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TDS Reports First Quarter 2010 Results

05/10/2010

CHICAGO, May 10, 2010 /PRNewswire via COMTEX/ --Note: Comparisons are year over year unless otherwise noted.

1Q 2010 Highlights

Enterprise/TDS Corporate

  • Operating revenues were $1.2 billion.
  • Repurchased 510,902 TDS special common shares for a total of $14.8 million.

 

Wireless/U.S. Cellular

  • 24,000 retail net additions, reflecting a gain of 33,000 prepaid customers and a loss of 9,000 postpay customers.
  • Service revenues of $965.2 million decreased 2 percent due to reductions in voice and inbound roaming revenues, offset by higher data revenues.
  • 28 percent increase in data revenues to $201.3 million, representing 21 percent of total service revenues.
  • Retail service ARPU (average revenue per unit) increased to $46.99 from $46.87.
  • Retail postpay churn low at 1.4 percent; postpay customers comprised 95 percent of retail customers.
  • 5 percent increase in cell sites in service to 7,310.

 

Wireline/TDS Telecom

  • 16 percent increase in ILEC high-speed data customers.
  • 13 percent increase in ILEC high-speed data revenues, representing 19 percent of ILEC revenues.
  • ILEC equivalent access lines remained stable at 778,700, due in part to acquisitions; ILEC physical access lines decreased 5 percent to 530,400.
  • Managed IP stations (ILEC and CLEC) grew to 16,600 from 5,100.

As previously announced, TDS will hold a teleconference May 10, 2010 at 9:30 am CDT. 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 $1,222.6 million for the first quarter of 2010, a decrease of 3 percent from $1,258.4 million in the comparable period one year ago. Net income attributable to TDS shareholders and related diluted earnings per share were $49.1 million and $0.46, respectively, for the first quarter of 2010, compared to $74.5 million and $0.66, respectively, in the comparable period one year ago.

"Both of our businesses are dedicated to ensuring outstanding customer experiences," said LeRoy T. Carlson, Jr., TDS president and CEO, "and that means a focus on providing excellent data and broadband services. Increased customer use of data in the quarter led to strong growth in wireless data revenues, and U.S. Cellular's commitment to quality in all aspects of the customer experience reduced retail postpay churn to 1.4 percent. Data revenue growth helped to stabilize profitability in our wireline business, along with benefits from cost-reduction initiatives implemented in 2009. In a highly competitive communications industry, our businesses' shared focus on superior customer service is an important differentiator.

"U.S. Cellular continues to drive data revenue growth with its broad assortment of smartphones and data-intensive devices, and through its expanded 3G network. This growth has helped to offset a decline in service revenues due to lower voice and inbound roaming revenues. The company made progress on its major enablement initiatives in the quarter, including upgrading its marketing campaign management system to better target key customer segments. Though planned expenses related to these initiatives reduced profitability in the quarter, U.S. Cellular expects that the initiatives will ultimately reduce operational expenses and support its customer-focused strategy over the long term.

"TDS Telecom continued to attract customers to its high-speed data services, which led to a year-over-year increase in data revenues. Value-oriented bundles of voice, high-speed data and video services remained popular and helped to keep churn low. As part of its commitment to bringing critical broadband services to rural communities, TDS Telecom submitted 46 applications, totaling $136 million, to the Rural Utilities Service for the second round of broadband stimulus funding. To advance our strategy of growing through complementary businesses, TDS recently acquired VISI Incorporated. VISI, based in Minnesota, provides data center services and managed hosting primarily to small and medium sized businesses.

"Both of our businesses are increasingly well-positioned to capitalize on the growing customer interest in wireless data and wireline broadband services. U.S. Cellular plans to make 3G speeds available to 98 percent of its customers by the end of this summer, while it continues to develop its 4G/LTE rollout plans. Ninety-three percent of TDS Telecom's ILEC access lines are equipped for broadband services, and the company is focused on increasing the broadband speeds offered to customers. Both businesses have the support and financial strength to move forward with their customer-focused strategies."

Guidance

Guidance for the year ending Dec. 31, 2010 is shown below compared to previous guidance provided on Feb. 25, 2010. The company has commenced guidance for adjusted OIBDA. There can be no assurance that final results will not differ materially from this guidance.

                                         Current guidance    Previous guidance
                                         ----------------    -----------------
    U.S. Cellular 2010 guidance as
     of May 10, 2010 is as follows:
      Service revenue                 $3,975-$4,075 million          Unchanged
      Adjusted OIBDA(1)                   $850-$950 million                N/A
      Operating income                    $250-$350 million          Unchanged
      Depreciation, amortization and
       accretion(2)                    Approx. $600 million          Unchanged
      Capital expenditures             Approx. $600 million          Unchanged




    TDS Telecom (ILEC and CLEC)
     2010 guidance as of
     May 10, 2010 is as follows:
      Operating revenues                $760-$790 million    $740-$780 million
      Adjusted OIBDA(1)                 $250-$275 million                  N/A
      Operating income                   $80-$105 million     $70-$100 million
      Depreciation, amortization
       and accretion(2)              Approx. $170 million            Unchanged
      Capital expenditures           Approx. $155 million Approx. $140 million

