Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 3, 2023

TELEPHONE AND DATA SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-14157

36-2669023

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602

(Address of principal executive offices and zip code)

Registrant's telephone number, including area code: (312) 630-1900

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Shares, $.01 par value

TDS

New York Stock Exchange

Depositary Shares each representing a 1/1000th interest in a share of 6.625% Series UU Cumulative Redeemable Perpetual Preferred Stock, $.01 par value

TDSPrU

New York Stock Exchange

Depositary Shares each representing a 1/1000th interest in a share of 6.000% Series VV Cumulative Redeemable Perpetual Preferred Stock, $.01 par value

TDSPrV

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


☐			Emerging growth company


☐			If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02. Results of Operations and Financial Condition

On November 3, 2023, Telephone and Data Systems, Inc. (TDS) issued a news release announcing its results of operations for the period ended September 30, 2023. A copy of the news release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

The information in this Item 2.02 of Form 8-K is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) The following exhibits are being filed herewith:


Exhibit Number						Description of Exhibits
99.1						Earnings Press Release dated November 3 , 2023

104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		TELEPHONE AND DATA SYSTEMS, INC.


Date:	November 3, 2023	By:	/s/ Vicki L. Villacrez
			Vicki L. Villacrez
			Executive Vice President and Chief Financial Officer

Exhibit 99.1

NEWS RELEASE

As previously announced, TDS will hold a teleconference on November 3, 2023, at 9:00 a.m. CDT. Listen to the call live via the Events & Presentations page of investors.tdsinc.com.

TDS reports third quarter 2023 results

CHICAGO (November 3, 2023) — Telephone and Data Systems, Inc. (NYSE:TDS) reported total operating revenues of $1,278 million for the third quarter of 2023, versus $1,392 million for the same period one year ago. Net income (loss) attributable to TDS common shareholders and related diluted earnings (loss) per share were $(17) million and $(0.16), respectively, for the third quarter of 2023 compared to $(25) million and $(0.22), respectively, in the same period one year ago.

3Q 2023 Highlights*

UScellular

•Postpaid ARPU grew 2%

•Executing on growth initiatives

◦Fixed Wireless customers grew 57% to 106,000

◦Tower rental revenues grew 8%

•Increased profitability

◦Net income, Adjusted OIBDA and Adjusted EBITDA up significantly

•Growth in cash flows from operating activities and positive free cash flow

TDS Telecom

•Increasing full-year 2023 fiber address goal to 200,000

◦Delivered 61,000 fiber services addresses in Q3; 127,000 year-to-date

•Broadband investments driving positive results

◦Residential broadband connections grew 5%

◦Residential broadband revenues grew 10%

◦Residential revenue per connection grew 3%

* Comparisons are 3Q’22 to 3Q’23 unless otherwise noted

“The TDS Family of Companies continues to invest in its networks to improve its competitive positions,” said LeRoy T. Carlson, Jr., TDS President and CEO. “UScellular is rolling out 5G mid-band spectrum, and TDS Telecom is deploying fiber in attractive markets.”

“At UScellular, while working to improve subscriber results amidst a challenging market, the organization’s financial discipline has enabled the team to deliver a notable increase in profitability. And its growth initiatives – the tower portfolio and fixed wireless services – are both contributing nicely to the gains.

"Due to better-than-expected fiber service address delivery results, TDS Telecom is raising its 2023 fiber service address delivery goal to 200,000. I am pleased that TDS Telecom’s fiber expansion program is driving broadband connection and revenue growth.”

Recent Development: 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. The process is still ongoing.

2023 Estimated Results

TDS’ current estimates of full-year 2023 results for UScellular and TDS Telecom are shown below. Such estimates represent management’s view as of November 3, 2023 and should not be assumed to be current as of any future date. TDS undertakes no duty to update such estimates, whether as a result of new information, future events, or otherwise. There can be no assurance that final results will not differ materially from estimated results.

The 2023 Estimated Results shown below do not reflect any anticipated costs, expenses or results of the strategic alternatives review referenced above.


