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TELEPHONE & DATA SYSTEMS INC /DE/

TELEPHONE & DATA SYSTEMS INC /DE/TDSEarnings & Financial Report

NYSE · telecommunications

Telephone and Data Systems, Inc. is a Chicago-based telecommunications service company primarily providing broadband, cable, telephone, and wireless services, and radio tower leasing, through its subsidiaries TDS Telecom and Array Digital Infrastructure, the latter of which was formerly the cell phone company United States Cellular.

What changed in TELEPHONE & DATA SYSTEMS INC /DE/'s 10-K — 2023 vs 2024

Top changes in TELEPHONE & DATA SYSTEMS INC /DE/'s 2024 10-K

435 paragraphs added · 343 removed · 284 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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UScellular has relationships with exclusive and non-exclusive agents (collectively “agents”), which are independent businesses that obtain customers for UScellular on a commission basis. UScellular’s agents are generally in the business of selling wireless devices, wireless service plans and other related products to consumer and business and government customers.
UScellular has relationships with exclusive and non-exclusive agents (collectively “agents”), which are independent businesses that obtain and service customers for UScellular on a commission basis. UScellular’s agents are generally in the business of selling wireless devices, wireless service plans and other related products to consumer and business and government customers.
TDS Telecom manages customer retention by focusing on outstanding customer service through extensive training of front-line sales and support associates. Competition TDS Telecom faces broadband, video, and voice competition from wireline providers, cable providers, fiber overbuilders, VoIP providers, satellite providers, wireless providers and providers using other emerging technologies.
TDS Telecom manages customer retention by focusing on outstanding customer service through extensive training of front-line sales and support associates. Competition TDS Telecom faces broadband, video, voice and wireless competition from wireline providers, cable providers, fiber overbuilders, VoIP providers, satellite providers, wireless providers and providers using other emerging technologies.
To optimize its portfolio and raise capital, TDS is exploring opportunities to divest certain markets. TDS Telecom believes that being a good corporate citizen is fundamental to its long-term success. TDS Telecom is committed to growing with its communities and meeting the needs of customers through great products and services, sponsorships, fundraising, and volunteering.
To optimize its portfolio, TDS is exploring opportunities to divest certain markets. TDS Telecom believes that being a good corporate citizen is fundamental to its long-term success. TDS Telecom is committed to growing with its communities and meeting the needs of customers through great products and services, sponsorships, fundraising, and volunteering.
UScellular’s interests in wireless spectrum licenses include both direct interests whereby UScellular is the licensee and investment interests in entities which are licensees; together, these direct and investment interests involve operating and non-operating wireless spectrum licenses covering portions of 30 states and a total population of approximately 51 million as of December 31, 2023.
UScellular’s interests in wireless spectrum licenses include both direct interests whereby UScellular is the licensee and investment interests in entities which are licensees; together, these direct and investment interests involve operating and non-operating wireless spectrum licenses covering portions of 30 states and a total population of approximately 51 million as of December 31, 2024.
In 2023, UScellular continued exploring ways to leverage its assets, brand, partnerships, and resources to close the digital divide with a focus on helping to ensure youth in its markets have reliable and fast internet access in school and at home through the After School Access Project .
In 2024, UScellular continued exploring ways to leverage its assets, brand, partnerships, and resources to close the digital divide with a focus on helping to ensure youth in its markets have reliable and fast internet access in school and at home through the After School Access Project .
In order to provide IP-based services, TDS Telecom has developed and deployed an inter-regional data routing infrastructure using owned and leased fiber capacity which allows it to leverage its 100-gigabit core network.
In order to provide IP-based services, TDS Telecom has developed and deployed an inter-regional data routing infrastructure using owned and leased fiber capacity which allows it to leverage its 400-gigabit core network.
TDS Telecom differentiates itself from competitors using a hyper-localized and community-based sales and marketing effort to maximize broadband penetration. Sales and Distribution Channels . TDS Telecom operates and uses sales contact centers, direct sales forces, retail stores, sales agents and an online platform to sell services and products. Customer Service.
TDS Telecom differentiates itself from competitors using a hyper-localized and community-based sales and marketing effort to maximize broadband penetration. Sales and Distribution Channels . TDS Telecom operates and uses sales contact centers, direct sales forces including third-party direct sales, retail stores, sales agents and an online platform to sell services and products. Customer Service.
In general, there are at least four competitors across UScellular's service area, including to a varying degree: the national wireless companies - Verizon Communications Inc., AT&T Inc., T-Mobile US, Inc., and Dish Network Corporation, cable wireless, including Comcast Corporation and Charter Communications, Inc., and mobile virtual network operators (MVNOs).
In general, there are at least four competitors across UScellular's service area, including to a varying degree: the national wireless companies - Verizon Communications Inc., AT&T Inc., T-Mobile US, Inc., and Dish Network Corporation, cable wireless, which predominantly includes Comcast Corporation and Charter Communications, Inc., and mobile virtual network operators (MVNOs).
As of December 31, 2023, TDS owned 83% of the combined total of the outstanding Common Shares and Series A Common Shares of UScellular and controlled 96% of the combined voting power of both classes of UScellular common stock. TDS provides broadband, video and voice services through its wholly-owned subsidiary TDS Telecommunications LLC (TDS Telecom).
As of December 31, 2024, TDS owned 83% of the combined total of the outstanding Common Shares and Series A Common Shares of UScellular and controlled 96% of the combined voting power of both classes of UScellular common stock. TDS provides broadband, video, voice and wireless services through its wholly-owned subsidiary TDS Telecommunications LLC (TDS Telecom).
UScellular owns and leases cell towers to provide service to its customers throughout its footprint. UScellular receives tower rental revenues when another carrier leases tower space on a UScellular owned tower.
UScellular owns and leases cell towers to provide service to its customers throughout its footprint. UScellular receives tower rental revenues when another carrier leas es tower space on a UScellular owned tower.
Approximately 90% of retail connections were postpaid connections as of December 31, 2023. UScellular offers various service plans with nationwide coverage tailored to the needs of customers.
Approximately 90 % of retail connections were postpaid connections as of December 31, 2024. UScellular offers various service plans with nationwide coverage tailored to the needs of customers.
General Reference is made to Item 7 of this Form 10-K under “Regulatory Matters” for information regarding any other significant recent developments and proposals relating to regulatory matters. 7 Table of Contents HUMAN CAPITAL RESOURCES Company and Culture TDS had approximately 8,800 full-time and part-time associates as of December 31, 2023.
General Reference is made to Item 7 of this Form 10-K under “Regulatory Matters” for information regarding any other significant recent developments and proposals relating to regulatory matters. 7 Table of Contents HUMAN CAPITAL RESOURCES Company and Culture TDS had approximately 7,900 full-time and part-time associates as of December 31, 2024.
Sales and Distribution Channels UScellular supports a multi-faceted distribution program, including retail sales, direct sales, telesales, ecommerce, indirect sales including resellers, independent agents and third-party national retailers. Company retail store locations are designed to market wireless services and products to the consumer and small business segments in a setting familiar to these types of customers.
Sales and Distribution Channels UScellular supports a multi-faceted distribution program, including retail sales, direct sales, telesales, ecommerce, and indirect sales including resellers, independent agents and a third-party national retailer. 3 Table of Contents Company retail store locations are designed to market wireless services and products to the consumer and small business segments in a setting familiar to these types of customers.
Since each of these competitors has access to comparable technology and facilities, competition among wireless service providers for customers is principally on the basis of types of services and products, price, brand, size of area covered, network quality, network speed and responsiveness of customer service.
Since each of these competitors has access to comparable technology and facilities, competition among wireless service providers for customers is principally on the basis of types of services and products offered, price, brand, network quality, network speed and responsiveness of customer service.
Fiber technology is being deployed to select markets to provide internet speeds of up to 8 Gbps. In certain non-fiber markets, TDS Telecom has deployed fiber-to-the-node and copper-based vectoring/pair bonding technology to increase data speeds reaching up to 100 Mbps. DOCSIS 3.1 technology is utilized across nearly all cable markets and offers speeds of up to 1 Gbps.
In certain non-fiber markets, TDS Telecom has deployed fiber-to-the-node and copper-based vectoring/pair bonding technology to increase data speeds reaching up to 100 Mbps. DOCSIS 3.1 technology is utilized across nearly all cable markets and offers speeds of up to 1 Gbps.
A high-quality network, supported by continued investments in that network, is an important factor for UScellular to remain competitive. 3 Table of Contents 5G technology helps address customers’ growing demand for data services and enhances services, including high-speed fixed wireless home internet services, requiring high speed and reliability as well as low latency.
A high-quality network, supported by continued investments in that network, is an important factor for UScellular to remain competitive. 5G technology helps address customers’ growing demand for data services and enhanced services, including high-speed fixed wireless home internet services, requiring high speed and reliability as well as low latency.
Item 1. Business Telephone and Data Systems, Inc. (TDS) provides high-quality communications services to customers with 4.6 million retail wireless connections and 1.2 million broadband, video and voice connections at December 31, 2023. TDS conducts all of its wireless operations through its majority-owned subsidiary, United States Cellular Corporation (UScellular).
Item 1. Business Telephone and Data Systems, Inc. (TDS) provides high-quality communications services to customers with 4.4 million retail wireless connections and 1.1 million broadband, video and voice connections at December 31, 2024. TDS conducts wireless operations through its majority-owned subsidiary, United States Cellular Corporation (UScellular).
UScellular also operates a VoLTE network, which allows customers to utilize a 4G LTE enabled mobile device for voice and data services, including high-definition voice and simultaneous voice and data sessions. As a result of its continued investment and modernization of its network, UScellular decommissioned its third-generation (3G) CDMA network in the first quarter of 2024. Roaming.
UScellular also operates a 4G LTE network including VoLTE technology, which allows customers to utilize a 4G LTE enabled mobile device for voice and data services, including high-definition voice and simultaneous voice and data sessions. UScellular decommissioned its third-generation (3G) CDMA network in the first quarter of 2024. Roaming.
UScellular offers a comprehensive range of devices such as smartphones and other handsets, tablets, wearables, mobile hotspots, fixed wireless home internet, and IoT devices. In addition, UScellular also offers a wide range of accessories, including wireless essentials such as cases, screen protectors, chargers, memory cards and consumer electronics such as audio, home automation and networking products.
UScellular offers a comprehensive range of devices such as smartphones and other handsets, tablets, wearables, mobile hotspots, fixed wireless home internet, and IoT devices. In addition, UScellular also offers a wide range of accessories, including wireless essentials such as cases, screen protectors, cables, chargers, memory cards and consumer electronics such as Bluetooth audio, wi-fi enabled cameras, and networking products.
UScellular manages relationships with its suppliers to ensure its customers have access to the industry's latest devices, to obtain best possible pricing, and to identify opportunities for promotional support from its suppliers. UScellular contracts with third-party providers for the majority of its product warehousing, distribution and direct customer fulfillment activities.
UScellular manages relationships with its suppliers to ensure its customers have access to the industry's latest devices, to obtain best possible pricing, and to identify opportunities for promotional support from its suppliers. UScellular contracts with third-party providers for its product warehousing, distribution and direct customer fulfillment activities. UScellular also contracts with third-party providers for its device service programs. Seasonality.
As of December 31, 2023, there were 7,000 cell sites in service of which UScellular owned 4,373. 4 Table of Contents TDS TELECOM OPERATIONS General TDS Telecom provides communications services to 1.2 million connections in 32 states through its high-quality fiber, coaxial and copper networks.
As of December 31, 2024, there were 7,010 cell sites in service of which UScellular owned 4,409 . 4 Table of Contents TDS TELECOM OPERATIONS General TDS Telecom provides communications services to 1.1 million connections in 31 states through its high-quality fiber, coaxial and copper networks.
In 2023, TDS Telecom continued to invest in its fiber market expansions in Wisconsin and the Pacific Northwest. TDS Telecom may seek to grow its operations through investments in fiber and through the acquisition of and/or partnership with businesses that support and complement its existing markets or by creating entirely new clusters of markets in attractive locations.
In 2024, TDS Telecom continued to expand its footprint through fiber investments in Wisconsin and the Pacific Northwest. TDS Telecom may seek to grow its operations through additional investments in fiber and through the acquisition of and/or partnership with businesses that support and complement its existing markets or by creating entirely new clusters of markets in attractive locations.
TDS Telecom’s Competitive Local Exchange Carriers (CLEC), expansion and cable operations are subject to similar but reduced regulation compared to ILECs. Providing video services requires TDS Telecom to obtain franchises from state or local governmental authorities to occupy public rights of way with network facilities.
TDS Telecom’s other operations are subject to similar but reduced regulation compared to ILECs. Providing video services requires TDS Telecom to obtain franchises from state or local governmental authorities to occupy public rights of way with network facilities.
Operating Strategy and Community Focus UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service and competitive devices, plans and pricing - all provided with a community focus. UScellular operates a regional wireless network.
All of its wireless operating markets are in the United States. Operating Strategy, Recent Developments and Community Focus UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service and competitive devices, plans and pricing - all provided with a community focus. UScellular operates a regional wireless network.
TDS Telecom residential customer operations provide high-speed broadband, video, and voice services. These services are bundled at competitive prices to encourage cross-selling within the customer base and to attract and retain new customers. Approximately 56% of residential customers have at least two services. • Broadband: TDS Telecom offers reliable high-speed internet connections and whole-home Wi-Fi.
TDS Telecom residential customer operations provide high-speed broadband, video, voice and wireless services. These services are bundled at competitive prices to encourage cross-selling within the customer base and to attract and retain customers. • Broadband: TDS Telecom offers reliable high-speed internet connections and whole-home Wi-Fi through fiber-rich networks.
Options include an in-home self-installed device, a self-installation device mounted on the external side of a window, and externally-mounted professionally-installed equipment with an internal router.
Options include an in-home self-installed device and a self-installation device mounted on the external side of a window.
UScellular supports mobility and fixed wireless services through a combination of low-band, mid-band and high-band spectrum. UScellular's initial 5G deployment has predominantly used low-band spectrum to launch 5G services in portions of substantially all its markets.
UScellular supports mobility and fixed wireless services through a combination of low-band, mid-band and high-band spectrum. In 2019-2023, UScellular focused on 5G coverage and predominantly used low-band spectrum to launch 5G services in portions of substantially all of its markets.
In addition, UScellular offers a Trade-In program through which UScellular buys customers' used equipment. UScellular purchases devices and accessory products from a number of original equipment manufacturers and distributors.
In addition, UScellular offers a Trade-In program through which UScellular acquires customers' used equipment in exchange for promotional or bill credit. UScellular purchases devices and accessory products from a number of original equipment manufacturers and distributors.
TDS is a controlled company because over 50% of the voting power for the election of a majority of the directors of TDS is held by the trustees of the TDS Voting Trust. TDS has two reportable segments: UScellular and TDS Telecom.
TDS is a controlled company because over 50% of the voting power for the election of a majority of the directors of TDS is held by the trustees of the TDS Voting Trust.
The map below highlights TDS’ consolidated areas of operations: 1 Table of Contents UScellular OPERATIONS General UScellular provides wireless telecommunications services to customers with 4.6 million retail connections in portions of 21 states collectively representing a total population of 32 million. UScellular operates in one reportable segment, and all of its wireless operating markets are in the United States.
The map below highlights TDS’ consolidated areas of operations: 1 Table of Contents UScellular OPERATIONS General UScellular provides wireless telecommunications services to customers with 4.4 million retail connections in portions of 21 states collectively representing a total population of 33 million. UScellular operates in two reportable segments – Wireless and Towers.
In addition to selling direct to businesses and residential homes, UScellular works with several municipalities to bring broadband internet to underserved communities. 2 Table of Contents UScellular offers advanced wireless solutions to consumers and business and government customers including an expansive suite of connected Internet of things (IoT) solutions and software applications across the categories of monitor and control (e.g., sensors and cameras), business automation/operations (e.g., e-forms, office solutions), communication (e.g., enterprise messaging, primary and back-up internet connectivity for business continuity), fleet and asset management, smart water solutions, private cellular networks (PCN) and custom, bespoke end-to-end IoT solutions et al.
UScellular offers advanced wireless solutions to consumers and business and government customers including an expansive suite of connected Internet of things (IoT) solutions and software applications across the categories of monitor and control (e.g., sensors and cameras), business automation/operations (e.g., e-forms, office solutions), communication (e.g., enterprise messaging, unified communications, primary and back-up internet connectivity for business continuity), fleet/asset/video management solutions, security solutions, private cellular networks (PCN) and custom and bespoke end-to-end IoT solutions et al.
UScellular also contracts with third-party providers for its device service programs. Seasonality. Seasonality in operating expenses may cause operating income to vary from quarter to quarter. UScellular’s operating expenses tend to be higher in the fourth quarter due to increased marketing and promotional activities during the holiday season.
Seasonality in operating expenses may cause operating income to vary from quarter to quarter. UScellular’s operating expenses tend to be higher in the fourth quarter due to increased marketing and promotional activities during the holiday season.
On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular. At this time, UScellular cannot predict the ultimate outcome of such process or estimate the potential impact of such process on the financial statements.
On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
TDS provides a competitive wage and benefits package, a safe workplace, and an environment where associates feel engaged and a sense of belonging. TDS regularly surveys its associates – those surveys have consistently shown that associates have strong engagement and high overall job satisfaction.
TDS provides a competitive wage and benefits package, a safe workplace, and an environment where associates feel engaged and a sense of belonging. TDS periodically surveys its associates to understand the level of associate engagement and overall job satisfaction.
In certain markets, TDS Telecom partners with a satellite TV provider to offer digital television. 5 Table of Contents • Voice: Call plans include local and long-distance telephone service, Voice over Internet Protocol (VoIP) and enhanced services like Find-Me/Follow-Me, collaboration, instant messaging and more. Many features are bundled with calling plans to give customers the best value.
In certain markets, TDS Telecom partners with a satellite TV provider to offer digital television. TDS video connections are declining due to rising prices and the industry-wide trend toward cord-cutting. • Voice: Call plans include local and long-distance telephone service, Voice over Internet Protocol (VoIP) and enhanced services like Find-Me/Follow-Me, collaboration, instant messaging and more.
The business organization also offers a suite of professional and managed services. Lastly, for first responders, UScellular offers a suite of critical connectivity solutions that includes Wireless Priority Services (WPS) and Quality Priority and Preemption (QPP) options. UScellular intends to continue to further enhance these offerings in 2024 and beyond. Products.