    (1) Defined as operating income excluding the effects of:
    depreciation, amortization and accretion (OIBDA); the net gain or
    loss on asset disposals (if any); and the loss on impairment of
    intangible assets (if any).  This amount may also be commonly
    referred to by management as operating cash flow. This amount should
    not be confused with cash flows from operating activities, which is
    a component of the consolidated statement of cash flows.  TDS did
    not previously provide guidance on adjusted OIBDA.
    (2) Includes estimated losses on disposals of assets but does not
    include an estimate for loss on impairment of intangible assets
    since this cannot be predicted.


This guidance represents the views of management as of May 10, 2010 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 TDS common shares and TDS special common shares.

                                          Cost (in
     Repurchase Period      # Shares      millions)
     -----------------      --------      ---------
     2010 (first quarter)    510,902        $14.8

     2009 (full year)      6,374,741       $176.6

     2008 (full year)      5,861,822       $199.6
                            --------       ------
     Total                12,747,465       $391.0
                           =========       ======


Conference call information

TDS will hold a conference call on May 10, 2010 at 9:30 a.m. CDT.

 

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(R) 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 March 31, 2010.

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 sixth-largest 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 8,900 full-time equivalent associates as of March 31, 2010.

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 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

U.S. Cellular: www.uscellular.com

TDS Telecom: www.tdstelecom.com

                        UNITED STATES CELLULAR CORPORATION
                               SUMMARY OPERATING DATA

    Quarter Ended                        3/31/2010   12/31/2009     9/30/2009
                                         ---------   ----------     ---------
    Total population
      Consolidated markets (1)         90,468,000  89,712,000   85,118,000
      Consolidated operating
       markets (1)                     46,546,000  46,306,000   46,306,000
    Market penetration at end of
     period
      Consolidated markets (2)                6.8%        6.8%         7.2%
      Consolidated operating markets (2)     13.2%       13.3%        13.2%
    All customers
      Total at end of period            6,147,000   6,141,000    6,131,000
      Gross additions                     358,000     399,000      386,000
      Net additions (losses)                6,000      10,000      (24,000)
    Retail customers
      Total at end of period            5,768,000   5,744,000    5,705,000
      Gross additions                     305,000     354,000      351,000
      Net retail additions (losses) (3)    24,000      39,000       (6,000)
        Net postpay additions (losses)     (9,000)     26,000        8,000
        Net prepaid additions (losses)     33,000      13,000      (14,000)
    Service revenues components
     (000s)
      Voice and other retail service     $663,939    $676,554     $690,106
      Data service                        201,280     189,759      174,286
                                          -------     -------      -------
      Total retail service               $865,219    $866,313     $864,392
      Inbound roaming                      51,942      61,728       68,767
      Other                                48,027      56,814       50,289
                                           ------      ------       ------
    Total service revenues (000s) (4)    $965,188    $984,855     $983,448

      Divided by average customers
       (000s)                               6,137       6,139        6,138
      Divided by three months in each
       quarter                                  3           3            3
                                              ---         ---          ---

    Average monthly revenue per
     unit (5)                              $52.42      $53.48       $53.41
      Voice and other retail service
       (5)                                 $36.06      $36.75       $37.48
      Data service (5)                     $10.93      $10.30        $9.46
                                           ------      ------        -----
      Total retail service (5)             $46.99      $47.05       $46.94

      Inbound roaming (5)                   $2.82       $3.35        $3.73
      Other (5)                             $2.61       $3.08        $2.74
    Postpay churn rate (6)                    1.4%        1.6%         1.7%
    Capital expenditures (000s)          $121,500    $189,000     $128,900
    Cell sites in service                   7,310       7,279        7,161


    Quarter Ended                               6/30/2009         3/31/2009
                                                ---------         ---------
    Total population
      Consolidated markets (1)                83,726,000         83,726,000
      Consolidated operating markets (1)      46,306,000         46,306,000
    Market penetration at end of
     period
      Consolidated markets (2)                       7.4%               7.5%
      Consolidated operating markets (2)            13.3%              13.5%
    All customers
      Total at end of period                   6,155,000          6,243,000
      Gross additions                            317,000            404,000
      Net additions (losses)                     (88,000)            47,000
    Retail customers
      Total at end of period                   5,711,000          5,770,000
      Gross additions                            286,000            366,000
      Net retail additions (losses) (3)          (59,000)            63,000
        Net postpay additions (losses)           (32,000)            60,000
        Net prepaid additions (losses)           (27,000)             3,000
    Service revenues components
     (000s)
      Voice and other retail service            $708,609           $718,885
      Data service                               161,955            156,954
                                                 -------            -------
      Total retail service                      $870,564           $875,839
      Inbound roaming                             62,223             60,057
      Other                                       41,323             47,719
                                                  ------             ------
    Total service revenues (000s) (4)           $974,110           $983,615