2023 Estimated Results

UScellular	Previous	Current
(Dollars in millions)
Service revenues	$3,025-$3,075	Unchanged
Adjusted OIBDA1	$750-$850	$770-$830
Adjusted EBITDA1	$925-$1,025	$945-$1,005
Capital expenditures	$600-$700	Unchanged


TDS Telecom	Previous	Current
(Dollars in millions)
Total operating revenues	$1,030-$1,060	Unchanged
Adjusted OIBDA1	$270-$300	Unchanged
Adjusted EBITDA1	$270-$300	Unchanged
Capital expenditures	$475-$525	Approx. $550

The following tables reconcile EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income or Income before income taxes. In providing 2023 estimated results, TDS has not completed the below reconciliation to Net income because it does not provide guidance for income taxes. Although potentially significant, TDS believes that the impact of income taxes cannot be reasonably predicted; therefore, TDS is unable to provide such guidance.


	2023 Estimated Results
	UScellular	TDS Telecom
(Dollars in millions)
Net income (GAAP)	N/A	N/A
Add back:
Income tax expense	N/A	N/A
Income before income taxes (GAAP)	$75-$135	$40-$70
Add back:
Interest expense	195	—
Depreciation, amortization and accretion expense	655	230
EBITDA (Non-GAAP)1	$925-$985	$270-$300
Add back or deduct:
(Gain) loss on asset disposals, net	20	—


Adjusted EBITDA (Non-GAAP)1	$945-$1,005	$270-$300
Deduct:
Equity in earnings of unconsolidated entities	160	—
Interest and dividend income	15	—

Adjusted OIBDA (Non-GAAP)1	$770-$830	$270-$300


	Actual Results
	Nine Months Ended September 30, 2023				Year Ended December 31, 2022
	UScellular		TDS Telecom			UScellular		TDS Telecom
(Dollars in millions)
Net income (GAAP)	$	43	$	19		$	35	$	53
Add back:
Income tax expense	56		6			37		23
Income before income taxes (GAAP)	$	99	$	25		$	72	$	76
Add back:
Interest expense	147		(6)			163		(7)
Depreciation, amortization and accretion expense	490		180			700		215
EBITDA (Non-GAAP)1	$	736	$	199		$	935	$	284
Add back or deduct:
Expenses related to strategic alternatives review	3		—			—		—
Loss on impairment of licenses	—		—			3		—
(Gain) loss on asset disposals, net	14		8			19		7
(Gain) loss on sale of business and other exit costs, net	—		—			(1)		—


Adjusted EBITDA (Non-GAAP)1	$	753	$	207		$	956	$	291
Deduct:
Equity in earnings of unconsolidated entities	121		—			158		—
Interest and dividend income	8		3			8		2
Other, net	—		1			—		1
Adjusted OIBDA (Non-GAAP)1	$	624	$	203		$	790	$	288

Numbers may not foot due to rounding.

1EBITDA, Adjusted EBITDA and Adjusted OIBDA are defined as net income adjusted for the items set forth in the reconciliation above. EBITDA, Adjusted EBITDA and Adjusted OIBDA are not measures of financial performance under Generally Accepted Accounting Principles in the United States (GAAP) and should not be considered as alternatives to Net income or Cash flows from operating activities, as indicators of cash flows or as measures of liquidity. TDS does not intend to imply that any such items set forth in the reconciliation above are infrequent or unusual; such items may occur in the future. Management uses Adjusted EBITDA and Adjusted OIBDA as measurements of profitability, and therefore reconciliations to Net income are deemed appropriate. Management believes Adjusted EBITDA and Adjusted OIBDA are useful measures of TDS’ operating results before significant recurring non-cash charges, nonrecurring expenses, gains and losses, and other items as presented above as they provide additional relevant and useful information to investors and other users of TDS’ financial data in evaluating the effectiveness of its operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. Adjusted EBITDA shows adjusted earnings before interest, taxes, depreciation, amortization and accretion, gains and losses, and expenses related to the strategic alternatives review of UScellular while Adjusted OIBDA reduces this measure further to exclude Equity in earnings of unconsolidated entities and Interest and dividend income in order to more effectively show the performance of operating activities excluding investment activities. The table above reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measure, Net income or Income before income taxes. Additional information and reconciliations related to Non-GAAP financial measures for September 30, 2023, can be found on TDS' website at investors.tdsinc.com.

