
Total operating revenues (1)		$3,800-$4,000		$	3,939		$1,200-$1,250		$	1,151		$5,015-$5,265		$	5,104
Operating cash flow (2)		$500-$650		$	618		$300-$340		$	295		$805-$995		$	916
Adjusted EBITDA (2)		$650-$800		$	816		$300-$340		$	298		$955-$1,145		$	1,118
Capital expenditures	Approx. $		500	$	446	Approx. $		225	$	173	Approx. $		735	$	630

 

The following table provides a reconciliation to Operating Cash Flow and Adjusted EBITDA for 2017 estimated results, and actual results for the year ended December 31, 2016.  In providing 2017 estimated results, TDS has not completed the below reconciliation to net income because it does not provide guidance for income taxes.  Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.  Accordingly, a reconciliation to net income is not available without unreasonable effort.

				U.S. Cellular				TDS Telecom				TDS (3)
				Estimate		Actual		Estimate		Actual		Estimate		Actual
(Dollars in millions)
Net income (loss) (GAAP)				N/A		49		N/A		42		N/A		52
Add back:
	Income tax expense (benefit)			N/A		33		N/A		25		N/A		40
Income (loss) before income taxes
	(GAAP)		$	(110)-40	$	82	$	75-115	$	67	$	(95)-95	$	92
Add back:
	Interest expense			110		113		–		3		170		170
	Depreciation, amortization and
		accretion expense		630		618		225		224		860		850
EBITDA (Non-GAAP)			$	630-780	$	813	$	300-340	$	294	$	935-1,125	$	1,112
Add back:
	(Gain) loss on sale of business and
		other exit costs, net		–		–		–		–		–		(1)
	(Gain) loss on license sales and
		exchanges, net		–		(19)		–		(1)		–		(20)
	(Gain) loss on asset disposals, net			20		22		–		4		20		27
Adjusted EBITDA (Non-GAAP)(2)			$	650-800	$	816	$	300-340	$	298	$	955-1,145	$	1,118
Deduct:
	Equity in earnings of
		unconsolidated entities		140		140		–		–		140		140
	Interest and dividend income;
		other income(1)		10		57		–		3		10		62
	Other, net			–		1		–		–		–		–
Operating cash flow (Non-GAAP)(2)(4)			$	500-650	$	618	$	300-340	$	295	$	805-995	$	916
Note: Totals may not foot due to rounding differences.

 

1. In 2016, Imputed interest related to equipment installment plans was recorded in Interest and dividend income.  Beginning in 2017, imputed interest will be recorded in service revenues.  The company recorded $51 million in imputed interest in 2016.
2. Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) is defined as net income adjusted for the items set forth in the reconciliation above.  Operating cash flow is defined as net income adjusted for the items set forth in the reconciliation above.  Adjusted EBITDA and Operating cash flow are not measures of financial performance under Generally Accepted Accounting Principles in the United States (“GAAP”) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity.  TDS does not intend to imply that any such items set forth in the reconciliation above are non-recurring, infrequent or unusual; such items may occur in the future.  Management uses Adjusted EBITDA and Operating cash flow as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed appropriate.  Management believes Adjusted EBITDA and Operating cash flow are useful measures of TDS’ operating results before significant recurring non-cash charges, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS’ financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance.  Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, and gains and losses, while Operating cash flow reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities.  The table above reconciles Adjusted EBITDA and Operating cash flow to the corresponding GAAP measure, Net income or Income (loss) before income taxes.
3. The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of consolidating eliminations, corporate operations and non-reportable segments, all of which are not presented above.
4. A reconciliation of Operating cash flow (Non-GAAP) to operating income (GAAP) for full year 2016, 2015 and 2014 actual results can be found on the Guidance and Reconciliation page of the company's website at investors.tdsinc.com.

Stock Repurchase Summary

TDS began repurchasing stock under its $250 million repurchase authorization on August 5, 2013.   The following represents repurchases of TDS Common Shares.

Repurchase Period		# Shares		Cost (in millions)
2016 (full year)		111,700		$	3
2015 (full year)		–		$	–
Total		111,700		$	3

 

Conference Call Information

TDS will hold a conference call on February 24, 2017 at 9:30 a.m. Central Time.

• Access the live call on the Events & Presentations page of investors.tdsinc.com or at https://www.webcaster4.com/Webcast/Page/1145/19842.

• Access the call by phone at 877-407-8029 (US/Canada), no pass code required. 

Before the call, certain financial and statistical information to be discussed during the call will be posted to investors.tdsinc.com. The call will be archived on the Events & Presentations page of investors.tdsinc.com. 

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless; cable and wireline broadband, TV and voice; and hosted and managed services to approximately 6 million customers nationwide through its businesses, U.S. Cellular, TDS Telecom, OneNeck IT Solutions, and TDS Broadband Service LLC.  Founded in 1969 and headquartered in Chicago, TDS employed 10,300 people as of December 31, 2016.