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

    Average monthly revenue per
     unit (5)                                     $52.38             $52.64
      Voice and other retail service (5)          $38.11             $38.47
      Data service (5)                             $8.71              $8.40
                                                   -----              -----
      Total retail service (5)                    $46.82             $46.87

      Inbound roaming (5)                          $3.35              $3.21
      Other (5)                                    $2.21              $2.56
    Postpay churn rate (6)                           1.7%               1.5%
    Capital expenditures (000s)                  $91,200           $137,700
    Cell sites in service                          7,043              6,942

    (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) Calculated by adding net postpay additions (losses) and net
    prepaid additions (losses).
    (4) U.S. Cellular revised previously reported Service revenues for all
    quarterly periods in 2009 to reflect certain corrections. See "Revision
    of Prior Period Amounts" section for additional details. Previously
    reported Service revenues were $986.3 million, $984.9 million,
    $974.8 million and $981.9 million for the three month periods ended
    December 31, September 30, June 30 and March 31, 2009, respectively.
    (5) Calculated by dividing the components of service revenues by the
    average customers and number of months in the quarter.
    (6) Calculated by dividing the total postpay customer disconnects
    during the quarter by the average postpay customer base for the
    quarter.


                                     TELEPHONE AND DATA SYSTEMS, INC.
                                         SUMMARY OPERATING DATA

    Quarter Ended                   3/31/2010 12/31/2009 9/30/2009
                                    --------- ---------- ---------
     TDS Telecom
     ILEC
        Equivalent access lines (1)   778,700    775,900   772,700
        Physical access lines (2)     530,400    536,300   539,400
        High-speed data customers (3) 217,400    208,300   202,100
        Long-distance customers       365,600    362,800   356,500
        Managed IP stations (4)         2,300      1,900     1,500
        Capital expenditures (000s)   $20,200    $26,900   $23,800
     CLEC
        Equivalent access lines (1)   349,300    355,900   364,100
        High-speed data customers (3)  36,000     36,900    37,600
        Managed IP stations (4)        14,300     12,000     9,600
        Capital expenditures (000s)    $3,200     $6,800    $4,700


    Quarter Ended                            6/30/2009            3/31/2009
                                             ---------            ---------
     TDS Telecom
     ILEC
        Equivalent access lines (1)            775,800              777,100
        Physical access lines (2)              548,000              556,800
        High-speed data customers (3)          197,100              188,100
        Long-distance customers                354,100              348,900
        Managed IP stations (4)                  1,200                1,000
        Capital expenditures (000s)            $26,200              $21,400
     CLEC
        Equivalent access lines (1)            372,300              381,100
        High-speed data customers (3)           38,700               39,700
        Managed IP stations (4)                  6,400                4,100
        Capital expenditures (000s)             $5,700               $5,000

    (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 March 31,
     (Unaudited, dollars and shares in thousands, except per share amounts)

                                                          2010     2009 (1)
                                                          ----      -------
    Operating revenues
      U.S. Cellular                                   $1,024,037  $1,054,505
      TDS Telecom                                        195,505     199,302
      All Other (2)                                        3,073       4,580
                                                           -----       -----
                                                       1,222,615   1,258,387
                                                       ---------   ---------
    Operating expenses
      U.S. Cellular
        Expenses excluding depreciation,
         amortization
          and accretion                                  796,843     793,743
        Depreciation, amortization and accretion         143,233     137,878
        Loss on asset disposals, net                       5,176       3,945
                                                         945,252     935,566
                                                         -------     -------
      TDS Telecom
        Expenses excluding depreciation,
         amortization
          and accretion                                  125,865     130,745
        Depreciation, amortization and accretion          43,423      41,863
        Loss on asset disposals, net                         345         215
                                                             ---         ---
                                                         169,633     172,823
                                                         -------     -------
      All Other (2)
        Expenses excluding depreciation and
         amortization                                      1,930       6,358
        Depreciation and amortization                      2,733       3,252
        Loss on asset disposals, net                         (90)         10
                                                           4,573       9,620
                                                           -----       -----

          Total operating expenses                     1,119,458   1,118,009
                                                       ---------   ---------
    Operating income (loss)
      U.S. Cellular                                       78,785     118,939
      TDS Telecom                                         25,872      26,479
      All Other (2)                                       (1,500)     (5,040)
                                                          ------      ------
                                                         103,157     140,378
                                                         -------     -------
    Investment and other income (expense)
      Equity in earnings of unconsolidated
       entities                                           24,903      25,337
      Interest and dividend income                         2,441       2,072
      Interest expense                                   (28,720)    (30,370)
      Other, net                                            (190)        499
                                                            ----         ---
          Total investment and other income (expense)     (1,566)     (2,462)
                                                          ------      ------
    Income before income taxes                           101,591     137,916
      Income tax expense                                  38,465      42,106
                                                          ------      ------
    Net income                                            63,126      95,810
      Less: Net income attributable to
       noncontrolling
        interests, net of tax                            (14,011)    (21,350)
                                                         -------     -------
    Net income attributable to TDS shareholders           49,115      74,460
      Preferred dividend requirement                         (12)        (13)
                                                             ---         ---
    Net income available to common shareholders          $49,103     $74,447
                                                         =======     =======

