Exhibit 99.1
Contact: Mark A. Steinkrauss, Vice President, Corporate Relations
(312) 592-5384 mark.steinkrauss@teldta.com
Julie D. Mathews, Manager, Investor Relations
(312) 592-5341 julie.mathews@teldta.com
FOR RELEASE: IMMEDIATE
TDS REPORTS SECOND QUARTER 2006 RESULTS
CHICAGO – Oct. 10, 2006 – Telephone and Data Systems, Inc. [AMEX:TDS, TDS.S] reported operating revenues of $1,065.9 million for the second quarter of 2006, up 10 percent from $969.9 million, as restated, for the comparable period one year ago. Operating income was $105.9 million, a decrease of 1 percent compared to operating income of $107.3 million, as restated, for the second quarter of 2005. Net income available to common and diluted earnings per share were $172.4 million and $1.48, respectively. In the second quarter of 2005, net income available to common and diluted earnings per share were $97 million and $0.83, respectively, as restated.
Second Quarter Highlights
· The total number of U.S. Cellular customers increased 9 percent year over year to 5,704,000. The number of retail customers increased 9 percent to 5,099,000.
· U.S. Cellular’s average monthly revenue per unit increased 4.5 percent to $46.52.
· U.S. Cellular recorded a postpay churn rate of 1.5 percent.
· The number of TDS Telecom access line equivalents (ILEC and CLEC) increased 2 percent to nearly 1.2 million.
· The number of ILEC Digital Subscriber Lines (DSL) increased 55 percent, and the number of CLEC DSL lines grew 19 percent, year over year.
· The number of ILEC long distance customers increased 7 percent to 331,300, with long distance penetration reaching 53 percent at June 30, 2006.
· TDS Telecom received $101.7 million as a result of the liquidation of the Rural Telecom Bank. It recorded a gain on investment of $90.3 million.
· Interest and dividend income increased 23 percent to $146.5 million due to increases in the dividends received from Deutsche Telekom and Vodafone, in addition to higher average rates of interest earned on investments.
“During the second quarter, U.S. Cellular continued to deliver on its goal of profitable growth in existing markets,” said LeRoy T. Carlson, Jr., president and chief executive officer. “Its operating revenues grew 14 percent, while operating income grew 19 percent. Additionally, U.S. Cellular’s continued growth in data services resulted in data revenues of $46.9 million for the quarter and
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approximately $91.2 million for the first six months of 2006, up 52 percent and 53 percent, respectively, year over year.”
“U.S. Cellular does not plan to launch any significant new markets during the remainder of 2006 or 2007. Instead, the company will continue to drive deeper penetration and improved profitability in existing markets. This should allow U.S. Cellular to continue to grow cash flow from operations in excess of its capital expenditures and better position the company to fund Auction 66 spectrum purchases by Barat Wireless, L.P. in which U.S. Cellular is a limited partner.”
“TDS Telecom continues to make good progress toward being the preferred broadband provider in its markets. As a result of targeted marketing and aggressive service bundling, the combined ILEC and CLEC organization grew the number of DSL customers 41 percent over the past 12 months, to 123,900. As a result, in an industry characterized by negative physical access line growth, TDS Telecom continued to grow its number of equivalent access lines, up nearly 2 percent year over year,” he concluded.
“Later today we will file our second quarter Form 10-Q. We will then be current with our SEC filings and compliant with American Stock Exchange listing standards,” said Sandra L. Helton, executive vice president and chief financial officer. “It has taken a considerable amount of time to return to current filing status, but it was critical that we ensure the accuracy, completeness, and transparency of our financial reporting. We are pleased to have the long process behind us, so we can focus more fully on business operations.”
TDS updated its 2006 guidance as of Oct. 10, 2006 and it is as follows. There can be no assurance that final results will not differ materially from this guidance.
U.S. Cellular 2006 guidance as of Oct. 10, 2006 is as follows: |
| | |
Net Retail Customer Additions | | 330,000 – 360,000 |
Service Revenues | | Approx. $3.2 billion |
Operating Income | | $275 - 325 million |
Depreciation, Amortization & Accretion | | Approx. $575 million |
Capital Expenditures | | $580 - $610 million |
| | |
TDS Telecom ILEC operations 2006 guidance as of Oct. 10, 2006 is as follows: |
| | |
Operating Revenues | | $645 - $655 million |
Operating Income | | Approx. $145 million |
Depreciation and Amortization | | $135 million |
Capital Expenditures | | $105 – 120 million (1) |
| | |
TDS Telecom CLEC operations 2006 guidance as of Oct. 10, 2006 is as follows: |
| | (unchanged) |
Operating Revenues | | $230 - $240 million |
Operating Income | | Approx. $(5) million |
Depreciation and Amortization | | $25 million |
Capital Expenditures | | Approx. $20 million |
| | |
(1) Includes approximately $95 million to support ongoing operations and approximately $15 - -$20 million for strategic initiatives
Certain financial and statistical information will be posted to the web site, together with reconciliations to generally accepted accounting principles (GAAP) of certain non-GAAP disclosures. Investors may access this additional information on the Guidance and Reconciliations page of the TDS web site.