Visit www.tdsinc.com for comprehensive financial information, including earnings releases, quarterly and annual filings, shareholder information and more.

Contacts     

Jane McCahon, Senior Vice President - Corporate Relations and Corporate Secretary

312-592-5379

jane.mccahon@tdsinc.com

 

Julie Mathews, IRC, Director - Investor Relations

312-592-5341

julie.mathews@tdsinc.com 

 

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, 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/divestures/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 the Form 8-K Current Report used by TDS to furnish this press release to the Securities and Exchange Commission (“SEC”), which are incorporated by reference herein.    

For more information about TDS and its subsidiaries, visit:

TDS: www.tdsinc.com 

U.S. Cellular: www.uscellular.com 

TDS Telecom: www.tdstelecom.com 

OneNeck IT Solutions: www.oneneck.com

United States Cellular Corporation
Summary Operating Data (Unaudited)
Quarter Ended						12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
Retail Connections
	Postpaid
		Total at end of period					4,482,000			4,484,000			4,490,000			4,454,000			4,409,000
		Gross additions					187,000			174,000			197,000			215,000			240,000
			Feature phones				7,000			10,000			8,000			9,000			10,000
			Smartphones				109,000			105,000			107,000			124,000			132,000
			Connected devices				71,000			59,000			82,000			82,000			98,000
		Net additions (losses)					(2,000)			(6,000)			36,000			45,000			68,000
			Feature phones				(21,000)			(20,000)			(21,000)			(25,000)			(25,000)
			Smartphones				(4,000)			(7,000)			8,000			20,000			23,000
			Connected devices				23,000			21,000			49,000			50,000			70,000
		ARPU (1)				$	45.19		$	47.08		$	47.37		$	48.13		$	51.46
		ABPU (Non-GAAP)(2)				$	55.43		$	56.79		$	56.09		$	56.06		$	58.57
		ARPA (3)				$	120.67		$	125.31		$	124.91		$	125.36		$	131.96
		ABPA (Non-GAAP)(4)				$	148.02		$	151.16		$	147.90		$	145.99		$	150.19
		Churn rate (5)					1.41%			1.34%			1.20%			1.28%			1.31%
			Handsets				1.23%			1.22%			1.10%			1.18%			1.23%
			Connected devices				2.49%			2.04%			1.84%			2.01%			1.95%
		Smartphone penetration (6)					79%			78%			77%			75%			74%
	Prepaid
		Total at end of period					484,000			480,000			413,000			399,000			387,000
		Gross additions					83,000			132,000			73,000			75,000			69,000
		Net additions					4,000			67,000			14,000			12,000			7,000
		ARPU (1)				$	33.25		$	34.39		$	34.58		$	35.51		$	35.54
		Churn rate (5)					5.44%			4.84%			4.86%			5.37%			5.40%
Total connections at end of period (7)							5,031,000			5,030,000			4,973,000			4,926,000			4,876,000
Smartphones sold as a percent of total
	handsets sold						93%			92%			91%			92%			91%
Market penetration at end of period
	Consolidated operating population						31,994,000			31,994,000			31,994,000			31,994,000			31,967,000
	Consolidated operating penetration (8)						16%			16%			16%			15%			15%
Capital expenditures (millions)						$	171		$	103		$	93		$	79		$	198
Total cell sites in service							6,415			6,374			6,324			6,306			6,297
Owned towers							4,040			4,015			3,988			3,989			3,978
(1)		Average Revenue Per User (“ARPU”) - metric calculated by dividing a revenue base by an average number of connections and by the number of months in the period.  These revenue bases and connection populations are shown below:
			▪	Postpaid ARPU consists of total postpaid service revenues and postpaid connections.
			▪	Prepaid ARPU consists of total prepaid service revenues and prepaid connections.
(2)		Average Billings Per User (“ABPU”) - non-GAAP metric calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid connections and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.
(3)		Average Revenue Per Account (“ARPA”) - metric calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.
(4)		Average Billings Per Account (“ABPA”) - non-GAAP metric calculated by dividing total postpaid service revenues plus equipment installment plan billings by the average number of postpaid accounts and by the number of months in the period.  Refer to the end of this release for a reconciliation of this metric to its most comparable GAAP metric.
(5)		Churn rate represents the percentage of the connections that disconnect service each month.  These rates represent the average monthly churn rate for each respective period.
(6)		Smartphone penetration is calculated by dividing postpaid smartphone connections by postpaid handset connections.
(7)		Includes reseller and other connections.
(8)		Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total population of consolidated operating markets as estimated by Nielsen.

TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended			12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
TDS Telecom
Wireline
	Residential connections
		Voice (1)		310,600			314,600			316,800			318,400			319,800
		Broadband (2)		229,500			232,800			232,200			229,100			228,500
		IPTV (3)		45,300			43,600			41,200			38,300			34,400
		Wireline residential connections		585,400			590,900			590,200			585,800			582,700
	Total residential revenue per connection (4)		$	44.27		$	44.25		$	43.67		$	43.28		$	41.24
	Commercial connections
		Voice (1)		157,400			160,900			164,000			167,400			171,500
		Broadband (2)		21,400			21,700			21,900			22,000			22,400
		managedIP (5)		150,900			151,500			149,000			148,500			147,100
		Wireline commercial connections		329,700			334,000			334,900			337,900			341,000
	Total Wireline connections			915,200			924,900			925,100			923,700			923,700
Cable
	Cable Connections
		Broadband (2)		133,700			130,200			125,700			121,700			117,100
		Video (6)		99,000			101,100			102,900			104,600			106,800
		Voice (1)		59,600			59,800			58,900			58,100			56,400
		Cable connections		292,400			291,000			287,600			284,400			280,300
Numbers may not foot due to rounding.
(1)		Refers to the individual circuits connecting a customer to Wireline’s central office facilities or the Cable billable number of lines into a building for voice services.
(2)		Refers to the number of Wireline customers provided high-capacity data circuits via various technologies, including DSL and dedicated internet circuit technologies or the Cable billable number of lines into a building for high-speed data services.
(3)		The number of Wireline customers provided video services using IP networking technology.
(4)		Total residential revenue per connection is calculated by dividing total Wireline residential revenue by the average number of total Wireline residential connections and by the number of months in the period.
(5)		The number of telephone handsets, data lines and IP trunks providing communications using IP networking technology.
(6)		Generally, a home or business receiving video programming counts as one video connection. In counting bulk residential or commercial connections, such as an apartment building or hotel, connections are counted based on the number of units/rooms within the building receiving service.

 

TDS Telecom
Capital Expenditures (millions)
Quarter Ended	12/31/2016			9/30/2016			6/30/2016			3/31/2016			12/31/2015
Wireline	$	26		$	27		$	27		$	27		$	50
Cable		13			11			17			13			15
HMS		5			2			2			2			8
	$	45		$	40		$	46		$	42		$	73

 

Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
				Three Months Ended December 31,
				2016			2015			2016 vs. 2015
										Increase (Decrease)
(Dollars and shares in millions, except per share amounts)
Operating revenues
	U.S. Cellular			$	991		$	987		$	4		-
	TDS Telecom				283			284			(1)		-
	All Other (1)				4			3			1		>100%
					1,278			1,274			4		-
Operating expenses
	U.S. Cellular
		Expenses excluding depreciation, amortization and
			accretion		861			851			10		1%
		Depreciation, amortization and accretion			156			156			–		-
		(Gain) loss on asset disposals, net			6			4			2		43%
		(Gain) loss on license sales and exchanges, net			(3)			–			(3)		N/M
					1,020			1,011			9		1%
	TDS Telecom
		Expenses excluding depreciation, amortization and
			accretion		212			214			(1)		(1)%
		Depreciation, amortization and accretion			56			58			(2)		(3)%
		(Gain) loss on asset disposals, net			1			3			(2)		(71)%
		(Gain) loss on sale of business and other exit costs, net			–			(6)			6		N/M
		(Gain) loss on license sales and exchanges, net			(1)			–			(1)		N/M
					269			268			–		-
	All Other (1)
		Expenses excluding depreciation and amortization			2			4			(2)		17%
		Depreciation and amortization			2			2			–		(4)%
					5			6			(1)		25%
			Total operating expenses		1,294			1,285			9		1%
Operating income (loss)
	U.S. Cellular				(29)			(24)			(5)		(21)%
	TDS Telecom				14			16			(1)		(7)%
	All Other (1)				(1)			(3)			2		36%
					(16)			(11)			(5)		(44)%
Investment and other income (expense)
	Equity in earnings of unconsolidated entities				30			30			–		-
	Interest and dividend income				18			11			7		68%
	Interest expense				(43)			(39)			(4)		(12)%
		Total investment and other income			5			2			3		>100%
Loss before income taxes					(11)			(9)			(2)		(25)%
	Income tax expense (benefit)				(6)			(7)			1		24%
Net loss					(5)			(2)			(3)		>(100)%
	Less:  Net income attributable to noncontrolling
		interests, net of tax			–			(1)			1		(65)%
Net loss attributable to TDS shareholders					(5)			(1)			(4)		>(100)%
	TDS Preferred dividend requirement				–			–			–		-
Net loss available to TDS common shareholders				$	(5)		$	(1)		$	(4)		>(100)%
Basic weighted average shares outstanding					110			109			1		1%
Basic loss per share available to TDS common shareholders				$	(0.05)		$	(0.01)		$	(0.04)		>(100)%
Diluted weighted average shares outstanding					110			109			1		1%
Diluted loss per share available to TDS common shareholders				$	(0.05)		$	(0.01)		$	(0.04)		>(100)%
(1)		Consists of TDS Corporate, intercompany eliminations and all other business operations not included in the U.S. Cellular and TDS Telecom segments.
N/M – Percentage change not meaningful
Numbers may not foot due to rounding.