Conference Call Information

TDS will hold a conference call on November 3, 2023 at 9:00 a.m. Central Time.

▪Access the live call on the Events & Presentations page of investors.tdsinc.com or at

https://events.q4inc.com/attendee/870810761

▪Access the call by phone at (888)330-2384, conference ID: 1328528.

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

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 1000® company, provides wireless; broadband, video and voice; and hosted and managed services to approximately 6 million connections nationwide through its businesses, UScellular, TDS Telecom, and OneNeck IT Solutions. Founded in 1969 and headquartered in Chicago, TDS employed approximately 9,100 associates as of September 30, 2023.

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

Contacts

Colleen Thompson, Vice President - Corporate Relations

colleen.thompson@tdsinc.com

Julie Mathews, IRC, Director - Investor Relations

julie.mathews@tdsinc.com

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates, and expectations. These statements are based on current estimates, projections, and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: whether any strategic alternatives for UScellular will be successfully identified or completed; whether any such strategic alternative will result in additional value for TDS or its shareholders and whether the process will have an adverse impact on TDS’ businesses; intense competition; the ability to obtain or maintain roaming arrangements with other carriers on acceptable terms and changes in roaming practices; the ability to obtain access to adequate radio spectrum to meet current or anticipated future needs, including participation in FCC auctions; the ability to attract people of outstanding talent throughout all levels of the organization; TDS' smaller scale relative to larger competitors; changes in demand, consumer preferences and perceptions, price competition, or churn rates; advances in technology; impacts of costs, integration problems or other factors associated with acquisitions, divestitures or exchanges of properties or wireless spectrum licenses and/or expansion of TDS’ businesses; the ability of the company to successfully construct and manage its networks; difficulties involving third parties with which TDS does business; uncertainties in TDS’ future cash flows and liquidity and access to the capital markets; the ability to make payments on TDS and UScellular indebtedness or comply with the terms of debt covenants; the effect on TDS' business if the collateral securing its secured term loan is foreclosed upon; conditions in the U.S. telecommunications industry; the value of assets and investments; the state and federal regulatory environment; pending and future litigation; cyber-attacks or other breaches of network or information technology security; control by the TDS Voting Trust; disruption in credit or other financial markets; deterioration of U.S. or global economic conditions; and the impact, duration and severity of public health emergencies. Investors are encouraged to consider these and other risks and uncertainties that are more fully described under “Risk Factors” in the most recent filing of TDS’ Form 10-K, as updated by any TDS Form 10-Q filed subsequent to such Form 10-K.

For more information about TDS and its subsidiaries, visit:

TDS: www.tdsinc.com

UScellular: www.uscellular.com

TDS Telecom: www.tdstelecom.com

OneNeck IT Solutions: www.oneneck.com


United States Cellular Corporation
Summary Operating Data (Unaudited)
As of or for the Quarter Ended	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
Retail Connections
Postpaid
Total at end of period	4,159,000			4,194,000			4,223,000			4,247,000			4,264,000
Gross additions	128,000			125,000			137,000			154,000			151,000
Handsets	84,000			83,000			93,000			105,000			107,000
Connected devices	44,000			42,000			44,000			49,000			44,000
Net additions (losses)	(35,000)			(28,000)			(24,000)			(17,000)			(31,000)
Handsets	(38,000)			(29,000)			(25,000)			(20,000)			(22,000)
Connected devices	3,000			1,000			1,000			3,000			(9,000)
ARPU1	$	51.11		$	50.64		$	50.66		$	50.60		$	50.21
ARPA2	$	130.91		$	130.19		$	130.77		$	130.97		$	130.27
Handset upgrade rate3	4.5		%	4.8		%	4.9		%	7.0		%	8.1		%
Churn rate4	1.30		%	1.21		%	1.27		%	1.35		%	1.42		%
Handsets	1.11		%	1.01		%	1.06		%	1.12		%	1.15		%
Connected devices	2.64		%	2.65		%	2.78		%	2.99		%	3.40		%
Prepaid
Total at end of period	462,000			462,000			470,000			493,000			493,000
Gross additions	52,000			50,000			43,000			61,000			62,000
Net additions (losses)	—			(8,000)			(23,000)			—			2,000
ARPU1	$	33.44		$	33.86		$	33.19		$	33.34		$	35.04
Churn rate4	3.68		%	4.18		%	4.63		%	4.11		%	4.07		%
Market penetration at end of period
Consolidated operating population	32,350,000			32,350,000			32,350,000			32,370,000			32,370,000
Consolidated operating penetration5	15		%	15		%	15		%	15		%	15		%
Capital expenditures (millions)	$	111		$	143		$	208		$	176		$	136
Total cell sites in service	6,973			6,952			6,950			6,945			6,933
Owned towers	4,356			4,341			4,338			4,336			4,329

