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TDS Reports Third Quarter 2009 Results

11/05/2009
Completes stock repurchase program early

CHICAGO, Nov. 5 /PRNewswire-FirstCall/ --

Note: Comparisons are year over year unless otherwise noted.

3Q 2009 Highlights

Enterprise/TDS Corporate

  • Operating revenues were $1,258.7 million.
  • Repurchased 1,149,046 TDS special common shares and 1,484,421 common shares for a total of $73.9 million.

Wireless/U.S. Cellular®

  • Postpay net additions were 8,000; prepaid net losses were 14,000.
  • Service revenues of $984.9 million, down 3 percent due primarily to a $24.7 million decrease in inbound roaming revenues.
  • Retail service ARPU (average revenue per unit) increased from $46.97 to $47.02.
  • 34 percent increase in data revenues, to $174.3 million, representing 18 percent of service revenues. Data revenue per customer increased from $7.01 to $9.46.
  • Postpay churn was 1.7 percent; postpay customers comprised 96 percent of retail customers.
  • 7 percent increase in cell sites in service, to 7,161.

Wireline/TDS Telecom®

  • 18 percent increase in ILEC high-speed data customers, to 202,100.
  • 14 percent increase in ILEC data revenues, to $26.2 million, representing 17 percent of ILEC revenues.
  • ILEC equivalent access lines remained stable at 772,700, due in part to acquisitions; ILEC physical access lines decreased 5 percent to 539,400.

As previously announced, TDS(TM) will hold a teleconference Nov. 5, 2009 at 10:00 a.m. Chicago time. Interested parties may listen to the call live by accessing the Conference Calls page of www.teldta.com.

Telephone and Data Systems, Inc. (NYSE: TDS, TDS.S) reported operating revenues of $1,258.7 million for the third quarter of 2009, a decrease of 4 percent from $1,304.6 million in the comparable period one year ago. Net income attributable to TDS and related diluted earnings per share were $35.6 million and $0.33, respectively, for the third quarter of 2009, compared to $101.2 million and $0.87, respectively, in the comparable period one year ago. In the third quarter of 2008, TDS recorded a $31.7 million pre-tax gain on disposition of investments related to Rural Cellular Corporation.

"TDS made progress on several strategic fronts this quarter," said LeRoy T. Carlson, Jr. , TDS president and CEO. "Both U.S. Cellular and TDS Telecom continued to achieve strong growth in data revenues. While total revenues were down slightly, aggressive marketing and promotional programs at U.S. Cellular were well-received by customers, and TDS Telecom continued to drive sales of bundled services. Backed by TDS' strong financial foundation, both businesses are investing in new technologies and network infrastructure to support future growth and to promote customer loyalty.

"U.S. Cellular accelerated the expansion of its 3G network, now reaching approximately 75 percent of its customer base," continued Carlson. "This network enhancement will further promote the already robust growth in smartphone sales, messaging and data applications. The company is also making headway on the initial stages of long-term initiatives that are designed to spur customer growth and enable more targeted marketing and sales programs, while increasing efficiency. These initiatives will be a major focus for U.S. Cellular in 2010 and beyond.

"TDS Telecom continues to build its portfolio of broadband services and products for residential and commercial customers," added Carlson. "The company is driving strong sales of triple play bundles of voice, broadband and DISH Network(TM) services, and enhancing its hosted solutions for commercial customers. Broadband penetration of TDS Telecom's ILEC customer base is currently 37 percent, which leaves substantial room for future growth.

"And, as part of our ongoing efforts to increase shareholder value, TDS recently completed its second $250 million stock repurchase program, well ahead of schedule. Between June 2007 and October 2009, TDS repurchased more than 14 million shares, representing approximately 12 percent of shares outstanding."

Guidance

Guidance for the year ending Dec. 31, 2009 is as follows. There can be no assurance that final results will not differ materially from this guidance.