    Basic weighted average shares outstanding            105,938     112,238
    Basic earnings per share attributable to
      TDS shareholders                                     $0.46       $0.66

    Diluted weighted average shares outstanding          106,250     112,427
    Diluted earnings per share attributable to
      TDS shareholders                                     $0.46       $0.66


                                                       Increase/(Decrease)
                                                        Amount     Percent
                                                        ------     -------
    Operating revenues
      U.S. Cellular                                    $(30,468)     (3)%
      TDS Telecom                                        (3,797)     (2)%
      All Other (2)                                      (1,507)    (33)%
                                                         ------
                                                        (35,772)     (3)%
                                                        -------
    Operating expenses
      U.S. Cellular
        Expenses excluding depreciation,
         amortization
          and accretion                                   3,100        -
        Depreciation, amortization and accretion          5,355       4 %
        Loss on asset disposals, net                      1,231      31 %
                                                          9,686       1 %
                                                          -----
      TDS Telecom
        Expenses excluding depreciation,
         amortization
          and accretion                                  (4,880)     (4)%
        Depreciation, amortization and accretion          1,560       4 %
        Loss on asset disposals, net                        130      60 %
                                                            ---
                                                         (3,190)     (2)%
                                                         ------
      All Other (2)
        Expenses excluding depreciation and
         amortization                                    (4,428)    (70)%
        Depreciation and amortization                      (519)    (16)%
        Loss on asset disposals, net                       (100) >(100)%
                                                         (5,047)    (52)%
                                                         ------

          Total operating expenses                        1,449        -
                                                          -----
    Operating income (loss)
      U.S. Cellular                                     (40,154)    (34)%
      TDS Telecom                                          (607)     (2)%
      All Other (2)                                       3,540      70 %
                                                          -----
                                                        (37,221)    (27)%
                                                        -------
    Investment and other income (expense)
      Equity in earnings of unconsolidated
       entities                                            (434)     (2)%
      Interest and dividend income                          369      18 %
      Interest expense                                    1,650       5 %
      Other, net                                           (689) >(100)%
                                                           ----
          Total investment and other income (expense)       896      36 %
                                                            ---
    Income before income taxes                          (36,325)    (26)%
      Income tax expense                                 (3,641)     (9)%
                                                         ------
    Net income                                          (32,684)    (34)%
      Less: Net income attributable to
       noncontrolling
        interests, net of tax                             7,339      34 %
                                                          -----
    Net income attributable to TDS shareholders         (25,345)    (34)%
      Preferred dividend requirement                          1       8 %
                                                            ---
    Net income available to common shareholders        $(25,344)    (34)%
                                                       ========

    Basic weighted average shares outstanding            (6,300)     (6)%
    Basic earnings per share attributable to
      TDS shareholders                                   $(0.20)    (30)%

    Diluted weighted average shares outstanding          (6,177)     (5)%
    Diluted earnings per share attributable to
      TDS shareholders                                   $(0.20)    (30)%

    (1) Amounts have been revised. See "Revision of Prior Period Amounts"
    section for additional details.
    (2) Consists of a non-reportable segment
    (Suttle-Straus printing
    and distribution operations), corporate operations, intercompany
    eliminations and corporate investments.


                          Telephone and Data Systems, Inc.
                       Consolidated Balance Sheet Highlights
                         (Unaudited, dollars in thousands)

                                           ASSETS


                                                     March 31, December 31,
                                                       2010     2009 (1)
                                                       ----      -------
    Current assets
      Cash and cash equivalents                      $645,466   $670,992
      Short-term investments                          148,364    113,275
      Accounts receivable from customers and
       other                                          486,778    515,443
      Inventory                                       157,935    156,987
      Other current assets                            200,522    190,974
                                                      -------    -------
                                                    1,639,065  1,647,671
                                                    ---------  ---------

    Investments
      Licenses                                      1,446,825  1,443,025
      Goodwill                                        713,013    707,840
      Other intangible assets                          31,823     26,589
      Investments in unconsolidated entities          221,112    203,799
      Other investments                                 9,627      9,785
                                                        -----      -----
                                                    2,422,400  2,391,038
                                                    ---------  ---------

    Property, plant and equipment, net
      U.S. Cellular                                 2,578,460  2,601,338
      TDS Telecom                                     871,232    880,378
      Other                                            25,963     26,129
                                                       ------     ------
                                                    3,475,655  3,507,845
                                                    ---------  ---------

    Other assets and deferred charges                  64,651     65,759
                                                       ------     ------

    Total assets                                   $7,601,771 $7,612,313
                                                   ========== ==========

    (1) Amounts have been revised. See "Revision of Prior Period Amounts"
    section for additional details.