The business organization also offers an extensive selection of professional and managed services including staff augmentation, IPX services, and SIM management. Lastly, for first responders, UScellular offers a suite of critical connectivity solutions that includes Wireless Priority Services (WPS) and Quality Priority and Preemption (QPP) options. Products.
TDS provides job specific, diversity and inclusion, safety, and fraud awareness training for all associates – and also offers programs that further develop its associates including educational assistance, developmental assignments, and mentoring programs.
Training Since its founding, TDS has been committed to associate development, including for emerging and existing leaders, which is critical to its success. TDS provides job specific, safety, and fraud awareness training for all associates – and also offers programs that further develop its associates including educational assistance, developmental assignments, and mentoring programs.
Whole-home Wi-Fi security and support services are available to enhance customers’ high-speed internet experience. • Video: TDS Telecom provides advanced home TV entertainment that includes basic channels and premium programming available in high-definition television combined with a digital video recording (DVR) service.
Whole-home Wi-Fi, security, and support services are available to enhance customers’ high-speed internet experience. • Video: TDS Telecom provides advanced home TV entertainment combined with a digital video recording (DVR) service. TDS Telecom offers TDS TV+, an integrated cloud TV platform that combines linear and on-demand programming, mobile device interfaces, personalized recommendations, and network-based DVR.
As part of its business development strategy, UScellular may periodically be engaged in negotiations relating to strategic partnerships and/or the acquisition, exchange or disposition of companies, strategic properties, and investment interests. Additionally, UScellular may be engaged in negotiations related to wireless spectrum, including participation in Federal Communications Commission (FCC) auctions.
As part of its business development strategy, UScellular may periodically be engaged in negotiations relating to strategic partnerships and/or the acquisition, exchange or disposition of companies, strategic properties, spectrum licenses and/or investment interests. 2 Table of Contents UScellular has a longstanding commitment to supporting its local communities through donations and volunteerism.
Fiber builds in strategically selected locations allow TDS Telecom to deliver more robust residential and commercial products in its incumbent markets that have historically utilized copper and coaxial cable technologies and to target growth in attractive, growing markets to increase its total footprint.
A key strategic initiative for TDS Telecom is investing in fiber to provide broadband speeds of up to 8 Gigabits per second (Gbps). Fiber builds allow TDS Telecom to deliver more robust residential and commercial products in its markets that have historically utilized copper technologies and to target attractive, growing markets to increase its total footprint.
Through its investments, TDS Telecom intends to improve its broadband services in its incumbent markets and extend its footprint into new expansion markets. TDS Telecom intends to augment that broadband growth by bundling with video, voice and other value-added services.
Through its investments, TDS Telecom intends to improve its broadband services and extend its footprint. TDS Telecom intends to augment that broadband growth by bundling with video, voice, wireless and other value-added services. TDS Telecom seeks to be the preferred broadband provider by offering fiber-rich networks, high-quality products and services, and a seamless customer experience.
TDS is committed to demonstrating equity and fairness through the inclusion of diverse associates, customers, and suppliers. Additionally, TDS sponsors Associate Resource Groups to promote dynamic community experiences that align with TDS’ vision and values, increase associate engagement and empowerment, and support professional development.
TDS sponsors Associate Resource Groups, open to all associates, to promote dynamic community experiences that align with TDS' vision and values, increase associate engagement and empowerment, and support professional development. TDS endeavors to encourage a broad range of thoughts, ideas and the innovation needed to move the business forward.
During 2023, UScellular continued to invest in 5G with a focus on deployment of mid-band spectrum, which will largely overlap portions of areas already covered with low-band 5G service. 5G service deployed over mid-band spectrum will further enhance speed and capacity for UScellular's mobility and fixed wireless services.
During 2023 and 2024, UScellular has focused on deploying 5G over its mid-band spectrum, largely overlapping areas already covered with low-band 5G service to enhance speed and capacity for UScellular's mobility and fixed wireless services. As of December 31, 2024, mid-band spectrum is deployed on sites that covered nearly 50% of data and voice traffic.
See Note 19 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information about TDS' segments.
HMS' and Suttle-Straus’ financial results were not significant to TDS’ operations. All of TDS' segments operate entirely in the United States. See Note 20 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information about TDS' segments.
UScellular provides support and training to its agents to increase customer satisfaction and to ensure a consistent customer experience. To expand its retail presence, UScellular also maintains a relationship with a large national retailer, selling postpaid and prepaid devices. Competition The wireless telecommunication industry is highly competitive. UScellular competes directly with several wireless service providers in each of its markets.
UScellular provides support and training to its agents to increase customer satisfaction and to ensure a consistent customer experience. UScellular also maintains a relationship with a large national retailer, selling postpaid and prepaid devices and similar to the agents, this national retailer obtains and services UScellular postpaid and prepaid customers on a commission basis.
TDS Telecom continues to develop and maintain an efficient cost structure to enhance its ability to compete with price-based initiatives from competitors. In addition to price, TDS Telecom competes based on a variety of factors including the reliability of its network, faster broadband speeds, the diversity and range of its product offerings and its outstanding customer service.
In addition to price, TDS Telecom competes based on a variety of factors including the reliability of its network, faster broadband speeds, the diversity and range of its product offerings and its focus on outstanding customer service. 6 Table of Contents TDS — REGULATION TDS’ operations are subject to federal, state and local regulation. Key regulatory considerations are discussed below.
TDS operations also include the operations of its wholly-owned hosted and managed services (HMS) subsidiary, which operates under the OneNeck IT Solutions brand, and its wholly-owned subsidiary Suttle-Straus, Inc. (Suttle-Straus). HMS' and Suttle-Straus’ financial results were not significant to TDS’ operations. TDS operates entirely in the United States.
TDS operations also include the operations of its wholly-owned subsidiary Suttle-Straus, Inc. (Suttle-Straus). TDS' wholly-owned hosted and managed services (HMS) subsidiary, which operated under the OneNeck IT Solutions brand was sold to a third-party on September 3, 2024. See Note 7 — Divestitures in the Notes to Consolidated Financial Statements for additional information.
Voice offerings continue to be impacted by the industry-wide decline in access lines and TDS Telecom expects to continue to experience erosion in voice connections due to competition from alternative technologies. Commercial. TDS Telecom commercial customer operations provide secure and reliable broadband, IP-based services, and hosted voice and video collaboration services to small- and medium-sized businesses.
Voice offerings continue to be impacted by the industry-wide decline in access lines and TDS Telecom expects to continue to experience erosion in voice connections due to competition from alternative technologies. 5 Table of Contents • Wireless: TDS introduced MVNO plans offering wireless services to customers in certain service areas.
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The FCC has historically conducted auctions through which additional spectrum is made available for the provision of wireless services. Historically, UScellular has participated in certain FCC auctions both directly and indirectly through its limited partnership interests. UScellular has a longstanding commitment to supporting its local communities through donations and volunteerism.
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During the second quarter of 2024, TDS and UScellular modified their reporting structure due to the planned disposal of the UScellular wireless operations and, as a result, disaggregated the UScellular operations into two reportable segments – Wireless and Towers. TDS has three reportable segments: UScellular Wireless, UScellular Towers and TDS Telecom.
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A key strategic initiative for TDS Telecom, subject to the availability of capital, is investing in fiber to provide broadband speeds of up to 8 Gigabits per second (Gbps).
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UScellular owns and operates towers which support UScellular's wireless network. UScellular also leases space on its owned towers to other wireless service providers. As of December 31, 2024, UScellular owned 4,409 towers with 2,444 third-party colocations.
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TDS Telecom offers an integrated cloud television platform called TDS TV+ which enhances the customer experience by combining linear and non-linear programming, adding interfaces to mobile devices, personalized content recommendations, and network-based DVR functionality. TDS TV+ offers video content and features not available on existing TDS platforms.
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On May 28, 2024, UScellular announced that its Board of Directors unanimously approved the execution of a Securities Purchase Agreement (Securities Purchase Agreement) by and among TDS, UScellular, T-Mobile US, Inc.
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TDS Telecom is building fiber in select expansion and incumbent markets. 6 Table of Contents TDS — REGULATION TDS’ operations are subject to federal, state and local regulation. Key regulatory considerations are discussed below.
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(T-Mobile) and USCC Wireless Holdings, LLC, pursuant to which, among other things, UScellular agreed to sell its wireless operations and select spectrum assets to T-Mobile for a purchase price, subject to adjustments, as specified in the Securities Purchase Agreement, of $4,400 million, which is payable in a combination of cash and the assumption of up to approximately $2,000 million in debt.
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Diversity, Equity, and Inclusion TDS wants each associate to make a meaningful contribution and leverages diversity and inclusion efforts to harness the talent and potential of its associates. These efforts strive to value and connect diverse people and perspectives, amplify their voices, and enable business performance through strategic collaboration.
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The purchase price includes $100 million contingent on the satisfaction of certain financial and operational metrics. The purchase price also includes $400 million allocated to certain wireless spectrum licenses held by entities in which UScellular is a non-controlling limited partner.
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TDS endeavors to encourage a broad diversity of thoughts, ideas and the innovation needed to move the business forward. Training Since its founding, TDS has been committed to associate development, including for emerging and existing leaders, which is critical to its success.
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The closing with respect to these wireless spectrum licenses is contingent upon UScellular's purchase, which is pending receipt of regulatory approval, of the remaining equity in the entities that UScellular does not currently own.
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The Securities Purchase Agreement also contemplates, among other things, a Short-Term Spectrum Manager Lease Agreement and Short-Term Spectrum Manager Sublease Agreements that will become effective at the closing date, which provide T-Mobile with an exclusive license to use certain UScellular spectrum assets and leases at no cost for up to one-year for the sole purpose of providing continued, uninterrupted service to customers.
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The sale of the wireless business to T-Mobile is expected to close in mid-2025, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions. On October 17, 2024, UScellular, and certain subsidiaries of UScellular, entered into a License Purchase Agreement (Verizon Purchase Agreement) with Verizon Communications Inc.
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(Verizon) to sell certain AWS, Cellular and PCS wireless spectrum licenses and agreed to grant Verizon certain rights to lease such licenses prior to the transaction close for total proceeds of $1,0 00 million. As of December 31, 2024, the book value of the wireless spectrum licenses to be sold was $586 million .
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The transaction is subject to regulatory approval and other customary closing conditions, and is contingent on the closing of the T-Mobile transaction and the termination of the T-Mobile Short-Term Spectrum Manager Lease Agreement.
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On November 6, 2024, UScellular, and certain subsidiaries of UScellular, entered into a License Purchase Agreement (AT&T Purchase Agreement) with New Cingular Wireless PCS, LLC (AT&T), a subsidiary of AT&T Inc., to sell certain 3.45 GHz and 700 MHz wireless spectrum licenses and agreed to grant AT&T certain rights to lease and sub-lease such licenses prior to the transaction close for total proceeds of $1,018 million, subject to certain purchase price adjustments.
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As of December 31, 2024 , the book value of the wireless spectrum licenses to be sold was $859 million. The transaction is subject to regulatory approval and other customary closing conditions and substantially all of the licenses subject to the transaction are contingent on the closing of the T-Mobile transaction.
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The purchase price includes $232 million allocated to certain wireless spectrum licenses that are held by an entity in which UScellular is a non-controlling limited partner. The closing with respect to these wireless spectrum licenses is contingent upon UScellular's purchase, which is pending receipt of regulatory approval, of the remaining equity in the entity that UScellular does not currently own.
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The strategic alternatives review process is ongoing as UScellular works toward closing the transactions signed during 2024, including the T-Mobile, Verizon and AT&T transactions and continues to seek to opportunistically monetize its spectrum assets that are not subject to the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement.
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Competition The wireless telecommunication industry is highly competitive. UScellular competes directly with several wireless service providers in each of its markets.
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Many features are bundled with calling plans to give customers the best value.
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TDS’ MVNO offerings are reliant on third parties to deliver wireless service to these customers. TDS currently offers By-the-Gig and Unlimited data plans. Commercial. TDS Telecom commercial customer operations provide secure and reliable broadband, IP-based services, and hosted voice and video collaboration services to small- and medium-sized businesses.
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TDS Telecom continues to improve the efficiency of its cost structure to enhance its ability to compete with price-based initiatives from competitors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Insufficient cash flows from operating activities, changes in TDS' credit ratings, defaults of the terms of debt or credit agreements, uncertainty of access to capital, deterioration in the capital markets, reduced regulatory capital at banks which in turn limits their ability to lend, other changes in the performance of TDS or in market conditions or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its acquisition, capital expenditure and business development programs, reduce the acquisition and development of wireless spectrum licenses, divest assets, reduce or cease share repurchases and/or the payment of dividends.
Insufficient cash flows from operating activities, changes in TDS' credit ratings, defaults of the terms of debt or credit agreements, uncertainty of access to capital, deterioration in the capital markets, reduced regulatory capital at banks which in turn limits their ability to lend, other changes in the performance of TDS or in market conditions or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which could require TDS to reduce its capital expenditure, acquisition and business development programs, reduce the development of wireless spectrum licenses, divest assets, reduce or cease share repurchases and/or the payment of dividends.
These transactions commonly involve a number of risks, including: ▪ Identification of attractive companies, businesses, properties, spectrum or other assets for acquisition or exchange, and/or the selection of TDS’ businesses or assets for divestiture or exchange; ▪ Competition for acquisition targets and the ability to acquire or exchange businesses at reasonable prices; ▪ Inability to make acquisitions that would achieve sufficient scale or substantial benefit to be competitive with competitors with greater scale; ▪ Possible lack of buyers for businesses or assets that TDS desires to divest and the ability to divest or exchange such businesses or assets at reasonable prices; ▪ Ability to negotiate favorable terms and conditions for acquisitions, divestitures and exchanges; ▪ Significant expenditures associated with acquisitions, divestitures and exchanges; ▪ Risks associated with integrating new businesses or markets, including risks relating to cybersecurity and privacy; ▪ Ability to enter markets in which TDS has limited or no direct prior experience and competitors have stronger positions; ▪ Ability to integrate and manage TDS’ different business operations and services, including wireless services, traditional wireline services and cable businesses; ▪ Uncertain revenues and expenses associated with acquisitions or the entry into new expansion markets, with the result that TDS may not realize the growth in revenues, anticipated cost structure, profitability, or return on investment that it expects; ▪ Difficulty of integrating the technologies, services, products, operations and personnel of the acquired businesses, or of separating such matters for divested businesses or assets; ▪ Diversion of management’s attention; ▪ Disruption of ongoing business; ▪ Impact on TDS’ cash and available credit lines for use in financing future growth and working capital needs; ▪ Inability to retain key personnel; ▪ Inability to successfully incorporate acquired assets and rights into TDS’ service offerings; ▪ Inability to utilize acquired wireless spectrum; ▪ Inability to maintain uniform standards, controls, procedures and policies; ▪ Possible conditions to approval by the FCC, the Federal Trade Commission and/or the Department of Justice; and ▪ Impairment of relationships with employees, customers or vendors.
These transactions commonly involve a number of risks, including: ▪ Identification of attractive companies, businesses, properties, spectrum or other assets for acquisition or exchange, and/or the selection of TDS’ businesses or assets for divestiture or exchange; ▪ Competition for acquisition targets and the ability to acquire or exchange businesses at reasonable prices; ▪ Inability to make acquisitions that would achieve sufficient scale or substantial benefit to be competitive with competitors with greater scale; ▪ Possible lack of buyers for businesses or assets that TDS desires to divest and the ability to divest or exchange such businesses or assets at reasonable prices; ▪ Ability to negotiate favorable terms and conditions for acquisitions, divestitures and exchanges; ▪ Significant expenditures associated with acquisitions, divestitures and exchanges; ▪ Risks associated with integrating new businesses or markets, including risks relating to cybersecurity and privacy; ▪ Ability to enter markets in which TDS has limited or no direct prior experience and competitors have stronger positions; ▪ Ability to integrate and manage TDS’ different business operations and services, including wireless services, traditional wireline services and cable businesses; ▪ Uncertain revenues and expenses associated with acquisitions or the entry into new expansion markets, with the result that TDS may not realize the growth in revenues, anticipated cost structure, profitability, or return on investment that it expects; ▪ Difficulty of integrating the technologies, services, products, operations and personnel of the acquired businesses, or of separating such matters for divested businesses or assets; 15 Table of Contents ▪ Diversion of management’s attention; ▪ Disruption of ongoing business; ▪ Impact on TDS’ cash and available credit lines for use in financing future growth and working capital needs; ▪ Inability to retain key personnel; ▪ Inability to successfully incorporate acquired assets and rights into TDS’ service offerings; ▪ Inability to utilize acquired wireless spectrum; ▪ Inability to maintain uniform standards, controls, procedures and policies; ▪ Possible conditions to approval by the FCC, the Federal Trade Commission and/or the Department of Justice; and ▪ Impairment of relationships with employees, customers or vendors.
The loss of existing key personnel due to competition, wage levels and/or retirements, the failure to recruit highly skilled and diverse personnel in a timely and cost-effective manner, the inability to foster and maintain a diverse and inclusive work environment, or failure to maintain its commitment to environmental and social responsibility could have an adverse effect on TDS’ business, financial condition or results of operations.
The loss of existing key personnel due to competition, wage levels and/or retirements, the failure to recruit highly skilled personnel in a timely and cost-effective manner, the inability to foster and maintain an inclusive work environment, or failure to maintain its commitment to environmental and social responsibility could have an adverse effect on TDS’ business, financial condition or results of operations.
TDS could fail to obtain access to sufficient spectrum capacity, including spectrum needed to support 5G and future technologies, in new or existing markets, whether through FCC auctions or other transactions, to meet the anticipated spectrum requirements associated with increased demand for existing services, especially increases in customer demand for data services and network speed, and to enable deployment of next-generation services.
TDS could fail to obtain access to sufficient spectrum capacity, including spectrum needed to support future technologies, in new or existing markets, whether through FCC auctions or other transactions, to meet the anticipated spectrum requirements associated with increased demand for existing services, especially increases in customer demand for data services and network speed, and to enable deployment of next-generation services.
Operational problems associated with such functions, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, including possible cyber-attacks or other breaches of network or information technology security, data protection or privacy, could have adverse effects on TDS’ business, financial condition or results of operations. 12) A failure by TDS to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.
