TDS Reports Fourth Quarter 2012 Results And 2013 Financial Guidance

     TDS Reports Fourth Quarter 2012 Results And 2013 Financial Guidance

PR Newswire

CHICAGO, Feb. 26, 2013

CHICAGO, Feb. 26, 2013 /PRNewswire/ -- As previously announced, TDS will hold
a teleconference Feb. 26, 2013 at 9:30 a.m. CST. Interested parties may listen
to the call live by accessing the Investor Relations page of www.teldta.com. 

Telephone and Data Systems, Inc. (NYSE:TDS) reported operating revenues of
$1,346.2 million for the fourth quarter of 2012, an increase of 2 percent from
$1,316.7 million in the comparable period one year ago. Net loss attributable
to TDS shareholders was $41.8 million, or $0.39 per diluted share,
respectively, for the fourth quarter of 2012, compared to $6.2 million and
$0.06, respectively, in the comparable period one year ago.

As previously announced on Nov. 7, 2012, U.S. Cellular reached a definitive
agreement to sell its Chicago, St. Louis, central Illinois and three other
markets (the "Divestiture Markets") to subsidiaries of Sprint Nextel
Corporation (NYSE: S) for $480 million (the "Divestiture Transaction"). The
transaction is subject to regulatory approvals and is expected to close in
mid-2013. In the fourth quarter of 2012, TDS' operating income was reduced by
$44.5 million due to divestiture-related costs, including a $10.7 million
write-down of assets, $12.6 million in employee-related costs, including
severance, and $20 million in accelerated depreciation, amortization and
accretion.

The table below provides pro forma performance highlights for U.S. Cellular's
Total Consolidated Markets, Divestiture Markets, and Core Markets for the
fourth quarter of 2012. Core Markets are the markets that U.S. Cellular will
continue to own upon completion of the Divestiture Transaction.

U.S. Cellular


($ in millions except    Total Consolidated  Divestiture Markets  Core Markets
ARPU)                    Markets             (1)                  (1)
Postpaid gross additions       241,000             23,000            218,000
Postpaid churn                 1.83%               3.35%             1.67%
Postpaid net additions         (41,000)            (25,000)          (16,000)
(losses)
Prepaid net additions          37,000              (1,000)           38,000
(losses)
Service revenues (1)           $1,008.9            $101.4            $907.5
Postpaid ARPU (1)              $54.56              $60.91            $53.92



    Total Consolidated Markets amounts represent GAAP financial measures and
    Divestiture Markets and Core Markets amounts represent non-GAAP financial
(1) measures. U.S. Cellular believes that the amounts under Divestiture
    Markets and Core Markets may be useful to investors and other users of its
    financial information.



The following table highlights the performance of U.S. Cellular's Core Markets
and TDS Telecom for the fourth quarter of 2012 and 2011.

U.S. Cellular                                                         %
($ in millions except ARPU)                      Q4 2012    Q4 2011   Change
Postpaid gross additions                          218,000    209,000   4%
Postpaid churn                                    1.67%      1.48%     (13%)
Postpaid net additions (losses)                   (16,000)   (2,000)   (>100%)
Prepaid net additions                             38,000     6,000     >100%
Retail net additions                              22,000     4,000     >100%
Service revenues (1)                              $907.5     $917.5    (1%)
Postpaid ARPU (1)                                 $53.92     $52.62    2%
Smartphones sold as % of total devices            62.9%      52.6%     20%
4G/LTE smartphones as % of total smartphones      74%        0%        >100%
sold
Capital expenditures (1)                          $241       $253      (5%)
Cell sites in service                             6,292      6,154     2%
Owned towers                                      3,847      3,755     2%
TDS Telecom                                                           %
                                                 Q4 2012    Q4 2011   Change
Operating revenues                                $221.5     $206.8    7%
ILEC triple play (voice, data and video)          31%        29%       7%
penetration
managedIP (ILEC and CLEC)                         94,600     53,500    77%



    The Core Markets amounts for Q4 2012 and Q4 2011 represent non-GAAP
(1) financial measures. U.S. Cellular believes that the amounts under Core
    Markets may be useful to investors and other users of its financial
    information.



"U.S. Cellular and TDS Telecom continued to execute on their strategic
initiatives, though profitability was impacted by smartphone subsidies,
reductions in regulatory support, and investment spending," said LeRoy T.
Carlson, Jr., TDS president and CEO.