1Average Revenue Per User (ARPU) - metric is calculated by dividing a revenue base by an average number of connections and by the number of months in the period. These revenue bases and connection populations are shown below:

•Postpaid ARPU consists of total postpaid service revenues and postpaid connections.

•Prepaid ARPU consists of total prepaid service revenues and prepaid connections.

2Average Revenue Per Account (ARPA) - metric is calculated by dividing total postpaid service revenues by the average number of postpaid accounts and by the number of months in the period.

3Handset upgrade rate calculated as total handset upgrade transactions divided by average postpaid handset connections.

4Churn rate represents the percentage of the connections that disconnect service each month. These rates represent the average monthly churn rate for each respective period.

5Market penetration is calculated by dividing the number of wireless connections at the end of the period by the total estimated population of consolidated operating markets.


TDS Telecom
Summary Operating Data (Unaudited)
As of or for the Quarter Ended	9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022
Residential connections
Broadband
Wireline, Incumbent	248,800		249,200		247,900		249,100		252,600
Wireline, Expansion	79,400		70,200		62,800		56,100		49,400
Cable	204,400		204,200		204,700		204,800		204,500
Total Broadband	532,600		523,600		515,400		510,000		506,500
Video	132,400		132,300		132,600		135,300		136,600
Voice	284,000		288,200		289,200		291,600		295,500
Total Residential connections	949,000		944,100		937,200		936,900		938,600
Commercial connections	217,400		223,300		229,800		236,000		242,800
Total connections	1,166,400		1,167,400		1,167,000		1,173,000		1,181,400

Residential revenue per connection1	$	62.15	$	61.97	$	60.24	$	59.91	$	60.32

Capital expenditures (millions)	$	172	$	132	$	130	$	165	$	166

Numbers may not foot due to rounding.

1Total residential revenue per connection is calculated by dividing total residential revenue by the average number of residential connections and by the number of months in the period.


Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		2023 vs. 2022		2023		2022		2023 vs. 2022
(Dollars and shares in millions, except per share amounts)
Operating revenues
UScellular	$	963	$	1,083	(11)	%	$	2,906	$	3,120	(7)	%
TDS Telecom	256		256		—		767		763		—
All Other1	59		53		10	%	175		173		2	%
	1,278		1,392		(8)	%	3,848		4,056		(5)	%
Operating expenses
UScellular
Expenses excluding depreciation, amortization and accretion	746		920		(19)	%	2,285		2,493		(8)	%
Depreciation, amortization and accretion	159		177		(10)	%	490		520		(6)	%
Loss on impairment of licenses	—		—		—		—		3		N/M
(Gain) loss on asset disposals, net	1		1		(33)	%	14		9		62	%
(Gain) loss on sale of business and other exit costs, net	—		—		85	%	—		(1)		N/M