Operational problems associated with such functions, including any failure by the vendor to provide the required level of service under the outsourcing arrangements, including possible cyber-attacks or other breaches of network or information technology security, data protection or privacy, could have adverse effects on TDS’ business, financial condition or results of operations. 15) A failure by TDS to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.
Cybersecurity of this Form 10-K for additional information. 26) Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations.
Cybersecurity of this Form 10-K for additional information. 28) Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations.
Any claims of infringement of intellectual property and proprietary rights of others could prevent TDS from using necessary technology to provide its services or subject TDS to expensive intellectual property litigation or monetary penalties. 24) Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS or have other consequences.
Any claims of infringement of intellectual property and proprietary rights of others could prevent TDS from using necessary technology to provide its services or subject TDS to expensive intellectual property litigation or monetary penalties. 26) Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS or have other consequences.
This presents a risk to TDS in that, to the extent TDS is not able to enter into economically viable roaming arrangements with these other carriers, this could impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network. 3) An inability to attract diverse people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.
This presents a risk to TDS in that, to the extent TDS is not able to enter into economically viable roaming arrangements with these other carriers, this could impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network. 8) An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations.
If customer demand for these new services, products and solutions does not develop as expected, TDS’ business, financial condition or results of operations could be adversely affected. 9) Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.
If customer demand for these new services, products and solutions does not develop as expected, TDS’ business, financial condition or results of operations could be adversely affected. 13) Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations.
TDS may not be able to respond to such changes and implement new technology on a timely or cost-effective basis, which could reduce its revenues or increase its costs of doing business. 8) Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects.
TDS may not be able to respond to such changes and implement new technology on a timely or cost-effective basis, which could reduce its revenues or increase its costs of doing business. 12) Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects.
However, TDS may not be able to acquire sufficient spectrum through these types of transactions, and TDS may not be able to complete any of these transactions on favorable terms. 7) Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.
However, TDS may not be able to acquire sufficient spectrum through these types of transactions, and TDS may not be able to complete any of these transactions on favorable terms. 11) Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business.
The extent of the impact of public health emergencies on TDS' business, financial condition and results of operations will depend on the severity and duration of the emergency, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted . 20 Table of Contents Item 1B. Unresolved Staff Comments None.
The extent of the impact of public health emergencies on TDS' business, financial condition and results of operations will depend on the severity and duration of the emergency, actions taken by governmental authorities and other possible direct and indirect consequences, all of which are uncertain and cannot be predicted . 22 Table of Contents Item 1B. Unresolved Staff Comments None.
Changes in economic conditions, changes in financial markets, changes in U.S. trade policies, deterioration in the capital markets or other factors could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows. 27) The impact of public health emergencies on TDS' business is uncertain, but depending on duration and severity could have a material adverse effect on TDS' business, financial condition or results of operations.
Changes in economic conditions, changes in financial markets, changes in U.S. trade policies, deterioration in the capital markets or other factors could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows. 29) The impact of public health emergencies on TDS' business is uncertain, but depending on duration and severity could have a material adverse effect on TDS' business, financial condition or results of operations.
Telecommunications companies may be designated by states, or in some cases by the FCC, as an Eligible Telecommunications Carrier (ETC) to receive universal service support payments if they provide specified services in “high-cost” areas. UScellular has been designated as an ETC in certain states and received $92 million in high-cost support for service to high-cost areas in 2023.
Telecommunications companies may be designated by states, or in some cases by the FCC, as an Eligible Telecommunications Carrier (ETC) to receive universal service support payments if they provide specified services in “high-cost” areas. UScellular has been designated as an ETC in certain states and received $92 million in high-cost support for service to high-cost areas in 2024 .
If TDS' indebtedness were to be accelerated, there can be no assurance that the assets would be sufficient to repay such indebtedness in full. 16) TDS’ assets and revenue are concentrated primarily in the U.S. telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry.
If TDS' indebtedness were to be accelerated, there can be no assurance that the assets would be sufficient to repay such indebtedness in full. 19) TDS’ assets and revenue are concentrated primarily in the U.S. telecommunications industry. Consequently, its operating results may fluctuate based on factors related primarily to conditions in this industry.
TDS’ liquidity would be adversely affected if, among other things, cash flows from operations significantly decline, TDS is unable to obtain short or long-term financing on acceptable terms, TDS is not able to comply with certain debt covenants or TDS is unsuccessful in negotiating related consents, waivers, or amendments, interest rates increase, TDS makes significant spectrum license purchases, TDS makes significant capital investments, TDS makes significant business acquisitions, the Los Angeles SMSA Limited Partnership (LA Partnership) and other minority-owned partnerships discontinue or significantly reduce distributions compared to historical levels, or Federal USF and/or other regulatory support payments decline.
TDS’ liquidity would be adversely affected if, among other things, cash flows from operations significantly decline, TDS is unable to implement cost reduction initiatives, TDS is unable to obtain short or long-term financing on acceptable terms, TDS is not able to comply with certain debt covenants or TDS is unsuccessful in negotiating related consents, waivers, or amendments, interest rates increase, TDS makes significant spectrum license purchases, TDS makes significant capital investments, TDS makes significant business acquisitions, the Los Angeles SMSA Limited Partnership (LA Partnership) and other minority-owned partnerships discontinue or significantly reduce distributions compared to historical levels, or Federal USF and/or other regulatory support payments decline.
If TDS cannot keep pace with its competitors in deploying 5G or other comparable offerings, or if TDS' deployment of 5G technology does not result in significant incremental revenues, TDS' financial condition, results of operations and ability to do business could continue to be adversely affected.
If TDS continues to not keep pace with its competitors in deploying 5G or other comparable offerings, or if TDS' deployment of 5G technology does not result in significant incremental revenues, TDS' financial condition, results of operations and ability to do business could continue to be adversely affected.
The U.S. telecommunications industry is facing significant change and an uncertain operating environment. TDS’ focus on the U.S. telecommunications industry, together with its sub-scale position relative to larger competitors with greater resources within the industry, may represent increased risk for investors due to the lack of diversification.
The U.S. telecommunications industry is facing significant change and an uncertain operating environment. TDS’ focus on the U.S. telecommunications industry, together with its lack of scale relative to larger competitors with greater resources within the industry, may represent increased risk for investors due to the lack of diversification.
TDS’ MVNO offerings will be reliant on third parties to deliver adequate wireless service to these customers and may not be able to successfully compete with wireless options provided by other industry competitors who have access to greater scale and financial resources than TDS.
TDS’ MVNO offerings are reliant on third parties to deliver adequate wireless service to these customers and may not be able to successfully compete with wireless options provided by other industry competitors who have access to greater scale and financial resources than TDS.
As a result, TDS’ level of indebtedness, restrictions contained in debt instruments and/or possible breaches of covenants, defaults, and acceleration of indebtedness could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows. 15) TDS has entered into a new Senior Secured Credit Agreement that imposes certain restrictions on its business and operations that may affect its ability to operate its business and make payments on its indebtedness.
As a result, TDS’ level of indebtedness, restrictions contained in debt instruments and/or possible breaches of covenants, defaults, and acceleration of indebtedness could have an adverse effect on TDS’ business, financial condition, revenues, results of operations and cash flows. 18) TDS has entered into a Senior Secured Credit Agreement that imposes certain restrictions on its business and operations that may affect its ability to operate its business and make payments on its indebtedness.
If TDS cannot keep pace with its competition in deploying higher speed technologies, offering competitive products and services at competitive prices and providing attractive video content options, TDS' financial condition, results of operations or ability to do business could be adversely affected. TDS’ wireline business intends to introduce MVNO plans offering wireless services to customers in its service areas.
If TDS cannot keep pace with its competition in deploying higher speed technologies, offering competitive products and services at competitive prices and providing attractive video content options, TDS' financial condition, results of operations or ability to do business could be adversely affected. TDS’ wireline business introduced MVNO plans offering wireless services to customers in its service areas.
While there is uncertainty, UScellular expects that regulatory support payments will likely decline in future periods, and there is no assurance that UScellular will qualify for future regulatory support programs. TDS Telecom also received support under the Connect America Fund support program.
While there is uncertainty, UScellular expects regulatory support payments to decline in future periods, and there is no assurance that UScellular will qualify for future regulatory support programs. TDS Telecom also received support under the Connect America Fund support program.
These factors include, but are not limited to: ▪ Demand for or usage of services, particularly data services; ▪ Demand for leasing space on a tower; ▪ Consumer preferences, including internet speed and type of wireless devices; ▪ Consumer perceptions of network quality and performance; ▪ Consumer expectations for self-service options through digital means; ▪ Competitive pressure to deliver higher speed; ▪ Competitive pressure from promotional activity; ▪ The pricing of services, including an increase in price-based competition; ▪ The pricing of tower leases that can be charged to third parties; ▪ Inflationary pressures on costs without corresponding price increases for TDS' services; ▪ Access to and cost of programming; ▪ The overall size and growth rate of TDS’ customer base; ▪ Penetration rates; ▪ Churn rates; ▪ Selling expenses; ▪ Net customer acquisition and retention costs; ▪ Customers’ ability to pay for services and the potential impact on bad debts expense; ▪ Roaming agreements and rates; ▪ Third-party vendor support; ▪ Capacity constraints; ▪ The mix of services and products offered by TDS and purchased by customers; and ▪ The costs of providing services and products. 11 Table of Contents 6) A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.
These factors include, but are not limited to: ▪ Demand for or usage of services, particularly data services; ▪ Demand for leasing space on a tower; ▪ Consumer preferences, including internet speed and type of wireless devices; ▪ Consumer perceptions of network quality and performance; ▪ Consumer expectations for self-service options through digital means; ▪ Competitive pressure to deliver higher speed; ▪ Competitive pressure from promotional activity; ▪ The pricing of services, including an increase in price-based competition; ▪ The pricing of tower leases that can be charged to third parties; ▪ Increases in ground lease rates for owned towers; ▪ Inflationary pressures on costs without corresponding price increases for TDS' services; ▪ Access to and cost of programming; ▪ The overall size and growth rate of TDS’ customer base; ▪ Penetration rates; ▪ Churn rates; ▪ Selling expenses; ▪ Net customer acquisition and retention costs; ▪ Customers’ ability to pay for services and the potential impact on bad debts expense; ▪ Roaming agreements and rates; ▪ Third-party vendor support; ▪ Capacity constraints; ▪ The mix of services and products offered by TDS and purchased by customers; and ▪ The costs of providing services and products. 10) A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations.
Specifically, TDS’ smaller scale relative to most of its competitors could have the following impacts, among others: ▪ Low profit margins and returns on investment that are below TDS’ cost of capital; ▪ Increased operating and capital expenditure costs due to lack of leverage with vendors; ▪ Inability to timely and successfully deploy 5G or other wireless technologies, execute on fiber expansion plans, or to realize significant incremental revenues from their deployment; ▪ Inability to meet build-out requirements of state and federal broadband programs; ▪ Limited opportunities for strategic partnerships as potential partners are focused on telecommunications companies with greater scale and scope; ▪ For TDS' wireless business, limited opportunities for bundling wireless service with other services such as home internet; ▪ Limited access to content, as well as limited ability to obtain acceptably priced content and programming; ▪ Limited access to devices as larger competitors enter into exclusive device arrangements; ▪ Consumer expectations that TDS provides lower-priced wireless offerings relative to larger competitors; ▪ Limited ability to influence industry standards; ▪ Limited ability to acquire or build additional towers; ▪ Reduced ability to invest in research and development of new services and products; ▪ Lower risk tolerance when evaluating new markets; ▪ Vendors may deem TDS non-strategic and not develop or sell services and products to TDS, particularly where technical requirements differ from those of larger companies; ▪ Limited access to intellectual property; and ▪ Other limited opportunities such as for software development or third-party distribution.
Specifically, TDS’ lack of scale and structural disadvantages, particularly in the wireless business, relative to most of its competitors could have the following impacts, among others: ▪ Low profit margins and returns on investment that are below TDS’ cost of capital; ▪ Increased operating and capital expenditure costs due to lack of leverage with vendors and dispersed geography; ▪ Higher costs per wireless subscriber; ▪ Inability to timely and successfully deploy 5G or other wireless technologies, execute on fiber expansion plans, or to realize significant incremental revenues from their deployment; ▪ Inability to meet build-out requirements of state and federal broadband programs; ▪ Limited opportunities for strategic partnerships as potential partners are focused on telecommunications companies with greater scale and scope; ▪ For TDS' wireless business, limited opportunities for bundling wireless service with other services such as home internet; ▪ Limited access to content, as well as limited ability to obtain acceptably priced content and programming; ▪ Limited access to devices as larger competitors enter into exclusive device arrangements; ▪ Consumer expectations that TDS provides lower-priced wireless offerings relative to larger competitors; ▪ Limited ability to influence industry standards; ▪ Limited ability to acquire or build additional towers; ▪ Reduced ability to invest in research and development of new services and products; ▪ Lower risk tolerance when evaluating new markets; 12 Table of Contents ▪ Vendors may deem TDS non-strategic and not develop or sell services and products to TDS, particularly where technical requirements differ from those of larger companies; ▪ Limited access to intellectual property; and ▪ Other limited opportunities such as for software development or third-party distribution.
To the extent that UScellular's credit rating is downgraded, it may adversely affect TDS' credit rating, which could result in the impacts described above. 14) TDS has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.
To the extent that UScellular's credit rating is downgraded, it may adversely affect TDS' credit rating, which could result in the impacts described above. 17 Table of Contents 17) TDS has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt.
Competition in the tower industry is also challenging, as TDS competes with public and private tower companies, wireless carrier tower alliances, private equity sponsored tower companies, and owners of non-communications sites such as utility towers, rooftop structures, water towers, and other alternative structures.
Competition in the tower industry is also challenging, as TDS competes with public and private tower companies, private equity sponsored tower companies, and owners of non-communications sites such as utility towers, rooftop structures, water towers, and other alternative structures.
These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries. 18 Table of Contents 23) Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.
These concerns could lead to potential litigation relating to accidents, deaths or serious bodily injuries. 25) Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations.
TDS may or may not be able to recover some or all of those taxes from its customers and the amount of taxes may deter demand for its services or increase its cost to provide service. 21) Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ business, financial condition or results of operations.
TDS may or may not be able to recover some or all those taxes from its customers and the amount of taxes may deter demand for its services or increase its cost to provide service. 23) Settlements, judgments, restraints on its current or future manner of doing business and/or costs resulting from pending and future legal and policy proceedings could have an adverse effect on TDS’ business, financial condition or results of operations.
However, TDS is unable to predict the future actions of the various legislative and regulatory bodies that govern TDS, and such actions could have adverse effects on TDS’ business. 20) TDS receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on TDS’ business, financial condition or results of operations.
However, TDS is unable to predict the future actions of the various legislative and regulatory bodies that govern TDS, and such actions could have adverse effects on TDS’ business. 19 Table of Contents 22) TDS receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on TDS’ business, financial condition or results of operations.
The ACAM and E-ACAM programs have build-out requirements that may not be met, which would result in penalties, loss of support and/or deferral of future revenues. In 2023, TDS Telecom received $110 million under all federal regulatory support programs.
The ACAM and E-ACAM programs have build-out requirements that may not be met, which would result in penalties, loss of support and/or deferral of future revenues. In 2024 , TDS Telecom received $114 million under all federal regulatory support programs.
This could have an adverse effect on TDS’ ability to attain and sustain long-term, profitable revenue growth and could have an adverse effect on its business, financial condition or results of operations. 17) TDS has significant investments in entities that it does not control.
This could have an adverse effect on TDS’ ability to attain and sustain long-term, profitable revenue growth and could have an adverse effect on its business, financial condition or results of operations. 18 Table of Contents 20) TDS has significant investments in entities that it does not control.
In particular, competition from cable wireless companies has increased in recent periods, as they have continued to expand their presence in the wireless industry and have offered more competitive pricing. Many of TDS’ wireless competitors and other competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than TDS.
In particular, competition from cable wireless companies has increased in recent periods and is expected to increase into the foreseeable future, as they have continued to expand their presence in the wireless industry and have offered more competitive pricing. Many of TDS’ wireless and other competitors have substantially greater financial, technical, marketing, sales, purchasing and distribution resources than TDS.
For example, the expansion of other carriers' network coverage in TDS' footprint and/or lower roaming rates with other carriers could continue to decrease future roaming revenues for TDS. Similarly, TDS’ wireless customers can access another carrier’s network automatically only if the other carrier allows TDS’ customers to roam on its network.
For example, the expansion of other carriers' network coverage in TDS' footprint and/or lower roaming rates with other carriers has decreased and is expected to continue to decrease roaming revenues for TDS. Similarly, TDS’ wireless customers can access another carrier’s network automatically only if the other carrier allows TDS’ customers to roam on its network.
There is competition in service plan pricing; handsets and other devices; promotional discounts; network quality, coverage, speed and technologies, including 5G technology; distribution; new entrants; bundled services and products, such as content; and other categories.
There is competition in service plan pricing; handsets and other devices; promotional discounts; network quality, coverage, speed and technologies, including 5G technology; distribution; new entrants; bundled services, such as home internet and wireless; and other categories.
Competition in the wireless industry is intense and is expected to remain intense in the future due to multiple factors such as increasing market penetration, introduction of new products, new competitors, increasing promotional aggressiveness and changing prices.
Competition in the wireless industry is intense and is expected to increase in intensity into the foreseeable future due to multiple factors such as increasing market penetration, introduction of new products, new competitors, increasing promotional aggressiveness and changing prices.
TDS has smaller scale efficiencies compared to larger competitors. TDS may be unable to compete successfully with larger companies that have substantially greater financial, technical, marketing, sales, purchasing and distribution resources or that offer more services than TDS, which could adversely affect TDS’ revenues and costs of doing business.
TDS may be unable to compete successfully with larger companies that have substantially greater financial, technical, marketing, sales, purchasing and distribution resources or that offer more services than TDS, which has adversely affected and could continue to adversely affect TDS’ revenues and costs of doing business.
TDS has incurred negative free cash flow (defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and less Cash paid for software license agreements) at times in the past and expects to incur negative free cash flow in future periods.
TDS has incurred negative free cash flow (defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and less Cash paid for software license agreements) at times in past periods, and this could occur in future periods.