    U.S. Cellular 2009 guidance as of Nov. 5, 2009 remains unchanged from
     Aug. 6, 2009 and is as follows:
      Service revenue                                    $3,900-$3,950 million
      Operating income(1)                                    $300-$375 million
      Depreciation, amortization and accretion(1)         Approx. $600 million
      Capital expenditures                                Approx. $575 million

    TDS Telecom (ILEC and CLEC) 2009 guidance as of Nov. 5, 2009 is as
     follows:
      Operating revenues                                     $775-$800 million
      Operating income (1) (2)                                 $80-$95 million
      Depreciation, amortization and accretion (1) (2)    Approx. $170 million
      Capital expenditures                                Approx. $125 million



    (1)  Includes losses on disposals of assets.
    (2)  Revised from guidance issued on Aug. 6, 2009.

This guidance represents the views of management as of Nov. 5, 2009 and should not be assumed to be accurate as of any other date. TDS undertakes no legal duty to update such information, whether as a result of new information, future events or otherwise.

Stock repurchase summary

The following represents repurchases of both TDS common shares and TDS special common shares.

    Repurchase Period               # Shares         Cost (in millions)
    -----------------               --------         ------------------
    2009 (fourth quarter)            441,679               $13.4

    2009 (third quarter)           2,633,467               $73.9

    2009 (second quarter)          2,684,267               $73.9

    2009 (first quarter)             504,026               $12.1
    2008 (full year)               5,861,822              $199.6
    2007 (full year)               2,076,979              $126.7
                                   ---------              ------
    Total 2009, 2008 and 2007     14,202,240              $499.6
                                  ==========              ======

Conference call information

TDS will hold a conference call on Nov. 5, 2009 at 10:00 a.m. Chicago time.

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of www.teldta.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of www.teldta.com.

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 500® company, provides wireless, local and long-distance telephone, and broadband services to approximately 7.3 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS employed 12,300 people as of Sept. 30, 2009.

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

About U.S. Cellular®

United States Cellular Corporation, the nation's fifth-largest, full-service wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to approximately 6.1 million customers in 26 states. The Chicago-based company employed 8,700 full-time equivalent associates as of Sept. 30, 2009. For more information about U.S. Cellular, visit www.uscellular.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: The ability of the company to successfully grow its markets; the current credit crisis affecting financial markets, and its effects on the overall economy; competition; the access to and pricing of unbundled network elements; the ability to obtain or maintain roaming arrangements with other carriers; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. 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 and its subsidiaries, visit:

TDS: www.teldta.com

USM: www.uscellular.com

TDS Telecom: www.tdstelecom.com

                            UNITED STATES CELLULAR CORPORATION
                                  SUMMARY OPERATING DATA


    Quarter Ended      9/30/2009  6/30/2009  3/31/2009 12/31/2008  9/30/2008
                       ---------  ---------  --------- ----------  ---------
    Total population
      Consolidated
       markets(1)     85,118,000 83,726,000 83,726,000 83,014,000 82,875,000
      Consolidated
       operating
       markets(1)     46,306,000 46,306,000 46,306,000 46,009,000 45,493,000
    All customers
      Total at end
       of period       6,131,000  6,155,000  6,243,000  6,196,000  6,176,000
      Gross additions    386,000    317,000    404,000    395,000    367,000
      Net additions
       (losses)          (24,000)   (88,000)    47,000     20,000    (18,000)
    Market penetration
     at end of period
      Consolidated
       markets(2)            7.2%       7.4%       7.5%       7.5%       7.5%
      Consolidated
       operating
       markets(2)           13.2%      13.3%      13.5%      13.5%      13.6%
    Retail customers
      Total at end of
       period          5,705,000  5,711,000  5,770,000  5,707,000  5,674,000
      Gross additions    351,000    286,000    366,000    352,000    325,000
      Net postpay
       additions
       (losses)            8,000    (32,000)    60,000     41,000     12,000
      Net prepay
       additions
       (losses)          (14,000)   (27,000)     3,000     (8,000)   (15,000)

    Cell sites in
     service               7,161      7,043      6,942      6,877      6,716
    Average monthly
     revenue per
     unit(3)              $53.49     $52.41     $52.54     $52.71     $54.59
      Retail service
       revenue per
       unit(3) (5)        $47.02     $46.85     $46.78     $46.43     $46.97
      Inbound roaming
       revenue per
       unit(3) (5)         $3.73      $3.35      $3.21      $4.25      $5.03
      Other revenue
       per unit(3) (5)     $2.74      $2.21      $2.55      $2.03      $2.59
    Postpay churn
     rate(4)                 1.7%       1.7%       1.5%       1.6%       1.6%
    Construction
     expenditures
     (000s)             $128,900    $91,200   $137,700   $190,000   $146,100