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About TDS
TDS is a diversified telecommunications corporation founded in 1969. Through its business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless, local telephone and broadband services. As of June 30, 2006, the company employed 11,500 people and served 6.9 million customers/units in 36 states.
About U.S. Cellular
As of June 30, 2006, U.S. Cellular Corporation, the nation's sixth-largest wireless service carrier, provided wireless service to 5.7 million customers in 26 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support, and a high-quality network.
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: The ability of U.S. Cellular to successfully manage and grow the operations of the Chicago MTA and newly launched markets; changes in the overall economy; changes in competition in the markets in which U.S. Cellular and TDS Telecom operate; changes due to industry consolidation; advances in telecommunications technology, including Voice over Internet Protocol; changes to access and pricing of unbundled network elements; changes in the state and federal telecommunications regulatory environment; changes in the value of assets; changes in the value of investments, including variable prepaid forward contracts; an adverse change in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; uncertainty of access to the capital markets; possible future restatements; pending and future litigation; acquisitions/ divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming rates and the mix of products and services offered in U.S. Cellular and TDS Telecom markets. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by TDS to furnish this press release to the SEC, which are incorporated by reference herein.
For more information about TDS or its business units, visit:
TDS: www.teldta.com | | TDS Telecom: www.tdstelecom.com |
USM: www.uscellular.com | | TDS Metrocom: www.tdsmetro.com |
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TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | |
U.S. Cellular | | | | | | | | | | | |
Consolidated Markets: | | | | | | | | | | | |
Total population (000s) (1) | | 55,543 | | 55,164 | | 45,244 | | 44,690 | | 44,690 | |
All customers - | | | | | | | | | | | |
Customer units | | 5,704,000 | | 5,633,000 | | 5,482,000 | | 5,303,000 | | 5,227,000 | |
Gross customer unit activations | | 347,000 | | 434,000 | | 419,000 | | 355,000 | | 340,000 | |
Net customer unit activations | | 48,000 | | 151,000 | | 125,000 | | 76,000 | | 94,000 | |
Market penetration (1) | | 10.27 | % | 10.21 | % | 12.12 | % | 11.87 | % | 11.70 | % |
Retail customers - | | | | | | | | | | | |
Customer units | | 5,099,000 | | 5,029,000 | | 4,927,000 | | 4,765,000 | | 4,688,000 | |
Gross customer unit activations | | 332,000 | | 380,000 | | 392,000 | | 346,000 | | 317,000 | |
Net customer unit activations | | 50,000 | | 122,000 | | 130,000 | | 77,000 | | 81,000 | |
| | | | | | | | | | | |
Cell sites in service | | 5,583 | | 5,438 | | 5,428 | | 5,149 | | 5,034 | |
Average monthly revenue per unit (2) | | $ | 46.52 | | $ | 46.22 | | $ | 45.94 | | $ | 46.19 | | $ | 44.52 | |
Retail service revenue per unit (2) | | $ | 40.82 | | $ | 40.75 | | $ | 40.19 | | $ | 40.25 | | $ | 39.40 | |
Inbound roaming revenue per unit (2) | | $ | 2.28 | | $ | 2.12 | | $ | 2.31 | | $ | 2.70 | | $ | 2.27 | |
Long-distance/other revenue per unit (2) | | $ | 3.42 | | $ | 3.35 | | $ | 3.44 | | $ | 3.24 | | $ | 2.85 | |
Minutes of use (MOU) (3) | | 719 | | 658 | | 648 | | 639 | | 627 | |
Postpay churn rate per month (4) | | 1.5 | % | 1.5 | % | 1.6 | % | 1.5 | % | 1.4 | % |
Marketing cost per gross customer unit addition (5) | | $ | 503 | | $ | 412 | | $ | 498 | | $ | 491 | | $ | 461 | |
Construction Expenditures (000s) | | $ | 153,400 | | $ | 119,800 | | $ | 201,700 | | $ | 128,300 | | $ | 143,800 | |
(1) Market penetration is calculated using 2005 Claritas population estimates for all periods of 2006 and 2004 Claritas estimates for all periods of 2005. “Total population” represents the total population of each of U.S. Cellular’s consolidated markets, regardless of whether the market has begun marketing operations. The 6/30/06 and 3/31/06 total population count includes the markets acquired in January 2006 by Carroll Wireless, L.P., a consolidated U.S. Cellular subsidiary, representing the licensed areas for which Carroll Wireless L.P. was the winning bidder in the Federal Communications Commission’s Auction 58 that concluded in February 2005. The 6/30/06, 3/31/06 and 12/31/05 total population counts include the the population of the 15 markets acquired from ALLTEL in December 2005, and exclude the population of the two markets transferred to ALLTEL in the same transaction. The population of markets in which U.S. Cellular has deferred the transfer of licenses from AT&T Wireless (now Cingular Wireless) are not included in the total population counts for any period.