Access to wireless spectrum licenses won in FCC auctions may not be available on a timely basis. Such access is dependent upon the FCC actually granting wireless spectrum licenses won, which can be rescinded or delayed for various reasons, including but not limited to exceeding spectrum ownership and attribution limits, and safety concerns due to interference with other spectrum bands.
Such access is dependent upon the FCC actually granting wireless spectrum licenses won, which can be rescinded or delayed for various reasons, including but not limited to exceeding spectrum ownership and attribution limits, and safety concerns due to interference with other spectrum bands.
TDS and its competitors are actively marketing their deployment of 5G and, as a result, are raising consumer awareness of the technology.
TDS and its competitors are actively marketing their deployment of 5G and, as a result, continue to raise consumer awareness of the technology.
Due to factors such as geographic size of wireless spectrum licenses and auction bidders that may raise prices beyond acceptable levels, TDS may not be successful in FCC auctions in obtaining access to the spectrum that it believes is necessary to implement its business and technology strategies.
Due to factors such as geographic size of wireless spectrum licenses and auction bidders that may raise prices beyond acceptable levels, TDS may not be successful in FCC auctions in obtaining access to the spectrum that it believes is necessary to implement its business and technology strategies. 14 Table of Contents Access to wireless spectrum licenses won in FCC auctions may not be available on a timely basis.
The applicability of these surcharges and fees to TDS’ services is uncertain in many cases and jurisdictions may contest whether TDS has assessed and remitted those monies correctly. Periodically, state and federal regulators may increase or change the surcharges and fees TDS currently pays. In some instances, TDS passes through these charges to its customers.
The applicability of these surcharges and fees to TDS’ services is uncertain in many cases and periodically, state and federal regulators may increase or change the surcharges and fees TDS currently pays. In some instances, TDS passes through these charges to its customers.
The increased number of associates working remotely increases risks associated with data handling and vulnerability management. The rapid evolution and increased adoption of artificial intelligence technologies may intensify TDS' cybersecurity risk. TDS maintains administrative, technical and physical controls, as well as other preventative actions, to reduce the risk of security breaches.
The rapid evolution and increased adoption of artificial intelligence technologies may intensify TDS' cybersecurity risk. TDS maintains administrative, technical and physical controls, as well as other preventative actions, to reduce the risk of security breaches.
In the interim, some state legislators and regulators are seeking to or have already enacted state net neutrality laws and regulations, and it is unclear whether more states will seek to do so now that the FCC has announced its intent to reinstate net neutrality rules.
Some state legislators and regulators are seeking to or have already enacted state net neutrality laws and regulations, and it is unclear whether more states will seek to do so.
Depending on a range of factors, these or similar proceedings could impose restraints on TDS’ current or future manner of doing business. 22) The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals or due to contamination from network cabling, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on TDS’ wireless and/or wireline business, financial condition or results of operations.
See Note 15 — Commitments and Contingencies in the Notes to Consolidated Financial Statements for additional information related to legal proceedings. 20 Table of Contents 24) The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals or due to contamination from network cabling, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on TDS’ wireless and/or wireline business, financial condition or results of operations.
Many of these competitors are larger than TDS, have greater financial and other resources, have more advantageous tower locations than TDS, have greater capacity on their towers, and have more scale and coverage nationwide than TDS – such factors could result in an inability to acquire or build additional towers, difficulty in leasing tower space, or cause lease revenue to decline in the future. 9 Table of Contents Competition in the wireline industry is intensified with the increasing deployment of broadband technologies, MVNO plans offering wireless services, and enhanced video services.
Many of these competitors are larger than TDS, have greater financial and other resources, have more advantageous tower locations than TDS, have greater capacity on their towers, and have more scale and coverage nationwide than TDS – such factors could result in an inability to acquire or build additional towers, difficulty in leasing tower space or renewing leases, or cause lease revenue to decline in the future.
On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
Costs and uncertainties related to the transactions could have adverse effects on TDS’ financial condition or results of operations. On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
Losses in the values of such investments or a reduction in income from these investments could adversely affect TDS’ financial condition or results of operations.
Losses in the values of such investments or a reduction in income from these investments could adversely affect TDS’ financial condition or results of operations. In addition, certain investments have historically contributed significant cash flows to TDS and a reduction or suspension of such cash flows could adversely affect TDS’ cash flows and financial condition.
The TDS Restated Certificate of Incorporation also authorizes the TDS Board of Directors to designate and issue TDS Undesignated Shares in one or more classes or series of preferred or common stock from time to time.
The trustees of the TDS Voting Trust have advised TDS that they intend to maintain the ability to keep or dispose of voting control of TDS. 21 Table of Contents The TDS Restated Certificate of Incorporation also authorizes the TDS Board of Directors to designate and issue TDS Undesignated Shares in one or more classes or series of preferred or common stock from time to time.
There is no guarantee that these MVNO plans will attract or retain broadband customers. 2) Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.
If TDS is unable to obtain timely access to new content or wireless devices being developed by vendors, its business, financial condition or results of operations could be adversely affected. 7) Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations.
Any difficulties in supply chain constraints, labor shortages, project management, engineering or construction resources could delay construction and expansion of operations in new or existing markets or result in increased costs.
Any difficulties in supply chain constraints, labor shortages, project management, engineering or construction resources, or difficulties in build activities, including inadvertently damaging other utility lines or pipes, could delay construction and expansion of operations, cause reputational harm or result in increased costs.
If TDS fails to effectively deploy new wireless technologies, services or products on a timely basis, this could have an adverse impact on TDS’ business, financial condition and results of operations. 12 Table of Contents Furthermore, it is not certain that TDS’ investments in various new, unproven technologies and the related service and product offerings will be effective.
Furthermore, the wireless business experiences rapid changes in technology and services and products. If TDS fails to effectively deploy new wireless technologies, services or products on a timely basis, this could have an adverse impact on TDS’ business, financial condition and results of operations.
Also, TDS has other arrangements with third parties, including arrangements pursuant to which TDS outsources certain support and billing functions to third-party vendors, including service providers and third-party wireless network operators for TDS' wireline MVNO product.
Supply chain disruptions may result in limited component availability, constraints on certain devices and network equipment, extended lead times, delayed construction and additional uncertainty. Also, TDS has other arrangements with third parties, including arrangements pursuant to which TDS outsources certain support and billing functions to third-party vendors, including service providers and third-party wireless network operators for TDS' wireline MVNO product.
Although to date TDS has not discovered a material security breach, these efforts may be insufficient to prevent a material security breach stemming from future cyber-attacks including ransomware.
Although to date TDS has not discovered a material security breach, these efforts may be insufficient to prevent a material security breach stemming from future cyber-attacks including ransomware. Recently, companies in the telecommunications industry have been the subject of targeted cybersecurity attacks, which may increase the risk for TDS.
Failure to complete its fiber deployment activities could have an adverse effect on TDS’ business, business prospects, financial condition or results of operations. 11) Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations.
No assurance can be given that TDS will be successful with respect to its acquisition, divestiture or exchange strategies or initiatives. 14) Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations.
TDS is often reliant on third parties for items such as construction, franchises, utility locates and easements, aerial attachments and other permits. Difficulties with third-party performance could cause delays or additional costs.
TDS’ wireline and cable businesses are devoting a substantial amount of capital for fiber builds in its markets using a combination of internal and third-party construction crews. TDS is also often reliant on third parties for items such as franchises, utility locates and easements, aerial attachments and other permits. Difficulties with third-party performance could cause delays or additional costs.
TDS experiences cyber-attacks of varying degrees on a regular basis. These include cyber-attacks intended to wrongfully obtain private and valuable information, or cause other types of malicious events, including denial of service attacks which may cause TDS' services to be disrupted or unavailable to customers.
These include cyber-attacks intended to wrongfully obtain private and valuable information, or cause other types of malicious events, including denial of service attacks which may cause TDS' services to be disrupted or unavailable to customers. The number of associates working remotely increases risks associated with data handling and vulnerability management.
Failure to successfully deploy new technologies, including 5G, and/or build-out and enhance TDS’ network, support facilities and other systems and infrastructure in a cost-effective manner, and in a manner that satisfies consumers' expectations for quality and coverage, could have an adverse effect on TDS’ business, business prospects, financial condition or results of operations. 13 Table of Contents TDS’ wireline and cable businesses are devoting a substantial amount of capital for fiber overbuilds and expansion into new markets.
Failure to successfully deploy new technologies, including the continued deployment of 5G, and/or build-out and enhance TDS’ network, support facilities and other systems and infrastructure in a cost-effective manner, and in a manner that satisfies consumers' expectations for quality and coverage, has adversely affected and could continue to adversely affect TDS’ business, business prospects, financial condition or results of operations.
This could result in lost sales opportunities or an excess supply of device inventory or network equipment that may need to be written down, depreciated, or disposed of for a loss.
If overall demand for devices or the mix of demand for devices is significantly different than TDS’ expectations, TDS could face inadequate or excess supplies of particular models of devices. This could result in lost sales opportunities or an excess supply of device inventory that may need to be written down, depreciated, or disposed of for a loss.
TDS’ wireless competitors include national or global telecommunications and cable wireless companies that are larger than TDS, possess greater financial and other resources, possess more extensive coverage areas and more spectrum within their coverage areas, and market other services with their communications services that TDS does not offer.
These competitive factors have and are expected to continue to result in losses of retail connections, may cause the prices for certain services and products to decline and the costs to compete to increase. 11 Table of Contents TDS’ wireless competitors include national or global telecommunications and cable wireless companies that are larger than TDS, possess greater financial and other resources, possess more extensive coverage areas and more spectrum within their coverage areas, and market other services with their communications services that TDS does not offer.
Incumbent carriers are upgrading existing networks with higher speed broadband services and overbuilders are deploying broadband to compete with legacy incumbent carriers. Overbuilding activity is increasing with investments by venture capital and private equity and with additional access to state and federal funding.
Overbuilding activity is increasing with investments by venture capital and private equity and with additional access to state and federal funding.
In general, TDS may not disclose the negotiation of such transactions until a definitive agreement has been reached.
TDS may change the markets in which it operates and the services that it provides through such acquisitions, divestitures and/or exchanges. In general, TDS may not disclose the negotiation of such transactions until a definitive agreement has been reached.
There is no assurance that this will be the case in the future. TDS expects to engage in additional financing activity to fund its current fiber plans and E-ACAM builds.
There is no assurance that this will be the case in the future. TDS expects to fund its current fiber plans and E-ACAM builds through its plans and actions to reallocate capital among its businesses and investments, including seeking to obtain funding from planned and potential future divestitures.
UScellular's credit rating from nationally recognized credit agencies may impact TDS' credit rating as, given UScellular's ownership structure, the rating agencies often consider rating actions related to TDS and UScellular in tandem.
TDS cannot provide assurance that circumstances that could have a material adverse effect on its liquidity or capital resources will not occur. UScellular's credit rating from nationally recognized credit agencies may impact TDS' credit rating as, given UScellular's ownership structure, the rating agencies often consider rating actions related to TDS and UScellular in tandem.
The reader should carefully consider the following risk factors and other information contained in, or incorporated by reference into, this Form 10-K to understand the material risks relating to TDS’ business. Operational Risk Factors 1) Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect TDS’ revenues or increase its costs to compete.
The reader should carefully consider the following risk factors and other information contained in, or incorporated by reference into, this Form 10-K to understand the material risks relating to TDS’ business, financial condition or results of operations.
The provisions of the TDS Restated Certificate of Incorporation and the existence of different classes of capital stock and voting rights could result in the exclusion of TDS Common Shares from certain major stock indices at some point in the future, unless TDS is grandfathered by such stock indices or qualifies for some other exception. 19 Table of Contents General Risk Factors 25) TDS has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on TDS' business, financial condition or results of operations.
General Risk Factors 27) TDS has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on TDS' business, financial condition or results of operations. TDS experiences cyber-attacks of varying degrees on a regular basis.
Various regulatory agencies and legislative bodies could implement different policies with respect to many federal laws and regulations, including but not limited to changes to fiscal and tax policies, trade policies, tariffs on import goods and climate change. New or amended regulatory requirements could increase TDS’ costs and divert resources from other initiatives.
Changes in the administration of the various regulatory agencies and legislative bodies are resulting in and could continue to result in different policies with respect to many federal laws and regulations, including but not limited to changes to fiscal and tax policies, trade policies, tariffs on imported goods, climate change and workforce-related practices.
The markets for some of these services, products and solutions may still be emerging and the overall potential for these markets, including revenues to be realized, may be uncertain.
Furthermore, it is not certain that TDS’ investments in various new, unproven technologies and the related service and product offerings will be effective. The markets for some of these services, products and solutions may still be emerging and the overall potential for these markets, including revenues to be realized, may be uncertain.
In addition, TDS’ networks and information technologies and the networks and information technologies of vendors on which TDS relies are subject to damage or interruption due to various events, including power outages, computer, network and telecommunications failures, computer viruses, security breaches, hackers and other cyber security risks, catastrophic events, natural disasters, severe weather, adverse climate changes, errors or unauthorized actions by employees and vendors, flawed conversion of systems, disruptive technologies and technology changes. 14 Table of Contents Financial Risk Factors 13) Uncertainty in TDS’ or UScellular's future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in TDS’ or UScellular's performance or market conditions, changes in TDS’ or UScellular's credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which has required and could in the future require TDS to reduce or delay its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, divest assets or businesses, and/or reduce or cease share repurchases and/or the payment of dividends.
Financial Risk Factors 16) Uncertainty in TDS’ or UScellular's future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in TDS’ or UScellular's performance or market conditions, changes in TDS’ or UScellular's credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which has required and is expected in the future to require TDS to reduce or delay its construction, development or acquisition programs, divest assets or businesses, and/or reduce or cease share repurchases and/or the payment of common shareholder dividends.
A substantial portion of TDS' debt is subject to variable interest rates, which has increased interest expense in recent periods and TDS will continue to be vulnerable to unfavorable changes in market interest rates. 15 Table of Contents The TDS and UScellular revolving credit agreements, the TDS and UScellular term loan agreements, the TDS and UScellular export credit financing agreements and the UScellular receivables securitization agreement require TDS or UScellular, as applicable, to comply with certain affirmative and negative covenants, including certain financial covenants.
The TDS and UScellular revolving credit agreements, the TDS and UScellular term loan agreements, the TDS and UScellular export credit financing agreements and the UScellular receivables securitization agreement require TDS or UScellular, as applicable, to comply with certain affirmative and negative covenants, including certain financial covenants.
If TDS is unable to obtain timely access to new content or wireless devices being developed by vendors, its business, financial condition or results of operations could be adversely affected. 5) Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations.
Failure to ensure effective transfer of knowledge and smooth transition involving key employees could also adversely affect TDS’ business, financial condition and results of operations. 13 Table of Contents 9) Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, cost increases, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations.
No assurance can be given that TDS will be successful with respect to its acquisition, divestiture or exchange strategies or initiatives. 10) A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations.
Operational Risk Factors 4) A delay or failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure as well as renew wireless spectrum licenses, could adversely affect its operations.
There can be no assurance that such comprehensive process will result in any strategic alternative of any kind being successfully identified or completed or that the process or any outcomes of the process will not have an adverse impact on TDS' business or financial statements. 19) Failure by TDS to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect TDS’ business, financial condition or results of operations.
There can be no assurance that the strategic alternatives review process, which is ongoing, will result in the transactions or any strategic alternative of any kind being successfully completed or that the process or any outcomes of the process will not have an adverse impact on UScellular's business or financial statements.
There can be no assurance that sufficient funds will continue to be available to TDS or its subsidiaries on terms or at prices acceptable to TDS.
TDS may require substantial additional capital for, among other uses, capital expenditures, acquisitions, investments in new technologies and fiber deployments, the repurchase of shares, and the payment of dividends. There can be no assurance that sufficient funds will continue to be available to TDS or its subsidiaries on terms or at prices acceptable to TDS.
Adding to this uncertainty are a series of court cases challenging the constitutionality of the universal service fund program that establishes and administers these regulatory support payments. 17 Table of Contents Telecommunications providers pay a variety of surcharges and fees on their gross revenues from interstate and intrastate services, including USF fees and common carrier regulatory fees.
Adding to this uncertainty are a series of court cases challenging the constitutionality of the universal service fund program that establishes and administers these regulatory support payments. On July 24, 2024, differing from earlier decisions at the Sixth and Eleventh Circuits, the U.S.
Failure to ensure effective transfer of knowledge and smooth transition involving key employees could also adversely affect TDS’ business, financial condition and results of operations. 10 Table of Contents 4) TDS’ smaller scale relative to larger competitors that may have greater financial and other resources than TDS could cause TDS to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations.
There is no guarantee that these MVNO plans will attract or retain broadband customers. 6) TDS’ lack of scale and structural disadvantages, particularly in the wireless business, relative to larger competitors that may have greater financial and other resources than TDS has caused and could continue to cause TDS to be unable to compete successfully, which has adversely affected and could continue to adversely affect its business, financial condition or results of operations.
Transition to 5G or other new technologies involves significant time, cost and risk, and anticipated products and revenues may not be realized. Furthermore, the wireless business experiences rapid technology changes and new services and products.
Transition to 5G or other new technologies involves significant time, cost and risk, and anticipated products and revenues may not be realized. Due to its lack of scale, TDS’ wireless business has higher costs per subscriber than its larger competitors and is balancing the timing of investments, such as its 5G deployment, with liquidity constraints.
As part of TDS’ operating strategy, TDS from time to time may be engaged in the acquisition, divestiture or exchange of companies, businesses, strategic properties, wireless spectrum or other assets. TDS may change the markets in which it operates and the services that it provides through such acquisitions, divestitures and/or exchanges.
TDS has entered into and may continue to enter into agreements to divest of companies, businesses, wireless spectrum and other assets. TDS may also be engaged in the acquisition, divestitures or exchange of companies, businesses, strategic properties, wireless spectrum or other assets.
TDS’ business plan includes significant construction activities and enhancements to its network, support and other systems and infrastructure. Additionally, the deployment of new wireless technologies, including 5G, will require substantial investments in TDS' wireless network. As TDS deploys, expands and enhances its wireless network, it may need to acquire additional spectrum.
Additionally, the deployment of new wireless technologies, including the continued deployment of 5G, will require substantial investments in TDS' wireless network.