    (1) Used only to calculate market penetration of consolidated markets and
        consolidated operating markets, respectively, which is calculated by
        dividing customers by the total market population (without duplication
        of population in overlapping markets).
    (2) Calculated by dividing the number of wireless customers at the end of
        the period by the total population of consolidated markets and
        consolidated operating markets, respectively, as estimated by
        Claritas.
    (3) Derived from Service revenues as reported in Financial Highlights for
        each respective quarter as follows



    Service revenue
     (000s)             $984,923   $974,755   $981,874   $976,952 $1,013,928
    Components
      Retail service
       revenue (000s)    865,867    871,209    874,098    860,503    872,397
      Inbound roaming
       revenue (000s)     68,767     62,223     60,057     78,768     93,472
      Other revenue
       (000s)             50,289     41,323     47,719     37,681     48,059

    Divided by average
     customers (000s)      6,138      6,199      6,229      6,178      6,191
    Divided by three
     months in each
     quarter                   3          3          3          3          3
                             ---        ---        ---        ---        ---

    Average monthly
     revenue per unit     $53.49     $52.41     $52.54     $52.71     $54.59
    Retail service
     revenue per unit     $47.02     $46.85     $46.78     $46.43     $46.97
    Inbound roaming
     revenue per unit      $3.73      $3.35      $3.21      $4.25      $5.03
    Other revenue per
     unit                  $2.74      $2.21      $2.55      $2.03      $2.59



    (4)  Calculated by dividing the total postpay customer disconnects during
         the quarter by the average postpay customer base for the quarter.
    (5)  Long-distance revenue was reclassified in the fourth quarter of 2008
         from Other revenue to Retail service revenue and Inbound roaming
         revenue.  Previous quarters have been adjusted to reflect this
         change.



                             TELEPHONE AND DATA SYSTEMS, INC.
                                 SUMMARY OPERATING DATA

    Quarter Ended      9/30/2009  6/30/2009  3/31/2009 12/31/2008  9/30/2008
                       ---------  ---------  --------- ----------  ---------
    TDS Telecom
    ILEC
      Equivalent access
       lines(1)          772,700    775,800    777,100    776,700    773,700
      Physical access
       lines(2)          539,400    548,000    556,800    566,200    568,900
      High-speed data
       customers(3)      202,100    197,100    188,100    178,300    171,300
      Managed IP
       stations(4)         1,500      1,200      1,000        600        500
      Long-distance
       customers         356,500    354,100    348,900    347,000    346,600
      Construction
       expenditures
       (000s)            $23,800    $26,200    $21,400    $50,200    $33,300
    CLEC
      Equivalent access
       lines (1)         364,100    372,300    381,000    393,000    402,600
      High-speed data
       customers(3)       37,600     38,700     39,700     40,800     41,900
      Managed IP
       stations(4)         9,600      6,400      4,100      2,100        600
      Construction
       expenditures
       (000s)             $4,700     $5,700     $5,000     $7,200     $4,500



    (1)  Sum of physical access lines and high-capacity data lines, adjusted
         to estimate the equivalent number of physical access lines in terms
         of capacity, plus the number of managed IP stations.
    (2)  Individual circuits connecting customers to a telephone company's
         central office facilities.
    (3)  The number of customers provided high-capacity data circuits via
         various technologies, including digital subscriber line ("DSL"),
         managed Internet Protocol ("Managed IP") and dedicated Internet
         circuit technologies.
    (4)  The number of telephone handsets providing communications using
         packet networking technology.
                         Telephone And Data Systems, Inc.
                  Consolidated Statement of Operations Highlights
                         Three Months Ended September 30,
      (Unaudited, dollars and shares in thousands, except per share amounts)