                               Telephone and Data Systems, Inc.
                             Consolidated Balance Sheet Highlights
                               (Unaudited, dollars in thousands)


                             LIABILITIES AND STOCKHOLDERS' EQUITY

                                                      March 31,  December 31,
                                                        2010       2009 (1)
                                                        ----       -------

    Current liabilities
      Current portion of
       long-term debt                                   $2,277        $2,509
      Accounts payable                                 307,423       347,348
      Customer deposits and
       deferred revenues                               166,080       164,451
      Accrued interest                                  21,330        12,227
      Accrued taxes                                     99,432        57,087
      Accrued compensation                              62,021        93,524
      Other current
       liabilities                                      99,023       117,081
                                                        ------       -------
                                                       757,586       794,227

    Deferred liabilities
     and credits
      Net deferred income tax
       liability                                       506,453       516,919
      Other deferred
       liabilities and
       credits                                         371,698       373,862
                                                       -------       -------
                                                       878,151       890,781

    Long-term debt                                   1,492,666     1,492,908

    Noncontrolling
     interests with
     redemption features                                   752           727

    Equity
      TDS shareholders'
       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                                   2,095,636     2,088,807
        Treasury shares, at
         cost:
          Common Shares                               (216,249)     (217,381)
          Special Common Shares                       (477,140)     (464,268)
        Accumulated other
         comprehensive loss                             (2,966)       (2,710)
        Retained earnings                            2,399,321     2,363,759
                                                     ---------     ---------
          Total TDS shareholders'
           equity                                    3,799,872     3,769,477

      Preferred shares                                     831           832
      Noncontrolling
       interests                                       671,913       663,361
                                                       -------       -------

        Total equity                                 4,472,616     4,433,670


    Total liabilities and
     equity                                         $7,601,771    $7,612,313
                                                    ==========    ==========

    (1) Amounts have been revised. See "Revision of Prior Period
    Amounts" section for additional details.



                                Telephone and Data Systems, Inc.
                                    Balance Sheet Highlights
                               Three Months Ended March 31, 2010
                                (Unaudited, dollars in thousands)

                                         U.S.             TDS            TDS
                                         ----             ---            ---
                                       Cellular         Telecom      Corporate
                                       --------         -------      ---------
                                                                       & Other
                                                                       -------
    Cash and cash equivalents          $289,658          $33,691     $322,117
    Affiliated cash investments               -          310,856            -
    Short-term investments               25,534           97,510       25,320
    Notes receivable-affiliates               -                -        8,809
                                             --               --        -----
                                       $315,192         $442,057     $356,246
                                       ========         ========     ========

    Licenses, goodwill and other
     intangibles                     $1,936,429         $451,282    $(196,050)
    Investment in unconsolidated
     entities                           178,903            3,661       45,120
    Other investments                     4,179            2,072        3,376
                                          -----            -----        -----
                                     $2,119,511         $457,015    $(147,554)
                                     ==========         ========    =========


    Property, plant and equipment,
     net                             $2,578,460         $871,232      $25,963
                                     ==========         ========      =======

    Notes payable-affiliates                 $-           $8,809     $310,856
                                            ===           ======     ========

    Long-term debt
             Current portion                $84             $391       $1,802
             Non-current portion        867,662            2,181      622,823

             Total                     $867,746           $2,572     $624,625
                                       ========           ======     ========

    Preferred shares                         $-               $-         $831
                                            ===              ===         ====

    Capital expenditures
             Quarter ended 3/31/2010   $121,514          $23,376       $1,732


                                      Intercompany          TDS
                                      ------------          ---
                                      Eliminations      Consolidated
                                      ------------      ------------
    Cash and cash equivalents                 $-           $645,466
    Affiliated cash investments         (310,856)                 -
    Short-term investments                     -            148,364
    Notes receivable-affiliates           (8,809)                 -
                                          ------                 --
                                       $(319,665)          $793,830
                                       =========           ========

    Licenses, goodwill and other
     intangibles                              $-         $2,191,661
    Investment in unconsolidated
     entities                             (6,572)           221,112
    Other investments                          -              9,627
                                              --              -----
                                         $(6,572)        $2,422,400
                                         =======         ==========


    Property, plant and equipment,
     net                                      $-         $3,475,655
                                             ===         ==========

    Notes payable-affiliates           $(319,665)                $-
                                       =========                ===

    Long-term debt
             Current portion                  $-             $2,277
             Non-current portion               -          1,492,666

             Total                            $-         $1,494,943
                                             ===         ==========

    Preferred shares                          $-               $831
                                             ===               ====

    Capital expenditures
             Quarter ended 3/31/2010          $-           $146,622




                               TDS Telecom Highlights
                             Three Months Ended March 31,
                          (Unaudited, dollars in thousands)