This comprehensive process could result in a diversion of management's attention from TDS' existing business; a failure to achieve financial and operating objectives; the failure to retain key personnel, customers, business partners or contracts; and volatility in TDS' stock price. In addition, this process has already resulted in the incurrence of significant expense - this is expected to continue.
The closing with respect to these wireless spectrum licenses is contingent upon UScellular's purchase, which is pending receipt of regulatory approval, of the remaining equity in the entities that UScellular does not currently own. 9 Table of Contents The uncertainty regarding the transactions and continued strategic alternatives review process could result in: a diversion of management's attention from UScellular's existing business; a failure to achieve financial and operating objectives; adverse effects on TDS' financial condition or results of operations; a failure to retain key personnel, customers, business partners or contracts; and volatility in TDS' and UScellular's stock price.
Further, TDS' supply chain could be disrupted unexpectedly by raw material shortages, wars, natural disasters, disease or other factors. Supply chain disruptions may result in limited component availability, constraints on certain devices and network equipment, extended lead times, delayed construction and additional uncertainty.
Also, if TDS fails to accurately forecast customer usage and network demands, TDS may have excess supply of network equipment inventory that may need to be written down, depreciated or disposed at a loss. Further, TDS' supply chain could be disrupted unexpectedly by raw material shortages, wars, natural disasters, disease or other factors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The assessment results are used to drive continuous improvement in the TDS cybersecurity control environment, as well as to manage potential data security risks of third-party service providers. TDS assesses the threat and vulnerability landscape using various commercial, government, vendor and publicly available information sources and tools.
The assessment results are used to drive continuous improvement in the TDS cybersecurity control environment, as well as to manage potential data security risks of third-party service providers. TDS identifies risks across the threat and vulnerability landscape using various commercial, government, vendor and publicly available information sources and tools.
TDS manages these evolving risks through ongoing investments in the security program including active monitoring of the internal data environment and the environments of third-party service providers who manage sensitive data. In addition, TDS Information Technology leaders conduct regular cyber incident simulations to ensure preparedness in the event of a cyber-attack.
The TDS security operations program includes active monitoring of the internal data environment and regular assessment of the environments of third-party service providers who manage sensitive data. In addition, TDS security leaders conduct regular cyber incident simulations to ensure preparedness in the event of a cyber-attack and further test potential risks.
The TDS Audit Committee oversees the processes over internal controls and financial reporting that includes controls and procedures that are designed to ensure that significant cybersecurity incidents are communicated to both senior management and the Audit Committee. Cybersecurity is also discussed with the Technology Advisory Group of the Board of Directors as warranted, at least on an annual basis.
The TDS Audit Committee oversees the processes over internal controls and financial reporting that includes controls and procedures that are designed to ensure that significant cybersecurity incidents are communicated to both senior management and the Audit Committee. The Audit Committee meets with the TDS CISO and UScellular Senior Vice President of Information Technology at least two times per year.
TDS leverages external parties to perform independent assessments and tests of security controls in the environment. TDS’ Information Technology Security leaders are responsible for assessing and managing cybersecurity risks. Management has a depth of cybersecurity experience focused on increasing the organization's resilience to security threats and stays current on new developments through continuing education and monitoring of the cybersecurity landscape.
Management has a depth of cybersecurity experience focused on increasing the organization's resilience to security threats and stays current on new developments through continuing education and monitoring of the cybersecurity landscape.
Item 1C. Cybersecurity The TDS information security program aligns with the National Institute of Standards and Technology (NIST) cybersecurity framework. Risk assessments are conducted periodically leveraging this standard and are integrated into the TDS Enterprise Risk Management (ERM) program.
Item 1C. Cybersecurity The TDS information security program is based on a defense-in-depth approach and aligns with the National Institute of Standards and Technology (NIST) cybersecurity framework. Security control and maturity assessments are conducted periodically leveraging this standard. TDS also leverages internal and external auditors and consultants to perform independent assessments and tests of security controls.
The TDS environment is monitored for potential security threats and security events are investigated and acted on to minimize potential risk to the environment. The full Board of Directors engages in oversight of TDS' cybersecurity risks. The Board of Directors receives regular updates from management on technology and security updates and TDS’ assessment of cybersecurity threats and mitigation plans.
The Board of Directors receives regular updates from management on technology and security updates and TDS’ assessment of cybersecurity threats and mitigation plans. The TDS CISO and UScellular Senior Vice President of Information Technology provide the full Board of Directors an annual update and discussion of the cybersecurity program.
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Risks related to third-party providers who have access to TDS data and systems are identified, assessed and managed through a formal third-party risk assessment process. Third-parties who access sensitive company or customer information are contractually obligated to meet specific privacy and security requirements.
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Identified risks are evaluated against a risk classification framework to direct remediation, mitigation and management efforts based on severity. Cybersecurity risks are integrated into the TDS Enterprise Risk Management (ERM) program with updates provided on a quarterly basis.
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The TDS Chief Information Security Officer (CISO) and UScellular Senior Vice President of Information Technology are responsible for assessing and managing cybersecurity risks. Each has over twenty years of experience at the company, encompassing network engineering, information technology and cyber security.
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As part of their accountability for incident response, significant incidents are communicated to an internal committee including the Chief Financial Officer and general counsel to assess their materiality and if materiality is confirmed it is reported by the defined process.
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To date TDS has not identified nor become aware of any cybersecurity incidents that individually or in aggregate have materially affected or are reasonably likely to materially affect the company, including its business strategy, results of operations, or financial condition. The full Board of Directors engages in oversight of TDS' cybersecurity risks.
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Cybersecurity is also discussed with the Technology Advisory Group of the Board of Directors as warranted, typically on an annual basis. 23 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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These properties are either owned or leased by UScellular, one of its subsidiaries, or the partnership, limited liability company or corporation which holds the license issued by the FCC. TDS Telecom owns or leases its physical assets consisting of cable and telephone distribution networks, headends, network electronic equipment, customer premises equipment, land and buildings.
These properties are either owned or leased by UScellular, one of its subsidiaries, or the partnership, limited liability company or corporation which holds the license issued by the FCC. TDS Telecom owns or leases its physical assets consisting of cable and telephone distribution networks, headends, network electronic equipment, customer premise equipment, land and buildings.
Item 2. Properties TDS has properties located throughout the United States. As of December 31, 2023, TDS’ gross investment in property, plant and equipment was as follows: UScellular’s local business offices, cell sites, cell site equipment, connectivity centers, data centers, call centers and retail stores are located primarily in UScellular’s operating markets.
Item 2. Properties TDS has properties located throughout the United States. As of December 31, 2024, TDS’ gross investment in property, plant and equipment was as follows: UScellular’s local business offices, cell sites, cell site equipment, connectivity centers, data centers, call centers and retail stores are located primarily in UScellular’s operating markets.
Parent and Other fixed assets consist of assets, which are either owned or leased, at TDS Corporate, HMS, and Suttle-Straus. As of December 31, 2023, the gross investment in property, plant and equipment was $9,560 million at UScellular, $5,737 million at TDS Telecom and $315 million at Parent & Other.
Parent and Other fixed assets consist of assets, which are either owned or leased, at TDS Corporate and Suttle-Straus. As of December 31, 2024, the gross investment in property, plant and equipment was $8,387 million at UScellular, $5,890 million at TDS Telecom and $85 million at Parent & Other.
See Note 9 — Property, Plant and Equipment in the Notes to Consolidated Financial Statements for additional information. 21 Table of Contents
See Note 10 — Property, Plant and Equipment in the Notes to Consolidated Financial Statements for additional information. Item 3. Legal Proceedings For more information related to legal proceedings, see Note 15 — Commitments and Contingencies in the Notes to Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Telecommunications Index. 23 Table of Contents Dividend Reinvestment Plan TDS’ dividend reinvestment plans provide its common shareholders with a convenient and economical way to participate in the future growth of TDS. Holders of record of ten (10) or more Common Shares may purchase Common Shares with their reinvested dividends at a five percent discount from market price.
Telecommunications Index. 25 Table of Contents Dividend Reinvestment Plan TDS’ dividend reinvestment plans provide its common shareholders with a convenient and economical way to participate in the future growth of TDS. Holders of record of ten (10) or more Common Shares may purchase Common Shares with their reinvested dividends at a five percent discount from market price.
It is uncertain at this time how the strategic alternatives review for UScellular, TDS' available opportunities to reinvest in its businesses, or TDS' ongoing liquidity needs, may impact the decisions of the TDS Board of Directors regarding the declaration of future dividends.
It is uncertain at this time how the outcome of the ongoing strategic alternatives review process for UScellular, TDS' available opportunities to reinvest in its businesses, or TDS' ongoing liquidity needs, may impact the decisions of the TDS Board of Directors regarding the declaration of future dividends.
Subject to these considerations and to legal requirements, TDS may approve the repurchase of its shares from time to time when circumstances warrant. The maximum dollar value of shares that may yet be purchased under this program was $132 million as of December 31, 2023.
Subject to these considerations and to legal requirements, TDS may approve the repurchase of its shares from time to time when circumstances warrant. The maximum dollar value of shares that may yet be purchased under this program was $132 million as of December 31, 2024.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Information TDS' Common Shares are listed on the New York Stock Exchange under the symbol “TDS.” As of January 31, 2024, the last trading day of the month, TDS Common Shares were held by 1,561 record owners, and the Series A Common Shares were held by 64 record owners.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Information TDS' Common Shares are listed on the New York Stock Exchange under the symbol “TDS.” As of January 31, 2025, the last trading day of the month, TDS Common Shares were held by 1,490 record owners, and the Series A Common Shares were held by 64 record owners.
TDS did not determine to terminate the foregoing Common Share repurchase program, or cease making further purchases thereunder, during the fourth quarter of 2023.
TDS did not determine to terminate the foregoing Common Share repurchase program, or cease making further purchases thereunder, during the fourth quarter of 2024.
There were no purchases made by or on behalf of TDS, and any open market purchases made by any "affiliated purchaser" (as defined by the SEC) of TDS, of TDS Common Shares during the fourth quarter of 2023. Item 6. [Reserved] 24 Table of Contents
There were no purchases made by or on behalf of TDS, or any open market purchases made by any "affiliated purchaser" (as defined by the SEC) of TDS, of TDS Common Shares during the fourth quarter of 2024. Item 6. [Reserved] 26 Table of Contents
TDS paid quarterly dividends per outstanding share of $0.185 in 2023, $0.180 in 2022 and $0.175 in 2021. TDS increased the dividend per share to $0.190 in the first quarter of 2024. TDS has paid cash dividends on its common stock since 1974.
TDS paid dividends per outstanding share of $0.19 in the first quarter of 2024 and $0.04 in each of the second, third and fourth quarters of 2024. TDS paid quarterly dividends per outstanding share of $0.185 in 2023 and $0.180 in 2022. TDS has paid cash dividends on its common stock since 1974.
Telecommunications Index 100 127.88 120.31 109.89 103.57 107.20 The comparison above assumes $100.00 invested at the close of trading on the last trading day of 2018, in TDS Common Shares, S&P 500 Index and the Dow Jones U.S.
Telecommunications Index 100 94.08 85.93 80.99 83.83 108.72 The comparison above assumes $100.00 invested at the close of trading on the last trading day of 2019, in TDS Common Shares, S&P 500 Index and the Dow Jones U.S.
Telecommunications Index. Note: Cumulative total return assumes reinvestment of dividends. 2018 2019 2020 2021 2022 2023 TDS Common Shares (NYSE: TDS) $ 100 $ 80.02 $ 60.57 $ 67.89 $ 37.15 $ 69.21 S&P 500 Index 100 131.49 155.68 200.37 164.08 207.21 Dow Jones U.S.
Telecommunications Index. Note: Cumulative total return assumes reinvestment of dividends. 2019 2020 2021 2022 2023 2024 TDS Common Shares (NYSE: TDS) $ 100 $ 75.69 $ 84.84 $ 46.43 $ 86.50 $ 163.50 S&P 500 Index 100 118.40 152.39 124.79 157.59 197.02 Dow Jones U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

136 edited+78 added−44 removed49 unchanged
UScellular is an 83%-owned subsidiary of TDS. UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a community focus.
UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a community focus. UScellular is an 83%-owned subsidiary of TDS.
This includes providing exceptional wireless communication services which enhance consumers’ lives, increase the competitiveness of local businesses, and improve the efficiency of government operations in the markets UScellular serves. UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a local community focus.
This includes providing wireless communication services which enhance consumers’ lives, increase the competitiveness of local businesses, and improve the efficiency of government operations in the markets UScellular serves. UScellular’s strategy is to attract and retain customers by providing a high-quality network, outstanding customer service, and competitive devices, plans and pricing - all provided with a local community focus.
TDS makes substantial investments to acquire wireless spectrum licenses and properties and to construct and upgrade communications networks and facilities with a goal of creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to TDS’ networks.
TDS makes substantial investments to acquire wireless spectrum licenses and to construct and upgrade communications networks and facilities with a goal of creating long-term value for shareholders. In recent years, rapid changes in technology and new opportunities have required substantial investments in potentially revenue‑enhancing and cost-saving upgrades to TDS’ networks.
Strategic efforts include: ▪ UScellular offers economical and competitively priced service plans and devices to its customers and is focused on increasing revenues from sales of related products such as device protection plans and from new services such as fixed wireless home internet.
Strategic efforts include: ▪ UScellular offers economical and competitively priced wireless service plans and devices to its customers and is focused on increasing revenues from sales of related products such as device protection plans and from services such as fixed wireless home internet.
TDS Telecom will incur capital expenditures over the next several years to meet its obligations to serve the required locations with 100/20 Mbps service. 55 Index to MD&A Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement This Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.
TDS Telecom will incur capital expenditures over the next several years to meet its obligations to serve the required locations with 100/20 Mbps service. 58 Index to MD&A Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement This Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Annual Report contain statements that are not based on historical facts and represent forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.
See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information. ▪ Gross Additions – represents the total number of new connections added during the period, without regard to connections that were terminated during that period. ▪ Incumbent Markets – markets where TDS is positioned as the traditional local telephone or cable company. ▪ IPTV – internet protocol television. ▪ Net Additions (Losses) – represents the total number of new connections added during the period, net of connections that were terminated during that period. ▪ OIBDA – refers to operating income before depreciation, amortization and accretion and is used in the non-GAAP metric Adjusted OIBDA throughout this document.
See Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for additional information. ▪ Gross Additions – represents the total number of new connections added during the period, without regard to connections that were terminated during that period. ▪ Incumbent Markets – markets where TDS is positioned as the traditional local telephone company. ▪ IPTV – internet protocol television. ▪ Net Additions (Losses) – represents the total number of new connections added during the period, net of connections that were terminated during that period. ▪ OIBDA – refers to operating income before depreciation, amortization and accretion and is used in the non-GAAP metric Adjusted OIBDA throughout this document.
This support comes with an obligation to provide 100 megabits per second (Mbps) of download speed and 20 Mbps of upload speed (100/20 Mbps) to a certain number of locations. ▪ Expansion Markets – markets utilizing fiber networks in areas where TDS does not serve as the incumbent service provider. ▪ Free Cash Flow – non-GAAP metric defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and less Cash paid for software license agreements.
This support comes with an obligation to provide 100 megabits per second (Mbps) of download speed and 20 Mbps of upload speed (100/20 Mbps) to a certain number of locations. ▪ Expansion Markets – markets utilizing fiber networks in areas where TDS does not serve as the cable or incumbent service provider. ▪ Free Cash Flow – non-GAAP metric defined as Cash flows from operating activities less Cash paid for additions to property, plant and equipment and less Cash paid for software license agreements.
Refer to individual segment discussions in this MD&A for additional details on operating revenues and expenses at the segment level. 30 Index to MD&A Equity in earnings of unconsolidated entities Equity in earnings of unconsolidated entities represents TDS’ share of net income from entities in which it has a noncontrolling interest and that are accounted for using the equity method or the net asset value practical expedient.
Refer to individual segment discussions in this MD&A for additional details on operating revenues and expenses at the segment level. 32 Index to MD&A Equity in earnings of unconsolidated entities Equity in earnings of unconsolidated entities represents TDS’ share of net income from entities in which it has a noncontrolling interest and that are accounted for using the equity method or the net asset value practical expedient.
Fluctuations in market interest rates can lead to volatility in the fair value of fixed-rate notes and interest expense on variable-rate debt. The following table presents the scheduled principal payments on long-term debt, lease obligations and the related weighted average interest rates by maturity dates at December 31, 2023: Principal Payments Due by Period Long-Term Debt Obligations 1 Weighted-Avg.
Fluctuations in market interest rates can lead to volatility in the fair value of fixed-rate notes and interest expense on variable-rate debt. The following table presents the scheduled principal payments on long-term debt, lease obligations and the related weighted average interest rates by maturity dates at December 31, 2024: Principal Payments Due by Period Long-Term Debt Obligations 1 Weighted-Avg.
TDS and UScellular are also required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. TDS and UScellular believe that they were in compliance as of December 31, 2023 with all such financial covenants.
TDS and UScellular are also required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. TDS and UScellular believe that they were in compliance as of December 31, 2024 with all such financial covenants.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Overview The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial statements and notes of Telephone and Data Systems, Inc. (TDS) for the year ended December 31, 2023, and with the description of TDS’ business included herein.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Overview The following Management’s Discussion and Analysis (MD&A) should be read in conjunction with the audited consolidated financial statements and notes of Telephone and Data Systems, Inc. (TDS) for the year ended December 31, 2024, and with the description of TDS’ business included herein.
See Note 3 — Fair Value Measurements in the Notes to Consolidated Financial Statements for additional information. 58 Index to MD&A Supplemental Information Relating to Non-GAAP Financial Measures TDS sometimes uses information derived from consolidated financial information but not presented in its financial statements prepared in accordance with GAAP to evaluate the performance of its business.
See Note 3 — Fair Value Measurements in the Notes to Consolidated Financial Statements for additional information. 62 Index to MD&A Supplemental Information Relating to Non-GAAP Financial Measures TDS sometimes uses information derived from consolidated financial information but not presented in its financial statements prepared in accordance with GAAP to evaluate the performance of its business.
These expenditures are expected to be used for similar purposes as those listed above. TDS intends to finance its capital expenditures for 2024 using primarily Cash flows from operating activities, existing cash balances and additional debt financing from its existing agreements and/or other forms of available financing.