                                                           Increase/(Decrease)
                                      2009        2008      Amount     Percent
                                      ----        ----      ------     -------
    Operating
     revenues
      U.S. Cellular                $1,058,300  $1,091,875   $(33,575)     (3)%
      TDS Telecom                     196,542     205,992     (9,450)     (5)%
      All Other(1)                      3,900       6,731     (2,831)    (42)%
                                        -----       -----     ------
                                    1,258,742   1,304,598    (45,856)     (4)%
                                    ---------   ---------   --------
    Operating expenses
      U.S. Cellular
        Expenses excluding
         depreciation, amortization
         and accretion                849,651     819,600     30,051       4%
        Depreciation, amortization
         and accretion                147,586     145,434      2,152       1%
        Loss on asset disposals, net    3,371       6,884     (3,513)    (51)%
                                        -----       -----     ------
                                    1,000,608     971,918     28,690       3%
                                    ---------     -------     ------
      TDS Telecom
        Expenses excluding
         depreciation, amortization
         and accretion                131,439     130,944        495       -
        Depreciation, amortization
         and accretion                 41,746      39,036      2,710       7%
        Loss on asset disposals, net    1,135         151        984     N/M
                                        -----         ---        ---
                                      174,320     170,131      4,189       2%
                                      -------     -------      -----
      All Other(1)
        Expenses excluding
         depreciation and
         amortization                   3,185       6,840     (3,655)    (53)%
        Depreciation and amortization   2,915       3,505       (590)    (17)%
        Loss on asset disposals, net       51          65        (14)    (22)%
                                          ---         ---        ---
                                        6,151      10,410     (4,259)    (41)%
                                        -----      ------     ------

          Total operating expenses  1,181,079   1,152,459     28,620       2%
                                    ---------   ---------     ------
    Operating income (loss)
      U.S. Cellular                    57,692     119,957    (62,265)    (52)%
      TDS Telecom                      22,222      35,861    (13,639)    (38)%
      All Other (1)                    (2,251)     (3,679)     1,428      39%
                                       ------      ------      -----
                                       77,663     152,139    (74,476)    (49)%
                                       ------     -------   --------
    Investment and other income
     (expense)
      Equity in earnings of
       unconsolidated entities         23,334      22,566        768       3%
      Interest and dividend income      3,461       8,617     (5,156)    (60)%
      Gain on investments and
       financial instruments                -      31,997    (31,997)    N/M
      Interest expense                (30,430)    (31,684)     1,254       4%
      Other, net                        1,030         383        647     N/M
                                        -----         ---        ---
          Total investment and other
           income (expense)            (2,605)     31,879    (34,484)    N/M
                                       ------      ------   --------
    Income before income taxes         75,058     184,018   (108,960)    (59)%
      Income tax expense               27,793      61,024    (33,231)    (54)%
                                       ------      ------   --------
    Net income                         47,265     122,994    (75,729)    (62)%
      Less: Net income attributable
       to noncontrolling interests,
       net of tax                     (11,620)    (21,771)    10,151      47%
                                      -------     -------     ------
    Net income attributable to TDS     35,645     101,223    (65,578)    (65)%
      Preferred dividend requirement      (13)        (13)         -       -
                                          ---         ---        ---
    Net income available to common    $35,632    $101,210   $(65,578)    (65)%
                                      =======    ========   ========

    Basic weighted average shares
     outstanding                      108,289     115,700     (7,411)     (6)%
    Basic earnings per share
     attributable to TDS
     shareholders                       $0.33       $0.87     $(0.54)    (62)%

    Diluted weighted average shares
     outstanding                      108,565     116,193     (7,628)     (7)%
    Diluted earnings per share
     attributable to TDS
     shareholders                       $0.33       $0.87     $(0.54)    (62)%



    (1) Consists of Suttle-Straus printing and distribution operations,
        corporate operations and intercompany eliminations.

        N/M - Percentage change not meaningful
                         Telephone and Data Systems, Inc.
                  Consolidated Statement of Operations Highlights
                          Nine Months Ended September 30,
      (Unaudited, dollars and shares in thousands, except per share amounts)