"U.S. Cellular achieved strong growth in smartphone penetration as more
customers had access to 4G LTE speeds and devices. U.S. Cellular's Core
Markets also increased net retail customer additions, due to prepaid customer
growth. While revenue from our customers increased, overall service revenues
declined due to lower negotiated roaming rates which had a positive effect on
roaming expenses. To further differentiate our superior customer experience,
U.S. Cellular is working to provide seamless shopping and support across
channels, identify more opportunities to expand distribution, and through the
implementation of a new billing and operational support system, is also
simplifying operations and processes to increase efficiency and reduce
complexity and cost.

"TDS Telecom continued to build its residential customer base with TDS TV® and
broadband offerings, and further increased momentum in commercial managedIP
sales. TDS Telecom is focused on increasing residential TDS TV and broadband
penetration in existing markets, and expanding broadband access through
stimulus projects in progress nationwide. To grow the commercial customer
base, TDS Telecom plans to expand the managedIP portfolio, and build its
hosted and managed services business by providing integrated, end-to-end IT
solutions, including ReliaCloud^TM, to mid-market customers."

Baja Broadband
In a separate release today, TDS announced an agreement to acquire
substantially all of the assets of Baja Broadband, LLC for a purchase price of
$267.5 million.

2013 ESTIMATES

Estimates of full-year 2013 results for U.S. Cellular, TDS Telecom and TDS,
are shown below. Such estimates represent management's view as of the date of
filing of TDS' Form 10-K for the year ended December 31, 2012. Such
forward-looking statements should not be assumed to be current as of any
future date. TDS undertakes no duty to update such information whether as a
result of new information, future events or otherwise. There can be no
assurance that final results will not differ materially from such estimated
results.

TDS has changed the measures which it uses to present estimates of operating
results. TDS now provides estimates for consolidated revenues and capital
expenditures. In addition, TDS previously presented Adjusted OIBDA, defined
as operating income excluding the effects of: depreciation, amortization and
accretion (OIBDA); the loss on impairment of assets; and the net gain or loss
on asset disposals and exchanges. TDS believes Adjusted income before income
taxes, as defined below, is a measure which provides a more comprehensive and
meaningful view of TDS' recurring results of operations.

                             2013 EstimatedResults (1)
                             U.S. Cellular (2)  TDS Telecom (3)  TDS (2)(3)(7)
(Dollars in millions)
Adjusted operating revenues  $3,765-$3,885      $850-$900       $4,660-$4,830
(4)
Adjusted income before       $780-$900          $220-$250        $995-$1,145
income taxes (5)
Capital expenditures         Approx. $600      Approx. $155    Approx. $765



    These estimates are based on TDS' current plans, which include a
    multi-year deployment of 4G LTE technology which commenced in 2011 at U.S.
    Cellular and a multi-year deployment of IPTV which commenced in 2011 at
(1) TDS Telecom. New developments or changing conditions (such as, but not
    limited to, regulatory developments, customer net growth, customer demand
    for data services, costs to deploy, agreements for content or franchises,
    or possible acquisitions, dispositions or exchanges) could affect TDS'
    plans and, therefore, its 2013 estimated results.
    These estimates also assume the Divestiture Transaction closes July 1,
(2) 2013. Actual effects could vary significantly from these estimates as a
    result of a change in the expected timing of the Divestiture Transaction.
    These estimates reflect U.S. Cellular's consolidated results for 2013.
    Estimated results reflecting U.S. Cellular's Divestiture Markets and Core
    Markets are shown in the table below:



                        2013 Estimated Results
                        U.S. Cellular  U.S. Cellular
                        Core           Divestiture    U.S. Cellular
                                                      Consolidated (6)
                        Markets (6)    Markets (6)
(Dollars in millions)
Adjusted operating      $3,600-$3,700  $165-$185      $3,765-$3,885
revenues (4)
Adjusted income before  $765-$865      $15-$35        $780-$900
income taxes (5)
Capital expenditures    Approx. $600   —              Approx. $600