These expenditures are expected to be used for similar purposes as those listed above. TDS intends to finance its capital expenditures for 2025 using primarily Cash flows from operating activities, existing cash balances and additional debt financing from its existing agreements and/or other forms of available financing.
The amounts involved may be material. Refer to Market Risk — Long-Term Debt for additional information regarding required principal payments and the weighted average interest rates related to TDS’ Long-term debt. See Note 12 — Debt in the Notes to Consolidated Financial Statements for additional information related to the financing agreements.
The amounts involved may be material. Refer to Market Risk — Long-Term Debt for additional information regarding required principal payments and the weighted average interest rates related to TDS’ Long-term debt. See Note 13 — Debt in the Notes to Consolidated Financial Statements for additional information related to the financing agreements.
It is uncertain at this time how the strategic alternatives review for UScellular, TDS' available opportunities to reinvest in its businesses, or TDS' ongoing liquidity needs, may impact the decisions of the TDS Board of Directors regarding the declaration of future dividends.
It is uncertain at this time how the outcome of the ongoing strategic alternatives review process for UScellular, TDS' available opportunities to reinvest in its businesses, or TDS' ongoing liquidity needs, may impact the decisions of the TDS Board of Directors regarding the declaration of future dividends.
Refer to Supplemental Information to Non-GAAP Financial Measures within this MD&A for a reconciliation of the Goodwill impairment, net of tax. 27 Index to MD&A Terms Used by TDS The following is a list of definitions of certain industry terms that are used throughout this document: ▪ 4G LTE – fourth generation Long-Term Evolution, which is a wireless technology that enables more network capacity for more data per user as well as faster access to data compared to third generation (3G) technology. ▪ 5G – fifth generation wireless technology that helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. ▪ Account – represents an individual or business financially responsible for one or multiple associated connections.
Refer to Supplemental Information to Non-GAAP Financial Measures within this MD&A for a reconciliation of the Intangible assets impairment, net of tax. 30 Index to MD&A Terms Used by TDS The following is a list of definitions of certain industry terms that are used throughout this document: ▪ 4G LTE – fourth generation Long-Term Evolution, which is a wireless technology that enables more network capacity for more data per user as well as faster access to data compared to third generation (3G) technology. ▪ 5G – fifth generation wireless technology that helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency. ▪ Account – represents an individual or business financially responsible for one or multiple associated connections.
See Note 19 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed appropriate.
See Note 20 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to applicable GAAP income measures are deemed appropriate.
See the disclosure under the heading Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement elsewhere in this report for additional information. The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (GAAP). However, TDS uses certain “non-GAAP financial measures” in the MD&A.
See the disclosure under the heading Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement elsewhere in this report for additional information. The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (GAAP). However, TDS uses certain “non-GAAP financial measures” in the MD&A and the business segment information.
N/M - Percentage change not meaningful. 1 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure. 2 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures. 43 Index to MD&A Operating Revenues (Dollars in millions) Residential revenues consist of: • Broadband services • Video services, including IPTV, traditional cable programming and satellite offerings • Voice services Commercial revenues consist of: • High-speed and dedicated business internet services • Video services • Voice services Wholesale revenues consist of: • Network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom's networks • Federal and state regulatory support, including ACAM Key components of changes in the statement of operations items were as follows: Total operating revenues Residential revenues increased for 2023 due primarily to price increases and growth in broadband connections, partially offset by promotional activity and a decline in voice and video connections.
N/M - Percentage change not meaningful. 1 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure. 2 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures. 48 Index to MD&A Operating Revenues (Dollars in millions) Residential revenues consist of: • Broadband services • Video services, including IPTV, traditional cable programming and satellite offerings • Voice services • Wireless services Commercial revenues consist of: • High-speed and dedicated business internet services • Video services • Voice services Wholesale revenues consist of: • Network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecom's networks • Federal and state regulatory support, including E-ACAM Key components of changes in the statement of operations items were as follows: Total operating revenues Residential revenues increased for 2024 due primarily to price increases and growth in broadband connections, partially offset by a decline in voice and video connections.
Specifically, TDS has referred to the following measures in this Form 10-K Report: ▪ EBITDA ▪ Adjusted EBITDA ▪ Adjusted OIBDA ▪ Free cash flow ▪ Goodwill impairment, net of tax Following are explanations of each of these measures: EBITDA, Adjusted EBITDA and Adjusted OIBDA EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as Net income (loss) adjusted for the items set forth in the reconciliation below.
Specifically, TDS has referred to the following measures in this Form 10-K Report: ▪ EBITDA ▪ Adjusted EBITDA ▪ Adjusted OIBDA ▪ Free cash flow ▪ Intangible assets impairment, net of tax Following are explanations of each of these measures: EBITDA, Adjusted EBITDA and Adjusted OIBDA EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as Net income (loss) adjusted for the items set forth in the reconciliation below.
TDS’ significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies, Note 2 — Revenue Recognition and Note 10 — Leases in the Notes to Consolidated Financial Statements.
TDS’ significant accounting policies are discussed in detail in Note 1 — Summary of Significant Accounting Policies, Note 2 — Revenue Recognition and Note 11 — Leases in the Notes to Consolidated Financial Statements.
Loss on impairment of goodwill During the fourth quarter of 2023, TDS Telecom recorded a $547 million loss on impairment of Goodwill. See Note 7 — Intangible Assets in the Notes to Consolidated Financial Statements for additional information. 44 Index to MD&A Liquidity and Capital Resources Sources of Liquidity TDS and its subsidiaries operate capital-intensive businesses.
Loss on impairment of intangible assets During the fourth quarter of 2023, TDS Telecom recorded a $547 million loss on impairment of Goodwill. See Note 8 — Intangible Assets in the Notes to Consolidated Financial Statements for additional information. 49 Index to MD&A Liquidity and Capital Resources Sources of Liquidity TDS and its subsidiaries operate capital-intensive businesses.
Quantitative and Qualitative Disclosures About Market Risk See section entitled "Market Risk" in Item 7 of this Form 10-K. 62 Table of Contents
Quantitative and Qualitative Disclosures About Market Risk See section entitled "Market Risk" in Item 7 of this Form 10-K. 68 Table of Contents
This adjustment was not material to any of the periods impacted. 2 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure. 3 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures. 36 Index to MD&A Operating Revenues (Dollars in millions) Service revenues consist of: ▪ Retail Service – Postpaid and prepaid charges for voice, data and value-added services and cost recovery surcharges ▪ Inbound Roaming – Consideration from other wireless carriers whose customers use UScellular’s wireless systems when roaming ▪ Other Service – Amounts received from the Federal USF, third-party tower rental revenues, miscellaneous other service revenues and Internet of Things (IoT) Equipment revenues consist of: ▪ Sales of wireless devices and related accessories to new and existing customers, agents, and third-party distributors Key components of changes in the statement of operations line items were as follows: Total operating revenues Retail service revenues decreased in 2023 primarily as a result of a decrease in average postpaid and prepaid connections, partially offset by an increase in Postpaid ARPU as previously discussed in the Operational Overview section.
This adjustment was not material to any of the periods impacted. 2 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure. 3 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures. 39 Index to MD&A Operating Revenues (Dollars in millions) Service revenues consist of: ▪ Retail Service – Postpaid and prepaid charges for voice, data and value-added services and cost recovery surcharges ▪ Other Service – Amounts received from the Federal USF, inbound roaming, miscellaneous other service revenues and Internet of Things (IoT) Equipment revenues consist of: ▪ Sales of wireless devices and related accessories to new and existing customers, agents, and third-party distributors Key components of changes in the statement of operations line items were as follows: 2024-2023 Commentary Total operating revenues Retail service revenues decreased in 2024 primarily as a result of a decrease in average postpaid and prepaid connections, partially offset by an increase in Postpaid ARPU as previously discussed in the Operational Overview section.
TDS' liquidity would be adversely affected if it is unable to obtain short or long-term financing on acceptable terms. TDS will continue to monitor the rapidly changing business and market conditions and is taking and intends to take appropriate actions, as necessary, to meet its liquidity needs, including reducing its planned capital expenditures.
TDS' liquidity would be adversely affected if it is unable to obtain short or long-term financing on acceptable terms. TDS will continue to monitor the rapidly changing business and market conditions and is taking and intends to take appropriate actions, as necessary, to meet its liquidity needs.
A discussion of the reasons TDS determines these metrics to be useful and reconciliations of these measures to their most directly comparable measures determined in accordance with GAAP are included in the disclosure under the heading Supplemental Information Relating to Non-GAAP Financial Measures within the MD&A of this report. The following MD&A omits discussion of 2022 compared to 2021.
A discussion of the reasons TDS determines these metrics to be useful and reconciliations of these measures to their most directly comparable measures determined in accordance with GAAP are included in the disclosure under the heading Supplemental Information Relating to Non-GAAP Financial Measures within the MD&A of this report.
Postpaid ARPA was relatively flat in 2023 due to the impacts to Postpaid ARPU, offset by a decrease in the number of connections per account. 35 Index to MD&A Financial Overview — UScellular The following discussion and analysis compares financial results for the year ended December 31, 2023, to the year ended December 31, 2022.
Postpaid ARPA was relatively flat in 2023 due to the impacts to Postpaid ARPU, offset by a decrease in the number of connections per account. 38 Index to MD&A Financial Overview — Wireless The following discussion and analysis compares financial results for the year ended December 31, 2024, to the year ended December 31, 2023 and the year ended December 31, 2023, to the year ended December 31, 2022.
TDS paid quarterly dividends per outstanding Series UU depositary share (each representing 1/1,000th of a Preferred Share) of $0.414 in 2023 and 2022. TDS paid quarterly dividends per outstanding Series VV depositary share (each representing 1/1,000th of a Preferred Share) of $0.375 in 2023 and 2022. 50 Index to MD&A Consolidated Cash Flow Analysis TDS operates a capital-intensive business.
TDS paid quarterly dividends per outstanding Series VV depositary share (each representing 1/1,000th of a Preferred Share) of $0.375 in 2024, 2023 and 2022. 54 Index to MD&A Consolidated Cash Flow Analysis TDS operates a capital-intensive business.
TDS continues to make progress on developing and enhancing its Environmental, Social and Governance (ESG) program, including the publication of the most recent TDS ESG Report in July 2023, which is available on the TDS website.
TDS continues to make progress on developing and enhancing its Environmental, Social and Governance (ESG) program, including the publication of the most recent TDS ESG Report in August 2024, which is available on the TDS website.
See Note 19 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information about TDS' segments. 2023 Operating Revenues by Segment 26 Index to MD&A TDS Mission and Strategy TDS’ mission is to provide outstanding communications services to its customers and meet the needs of its shareholders, its people, and its communities.
See Note 20 — Business Segment Information in the Notes to Consolidated Financial Statements for additional information about TDS' segments. 2024 Operating Revenues by Segment 28 Index to MD&A TDS Mission and Strategy TDS’ mission is to provide outstanding communications services to its customers and meet the needs of its shareholders, its people, and its communities.
See Note 12 — Debt in the Notes to Consolidated Financial Statements for additional information. 2 Represents the weighted average stated interest rates at December 31, 2023, for debt maturing in the respective periods.
See Note 13 — Debt in the Notes to Consolidated Financial Statements for additional information. 2 Represents the weighted average stated interest rates at December 31, 2024, for debt maturing in the respective periods.
Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements. 2023 2022 (Dollars in millions) Cash flows from operating activities (GAAP) $ 1,142 $ 1,155 Cash paid for additions to property, plant and equipment (1,211) (1,161) Cash paid for software license agreements (66) (23) Free cash flow (Non-GAAP) $ (135) $ (29) Goodwill impairment, net of tax The following non-GAAP financial measure isolates the total effects on net income of the current period Loss on impairment of goodwill at TDS Telecom, including tax impacts.
Free cash flow is a non-GAAP financial measure which TDS believes may be useful to investors and other users of its financial information in evaluating liquidity, specifically, the amount of net cash generated by business operations after deducting Cash paid for additions to property, plant and equipment and Cash paid for software license agreements. 2024 2023 2022 (Dollars in millions) Cash flows from operating activities (GAAP) $ 1,145 $ 1,142 $ 1,155 Cash paid for additions to property, plant and equipment (884) (1,211) (1,161) Cash paid for software license agreements (67) (66) (23) Free cash flow (Non-GAAP) $ 194 $ (135) $ (29) 66 Index to MD&A Intangible assets impairment, net of tax The following non-GAAP financial measure isolates the total effects on net income of the Loss on impairment of intangible assets at TDS Telecom and UScellular, including tax impacts.
Management believes the application of the following critical accounting policies and the estimates required by such application reflect its most significant judgments and estimates used in the preparation of TDS’ consolidated financial statements. Intangible Asset Impairment Wireless spectrum licenses and Goodwill represent a significant component of TDS’ consolidated assets.
Management believes the application of the following critical accounting policies and the estimates required by such application reflect its most significant judgments and estimates used in the preparation of TDS’ consolidated financial statements. Wireless Spectrum License Impairment – UScellular Wireless spectrum licenses represent a significant component of UScellular’s consolidated assets.
OPERATIONS ▪ Serves 1.2 million connections in 32 states. ▪ Employs approximately 3,600 associates. 39 Index to MD&A TDS Telecom Mission and Strategy TDS Telecom's mission is to create a better world by providing high-quality communications services to connect people and businesses, support education, and strengthen communities.
OPERATIONS ▪ Serves 1.1 million connections in 31 states. ▪ Employs approximately 3,300 associates. 44 Index to MD&A TDS Telecom Mission and Strategy TDS Telecom's mission is to create a better world by providing high-quality communications services to connect people and businesses, support education, and strengthen communities.
In March 2023, the agreements were amended to require TDS and UScellular to maintain the Consolidated Leverage Ratio as of the end of any fiscal quarter at a level not to exceed the following: 4.25 to 1.00 from January 1, 2023 through March 31, 2024; 4.00 to 1.00 from April 1, 2024 through March 31, 2025; 3.75 to 1.00 from April 1, 2025 and thereafter.
TDS and UScellular are required to maintain the Consolidated Leverage Ratio as of the end of any fiscal quarter at a level not to exceed the following: 4.25 to 1.00 from January 1, 2023 to March 31, 2024; 4.00 to 1.00 from April 1, 2024 through March 31, 2025; 3.75 to 1.00 from April 1, 2025 and thereafter.
In addition, UScellular is focused on increasing tower rent revenues and expanding its solutions available to business and government customers. ▪ UScellular continues to enhance its network capabilities, including by deploying 5G technology. 5G technology helps address customers’ growing demand for data services and creates opportunities for new services requiring high speed and reliability as well as low latency.
In addition, UScellular is focused on expanding its solutions available to business and government customers. ▪ UScellular continues to enhance its network capabilities, including by deploying 5G technology to help address customers’ growing demand for data services and create opportunities for new services requiring high speed and reliability as well as low latency.
Revenues from certain of these investments are long-term and in some cases are uncertain. To meet its cash-flow needs, TDS may need to delay or reduce certain investments, dividend payments or sell assets. Refer to Liquidity and Capital Resources within this MD&A for additional information.
Revenues from certain of these investments are long-term and in some cases are uncertain. To meet its cash-flow needs, TDS may need to delay or reduce certain investments, dividend payments or sell assets. Refer to Liquidity and Capital Resources within this MD&A and Note 7 — Divestitures in the Notes to Consolidated Financial Statements for additional information.
Fair Value of Long-Term Debt At December 31, 2023 and 2022, the estimated fair value of long-term debt obligations, excluding lease obligations, the current portion of such long-term debt and debt financing costs, was $3,651 million and $3,047 million, respectively, and the book value was $4,139 million and $3,789 million, respectively.
Fair Value of Long-Term Debt At December 31, 2024 and 2023, the estimated fair value of long-term debt obligations, excluding lease obligations, the current portion of such long-term debt and debt financing costs, was $4,015 million and $3,651 million, respectively, and the book value was $4,119 million and $4,139 million, respectively.
TDS Telecom offers 1Gig+ service to 72% of its total footprint as of December 31, 2023, compared to 66% a year ago.
TDS Telecom offers 1Gig+ service to 74% of its total footprint as of December 31, 2024, compared to 72% a year ago.
TDS Telecom is a wholly-owned subsidiary of TDS and provides a wide range of broadband, video and voice communications services to residential, commercial and wholesale customers, with the constant focus on delivering outstanding customer service.
TDS Telecom is a wholly-owned subsidiary of TDS and provides a wide range of broadband, video, voice and wireless communications services to residential, commercial and wholesale customers, with the constant focus on delivering outstanding customer service. The following MD&A omits discussion of 2023 compared to 2022.
In 2023, these capital expenditures were used for the following purposes: • Continue to expand fiber deployment in expansion and incumbent markets; • Support broadband growth and success-based spending; and • Maintain and enhance existing infrastructure including build-out requirements of state broadband and ACAM programs. Capital expenditures for 2024 are expected to be between $310 million and $340 million.
In 2024, these capital expenditures were used for the following purposes: • Continue to expand fiber deployment primarily in expansion markets; • Support broadband growth and success-based spending; and • Maintain and enhance existing infrastructure including build-out requirements of state broadband and E-ACAM programs. TDS Telecom's capital expenditures for 2025 are expected to be between $375 million and $425 million.
On August 7, 2020, the FCC released a Public Notice establishing procedures for an auction offering wireless spectrum licenses in the 3.7-3.98 GHz bands (Auction 107). On February 24, 2021, the FCC announced by way of public notice that UScellular was the provisional winning bidder for 254 wireless spectrum licenses for $1,283 million.
Spectrum Auctions On February 24, 2021, the FCC announced by way of Public Notice that UScellular was the provisional winning bidder of 254 wireless spectrum licenses in the 3.7-3.98 GHz bands for $1,283 million in Auction 107.
OPERATIONS ▪ Serves customers with 4.6 million retail connections including 4.1 million postpaid and 0.5 million prepaid connections ▪ Operates in 21 states ▪ Employs approximately 4,300 associates ▪ Owns 4,373 towers ▪ Operates 7,000 cell sites in service 33 Index to MD&A UScellular Mission and Strategy UScellular’s mission is to connect its customers to what matters most to them.
OPERATIONS ▪ Serves customers with 4.4 million retail connections including 4.0 million postpaid and 0.4 million prepaid connections ▪ Operates in 21 states ▪ Employs approximately 4,100 associates ▪ Owns 4,409 towers ▪ Operates 7,010 cell sites in service 34 Index to MD&A UScellular Mission and Strategy UScellular’s mission is to connect its customers to what matters most to them.