                                                          Increase/(Decrease)
                                      2009        2008     Amount     Percent
                                      ----        ----     ------     -------
    Operating revenues
      U.S. Cellular               $3,153,614  $3,190,323  $(36,709)      (1)%
      TDS Telecom                    591,804     619,492   (27,688)      (4)%
      All Other(1)                    12,447      18,235    (5,788)     (32)%
                                      ------      ------    ------
                                   3,757,865   3,828,050   (70,185)      (2)%
                                   ---------   ---------  --------
    Operating expenses
      U.S. Cellular
        Expenses excluding
         depreciation,
         amortization
         and accretion             2,408,734   2,383,500    25,234        1%
        Depreciation,
         amortization and
         accretion                   423,851     433,222    (9,371)      (2)%
        Loss on asset disposals, net   7,648      16,776    (9,128)     (54)%
                                       -----      ------    ------
                                   2,840,233   2,833,498     6,735        -
                                   ---------   ---------     -----
      TDS Telecom
        Expenses excluding
         depreciation,
         amortization
         and accretion               398,002     392,661     5,341        1%
        Depreciation,
         amortization and
         accretion                   125,272     117,615     7,657        7%
        Loss on asset disposals, net   1,752         349     1,403      N/M
                                       -----         ---     -----
                                     525,026     510,625    14,401        3%
                                     -------     -------    ------
      All Other(1)
        Expenses excluding
         depreciation and
         amortization                 14,826      17,049    (2,223)     (13)%
        Depreciation and amortization  9,239      11,322    (2,083)     (18)%
        Loss on asset disposals, net      69          65         4        6%
                                         ---         ---       ---
                                      24,134      28,436    (4,302)     (15)%
                                      ------      ------    ------
          Total operating expenses 3,389,393   3,372,559    16,834        -
                                   ---------   ---------    ------
    Operating income (loss)
      U.S. Cellular                  313,381     356,825   (43,444)     (12)%
      TDS Telecom                     66,778     108,867   (42,089)     (39)%
      All Other (1)                  (11,687)    (10,201)   (1,486)     (15)%
                                     -------     -------    ------
                                     368,472     455,491   (87,019)     (19)%
                                     -------     -------  --------
    Investment and other income
     (expense)
      Equity in earnings of
       unconsolidated entities        67,034      66,945        89        -
      Interest and dividend income     8,435      35,818   (27,383)     (76)%
      Interest expense               (92,780)   (108,634)   15,854       15%
      Loss on investments and
       financial instruments               -      31,595   (31,595)     N/M
      Other, net                       1,504       2,086      (582)     (28)%
                                       -----       -----      ----
          Total investment and
           other income (expense)    (15,807)     27,810   (43,617)     N/M
                                     -------      ------  --------
    Income before income taxes       352,665     483,301  (130,636)     (27)%
      Income tax expense             121,467     163,536   (42,069)     (26)%
                                     -------     -------  --------
    Net income                       231,198     319,765   (88,567)     (28)%
      Less: Net income
       attributable to
       noncontrolling
       interests, net of tax         (53,814)    (57,298)    3,484        6%
                                     -------     -------     -----
    Net income attributable to TDS   177,384     262,467   (85,083)     (32)%
      Preferred dividend
       requirement                       (38)        (39)        1        3%
                                         ---         ---       ---
    Net income available to common  $177,346    $262,428  $(85,082)     (32)%
                                    ========    ========  ========
    Basic weighted average shares
     outstanding                     110,408     116,510    (6,102)      (5)%
    Basic earnings per share
     attributable to TDS
     shareholders                      $1.61       $2.25    $(0.64)     (28)%
    Diluted weighted average
     shares outstanding              110,633     117,065    (6,432)      (5)%
    Diluted earnings per share
     attributable to TDS
     shareholders                      $1.60       $2.24    $(0.64)     (29)%



    (1) Consists of Suttle-Straus printing and distribution operations,
        corporate operations and intercompany eliminations.

        N/M - Percentage change not meaningful
                        Telephone and Data Systems, Inc.
                      Consolidated Balance Sheet Highlights
                        (Unaudited, dollars in thousands)

                                      ASSETS

                                                 September 30,  December 31,
                                                      2009         2008
                                                      ----         ----
    Current assets
      Cash and cash equivalents                     $778,159     $777,309
      Short-term investments                         136,400       27,705
      Accounts receivable from customers and other   541,211      516,849
      Inventory                                      126,007      122,377
      Other current assets                           196,247      184,696
                                                     -------      -------
                                                   1,778,024    1,628,936
                                                   ---------    ---------

    Investments
      Licenses                                     1,453,526    1,441,440
      Goodwill                                       707,840      707,079
      Customer lists                                  25,577       34,032
      Investments in unconsolidated entities         219,760      205,768
      Other investments                                9,996       10,623
                                                       -----       ------
                                                   2,416,699    2,398,942
                                                   ---------    ---------