	906		1,098		(17)	%	2,789		3,024		(8)	%
TDS Telecom
Expenses excluding depreciation, amortization and accretion	189		190		(1)	%	563		539		4	%
Depreciation, amortization and accretion	61		53		16	%	180		158		14	%
(Gain) loss on asset disposals, net	6		3		87	%	8		4		100	%
	256		246		4	%	752		702		7	%
All Other1
Expenses excluding depreciation and amortization	64		55		16	%	187		171		9	%
Depreciation and amortization	5		4		3	%	11		13		—
(Gain) loss on asset disposals, net	(1)		—		(60)	%	—		—		(79)	%
	68		59		15	%	197		183		9	%
Total operating expenses	1,230		1,403		(12)	%	3,738		3,909		(4)	%
Operating income (loss)
UScellular	57		(15)		N/M		117		96		22	%
TDS Telecom	—		10		(98)	%	15		61		(76)	%
All Other1	(9)		(6)		(52)	%	(22)		(10)		N/M
	48		(11)		N/M		110		147		(26)	%
Investment and other income (expense)
Equity in earnings of unconsolidated entities	40		40		(1)	%	122		123		(1)	%
Interest and dividend income	5		4		50	%	16		10		57	%

Interest expense	(62)		(46)		(35)	%	(178)		(118)		(49)	%
Other, net	—		—		23	%	1		1		25	%
Total investment and other income (expense)	(17)		(2)		N/M		(39)		16		N/M
Income (loss) before income taxes	31		(13)		N/M		71		163		(57)	%
Income tax expense (benefit)	27		(3)		N/M		55		62		(11)	%
Net income (loss)	4		(10)		N/M		16		101		(84)	%
Less: Net income (loss) attributable to noncontrolling interests, net of tax	4		(2)		N/M		10		14		(29)	%
Net income (loss) attributable to TDS shareholders	—		(8)		94	%	6		87		(93)	%
TDS Preferred Share dividends	17		17		—		52		52		—
Net income (loss) attributable to TDS common shareholders	$	(17)	$	(25)	30	%	$	(46)	$	35	N/M

Basic weighted average shares outstanding	113		114		(1)	%	113		114		(1)	%
Basic earnings (loss) per share attributable to TDS common shareholders	$	(0.16)	$	(0.22)	30	%	$	(0.41)	$	0.31	N/M

Diluted weighted average shares outstanding	113		114		(1)	%	113		115		(2)	%
Diluted earnings (loss) per share attributable to TDS common shareholders	$	(0.16)	$	(0.22)	29	%	$	(0.41)	$	0.30	N/M

N/M - Percentage change not meaningful.

Numbers may not foot due to rounding.

1Consists of TDS corporate, intercompany eliminations and all other business operations not included in the UScellular and TDS Telecom segments.


Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
	Nine Months Ended September 30,
	2023		2022
(Dollars in millions)
Cash flows from operating activities
Net income	$	16	$	101
Add (deduct) adjustments to reconcile net income to net cash flows from operating activities
Depreciation, amortization and accretion	681		691
Bad debts expense	77		98
Stock-based compensation expense	27		32
Deferred income taxes, net	38		48
Equity in earnings of unconsolidated entities	(122)		(123)
Distributions from unconsolidated entities	97		100
Loss on impairment of licenses	—		3
(Gain) loss on asset disposals, net	22		13
(Gain) loss on sale of business and other exit costs, net	—		(1)


Other operating activities	4		7
Changes in assets and liabilities from operations
Accounts receivable	11		(59)
Equipment installment plans receivable	20		(131)
Inventory	87		(74)
Accounts payable	(36)		16
Customer deposits and deferred revenues	(15)		30
Accrued taxes	72		136
Accrued interest	8		10
Other assets and liabilities	(64)		4
Net cash provided by operating activities	923		901

Cash flows from investing activities
Cash paid for additions to property, plant and equipment	(906)		(794)
Cash paid for intangible assets	(24)		(603)




Other investing activities	8		(11)
Net cash used in investing activities	(922)		(1,408)

Cash flows from financing activities
Issuance of long-term debt	781		1,027
Repayment of long-term debt	(664)		(330)
Issuance of short-term debt	—		110
Repayment of short-term debt	(60)		(50)

