Telephone and Data Systems Inc (TDS) Q3 2024 Earnings Call Highlights: Strategic Moves and ...

GuruFocus News
4 min read

In This Article:

  • Adjusted EBITDA: UScellular increased its profitability outlook for adjusted EBITDA.

  • Free Cash Flow: Sale of OneNeck IT solutions is accretive to free cash flow.

  • Debt to EBITDA Ratios: Improved sequentially each quarter throughout 2024.

  • License Sale Proceeds: Expected proceeds of over $1 billion from spectrum sales.

  • Net Book Value of Licenses: Approximately $590 million for the licenses sold.

  • Cash Taxes on Spectrum Transactions: Estimated $200 million to $250 million for UScellular and $150 million to $200 million for TDS.

  • Impairment Loss: $136 million loss on impairment of licenses recorded in Q3 2024.

  • Service Revenues: Declined 2% year over year.

  • System Operations Expense: Decreased 2% year over year.

  • SG&A Expenses: Decreased 3%, excluding strategic alternative expenses, decreased 5%.

  • Adjusted Operating Income Before Depreciation and Amortization: Improved by 1%.

  • Adjusted EBITDA: Improved by 3%.

  • Free Cash Flow (Year-to-Date): $331 million, a $94 million increase over the prior year.

  • Debt Repayment: $163 million repaid in the first nine months of 2024, plus an additional $40 million in October.

  • Capital Expenditures Guidance: Lowered to $550 million to $600 million.

  • Residential Broadband Connections: Grew 4% year over year.

  • Operating Revenue (TDS Telecom): Increased 2% in the quarter.

  • Adjusted EBITDA (TDS Telecom): Increased 21% in the quarter.

  • Capital Expenditures (TDS Telecom): $78 million in the quarter, down 55% from last year.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Telephone and Data Systems Inc (NYSE:TDS) reported a solid cash and liquidity position, with improved debt to EBITDA ratios throughout 2024.

  • The company successfully closed the sale of OneNeck IT Solutions, which is accretive to free cash flow.

  • UScellular increased its profitability outlook for adjusted EBITDA and adjusted operating income before depreciation and amortization.

  • TDS Telecom achieved a milestone with 50% of its service addresses now served by fiber, contributing to a 2% increase in total operating revenue.

  • The company entered into agreements to sell certain spectrum licenses, expected to generate over $1 billion in proceeds, highlighting the significant value of these assets.

Negative Points

  • Service revenues declined by 2% due to a decrease in the average subscriber base.

  • UScellular recorded a loss on impairment of licenses amounting to $136 million, primarily due to challenges related to operationalizing millimeter wave spectrum.

  • The pace of net additions in TDS Telecom's expansion markets has been slower than expected, impacting overall growth.

  • The wireless industry is experiencing a slowdown in capital expenditures, affecting new tenant and amendment activity in the tower business.

  • TDS Telecom faced net broadband losses in its cable markets due to increased competition from fiber overbuilders and other providers.

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