    Property, plant and equipment, net
      U.S. Cellular                                2,561,766    2,620,376
      TDS Telecom                                    880,838      918,454
      Other                                           30,265       30,094
                                                      ------       ------
                                                   3,472,869    3,568,924
                                                   ---------    ---------

    Other assets and deferred charges                 65,583       55,614
                                                      ------       ------

    Total assets                                  $7,733,175   $7,652,416
                                                  ==========   ==========
                          Telephone and Data Systems, Inc.
                       Consolidated Balance Sheet Highlights
                         (Unaudited, dollars in thousands)

                       LIABILITIES AND STOCKHOLDERS' EQUITY

                                               September 30,    December 31,
                                                   2009             2008
                                                   ----             ----
    Current liabilities
      Current portion of long-term debt           $15,126         $15,337
      Accounts payable                            297,249         319,575
      Customer deposits and deferred revenues     170,493         174,101
      Accrued interest                             24,129          14,236
      Accrued taxes                                66,661          25,192
      Accrued compensation                         84,125          90,512
      Other current liabilities                   116,041         134,334
                                                  -------         -------
                                                  773,824         773,287

    Deferred liabilities and credits
      Net deferred income tax liability           499,002         471,623
      Other deferred liabilities and credits      384,032         368,045
                                                  -------         -------
                                                  883,034         839,668

    Long-term debt                              1,620,979       1,621,422

    Noncontrolling interests with mandatory
     redemption features                              708             589

    Equity
      TDS stockholders' equity
        Common Shares, par value $.01                 571             571
        Special Common Shares, par value $.01         634             634
        Series A Common Shares, par value $.01         65              65
        Capital in excess of par value          2,084,481       2,066,597
        Treasury shares, at cost:
          Common Shares                          (206,244)       (163,017)
          Special Common Shares                  (462,788)       (350,091)
        Accumulated other comprehensive loss      (12,951)        (16,812)
        Retained earnings                       2,370,595       2,229,540
                                                ---------       ---------
          Total TDS stockholders' equity        3,774,363       3,767,487

      Preferred shares                                845             852
      Noncontrolling interests                    679,422         649,111
                                                  -------         -------

          Total equity                          4,454,630       4,417,450

    Total liabilities and equity               $7,733,175      $7,652,416
                                               ==========      ==========
                         Telephone and Data System, Inc.
                            Balance Sheet Highlights
                      Three Months Ended September 30, 2009
                        (Unaudited, dollars in thousands)

                                               TDS                     TDS
                          U.S.       TDS    Corporate  Intercompany  Consoli-
                        Cellular   Telecom   & Other   Eliminations   dated
                        --------   -------   -------   ------------   -----
    Cash and cash
     equivalents         $404,894   $28,336   $344,929         $-    $778,159
    Affiliated cash
     investments                -   523,179          -   (523,179)          -
    Short-term
     investments              180   136,220          -          -     136,400
    Notes receivable-
     affiliates                 -         -    253,582   (253,582)          -
                              ---       ---    -------   --------         ---
                         $405,074  $687,735   $598,511  $(776,761)   $914,559
                         ========  ========   ========  =========    ========
    Licenses, goodwill
     and customer
     lists             $1,945,511  $435,836  $(194,404)        $-  $2,186,943
    Investment in
     unconsolidated
     entities             177,497     3,656     44,249     (5,642)    219,760
    Other
     investments            4,247     2,307      3,442          -       9,996
                            -----     -----      -----        ---       -----
                       $2,127,255  $441,799  $(146,713)   $(5,642) $2,416,699
                       ==========  ========  =========    =======  ==========

    Property, plant
     and equipment,
     net               $2,561,766  $880,838    $30,265         $-  $3,472,869
                       ==========  ========    =======        ===  ==========
    Notes payable-
     affiliates                $-  $253,582   $523,179  $(776,761)         $-
                              ===  ========   ========  =========         ===
    Long-term debt
      Current portion     $10,088      $428     $4,610         $-     $15,126
      Non-current
       portion            997,552     2,347    621,080          -   1,620,979
                          -------     -----    -------        ---   ---------
        Total          $1,007,640    $2,775   $625,690         $-  $1,636,105
                       ==========    ======   ========        ===  ==========
    Preferred shares           $-        $-       $845         $-        $845
                              ===       ===       ====        ===        ====
    Construction
     expenditures
      Quarter ended
       9/30/09           $128,900   $28,500     $2,400         $-    $159,800
      Nine months ended
       9/30/09           $357,800   $86,800     $6,000         $-    $450,600
                              TDS Telecom Highlights
                          Three Months Ended September 30,
                         (Unaudited, dollars in thousands)