(2) Per unit revenue measurements are derived from Service Revenues as reported in Financial Highlights for each respective quarter as follows:
Service Revenues per Financial Highlights | | $ | 791,272 | | $ | 770,082 | | $ | 738,682 | | $ | 729,504 | | $ | 691,746 | |
Components: | | | | | | | | | | | |
Retail service revenue during quarter | | $ | 694,279 | | $ | 678,970 | | $ | 646,178 | | $ | 635,610 | | $ | 612,159 | |
Inbound roaming revenue during quarter | | $ | 38,745 | | $ | 35,344 | | $ | 37,184 | | $ | 42,654 | | $ | 35,313 | |
Long-distance/other revenue during quarter | | $ | 58,248 | | $ | 55,768 | | $ | 55,320 | | $ | 51,240 | | $ | 44,274 | |
| | | | | | | | | | | |
Divided by average customers during quarter (000s) | | 5,670 | | 5,554 | | 5,360 | | 5,264 | | 5,179 | |
Divided by three months in each quarter | | 3 | | 3 | | 3 | | 3 | | 3 | |
| | | | | | | | | | | |
Average monthly revenue per unit | | $ | 46.52 | | $ | 46.22 | | $ | 45.94 | | $ | 46.19 | | $ | 44.52 | |
Retail service revenue per unit | | $ | 40.82 | | $ | 40.75 | | $ | 40.19 | | $ | 40.25 | | $ | 39.40 | |
Inbound roaming revenue per unit | | $ | 2.28 | | $ | 2.12 | | $ | 2.31 | | $ | 2.70 | | $ | 2.27 | |
Long-distance/other revenue per unit | | $ | 3.42 | | $ | 3.35 | | $ | 3.44 | | $ | 3.24 | | $ | 2.85 | |
(3) Average monthly local minutes of use per customer (without roaming).
(4) Postpay churn rate per month is calculated by dividing the average monthly postpay customer disconnects during the quarter by the average postpay customer base for the quarter.
(5) This measurement is not calculable using information from the financial statements as reported. The details of this calculation and a reconciliation to line items reported in Financial Highlights for each respective quarter are shown on U.S. Cellular’s web site, along with additional information related to U.S. Cellular’s second quarter results, at www.uscellular.com.
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TELEPHONE AND DATA SYSTEMS, INC.
SUMMARY OPERATING DATA
Quarter Ended | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | |
TDS Telecom | | | | | | | | | | | |
ILEC: | | | | | | | | | | | |
Access line equivalents (1) | | 747,500 | | 742,300 | | 735,300 | | 734,800 | | 734,200 | |
Access lines | | 628,600 | | 632,100 | | 635,500 | | 640,700 | | 645,800 | |
Dial-up Internet service accounts | | 86,800 | | 90,800 | | 90,700 | | 89,700 | | 94,500 | |
Digital Subscriber Lines (DSL) customers | | 84,000 | | 75,300 | | 65,500 | | 60,300 | | 54,200 | |
Long Distance customers | | 331,300 | | 327,100 | | 321,500 | | 316,100 | | 310,000 | |
Construction Expenditures (000s) | | $ | 29,700 | | $ | 17,100 | | $ | 37,500 | | $ | 25,100 | | $ | 18,800 | |
CLEC: | | | | | | | | | | | |
Access line equivalents (1) | | 450,900 | | 449,200 | | 448,600 | | 445,600 | | 442,900 | |
Dial-up Internet service accounts | | 11,800 | | 13,500 | | 14,200 | | 14,700 | | 16,000 | |
Percent of access lines on-switch | | 92.2 | % | 91.6 | % | 91.1 | % | 90.6 | % | 89.9 | % |
Digital Subscriber Lines (DSL) customers | | 39,900 | | 38,500 | | 36,400 | | 34,800 | | 33,500 | |
Construction Expenditures (000s) | | $ | 4,400 | | $ | 2,700 | | $ | 8,500 | | $ | 7,100 | | $ | 7,200 | |
(1) Access line equivalents are derived by converting high capacity data lines to the estimated capacity of one switched access line.
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