8-K: TDS Reports Q1 2025 Results: Revenue Declines Amid UScellular Sale

Telephone and Data Systems (TDS) reported a decrease in total operating revenues and a net loss for Q1 2025, as it progresses with the sale of UScellular's wireless operations to T-Mobile.

Summary

• Telephone and Data Systems, Inc. (TDS) reported its Q1 2025 financial results.
• Total operating revenues were $1,154 million, down from $1,262 million in the same period last year.
• Net loss attributable to TDS common shareholders was $(10) million, or $(0.09) per share, compared to a net income of $12 million, or $0.10 per share, in Q1 2024.
• UScellular's postpaid handset gross additions increased, and postpaid handset net losses improved.
• Third-party tower rental revenues increased by 6%.
• TDS Telecom revenues decreased by 3%, impacted by the 2024 divestitures of non-strategic assets.
• TDS Telecom added 14,000 marketable fiber service addresses and 2,800 residential broadband net additions, with 8,300 from fiber markets.
• The sale of UScellular's wireless operations to T-Mobile is expected to close in mid-2025.
• TDS Telecom's full-year 2025 estimated results include total operating revenues of $1,030-$1,070 million, adjusted OIBDA of $310-$350 million, adjusted EBITDA of $320-$360 million, and capital expenditures of $375-$425 million.
• TDS employed approximately 7,800 associates as of March 31, 2025.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While revenue and income are down, the company is making strategic moves to focus on fiber and towers, and the sale of UScellular is progressing.

Positives

• UScellular improved postpaid handset results with increased gross additions and improved net losses.
• Third-party tower rental revenues increased by 6%.
• TDS Telecom delivered 14,000 marketable fiber services addresses in Q1.
• TDS Telecom added 2,800 residential broadband net additions, with 8,300 from fiber markets.

Negatives

• Total operating revenues decreased to $1,154 million from $1,262 million year-over-year.
• Net loss attributable to TDS common shareholders was $(10) million, compared to a net income of $12 million in the same period last year.
• TDS Telecom revenues decreased by 3%, impacted by 2024 divestitures of non-strategic assets.

Risks

• The closing of the sale of UScellular's wireless operations to T-Mobile is subject to regulatory approval and customary closing conditions.
• The company faces intense competition in the telecommunications industry.
• Uncertainties exist in TDS' future cash flows and liquidity and access to the capital markets.
• The company's performance is subject to changes in the state and federal regulatory environment.
• Cyber-attacks or other breaches of network or information technology security pose a risk.

Future Outlook

TDS Telecom's full-year 2025 estimated results include total operating revenues of $1,030-$1,070 million, adjusted OIBDA of $310-$350 million, adjusted EBITDA of $320-$360 million, and capital expenditures of $375-$425 million. UScellular is not providing 2025 financial guidance due to the pending transaction with T-Mobile.

Management Comments

• As we work towards the expected mid-2025 closing of the sale of the wireless operations, the remaining businesses fiber and towers are making foundational changes that will support TDS transformation, said Walter Carlson, TDS President and CEO.
• In the first quarter, TDS and TDS Telecom results were impacted from the prior year divestitures of non-strategic assets, including the sale of One Neck and certain ILECs.
• TDS Telecom is continuing its fiber deployment adding 14,000 marketable fiber service addresses in the quarter while also investing in programs to streamline operations, enhance the customer experience and improve margins over time.
• And the tower business is continuing to grow the number of colocations and revenues, with third-party tower revenues increasing 6% in the quarter.

Industry Context

The telecommunications industry is undergoing significant changes with consolidation and a focus on fiber deployment and 5G network expansion. TDS's strategic moves, including the sale of UScellular's wireless operations and the focus on fiber and towers, reflect these trends. Competitors are also investing heavily in these areas.

Comparison to Industry Standards

• Comparing TDS Telecom's fiber deployment to companies like Frontier Communications and Lumen Technologies, TDS's 14,000 marketable fiber service addresses added in Q1 is a moderate pace.
• Verizon and AT&T are significantly larger players in the fiber and wireless space, making direct comparisons challenging.
• UScellular's tower business growth of 6% in third-party revenues is comparable to the growth rates seen by smaller independent tower companies.
• The sale of UScellular's wireless operations to T-Mobile mirrors the broader industry trend of consolidation, similar to the Sprint and T-Mobile merger.

Stakeholder Impact

• Shareholders may be impacted by the decrease in revenue and net income, but also by the potential special dividends from the UScellular sale.
• Employees may experience changes due to the sale of UScellular and the restructuring of TDS Telecom.
• Customers of TDS Telecom may benefit from the continued investment in fiber broadband.

Next Steps

• The company will continue to work towards closing the sale of UScellular's wireless operations to T-Mobile in mid-2025.
• TDS Telecom will continue its fiber deployment and invest in programs to streamline operations and enhance customer experience.
• The tower business will continue to grow the number of colocations and revenues.

Key Dates

Keywords

TDS Telecom, UScellular, Fiber Broadband, Wireless Operations, Financial Results, Operating Revenues, Net Income, EBITDA, Divestitures, Towers