(3) These estimates do not reflect the effects of the acquisition of Baja
    Broadband, LLC.
    Adjusted operating revenues is a non-GAAP financial measure defined as
    Operating revenues excluding U.S. Cellular Equipment sales revenues. U.S.
    Cellular Equipment sales revenues are excluded from Adjusted operating
    revenues since U.S. Cellular equipment is generally sold at a net loss,
    and such net loss that results from U.S. Cellular Equipment sales revenues
    less U.S. Cellular Cost of equipment sold is viewed as a cost of earning
(4) service revenues for purposes of assessing business results. For purposes
    of developing this guidance, TDS does not calculate an estimate of U.S.
    Cellular Equipment sales revenues. TDS believes this measure provides
    useful information to investors regarding TDS' results of operations.
    Adjusted operating revenues is not a measure of financial performance
    under GAAP and should not be considered as an alternative to Operating
    revenues as an indicator of the Company's operating performance.
    Adjusted income before income taxes is a non-GAAP financial measure
    defined as income before: Income taxes, Depreciation, amortization and
    accretion, net Gain or loss on sale of business and other exit costs, and
    Interest expense. Adjusted income before income taxes is not a measure of
    financial performance under GAAP and should not be considered as an
    alternative to Income before income taxes as an indicator of the Company's
    operating performance or as an alternative to cash flows from operating
(5) activities, determined in accordance with GAAP, as an indicator of cash
    flows or as a measure of liquidity. TDS believes Adjusted income before
    income taxes is a meaningful measure of TDS' operating results before
    significant recurring non-cash charges, discrete gains and losses and
    financing charges (Interest expense). The following tables provide a
    reconciliation of Income before income taxes to Adjusted income before
    income taxes for 2013 Estimated Results and 2012, 2011 and 2010 actual
    results:



               2013 Estimated Results
               U.S.
               Cellular   U.S. Cellular   U.S.           TDS
               Core       Divestiture     Cellular                   TDS (7)
                          Markets         Consolidated   Telecom
               Markets    (2)(6)          (6)
               (6)
(Dollars in
millions)
Income before
income taxes   $165-$265  ($180)-($160)   ($15)-$105     $25-$55     ($55)-$95
(8)(9)
Depreciation,
amortization   Approx.                                   Approx.     Approx.
and accretion  $545       Approx. $195    Approx. $740   $195        $940

expense
Interest       Approx.    —               Approx. $55    —           Approx.
expense        $55                                                   $110
Adjusted
income before  $765-$865  $15-$35         $780-$900      $220-$250   $995-$1,145
income taxes
                                          2012 Actual Results
                                          U.S.           TDS
                                          Cellular                   TDS (7)
                                          Consolidated   Telecom
                                          (6)
(Dollars in millions)
Income before income taxes (9)          $ 205.1        $ 45.0      $ 196.2
Depreciation, amortization and            608.6          193.1       813.6
accretion expense
(Gain) loss on sale of business and       21.0           -           21.1
other exit costs, net
Interest expense (Capitalized interest)   42.4           (1.5)       86.7
Adjusted income before income taxes     $ 877.1        $ 236.6     $ 1,117.6
                                          2011 Actual Results
                                          U.S.           TDS
                                          Cellular                   TDS (7)
                                          Consolidated   Telecom
                                          (6)
(Dollars in millions)
Income before income taxes              $ 312.8        $ 107.5     $ 363.7
Depreciation, amortization and            573.6          180.5       765.8
accretion expense
(Gain) loss on sale of business and       -              -           -
other exit costs, net
Interest expense (Capitalized interest)   65.6           (2.6)       118.2
Adjusted income before income taxes     $ 952.0        $ 285.4     $ 1,247.7
                                          2010 Actual Results
                                          U.S.           TDS
                                          Cellular                   TDS (7)
                                          Consolidated   Telecom
                                          (6)
(Dollars in millions)
Income before income taxes              $ 241.1        $ 101.3     $ 285.8
Depreciation, amortization and            571.0          174.1       755.6
accretion expense
(Gain) loss on sale of business and       -              -           -
other exit costs, net
Interest expense (Capitalized interest)   61.6           (0.8)       116.8
Adjusted income before income taxes     $ 873.7        $ 274.6     $ 1,158.2



    The U.S. Cellular Consolidated amounts represent GAAP financial measures
    and include the results of both the Core Markets and the Divestiture
    Markets. As used herein, "Core Markets" represents U.S. Cellular's total
(6) consolidated markets excluding the Divestiture Markets. The Core Markets
    and Divestiture Markets amounts represent non-GAAP financial measures. TDS
    believes that the Core Markets and Divestiture Markets amounts may be
    useful to investors and other users of its financial information in
    evaluating the pro forma results for the Core Markets.
    The TDS column includes U.S. Cellular, TDS Telecom and also the impacts of
(7) consolidating eliminations, corporate operations and non-reportable
    segments, all of which are not presented above.
    This amount does not include any estimate for (Gain) loss on sale of
(8) business and other exit costs, net, as the timing of such amount is not
    readily estimable.
    The 2013 estimated amounts for depreciation, amortization and accretion
    expense in the U.S. Cellular Divestiture Markets include approximately
(9) $120 million of incremental accelerated depreciation resulting from the
    Divestiture Transaction. The 2012 actual results include $20.1 million of
    incremental accelerated depreciation resulting from the Divestiture
    Transaction.