Equipment sales revenues decreased in 2023, due primarily to a decline in smartphone upgrades and gross additions, partially offset by a higher average price of new smartphone sales. Wireless service providers have been aggressive promotionally and on price to attract and retain customers. This includes both traditional carriers and cable companies operating as mobile virtual network operators (MVNOs).
Equipment sales revenues decreased in 2024, due primarily to a decline in smartphone devices sold due to lower upgrades and gross additions, partially offset by a higher average price of new smartphone sales. Wireless service providers have been aggressive promotionally and on price to attract and retain customers. This includes both traditional carriers and cable wireless companies.
The tax benefits recognized in the financial statements from such a position are measured based on management’s judgment as to the possible outcome that has a greater than 50% cumulative likelihood of being realized upon ultimate resolution.
The tax benefits recognized in the financial statements from such a position are measured based on management’s judgment as to the possible outcome that has a greater than 50% cumulative likelihood of being realized upon ultimate resolution. See Note 5 — Income Taxes in the Notes to Consolidated Financial Statements for additional information.
System operations expenses System operations expenses decreased in 2023, due primarily to decreases in roaming and customer usage expenses, partially offset by an increase in maintenance, utility, and cell site expenses.
System operations expenses System operations expenses decreased in 2023, due primarily to decreases in roaming and customer usage expenses, partially offset by an increase in maintenance, utility, and cell site expenses. The decrease in roaming expense was driven by a decrease in roaming rates partially offset by an increase in usage.
Such net losses include a non-cash charge related to the TDS Telecom Goodwill impairment of $547 million ($511 million, net of tax impacts), which was recorded during the three months ended December 31, 2023. The conclusion that this impairment was required was made in connection with the review and preparation of the financial statements.
The net loss in 2023 includes a non-cash charge related to the TDS Telecom Goodwill impairment of $547 million ($511 million, net of tax), which was recorded during the three months ended December 31, 2023. The conclusions that impairments were required in 2024 and 2023 were made in connection with the review and preparation of the financial statements.
Net cash provided by operating activities was $1,155 million due to net income of $72 million adjusted for non-cash items of $1,036 million and distributions received from unconsolidated entities of $145 million, including $59 million in distributions from the LA Partnership. This was partially offset by changes in working capital items which decreased net cash by $98 million.
Net cash provided by operating activities was $1,145 million due to net loss of $26 million adjusted for non-cash items of $1,070 million and distributions received from unconsolidated entities of $169 million, including $75 million in distributions from the LA Partnership. This was partially offset by changes in working capital items which decreased net cash by $68 million.
Export Credit Financing Agreements TDS has a $150 million term loan credit facility with Export Development Canada to finance (or refinance) imported equipment, including equipment purchased prior to entering the term loan facility agreement. During 2023, TDS borrowed $100 million under the agreement. The maturity date for the agreement is December 2027.
Export Credit Financing Agreements TDS and UScellular each have a $150 million term loan credit facility with Export Development Canada to finance (or refinance) imported equipment, including equipment purchased prior to entering the term loan facility agreement. The maturity date for the TDS agreement is December 2027 and for the UScellular agreement is January 2027.
Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, timing and other factors. The following discussion summarizes TDS’ cash flow activities in 2023 and 2022. 2023 Commentary TDS’ Cash, cash equivalents and restricted cash decreased $129 million.
Cash flows may fluctuate from quarter to quarter and year to year due to seasonality, timing and other factors. The following discussion summarizes TDS’ cash flow activities in 2024 and 2023.
These were partially offset by $250 million of repayments on the UScellular receivables securitization agreement, a $75 million repayment on the UScellular revolving credit agreement, a $50 million repayment on the UScellular EIP receivables repurchase agreement, the payment of dividends totaling $151 million, the repurchase of TDS and UScellular Common Shares totaling $83 million and cash paid for software license agreements of $23 million. 51 Index to MD&A Consolidated Balance Sheet Analysis The following discussion addresses certain captions in the consolidated balance sheet and changes therein.
These were partially offset by $440 million in repayments on the UScellular receivables securitization agreement, $265 million in repayments on the TDS revolving credit agreement, a $60 million repayment on the UScellular EIP receivables repurchase agreement, payment of $153 million in dividends and cash paid for software license agreements of $66 million. 55 Index to MD&A Consolidated Balance Sheet Analysis The following discussion addresses certain captions in the consolidated balance sheet and changes therein.
Executive Overview 26 Terms used by TDS 28 Results of Operations – TDS Consolidated 30 UScellular Operations 33 TDS Telecom Operations 39 Liquidity and Capital Resources 45 Consolidated Cash Flow Analysis 51 Consolidated Balance Sheet Analysis 52 Application of Critical Accounting Policies and Estimates 53 Regulatory Matters 55 Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement 56 Market Risk 58 Supplemental Information Relating to Non-GAAP Financial Measures 59 25 Index to MD&A Telephone and Data Systems, Inc.
Executive Overview 28 Terms used by TDS 31 Results of Operations – TDS Consolidated 32 UScellular Operations 34 Wireless Operations 37 Towers Operations 42 TDS Telecom Operations 44 Liquidity and Capital Resources 50 Consolidated Cash Flow Analysis 55 Consolidated Balance Sheet Analysis 56 Application of Critical Accounting Policies and Estimates 57 Regulatory Matters 58 Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement 59 Market Risk 62 Supplemental Information Relating to Non-GAAP Financial Measures 63 27 Index to MD&A Telephone and Data Systems, Inc.
Commercial revenues decreased for 2023 due primarily to declining connections in CLEC markets. Cost of services Cost of services increased for 2023 due primarily to higher video programming costs, information processing costs, and employee-related expenses, partially offset by a decrease in cost to provide legacy services.
Commercial revenues decreased for 2024 due primarily to declining connections in CLEC markets, partially offset by increases in ad revenue. Cost of services Cost of services decreased for 2024 due primarily to lower employee-related expenses, plant and maintenance costs, costs to provide legacy services, and information processing costs, partially offset by higher video programming costs.
Operational Risk Factors ▪ Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect TDS’ revenues or increase its costs to compete. ▪ Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ An inability to attract diverse people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations. ▪ TDS’ smaller scale relative to larger competitors that may have greater financial and other resources than TDS could cause TDS to be unable to compete successfully, which could adversely affect its business, financial condition or results of operations. ▪ Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business. ▪ Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects. ▪ Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ A failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure could have an adverse effect on its operations. ▪ Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations. ▪ A failure by TDS to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations. 56 Index to MD&A Financial Risk Factors ▪ Uncertainty in TDS’ or UScellular's future cash flow and liquidity or the inability to access capital, deterioration in the capital markets, changes in interest rates, other changes in TDS’ or UScellular's performance or market conditions, changes in TDS’ or UScellular's credit ratings or other factors could limit or restrict the availability of financing on terms and prices acceptable to TDS, which has required and could in the future require TDS to reduce or delay its construction, development or acquisition programs, reduce the amount of wireless spectrum licenses acquired, divest assets or businesses, and/or reduce or cease share repurchases and/or the payment of dividends. ▪ TDS has a significant amount of indebtedness which could adversely affect its financial performance and in turn adversely affect its ability to make payments on its indebtedness, comply with terms of debt covenants and incur additional debt. ▪ TDS has entered into a new Senior Secured Credit Agreement that imposes certain restrictions on its business and operations that may affect its ability to operate its business and make payments on its indebtedness. ▪ TDS’ assets and revenue are concentrated primarily in the U.S. telecommunications industry.
Operational Risk Factors ▪ A delay or failure by TDS to complete significant network construction and systems implementation activities as part of its plans to improve the quality, coverage, capabilities and capacity of its network, support and other systems and infrastructure as well as renew wireless spectrum licenses, could adversely affect its operations. ▪ Intense competition involving products, services, pricing, promotions and network speed and technologies could adversely affect TDS’ revenues or increase its costs to compete. ▪ TDS’ lack of scale and structural disadvantages, particularly in the wireless business, relative to larger competitors that may have greater financial and other resources than TDS has caused and could continue to cause TDS to be unable to compete successfully, which has adversely affected and could continue to adversely affect its business, financial condition or results of operations. ▪ Changes in roaming practices or other factors could cause TDS’ roaming revenues to decline from current levels, roaming expenses to increase from current levels and/or impact TDS’ ability to service its customers in geographic areas where TDS does not have its own network, which could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ An inability to attract people of outstanding talent throughout all levels of the organization, to develop their potential through education and assignments, and to retain them by keeping them engaged, challenged and properly rewarded could have an adverse effect on TDS' business, financial condition or results of operations. ▪ Changes in various business factors, including changes in demand, consumer preferences and perceptions, price competition, cost increases, churn from customer switching activity and other factors, could have an adverse effect on TDS’ business, financial condition or results of operations. 59 Index to MD&A ▪ A failure by TDS to obtain access to adequate radio spectrum to meet current or anticipated future needs and/or to accurately predict future needs for radio spectrum could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Advances or changes in technology could render certain technologies used by TDS obsolete, could put TDS at a competitive disadvantage, could reduce TDS’ revenues or could increase its costs of doing business. ▪ Complexities associated with deploying new technologies present substantial risk and TDS’ investments in unproven technologies may not produce the benefits that TDS expects. ▪ Costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Difficulties involving third parties with which TDS does business, including changes in TDS’ relationships with or financial or operational difficulties, including supply chain disruptions, of key suppliers or independent agents and third-party national retailers who market TDS’ services, could adversely affect TDS’ business, financial condition or results of operations. ▪ A failure by TDS to maintain flexible and capable telecommunication networks or information technologies, or a material disruption thereof, could have an adverse effect on TDS’ business, financial condition or results of operations.
TDS Telecom focuses on driving growth by investing in fiber deployment primarily in its expansion markets and also in its incumbent markets that have historically utilized copper and coaxial cable technologies. ▪ TDS Telecom seeks to grow its operations by creating clusters of markets in attractive, growing locations and may seek to acquire and/or divest of assets to support its strategy. 40 Index to MD&A Operational Overview — TDS Telecom Total Service Address Mix As of December 31, TDS Telecom increased its service addresses 12% from a year ago to 1.7 million as of December 31, 2023, through network expansion.
TDS Telecom focuses on driving growth by investing in fiber deployment. ▪ TDS Telecom seeks to grow its operations by creating clusters of markets in attractive, growing locations and may seek to acquire and/or divest of assets to support its strategy. 45 Index to MD&A Operational Overview — TDS Telecom Total Service Address Mix As of December 31, TDS Telecom increased its service addresses 6% from a year ago to 1.8 million as of December 31, 2024, through network expansion. 44% of incumbent service addresses are served by fiber.
In 2023, a market approach was used to value the wireless spectrum license portfolio. The wireless spectrum licenses were pooled by band, and a range of values was established using industry benchmarks, FCC auction data, and precedent transactions.
The wireless spectrum licenses were pooled by band, and a range of values was established using industry benchmarks, FCC auction data, and precedent transactions.
TDS believes this measure may be useful to investors and other users of its financial information to assist in comparing the current period financial results with periods that were not impacted by such a charge. 2023 2022 (Dollars in millions) Net loss attributable to TDS common shareholders (GAAP) $ (569) $ (7) Adjustments: Loss on impairment of goodwill 547 — Deferred tax benefit on the tax-amortizable portion of the impaired Goodwill (36) — Subtotal of Non-GAAP adjustments 511 — Net loss attributable to TDS common shareholders excluding goodwill impairment charge (Non-GAAP) $ (58) $ (7) 61 Table of Contents Item 7A.
TDS believes this measure may be useful to investors and other users of its financial information to assist in comparing financial results with periods that were not impacted by impairment charges. 2024 2023 2022 (Dollars in millions) Net income (loss) attributable to TDS common shareholders (GAAP) $ (97) $ (569) $ (7) Adjustments: Loss on impairment of intangible assets 137 547 3 Deferred tax benefit on the tax-amortizable portion of the impaired intangible assets (34) (36) — UScellular noncontrolling public shareholders' portion of the impaired intangible assets (18) — — Subtotal of Non-GAAP adjustments 85 511 3 Net income (loss) attributable to TDS common shareholders excluding intangible assets impairment charge (Non-GAAP) $ (12) $ (58) $ (4) 67 Table of Contents Item 7A.
Recent Development On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies have decided to initiate a process to explore a range of strategic alternatives for UScellular. During 2023, TDS incurred third-party expenses of $13 million related to the strategic alternatives review.
Announced Transactions and Strategic Alternatives Review On August 4, 2023, TDS and UScellular announced that the Boards of Directors of both companies decided to initiate a process to explore a range of strategic alternatives for UScellular.
In 2023, UScellular's capital expenditures were used for the following purposes: • Enhance and maintain UScellular's network capacity and coverage, including continued deployment of 5G with a focus on mid-band spectrum to provide additional speed and capacity to accommodate increased data usage by current customers; and • Invest in information technology to support existing and new services and products.
In 2024, UScellular's capital expenditures were used for the following purposes: • Continue to deploy 5G using mid-band spectrum to provide additional speed and capacity to accommodate increased data usage by current customers; and • Invest in information technology to support existing and new services and products.
See Note 7 — Intangible Assets for a detailed discussion regarding the Goodwill impairment.
See Note 8 — Intangible Assets for a detailed discussion regarding the impairments.
TDS may require substantial additional funding for, among other uses, capital expenditures, making additional investments including new technologies, fiber deployments and E-ACAM builds, acquisitions of providers of telecommunications services, wireless spectrum license acquisitions, agreements to purchase goods or services, leases, repurchases of shares, or payment of dividends.
In addition, TDS retains the ability, as described below, to reduce its capital expenditures to lower its funding needs. TDS may require substantial additional funding for, among other uses, capital expenditures, making additional investments including new technologies, fiber deployments and E-ACAM builds, agreements to purchase goods or services, leases, repurchases of shares, or payment of dividends.
TDS’ investment in the Los Angeles SMSA Limited Partnership (LA Partnership) contributed pre-tax income of $65 million for both 2023 and 2022. See Note 8 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information. Interest expense Interest expense increased in 2023 due primarily to interest rate increases on variable rate debt.
TDS’ investment in the Los Angeles SMSA Limited Partnership (LA Partnership) contributed pre-tax income of $62 million and $65 million for 2024 and 2023, respectively. See Note 9 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information.
For additional information related to the current TDS and UScellular repurchase authorizations, see Note 17 — Shareholders’ Equity in the Notes to Consolidated Financial Statements. Dividends TDS paid quarterly dividends per outstanding Common Share of $0.185 in 2023 and $0.180 in 2022. TDS increased the dividend per share to $0.190 in the first quarter of 2024.
For additional information related to the current TDS and UScellular repurchase authorizations, see Note 18 — Shareholders’ Equity in the Notes to Consolidated Financial Statements. Dividends TDS paid quarterly dividends per outstanding share of $0.19 in the first quarter of 2024 and $0.04 in each of the second, third and fourth quarters of 2024.
It is uncertain at this time how the strategic alternatives review for UScellular, TDS' available opportunities to reinvest in its businesses, or TDS' ongoing liquidity needs may impact TDS' long-term strategy, including with regard to the payment of dividends, in future periods.
It is uncertain at this time how the outcome of the ongoing strategic alternatives review process for UScellular, TDS' available opportunities to reinvest in its businesses, or TDS' ongoing liquidity needs, may impact the decisions of the TDS Board of Directors regarding the declaration of future dividends.
The decrease in roaming expense was driven by a decrease in roaming rates partially offset by an increase in usage. 37 Index to MD&A Cost of equipment sold Cost of equipment sold decreased in 2023, due primarily to a decline in smartphone upgrades and gross additions, partially offset by a higher average cost per unit sold.
Cost of equipment sold Cost of equipment sold decreased in 2023, due primarily to a decline in smartphone upgrades and gross additions, partially offset by a higher average cost per unit sold.
FCC Enhanced Alternative Connect America Cost Model (E-ACAM) On July 24, 2023, the FCC released an order adopting the E-ACAM program for the purpose of supporting widespread deployment of 100/20 Mbps service speeds in eligible rural areas. The program is offered and extended to carriers currently receiving ACAM or legacy rate-of-return support.
UScellular received full access to the spectrum in the third quarter of 2023. FCC Enhanced Alternative Connect America Cost Model (E-ACAM) On July 24, 2023, the FCC released an order adopting the E-ACAM program for the purpose of supporting widespread deployment of 100/20 Mbps service speeds in eligible rural areas.
It is possible that TDS Telecom will be required, if it is unable to access capital on acceptable terms, to substantially reduce its plans for fiber deployment, in both the short and long-term. Cash and Cash Equivalents Cash and cash equivalents include cash and money market investments.
It is possible that TDS Telecom will be required, if it is unable to access capital on acceptable terms, to substantially reduce its plans for fiber deployment, in both the short and long-term, which may result in fewer opportunities to deploy fiber as competitors continue their deployments.
Acquisitions, Divestitures and Exchanges TDS may be engaged in negotiations (subject to all applicable regulations) relating to the acquisition, divestiture or exchange of companies, properties, assets, wireless spectrum licenses (including pursuant to FCC auctions) and other possible businesses. In general, TDS may not disclose such transactions until there is a definitive agreement.
Divestitures TDS is engaged and may in the future be engaged in negotiations (subject to all applicable regulations) relating to the divestiture of companies, properties and assets. In general, TDS does not disclose such transactions until there is a definitive agreement.
TDS Telecom's strategic efforts include: ▪ TDS Telecom strives to provide high-quality broadband services in its markets with the ability to provide value-added bundling with video and voice service options.
TDS Telecom seeks to be the preferred broadband provider by offering fiber-rich networks, high-quality products and services, and a seamless customer experience. TDS Telecom's strategic efforts include: ▪ TDS Telecom strives to provide high-quality broadband services in its markets with the ability to provide value-added bundling with video, voice and wireless service options.
As of December 31, 2023, TDS and UScellular have borrowed the full amounts available under the agreements and the outstanding borrowings were $492 million and $783 million, respectively. Secured Term Loan Agreement In September 2023, TDS entered into a $300 million senior secured term loan credit agreement.
As of December 31, 2024, UScellular has borrowed the full amount available under the agreements and the outstanding borrowings were $723 million. Secured Term Loan Agreement TDS has a $300 million senior secured term loan credit agreement.
