TELEPHONE & DATA SYSTEMS INC /DE/ Q1 FY2025 earnings call

• UScellular: Making progress on 2025 priorities, expecting mid-2025 closing of T-Mobile transaction subject to regulatory approval. Extended near-term bank maturities and amended revolvers for financial flexibility. Focusing on separation, integration, and future organization. UScellular expects to declare special dividend to shareholders post-T-Mobile transaction close, with TDS receiving pro rata share. - TDS Telecom: Confident in achieving 150,000 fiber addresses in 2025. Made improvements to sales and marketing programs, including third-party staffing and internal team changes. Identified $100 million in annual cost savings by year-end 2028. Divested two copper ILEC companies in Colorado, receiving $18 million in proceeds.

UScellular: First quarter results were impacted by prior year divestitures. Delivered year-over-year improvements in postpaid handset results, with third-party tower revenue up 6% due to new colocations and escalators on renewed leases. Achieved $79 million in free cash flow in Q1, an $18 million increase y-o-y. TDS Telecom: Extended fiber footprint over 30% in three years. In Q1, 14,000 new fiber service addresses were delivered, targeting 150,000 fiber addresses in 2025. Residential broadband had 2,800 net additions, with 8,300 from fiber markets. Fiber churn was 0.9%, lower than overall broadband churn. Average residential revenue per connection was up 2% y-o-y.

• UScellular: Not providing 2025 financial guidance due to expected mid-2025 close of T-Mobile transaction. - TDS Telecom: 2025 guidance unchanged; targeting 150,000 new fiber addresses, 80% of total addresses served by fiber, and 95% of footprint offering 1 gig or higher speeds.

• Uncertainty in timing of designated entity spectrum approvals, dependent on SEC regulatory approval. - Timing of debt exchange offer and its impact on transaction proceeds. - Regulatory approvals required for the T-Mobile transaction and related spectrum deals.

Q: Regarding the designated entity spectrum approval, is it on a similar timeline to the whole merger?

A: The timing is uncertain, dependent on SEC regulatory approval, but optimistic to close designated entities eventually.

Q: How should we think about the run rate of free cash flow like $79 million in the quarter?

A: Capital expenditures are down in 2025, positive for free cash flow, but not providing guidance on proceeds until transaction close.

Q: Thoughts on the debt exchange offer?

A: Debt is at attractive rates, lot of it may convert, but difficult to predict exactly where it will end up.

Q: On the Tower side, what are working well for additional colocations?

A: Movement from AT&T/Verizon looking to fill gaps, in-house sales/marketing moves, and continuing data demand growth. Also, working on structuring Tower business to stand on its own post-close.

Q: On TDS Telecom divestitures, how are you approaching them?

A: Evaluating portfolio to put resources in strategic opportunities, focusing on copper markets with no economic path to fiber that meet financial criteria.

Q: Why does USM need to remain a public entity?

A: Incremental cost to operate as public is minimal, focus is on efficient capital use and tax flow structures, with TDS evaluating long-term paths.