                                                       Increase (Decrease)
                                                       ------------------
                                   2009       2008      Amount    Percent
                                   ----       ----      ------    -------
    Local Telephone Operations
      Operating revenues
        Voice                    $46,462    $51,222    $(4,760)      (9)%
        Data                      26,166     22,964      3,202       14%
        Network access            66,963     69,199     (2,236)      (3)%
        Miscellaneous             10,068      9,604        464        5%
                                  ------      -----        ---
                                 149,659    152,989     (3,330)      (2)%
                                 -------    -------     ------
      Operating expenses
        Cost of services
         and products             50,352     47,337      3,015        6%
        Selling, general and
         administrative expenses  41,397     40,311      1,086        3%
        Depreciation,
         amortization and
         accretion                35,652     33,469      2,183        7%
        Loss on asset disposals,
         net                       1,072         78        994      N/M
                                   -----         --        ---
                                 128,473    121,195      7,278        6%
                                 -------    -------      -----

      Operating income           $21,186    $31,794   $(10,608)     (33)%
                                 -------    -------  ---------

    Competitive Local Exchange
     Carrier Operations
        Revenues                 $49,153    $54,690    $(5,537)     (10)%
                                 -------    -------    -------

        Expenses excluding
         depreciation,
         amortization and
         accretion                41,960     44,983     (3,023)      (7)%
        Depreciation,
         amortization and
         accretion                 6,094      5,567        527        9%
        Loss on asset disposals,
         net                          63         73        (10)     (14)%
                                     ---        ---        ---
                                  48,117     50,623     (2,506)      (5)%
                                  ------     ------     ------
      Operating income            $1,036     $4,067    $(3,031)     (75)%
                                  ------     ------    -------

    Intercompany revenues        $(2,270)   $(1,687)     $(583)     (35)%
    Intercompany expenses         (2,270)    (1,687)      (583)     (35)%
                                  ------     ------       ----
                                       -          -          -
                                     ---        ---        ---

    Total TDS Telecom operating
     income                      $22,222    $35,861   $(13,639)     (38)%
                                 =======    =======  =========



    N/M - Percentage change not meaningful.
                              TDS Telecom Highlights
                          Nine Months Ended September 30,
                         (Unaudited, dollars in thousands)

                                                           Increase (Decrease)
                                                           -------------------
                                         2009      2008      Amount   Percent
                                         ----      ----      ------   -------
    Local Telephone Operations
      Operating revenues
        Voice                          $141,919  $153,723   $(11,804)   (8)%
        Data                             76,717    65,888     10,829    16%
        Network access                  201,912   210,008     (8,096)   (4)%
        Miscellaneous                    27,506    28,384       (878)   (3)%
                                         ------    ------       ----
                                        448,054   458,003     (9,949)   (2)%
                                        -------   -------     ------
      Operating expenses
        Cost of services and products   146,442   139,044      7,398     5%
        Selling, general and
         administrative expenses        128,254   124,208      4,046     3%
        Depreciation, amortization
         and accretion                  107,040   100,595      6,445     6%
        Loss on asset disposals, net      1,493        32      1,461   N/M
                                          -----        --      -----
                                        383,229   363,879     19,350     5%
                                        -------   -------     ------
      Operating income                  $64,825   $94,124   $(29,299)  (31)%
                                        -------   -------   --------

    Competitive Local Exchange Carrier
     Operations
        Revenues                       $150,435  $166,707   $(16,272)  (10)%
                                       --------  --------   --------

        Expenses excluding
         depreciation, amortization
         and accretion                  129,991   134,627     (4,636)   (3)%
        Depreciation, amortization
         and accretion                   18,232    17,020      1,212     7%
        Loss on asset disposals, net        259       317        (58)  (18)%
                                            ---       ---        ---
                                        148,482   151,964     (3,482)   (2)%
                                        -------   -------     ------

      Operating income                   $1,953   $14,743   $(12,790)  (87)%
                                         ------   -------  ---------

    Intercompany revenues               $(6,685)  $(5,218)   $(1,467)  (28)%
    Intercompany expenses                (6,685)   (5,218)    (1,467)  (28)%
                                         ------    ------     ------
                                              -         -          -
                                            ---       ---        ---

    Total TDS Telecom operating income  $66,778  $108,867   $(42,089)  (39)%
                                        =======  ========   ========



    N/M - Percentage change not meaningful.
                         Telephone and Data Systems, Inc.