Regulatory, Legal and Governance Risk Factors ▪ TDS and UScellular have initiated a process to explore a range of strategic alternatives for UScellular and there can be no assurance that any strategic alternative will be successfully identified or completed, that any such strategic alternative will result in additional value for TDS and its shareholders, or that the process will not have an adverse impact on TDS' business or financial statements. ▪ Failure by TDS to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect TDS’ business, financial condition or results of operations. ▪ TDS receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to great uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Settlements, judgments, restraints on its current or future manner of doing business and/or legal costs resulting from pending and future litigation could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals or due to contamination from network cabling, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on TDS’ wireless and/or wireline business, financial condition or results of operations. ▪ Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS or have other consequences.
Regulatory, Legal and Governance Risk Factors ▪ Failure by TDS to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect TDS’ business, financial condition or results of operations. ▪ TDS receives significant regulatory support, and is also subject to numerous surcharges and fees from federal, state and local governments – the applicability and the amount of the support and fees are subject to uncertainty, including the ability to pass through certain fees to customers, and this uncertainty could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Settlements, judgments, restraints on its current or future manner of doing business and/or costs resulting from pending and future legal and policy proceedings could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ The possible development of adverse precedent in litigation or conclusions in professional or environmental studies to the effect that potentially harmful emissions from devices or network equipment, including but not limited to radio frequencies emitted by wireless signals or due to contamination from network cabling, may cause harmful health or environmental consequences, including cancer, tumors or otherwise harmful impacts, or may interfere with various electronic medical devices or frequencies used by other industries, could have an adverse effect on TDS’ wireless and/or wireline business, financial condition or results of operations. ▪ Claims of infringement of intellectual property and proprietary rights of others, primarily involving patent infringement claims, could prevent TDS from using necessary technology to provide products or services or subject TDS to expensive intellectual property litigation or monetary penalties, which could have an adverse effect on TDS’ business, financial condition or results of operations. ▪ Certain matters, such as control by the TDS Voting Trust and provisions in the TDS Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of TDS or have other consequences. 60 Index to MD&A General Risk Factors ▪ TDS has experienced, and in the future expects to experience, cyber-attacks or other breaches of network or information technology security of varying degrees on a regular basis, which could have an adverse effect on TDS' business, financial condition or results of operations. ▪ Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions or other events could, among other things, impede TDS’ access to or increase the cost of financing its operating and investment activities and/or result in reduced revenues and lower operating income and cash flows, which would have an adverse effect on TDS’ business, financial condition or results of operations. ▪ The impact of public health emergencies on TDS' business is uncertain, but depending on duration and severity could have a material adverse effect on TDS' business, financial condition or results of operations. 61 Index to MD&A Market Risk Long-Term Debt As of December 31, 2024, approximately 50% of TDS' long-term debt was in fixed-rate senior notes and approximately 50% in variable-rate debt.
Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in TDS' Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 16, 2023, for that discussion. General TDS is a diversified telecommunications company that provides high-quality communications services to approximately 6 million connections nationwide.
Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in TDS' Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 16, 2024, for that discussion.
Year Ended December 31, 2023 2022 2023 vs. 2022 (Dollars in millions) Residential Wireline, Incumbent $ 352 $ 350 1 % Wireline, Expansion 75 49 53 % Cable 273 270 1 % Total residential 700 669 5 % Commercial 155 173 (10) % Wholesale 172 177 (3) % Total service revenues 1,027 1,019 1 % Equipment revenues 1 1 (12) % Total operating revenues 1,028 1,020 1 % Cost of services (excluding Depreciation, amortization and accretion reported below) 423 418 1 % Cost of equipment and products — 1 (26) % Selling, general and administrative 326 313 4 % Depreciation, amortization and accretion 245 215 14 % Loss on impairment of goodwill 547 — N/M (Gain) loss on asset disposals, net 10 7 31 % Total operating expenses 1,551 954 63 % Operating income (loss) $ (523) $ 66 N/M Net income (loss) $ (483) $ 53 N/M Adjusted OIBDA (Non-GAAP) 1 $ 279 $ 288 (3) % Adjusted EBITDA (Non-GAAP) 1 $ 285 $ 291 (2) % Capital expenditures 2 $ 577 $ 556 4 % Numbers may not foot due to rounding.
Year Ended December 31, 2024 2023 2024 vs. 2023 (Dollars in millions) Residential Incumbent $ 355 $ 352 1 % Expansion 114 75 52 % Cable 270 273 (1) % Total residential 740 700 6 % Commercial 148 155 (5) % Wholesale 173 172 — Total service revenues 1,060 1,027 3 % Equipment revenues 1 1 (3) % Total operating revenues 1,061 1,028 3 % Cost of services (excluding Depreciation, amortization and accretion reported below) 400 423 (5) % Cost of equipment and products 1 — 58 % Selling, general and administrative 320 326 (2) % Depreciation, amortization and accretion 271 245 10 % Loss on impairment of intangible assets 1 547 (100) % (Gain) loss on asset disposals, net 12 10 28 % (Gain) loss on sale of business and other exit costs, net (49) — N/M Total operating expenses 956 1,551 (38) % Operating income (loss) $ 105 $ (523) N/M Net income (loss) $ 85 $ (483) N/M Adjusted OIBDA (Non-GAAP) 1 $ 340 $ 279 22 % Adjusted EBITDA (Non-GAAP) 1 $ 350 $ 285 23 % Capital expenditures 2 $ 324 $ 577 (44) % Numbers may not foot due to rounding.
As of December 31, 2023, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $132 million. UScellular had no share repurchases during 2023. At December 31, 2023, the total cumulative amount of UScellular Common Shares authorized to be repurchased is 1,927,000.
As of December 31, 2024, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $132 million. During 2024, UScellular repurchased 939,999 Common Shares for $55 million at an average cost per share of $58.06. At December 31, 2024, the total cumulative amount of UScellular Common Shares authorized to be repurchased is 986,942.
Other Long-Term Financing TDS and UScellular each have an effective shelf registration statement on Form S-3 to issue senior or subordinated debt securities, preferred shares and depositary shares.
TDS and UScellular have not failed to make nor do they expect to fail to make any scheduled payment of principal or interest under such indentures. Other Long-Term Financing TDS and UScellular each have an effective shelf registration statement on Form S-3 to issue senior or subordinated debt securities, preferred shares and depositary shares.
In September 2023, UScellular amended the agreement to extend the maturity date to September 2025. Amounts under the agreement may be borrowed, repaid and reborrowed from time to time until maturity. Unless the agreement is amended to extend the maturity date, repayments based on receivable collections commence in October 2025.
Unless the agreement is amended to extend the maturity date, repayments based on receivable collections commence in October 2025. During 2024, UScellular borrowed $40 million and repaid $188 million under the agreement.
The agreements do not cease to be available nor do the maturity dates accelerate solely as a result of a downgrade in TDS’ or UScellular’s credit rating.
The agreements do not cease to be available nor do the maturity dates accelerate solely as a result of a downgrade in TDS’ or UScellular’s credit rating. However, downgrades in TDS’ or UScellular’s credit rating could adversely affect their ability to renew the agreements, obtain consents, waivers, or amendments, or obtain access to other credit agreements in the future.
The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income (loss) and Operating income (loss). 59 Index to MD&A TDS - CONSOLIDATED 2023 2022 (Dollars in millions) Net income (loss) (GAAP) $ (487) $ 72 Add back: Income tax expense 10 53 Interest expense 244 174 Depreciation, amortization and accretion 915 929 EBITDA (Non-GAAP) 682 1,228 Add back or deduct: Expenses related to strategic alternatives review 13 — Loss on impairment of intangible assets 547 3 (Gain) loss on asset disposals, net 27 27 (Gain) loss on sale of business and other exit costs, net — (1) (Gain) loss on license sales and exchanges, net (2) — Adjusted EBITDA (Non-GAAP) 1,267 1,257 Deduct: Equity in earnings of unconsolidated entities 159 159 Interest and dividend income 20 17 Other, net 2 1 Adjusted OIBDA (Non-GAAP) 1,086 1,080 Deduct: Depreciation, amortization and accretion 915 929 Expenses related to strategic alternatives review 13 — Loss on impairment of intangible assets 547 3 (Gain) loss on asset disposals, net 27 27 (Gain) loss on sale of business and other exit costs, net — (1) (Gain) loss on license sales and exchanges, net (2) — Operating income (loss) (GAAP) $ (414) $ 122 UScellular 2023 2022 (Dollars in millions) Net income (GAAP) $ 58 $ 35 Add back: Income tax expense 53 37 Interest expense 196 163 Depreciation, amortization and accretion 656 700 EBITDA (Non-GAAP) 963 935 Add back or deduct: Expenses related to strategic alternatives review 8 — Loss on impairment of licenses — 3 (Gain) loss on asset disposals, net 17 19 (Gain) loss on sale of business and other exit costs, net — (1) (Gain) loss on license sales and exchanges, net (2) — Adjusted EBITDA (Non-GAAP) 986 956 Deduct: Equity in earnings of unconsolidated entities 158 158 Interest and dividend income 10 8 Adjusted OIBDA (Non-GAAP) 818 790 Deduct: Depreciation, amortization and accretion 656 700 Expenses related to strategic alternatives review 8 — Loss on impairment of licenses — 3 (Gain) loss on asset disposals, net 17 19 (Gain) loss on sale of business and other exit costs, net — (1) (Gain) loss on license sales and exchanges, net (2) — Operating income (GAAP) $ 139 $ 69 60 Index to MD&A TDS TELECOM 2023 2022 (Dollars in millions) Net income (loss) (GAAP) $ (483) $ 53 Add back or deduct: Income tax expense (benefit) (26) 23 Interest expense (8) (7) Depreciation, amortization and accretion 245 215 EBITDA (Non-GAAP) (272) 284 Add back or deduct: Loss on impairment of goodwill 547 — (Gain) loss on asset disposals, net 10 7 Adjusted EBITDA (Non-GAAP) 285 291 Deduct: Interest and dividend income 4 2 Other, net 2 1 Adjusted OIBDA (Non-GAAP) 279 288 Deduct: Depreciation, amortization and accretion 245 215 Loss on impairment of goodwill 547 — (Gain) loss on asset disposals, net 10 7 Operating income (loss) (GAAP) $ (523) $ 66 Numbers may not foot due to rounding.
Income and expense items below Operating income (loss) are not provided at the individual segment level for Wireless and Towers; therefore, the reconciliations begin with EBITDA and the most directly comparable GAAP measure is Operating income (loss) rather than Net income (loss) at the segment level. 63 Index to MD&A TDS - CONSOLIDATED 2024 2023 2022 (Dollars in millions) Net income (loss) (GAAP) $ (26) $ (487) $ 72 Add back: Income tax expense 6 10 53 Interest expense 279 244 174 Depreciation, amortization and accretion 943 915 929 EBITDA (Non-GAAP) 1,202 682 1,228 Add back or deduct: Expenses related to strategic alternatives review 56 13 — Loss on impairment of intangible assets 137 547 3 (Gain) loss on asset disposals, net 30 27 27 (Gain) loss on sale of business and other exit costs, net (68) — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Adjusted EBITDA (Non-GAAP) 1,360 1,267 1,257 Deduct: Equity in earnings of unconsolidated entities 164 159 159 Interest and dividend income 27 20 17 Other, net 5 2 1 Adjusted OIBDA (Non-GAAP) 1,164 1,086 1,080 Deduct: Depreciation, amortization and accretion 943 915 929 Expenses related to strategic alternatives review 56 13 — Loss on impairment of intangible assets 137 547 3 (Gain) loss on asset disposals, net 30 27 27 (Gain) loss on sale of business and other exit costs, net (68) — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Operating income (loss) (GAAP) $ 63 $ (414) $ 122 UScellular 2024 2023 2022 (Dollars in millions) Net income (loss) (GAAP) $ (32) $ 58 $ 35 Add back: Income tax expense 10 53 37 Interest expense 183 196 163 Depreciation, amortization and accretion 665 656 700 EBITDA (Non-GAAP) 826 963 935 Add back or deduct: Expenses related to strategic alternatives review 35 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 18 17 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Adjusted EBITDA (Non-GAAP) 1,018 986 956 Deduct: Equity in earnings of unconsolidated entities 161 158 158 Interest and dividend income 12 10 8 Adjusted OIBDA (Non-GAAP) 845 818 790 Deduct: Depreciation, amortization and accretion 665 656 700 Expenses related to strategic alternatives review 35 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 18 17 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Operating income (loss) (GAAP) $ (12) $ 139 $ 69 64 Index to MD&A UScellular Wireless 2024 2023 2022 (Dollars in millions) EBITDA (Non-GAAP) $ 530 $ 672 $ 656 Add back or deduct: Expenses related to strategic alternatives review 33 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 17 19 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) 719 697 677 Deduct: Depreciation, amortization and accretion 620 610 655 Expenses related to strategic alternatives review 33 8 — Loss on impairment of licenses 136 — 3 (Gain) loss on asset disposals, net 17 19 19 (Gain) loss on sale of business and other exit costs, net — — (1) (Gain) loss on license sales and exchanges, net 3 (2) — Operating income (loss) (GAAP) $ (90) $ 62 $ 1 UScellular Towers 2024 2023 2022 (Dollars in millions) EBITDA (Non-GAAP) $ 123 $ 123 $ 113 Add back or deduct: Expenses related to strategic alternatives review 2 — — (Gain) loss on asset disposals 1 (2) — Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) 126 121 113 Deduct: Depreciation, amortization and accretion 45 46 45 Expenses related to strategic alternatives review 2 — — (Gain) loss on asset disposals, net 1 (2) — Operating income (GAAP) $ 78 $ 77 $ 68 65 Index to MD&A TDS TELECOM 2024 2023 2022 (Dollars in millions) Net income (loss) (GAAP) $ 85 $ (483) $ 53 Add back or deduct: Income tax expense (benefit) 35 (26) 23 Interest expense (5) (8) (7) Depreciation, amortization and accretion 271 245 215 EBITDA (Non-GAAP) 385 (272) 284 Add back or deduct: Loss on impairment of intangible assets 1 547 — (Gain) loss on asset disposals, net 12 10 7 (Gain) loss on sale of business and other exit costs, net (49) — — Adjusted EBITDA (Non-GAAP) 350 285 291 Deduct: Interest and dividend income 5 4 2 Other, net 4 2 1 Adjusted OIBDA (Non-GAAP) 340 279 288 Deduct: Depreciation, amortization and accretion 271 245 215 Loss on impairment of intangible assets 1 547 — (Gain) loss on asset disposals, net 12 10 7 (Gain) loss on sale of business and other exit costs, net (49) — — Operating income (loss) (GAAP) $ 105 $ (523) $ 66 Numbers may not foot due to rounding.
Treasury or U.S. government agencies. Refer to the Consolidated Cash Flow Analysis for additional information related to changes in Cash and cash equivalents. 45 Index to MD&A In addition to Cash and cash equivalents, TDS and UScellular had available undrawn borrowing capacity (taking into account debt covenant restrictions) from the following debt facilities at December 31, 2023.
Refer to the Consolidated Cash Flow Analysis for additional information related to changes in Cash and cash equivalents. 50 Index to MD&A In addition to Cash and cash equivalents, TDS and UScellular had available undrawn borrowing capacity from the following debt facilities at December 31, 2024. See the Financing section below for further details.
Year Ended December 31, 2023 2022 2023 vs. 2022 (Dollars in millions) Retail service 1 $ 2,742 $ 2,793 (2) % Inbound roaming 32 67 (52) % Other 270 265 2 % Service revenues 3,044 3,125 (3) % Equipment sales 862 1,044 (17) % Total operating revenues 3,906 4,169 (6) % System operations (excluding Depreciation, amortization and accretion reported below) 740 755 (2) % Cost of equipment sold 988 1,216 (19) % Selling, general and administrative 1,368 1,408 (3) % Depreciation, amortization and accretion 656 700 (6) % Loss on impairment of licenses — 3 N/M (Gain) loss on asset disposals, net 17 19 (9) % (Gain) loss on sale of business and other exit costs, net — (1) N/M (Gain) loss on license sales and exchanges, net (2) — N/M Total operating expenses 3,767 4,100 (8) % Operating income $ 139 $ 69 N/M Net income $ 58 $ 35 67 % Adjusted OIBDA (Non-GAAP) 2 $ 818 $ 790 4 % Adjusted EBITDA (Non-GAAP) 2 $ 986 $ 956 3 % Capital expenditures 3 $ 611 $ 717 (15) % N/M - Percentage change not meaningful 1 UScellular recorded an adjustment to correct a prior period error related to the recognition of discounts for certain Prepaid customers, which decreased Service revenue by $5 million in 2023.
Year Ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 (Dollars in millions) Retail service 1 $ 2,674 $ 2,742 $ 2,793 (2) % (2) % Other 210 201 239 5 % (16) % Service revenues 2,884 2,943 3,032 (2) % (3) % Equipment sales 783 862 1,044 (9) % (17) % Total operating revenues 3,667 3,805 4,076 (4) % (7) % System operations (excluding Depreciation, amortization and accretion reported below) 777 794 807 (2) % (2) % Cost of equipment sold 906 988 1,216 (8) % (19) % Selling, general and administrative 1,298 1,334 1,376 (3) % (3) % Depreciation, amortization and accretion 620 610 655 1 % (7) % Loss on impairment of licenses 136 — 3 N/M N/M (Gain) loss on asset disposals, net 17 19 19 (11) % 3 % (Gain) loss on sale of business and other exit costs, net — — (1) N/M N/M (Gain) loss on license sales and exchanges, net 3 (2) — N/M N/M Total operating expenses 3,757 3,743 4,075 — (8) % Operating income (loss) $ (90) $ 62 $ 1 N/M N/M Adjusted OIBDA (Non-GAAP) 2 $ 719 $ 697 $ 677 3 % 3 % Adjusted EBITDA (Non-GAAP) 2 $ 719 $ 697 $ 677 3 % 3 % Capital expenditures 3 $ 554 $ 580 $ 689 (5) % (16) % N/M - Percentage change not meaningful 1 UScellular recorded an adjustment to correct a prior period error related to the recognition of discounts for certain Prepaid customers, which decreased Service revenue by $5 million in 2023.

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Other TDS 10-K year-over-year comparisons