                                                    2010                2009
                                                    ----                ----
    Local Telephone Operations
      Operating revenues
        Voice                                     $44,558             $48,578
        Data                                       28,298              25,060
        Network access                             67,942              67,831
        Miscellaneous                               9,358               8,718
                                                     ----                ----
                                                  150,156             150,187
                                                   ------              ------
      Operating expenses
        Cost of services and products              46,492              47,684
        Selling, general and administrative
         expenses                                  41,737              41,029
        Depreciation, amortization and
         accretion                                 37,058              36,086
        Loss on asset disposals, net                  260                 138
                                                       --                  --
                                                  125,547             124,937
                                                   ------              ------

      Operating income                            $24,609             $25,250
                                                  -------             -------

    Competitive Local Exchange Carrier
     Operations
        Revenues                                  $47,743             $51,189
                                                  -------             -------

        Expenses excluding depreciation,
         amortization
          and accretion                            40,030              44,106
        Depreciation, amortization and
         accretion                                  6,365               5,777
        Loss on asset disposals, net                   85                  77
                                                       --                  --
                                                   46,480              49,960
                                                    -----               -----

      Operating income                             $1,263              $1,229
                                                   ------              ------

    Intercompany revenues                         $(2,394)            $(2,074)
    Intercompany expenses                          (2,394)             (2,074)
                                                   ------              ------
                                                        -                   -
                                                       --                  --

    Total TDS Telecom operating income            $25,872             $26,479
                                                  =======             =======


                                                      Increase (Decrease)
                                                      -------------------
                                                   Amount             Percent
                                                   ------             -------
    Local Telephone Operations
      Operating revenues
        Voice                                     $(4,020)             (8)%
        Data                                        3,238               13%
        Network access                                111                -
        Miscellaneous                                 640                7%
                                                       --
                                                      (31)               -
                                                      ---
      Operating expenses
        Cost of services and products              (1,192)             (2)%
        Selling, general and administrative
         expenses                                     708                2%
        Depreciation, amortization and
         accretion                                    972                3%
        Loss on asset disposals, net                  122               88%
                                                       --
                                                      610                -
                                                       --

      Operating income                              $(641)             (3)%
                                                    -----

    Competitive Local Exchange Carrier
     Operations
        Revenues                                  $(3,446)             (7)%
                                                  -------

        Expenses excluding depreciation,
         amortization
          and accretion                            (4,076)             (9)%
        Depreciation, amortization and
         accretion                                    588               10%
        Loss on asset disposals, net                    8               10%
                                                       --
                                                   (3,480)             (7)%
                                                   ------

      Operating income                                $34                3%
                                                       --

    Intercompany revenues                           $(320)            (15)%
    Intercompany expenses                            (320)            (15)%
                                                     ----
                                                        -
                                                       --

    Total TDS Telecom operating income              $(607)             (2)%
                                                    =====



                       Telephone and Data Systems, Inc.
                     Consolidated Statement of Cash Flows
                                    (Unaudited)

                                                Three Months Ended
                                                     March 31,
                                                2010            2009 (1)
                                                ----             -------

                                              (Dollars in thousands)
    Cash flows from operating
     activities
      Net income                             $63,126              $95,810
      Add (deduct) adjustments
       to reconcile net income
       to net cash flows
        from operating activities
          Depreciation, amortization
           and accretion                     189,389              182,993
          Bad debts expense                   20,245               20,303
          Stock-based compensation
           expense                             7,444                5,556
          Deferred income taxes, net         (13,874)               5,603
          Equity in earnings of
           unconsolidated entities           (24,903)             (25,337)
          Distributions from
           unconsolidated entities             7,243                6,029
          Loss on asset disposals,
           net                                 5,431                4,170
          Other operating activities             948                   52
        Changes in assets and
         liabilities from
         operations
          Accounts receivable                  9,648              (10,936)
          Inventory                             (947)               7,720
          Accounts payable                   (40,676)             (48,271)
          Customer deposits and
           deferred revenues                     784               (1,010)
          Accrued taxes                       35,641               34,893
          Accrued interest                     9,212                9,358
          Other assets and
           liabilities                       (58,051)             (63,683)
                                             -------              -------
                                             210,660              223,250
                                             -------              -------

    Cash flows from investing
     activities
      Additions to property,
       plant and equipment                 (146,622)            (165,236)
      Cash paid for acquisitions
       and licenses                          (21,118)             (14,582)
      Cash paid for investments              (50,000)             (26,248)
      Cash received for
       investments                            15,561                    -
      Other investing activities                 439                1,010
                                                 ---                -----
                                           (201,740)            (205,056)
                                            --------             --------

    Cash flows from financing
     activities
      Repayment of long-term
       debt                                     (697)                (993)
      TDS Common Shares and
       Special Common Shares
       reissued for benefit
       plans,
        net of tax payments                      463                  383
      U.S. Cellular Common
       Shares reissued for
       benefit plans, net of tax
       payments                                  486                  356
      Repurchase of TDS Special
       Common Shares                         (14,810)             (12,237)
      Repurchase of U.S.
       Cellular Common Shares                 (5,186)             (13,291)
      Dividends paid                         (11,891)             (12,057)
      Distributions to
       noncontrolling interests               (2,284)              (1,458)
      Other financing activities                (527)                  61
                                                ----                  ---
                                             (34,446)             (39,236)
                                             -------              -------

    Net decrease in cash and
     cash equivalents                        (25,526)             (21,042)

    Cash and cash equivalents
      Beginning of period                    670,992              777,309
                                             -------              -------
      End of period                         $645,466             $756,267
    (1) Amounts have been revised. See "Revision of Prior
     Period Amounts" section for additional details.