TDS Common Shares reissued for benefit plans, net of tax payments	(3)		(4)
UScellular Common Shares reissued for benefit plans, net of tax payments	(6)		(5)
Repurchase of TDS Common Shares	(6)		(25)
Repurchase of UScellular Common Shares	—		(28)
Dividends paid to TDS shareholders	(114)		(114)

Distributions to noncontrolling interests	(2)		(3)
Cash paid for software license agreements	(29)		(5)
Other financing activities	(4)		1
Net cash provided by (used in) financing activities	(107)		574

Net increase (decrease) in cash, cash equivalents and restricted cash	(106)		67

Cash, cash equivalents and restricted cash
Beginning of period	399		414
End of period	$	293	$	481


Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)

ASSETS

	September 30, 2023		December 31, 2022
(Dollars in millions)
Current assets
Cash and cash equivalents	$	256	$	360

Accounts receivable, net	1,081		1,181
Inventory, net	181		268
Prepaid expenses	99		102
Income taxes receivable	3		59
Other current assets	60		58
Total current assets	1,680		2,028

Assets held for sale	16		26

Licenses	4,700		4,699

Goodwill	547		547

Other intangible assets, net	188		204

Investments in unconsolidated entities	520		495

Property, plant and equipment, net	4,998		4,760

Operating lease right-of-use assets	988		995

Other assets and deferred charges	777		796

Total assets	$	14,414	$	14,550


Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited)

LIABILITIES AND EQUITY

	September 30, 2023		December 31, 2022
(Dollars in millions, except per share amounts)
Current liabilities
Current portion of long-term debt	$	24	$	19
Accounts payable	550		506
Customer deposits and deferred revenues	270		285
Accrued interest	20		12
Accrued taxes	51		46
Accrued compensation	110		144
Short-term operating lease liabilities	147		146
Other current liabilities	155		356
Total current liabilities	1,327		1,514



Deferred liabilities and credits
Deferred income tax liability, net	1,003		969
Long-term operating lease liabilities	896		908
Other deferred liabilities and credits	819		813

Long-term debt, net	3,840		3,731

Noncontrolling interests with redemption features	12		12

Equity
TDS shareholders' equity
Series A Common and Common Shares, par value $0.01 per share	1		1
Capital in excess of par value	2,544		2,551
Preferred Shares, par value $0.01 per share	1,074		1,074
Treasury shares, at cost	(465)		(481)
Accumulated other comprehensive income	5		5
Retained earnings	2,567		2,699
Total TDS shareholders' equity	5,726		5,849

Noncontrolling interests	791		754

Total equity	6,517		6,603

Total liabilities and equity	$	14,414	$	14,550


Balance Sheet Highlights
(Unaudited)

	September 30, 2023
			TDS		TDS Corporate		Intercompany		TDS
	UScellular		Telecom		& Other		Eliminations		Consolidated
(Dollars in millions)


Cash and cash equivalents	$	153	$	59	$	115	$	(71)	$	256

Licenses, goodwill and other intangible assets	$	4,690	$	739	$	6	$	—	$	5,435
Investment in unconsolidated entities	477		4		47		(8)		520
	$	5,167	$	743	$	53	$	(8)	$	5,955

Property, plant and equipment, net	$	2,593	$	2,318	$	87	$	—	$	4,998

Long-term debt, net:
Current portion	$	18	$	—	$	6	$	—	$	24
Non-current portion	2,903		3		934		—		3,840
	$	2,921	$	3	$	940	$	—	$	3,864


TDS Telecom Highlights
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		2023 vs. 2022		2023		2022		2023 vs. 2022
(Dollars in millions)
Operating revenues
Residential
Wireline, Incumbent	$	89	$	89	—		$	264	$	262	1	%
Wireline, Expansion	20		13		56	%	52		35		50	%
Cable	68		68		—		204		203		1	%
Total residential	177		170		4	%	521		500		4	%
Commercial	38		43		(12)	%	118		130		(10)	%
Wholesale	42		43		(3)	%	127		132		(4)	%
Total service revenues	256		256		—		766		763		—
Equipment revenues	—		—		12	%	1		1		(9)	%
Total operating revenues	256		256		—		767		763		—

Cost of services	107		109		(2)	%	319		308		4	%
Cost of equipment and products	—		—		(7)	%	—		1		(9)	%
Selling, general and administrative expenses	82		81		1	%	244		231		6	%
Depreciation, amortization and accretion	61		53		16	%	180		158		14	%
(Gain) loss on asset disposals, net	6		3		87	%	8		4		100	%
Total operating expenses	256		246		4	%	752		702		7	%

Operating income	$	—	$	10	(98)	%	$	15	$	61	(76)	%

Numbers may not foot due to rounding.