                       Consolidated Statement of Cash Flows
                                   (Unaudited)

                                                    Nine Months Ended
                                                       September 30,
                                                     ----------------
                                                     2009        2008
                                                     ----        ----
                                                  (Dollars in thousands)
    Cash flows from operating activities
      Net income                                   $231,198    $319,765
      Add (deduct) adjustments to reconcile
       net income to net cash flows from
       operating activities
        Depreciation, amortization and accretion    558,362     562,159
        Bad debts expense                            78,941      59,452
        Stock-based compensation expense             24,523      15,961
        Deferred income taxes, net                   25,935    (298,200)
        (Gain)/loss on investments and financial
         instruments, net                                 -     (31,595)
        Equity in earnings of unconsolidated
         entities                                   (67,034)    (66,945)
        Distributions from unconsolidated entities   51,668      51,224
        Loss on asset disposals, net                  9,469      17,190
        Noncash interest expense                      2,160       8,573
        Excess tax benefit from stock awards             (5)     (1,832)
        Other operating activities                      (41)     (1,955)
      Changes in assets and liabilities from
       operations
        Accounts receivable                        (102,137)    (82,857)
        Inventory                                    (3,595)    (12,929)
        Accounts payable                            (29,401)      7,140
        Customer deposits and deferred revenues      (3,609)      9,827
        Accrued taxes                                82,267     109,269
        Accrued interest                              9,893       5,528
        Other assets and liabilities                (68,643)    (37,951)
                                                    -------     -------
                                                    799,951     631,824
                                                    -------     -------

    Cash flows from investing activities
      Additions to property, plant and equipment   (450,594)   (485,028)
      Cash paid for acquisitions and licenses       (15,242)   (336,259)
      Cash received from divestitures                    50       6,838
      Proceeds from disposition of investments            -     259,017
      Cash paid to settle derivative liabilities          -     (17,404)
      Cash paid for short-term investments         (109,055)          -
      Other investing activities                      3,285        (832)
                                                      -----        ----
                                                   (571,556)   (573,668)
                                                   --------    --------

    Cash flows from financing activities
      Issuance of notes payable                           -     100,000
      Repayment of notes payable                          -    (100,000)
      Repayment of variable prepaid forward
       contracts                                          -     (47,357)
      Repayment of long-term debt                    (2,507)     (8,296)
      TDS Common Shares and Special Common Shares
       reissued for benefit plans, net of tax
       payments                                       1,296       1,916
      U.S. Cellular Common Shares reissued for
       benefit plans, net of tax payments              (119)     (1,286)
      Excess tax benefit from stock awards                5       1,832
      Repurchase of TDS Common and Special Common
       Shares                                      (152,918)   (111,769)
      Repurchase of U.S. Cellular Common Shares     (24,283)    (23,146)
      Dividends paid                                (35,389)    (35,783)
      Payment of debt issuance costs                (10,074)          -
      Distributions to noncontrolling interests      (4,962)     (6,539)
      Other financing activities                      1,406       3,909
                                                      -----       -----
                                                   (227,545)   (226,519)
                                                   --------    --------

    Net increase (decrease) in cash and cash
     equivalents                                        850    (168,363)

    Cash and cash equivalents
      Beginning of period                           777,309   1,174,446
                                                    -------   ---------
      End of period                                $778,159  $1,006,083
                                                   ========  ==========

SOURCE Telephone and Data Systems, Inc.

Jane W. McCahon, Vice President, Corporate Relations, +1-312-592-5379, jane.mccahon@teldta.com, or Julie D. Mathews, Manager, Investor Relations, +1-312-592-5341, julie.mathews@teldta.com, both of Telephone and Data Systems, Inc.

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