                                Telephone and Data Systems, Inc.
                             Financial Measures and Reconciliations
                                (Unaudited, dollars in thousands)

    Three Months Ended March 31,          U.S.         TDS
     2010                               Cellular    Telecom (1)
    ----------------------------         --------  ------------

      Operating revenues               $1,024,037      $195,505
      Deduct:
        U.S. Cellular equipment sales
         revenue                           58,849
                                           ------
          Service revenues               $965,188

      Operating income                    $78,785       $25,872
      Add:
        Depreciation, amortization and
         accretion                        143,233        43,423
        (Gain) Loss on asset disposals      5,176           345
                                            -----           ---
          Adjusted OIBDA (3)(6)          $227,194       $69,640
                                         ========       =======

          Adjusted OIBDA margin (4)          23.5%         35.6%


    Three Months Ended March 31,          U.S.          TDS
     2009                              Cellular (7) Telecom (1)
    ----------------------------       ---------    ------------

      Operating revenues               $1,054,505      $199,302
      Deduct:
        U.S. Cellular equipment sales
         revenue                           70,890
                                           ------
          Service revenues               $983,615

      Operating income                   $118,939       $26,479
      Add (Deduct):
        Depreciation, amortization and
         accretion                        137,878        41,863
        Loss on asset disposals             3,945           215
                                            -----           ---
          Adjusted OIBDA (3)(6)          $260,762       $68,557
                                         ========       =======

          Adjusted OIBDA margin (4)          26.5%         34.4%



    Three Months Ended March 31,            All       Consolidated
     2010                                 Other (2)       Total
    ----------------------------         ----------       -----

      Operating revenues                   $3,073    $1,222,615
      Deduct:
        U.S. Cellular equipment sales
         revenue
          Service revenues

      Operating income                    $(1,500)     $103,157
      Add:
        Depreciation, amortization and
         accretion                          2,733       189,389
        (Gain) Loss on asset disposals        (90)        5,431
                                              ---         -----
          Adjusted OIBDA (3)(6)            $1,143      $297,977
                                           ======      ========

          Adjusted OIBDA margin (4)

    Three Months Ended March 31,           All     Consolidated
     2009                               Other (2)     Total (7)
    ----------------------------       ----------   ---------

      Operating revenues                   $4,580    $1,258,387
      Deduct:
        U.S. Cellular equipment sales
         revenue
          Service revenues

      Operating income                    $(5,040)     $140,378
      Add (Deduct):
        Depreciation, amortization and
         accretion                          3,252       182,993
        Loss on asset disposals                10         4,170
                                              ---         -----
          Adjusted OIBDA (3)(6)           $(1,778)     $327,541
                                          =======      ========

          Adjusted OIBDA margin (4)


                                                     TDS Consolidated
                                                     ----------------
     Three Months Ended March 31,                 2010                 2009
                                                  ----                 ----

      Cash flows from operating
       activities                             $210,660             $223,250
      Deduct:
        Capital expenditures                   146,622              165,236
                                                ------               ------
          Free cash flow (5)                   $64,038              $58,014
                                               =======              =======

    (1) Includes ILEC and CLEC intercompany eliminations.
    (2) Consists of a non-reportable segment (Suttle Straus), corporate
    operations, intercompany eliminations between U.S. Cellular, TDS
    Telecom and corporate investments. Amounts in this column are
    presented only to reconcile to consolidated totals and may not
    otherwise be meaningful.
    (3) Adjusted OIBDA is a segment measure reported to the chief
    operating decision maker for purposes of making decisions about
    allocating resources to the segments and assessing their
    performance.  Adjusted OIBDA is defined as operating income
    excluding the effects of: depreciation, amortization and accretion
    (OIBDA); the net gain or loss on asset disposals (if any); and the
    loss on impairment of intangible assets (if any).  This amount may
    also be commonly referred to by management as operating cash flow.
    This amount should not be confused with Cash flows from operating
    activities, which is a component of the consolidated statement of
    cash flows.
    (4) Defined as Adjusted OIBDA divided by service revenues (U.S.
    Cellular) and operating revenues (TDS Telecom).  Equipment revenues
    are excluded from the denominator of the U.S. Cellular calculation
    since equipment is generally sold at a net negative margin, and the
    equipment subsidy is effectively a cost for purposes of assessing
    business results.   TDS believes that this calculation method is
    consistent with the method used by certain investors to assess U.S.
    Cellular's business results.  Adjusted OIBDA margin may also be
    commonly referred to by management as operating cash flow margin.
    (5) Defined as cash flows from operating activities minus capital
    expenditures. Free cash flow is a Non-GAAP financial measure.  TDS
    believes that free cash flow as reported by TDS is useful to
    investors and other users of its financial information in evaluating
    the amount of cash generated by business operations, after
    consideration of capital expenditures.
    (6) Excludes the net gain or loss on asset disposals and loss on
    impairment of intangible assets, if any, in order to show operating
    results on a more comparable basis from period to period.  TDS does
    not intend to imply that any of such amounts that are excluded are
    non-recurring, infrequent or unusual.  Accordingly, you should be
    aware that TDS may incur such amounts in the future.
    (7) Previously reported GAAP amounts have been revised. See "Revision
    of Prior Period Amounts" section for additional details.