Telephone and Data Systems, Inc.

Financial Measures and Reconciliations

(Unaudited)

Free Cash Flow


	Three Months Ended September 30,				Nine Months Ended September 30,
TDS - CONSOLIDATED	2023		2022		2023		2022
(Dollars in millions)
Cash flows from operating activities (GAAP)	$	408	$	167	$	923	$	901
Cash paid for additions to property, plant and equipment	(278)		(268)		(906)		(794)
Cash paid for software license agreements	(9)		(3)		(29)		(5)
Free cash flow (Non-GAAP)1	$	121	$	(104)	$	(12)	$	102


	Three Months Ended September 30,				Nine Months Ended September 30,
UScellular	2023		2022		2023		2022
(Dollars in millions)
Cash flows from operating activities (GAAP)	$	329	$	73	$	719	$	652
Cash paid for additions to property, plant and equipment	(103)		(121)		(454)		(409)
Cash paid for software license agreements	(9)		(2)		(28)		(5)
Free cash flow (Non-GAAP)1	$	217	$	(50)	$	237	$	238

1.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.

EBITDA, Adjusted EBITDA and Adjusted OIBDA

The following table reconciles EBITDA, Adjusted EBITDA and Adjusted OIBDA to the corresponding GAAP measures, Net income (loss) and Income (loss) before income taxes.


	Three Months Ended September 30,
UScellular	2023		2022
(Dollars in millions)
Net income (loss) (GAAP)	$	23	$	(12)
Add back:
Income tax expense (benefit)	27		(3)
Income (loss) before income taxes (GAAP)	50		(15)
Add back:
Interest expense	50		42
Depreciation, amortization and accretion	159		177
EBITDA (Non-GAAP)	259		204
Add back or deduct:

Expenses related to strategic alternatives review	3		—
(Gain) loss on asset disposals, net	1		1



Adjusted EBITDA (Non-GAAP)	263		205
Deduct:
Equity in earnings of unconsolidated entities	40		40
Interest and dividend income	3		2

Adjusted OIBDA (Non-GAAP)	$	220	$	163

Document and Entity Information Document	Nov. 03, 2023
Entity Central Index Key	0001051512
Document Type	8-K
Document Period End Date	Nov. 03, 2023
Entity Registrant Name	TELEPHONE AND DATA SYSTEMS, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-14157
Entity Tax Identification Number	36-2669023
Entity Address, Address Line One	30 North LaSalle Street, Suite 4000
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60602
City Area Code	(312)
Local Phone Number	630-1900
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Amendment Flag	false
Common Shares
Title of 12(b) Security	Common Shares, $.01 par value
Trading Symbol	TDS
Security Exchange Name	NYSE
Depositary Shares each representing a 1/1000th interest in a share of 6.625% Series UU Cumulative Redeemable Perpetual Preferred Stock, $.01 par value
Title of 12(b) Security	Depositary Shares each representing a 1/1000th interest in a share of 6.625% Series UU Cumulative Redeemable Perpetual Preferred Stock, $.01 par value
Trading Symbol	TDSPrU
Security Exchange Name	NYSE
Depositary Shares each representing a 1/1000th interest in a share of 6.000% Series VV Cumulative Redeemable Perpetual Preferred Stock, $.01 par value
Title of 12(b) Security	Depositary Shares each representing a 1/1000th interest in a share of 6.000% Series VV Cumulative Redeemable Perpetual Preferred Stock, $.01 par value
Trading Symbol	TDSPrV
Security Exchange Name	NYSE