Revision of Prior Period Amounts

In preparing its financial statements for the three months ended March 31, 2010, TDS discovered certain errors related to accounting for service revenues and sales tax liabilities. These errors resulted in the overstatement of operating revenues and understatement of sales tax liabilities for 2009, 2008 and 2007. In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 ("SAB 99 and SAB 108"), TDS evaluated these errors and determined that they were immaterial to each of the reporting periods affected and, therefore, amendment of previously filed reports was not required. However, if the adjustments to correct the cumulative errors had been recorded in the first quarter 2010, TDS believes the impact would have been significant to the first quarter and would impact comparisons to prior periods. As permitted by SAB 108, TDS revised in the current filing and plans to revise in the next filings of its quarterly and annual consolidated financial statements previously reported annual and quarterly results for 2009, 2008 and 2007 for these immaterial amounts. In addition to recording these adjustments, TDS recorded and plans to record other adjustments to prior-year amounts to correct other immaterial items, which include adjustments related to rent expense, as disclosed in TDS' 2009 Form 10-K.

The Consolidated Balance Sheet at December 31, 2009 was revised to reflect the cumulative effect of these errors which resulted in a decrease to Retained earnings of $7.8 million. Also, in accordance with SAB 108, the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows have been revised as follows:

    Consolidated Statement of Operations -- Three Months Ended March 31, 2009

                                        As
                                    previously
     (Dollars in thousands)          reported     Adjustment   Revised
                                     --------     ----------   -------


     Operating revenues             $1,256,646       $1,741  $1,258,387
     Total operating expenses        1,120,437       (2,428)  1,118,009
     Operating income                  136,209        4,169     140,378
     Interest expense                  (30,105)        (265)    (30,370)
     Total investment and other
      income (expense)                  (2,197)        (265)     (2,462)
     Income before income taxes        134,012        3,904     137,916
     Income tax expense                 40,638        1,468      42,106
     Net income                         93,374        2,436      95,810
     Net income attributable to
      noncontrolling interests,
       net of tax                      (21,366)          16     (21,350)
     Net income attributable to TDS
      shareholders                      72,008        2,452      74,460
     Net income available to common
      shareholders                      71,995        2,452      74,447
     Basic earnings attributable to
      TDS shareholders                    0.64         0.02        0.66
     Diluted earnings attributable
      to TDS shareholders                 0.64         0.02        0.66



    Consolidated Balance Sheet -- December 31, 2009

                                            As
                                        previously
     (Dollars in thousands)              reported   Adjustment    Revised
                                         --------   ----------    -------


     Accounts receivable from customers
      and others                          $511,914      $3,529    $515,443
     Total current assets                1,644,142       3,529   1,647,671
     Total assets                       7,608,784       3,529   7,612,313
     Customer deposits and deferred
      revenues                             167,963      (3,512)    164,451
     Accrued taxes                          39,644      17,443      57,087
     Total current liabilities             780,296      13,931     794,227
     Net deferred income tax liability     517,762        (843)    516,919
     Total deferred liabilities and
      credits                              891,624        (843)    890,781
     Retained earnings                   2,371,587      (7,828)  2,363,759
     Total TDS shareholders' equity      3,777,305      (7,828)  3,769,477
     Noncontrolling interests              665,092      (1,731)    663,361
     Total equity                        4,443,229      (9,559)  4,433,670
     Total liabilities and equity        7,608,784       3,529   7,612,313




    Consolidated Statement of Cash Flows -- Three Months Ended March 31, 2009

                                         As
                                     previously
     (Dollars in thousands)           reported   Adjustment   Revised
                                      --------   ----------   -------


     Net income                         $93,374       $2,436     $95,810
     Depreciation, amortization and
      accretion                         182,766          227     182,993
     Deferred income taxes, net           4,934          669       5,603
     Loss on asset disposals              2,416        1,754       4,170
     Change in accounts receivable       (6,272)      (4,664)    (10,936)
     Change in customer deposits and
      deferred revenues                    (823)        (187)     (1,010)
     Change in accrued taxes             34,865           28      34,893
     Change in other assets and
      liabilities                       (63,420)        (263)    (63,683)
     Cash flows from operating
      activities                        223,250            -     223,250



SOURCE Telephone and Data Systems, Inc.

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