Stock Repurchase
The following represents repurchases of TDS Common Shares (including Special
Common Shares that were reclassified as Common Shares in the Share
Consolidation Amendment in January 2012).

Repurchase Period  # Shares    Cost (in millions)
2012 (full year)   867,841     $       20.0
2011 (full year)   748,246     $       21.5
2010 (full year)   2,394,476   $       68.1
2009 (full year)   6,374,741   $       176.6
2008 (full year)   5,861,822   $       199.6
Total             16,247,126  $       485.8



Conference Call Information
TDS will hold a conference call on Feb. 26, 2013 at 9:30 a.m. CST.

  oAccess the live call on the Investor Relations page of www.teldta.com or
    at
    http://ir.teldta.com/phoenix.zhtml?c=67422&p=irol-eventDetails&EventId=4917451.
  oAccess the call by phone at 877/407-8029 (US/Canada), no pass code
    required.

Before the call, certain financial and statistical information to be discussed
during the call will be posted to the Investor Relations page of
www.teldta.com. 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; broadband, TV and voice; and hosted and managed servicesto
approximately 7 million customers in 36 states through its business units,
U.S. Cellular, TDS Telecom and TDS Hosted & Managed Services. Founded in 1969
and headquartered in Chicago, TDS employed 12,300 people as of Dec. 31, 2012.

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

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: impacts of the pending acquisition and divestiture transactions,
including, but not limited to, the ability to obtain regulatory approvals,
successfully complete the transaction and the financial impacts of such
transaction; the ability of the company to successfully manage and 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 on acceptable terms; 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; changes in customer growth rates, average monthly revenue per user,
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 Current Report used by TDS to furnish this
press release to the Securities and Exchange Commission ("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
Total Markets Summary Operating Data (Unaudited)
Quarter Ended   12/31/2012    9/30/2012     6/30/2012     3/31/2012     12/31/2011
Total
population
 Consolidated   93,244,000    92,996,000    92,684,000    92,684,000    91,965,000
 markets (1)
 Consolidated
 operating      46,966,000    46,966,000    46,966,000    46,966,000    46,888,000
 markets (1)
Market
penetration
at end of
period
 Consolidated   6.2%          6.2%          6.3%          6.3%          6.4%
 markets (2)
 Consolidated
 operating      12.3%         12.4%         12.3%         12.4%         12.6%
 markets (2)
All customers
 Total at end   5,798,000     5,808,000     5,799,000     5,837,000     5,891,000
 of period
 Gross          363,000       364,000       290,000       285,000       306,000
 additions
 Net
 additions      (10,000)      9,000         (38,000)      (49,000)      (41,000)
 (losses)
 Smartphones
 sold as a
 percent of     62.9%         53.0%         51.9%         54.1%         52.5%
 total
 devices sold
 (3)
Retail
customers
 Total at end   5,557,000     5,561,000     5,542,000     5,570,000     5,608,000
 of period
 Postpaid
 smartphone     41.8%         38.6%         36.8%         34.4%         30.5%
 penetration
 (3) (4)
 Gross          348,000       350,000       277,000       273,000       298,000
 additions
 Net retail
 additions      (4,000)       19,000        (28,000)      (34,000)      (13,000)
 (losses) (5)
  Net
 postpaid       (41,000)      (38,000)      (48,000)      (38,000)      (20,000)
 additions
 (losses)
  Net
 prepaid        37,000        57,000        20,000        4,000         7,000
 additions
 (losses)
Service
revenue
components
(000s)
 Retail       $ 886,014     $ 884,219     $ 889,219     $ 888,527     $ 882,091
 service
 Inbound        76,090        106,132       86,363        80,132        93,353
 roaming
 Other          46,820        46,019        54,160        55,161        54,601
Total service
revenues      $ 1,008,924   $ 1,036,370   $ 1,029,742   $ 1,023,820   $ 1,030,045
(000s)
Total ARPU    $ 58.00       $ 59.57       $ 59.05       $ 58.21       $ 58.13
(6)
Billed ARPU   $ 50.94       $ 50.83       $ 50.99       $ 50.52       $ 49.78
(7)
Postpaid ARPU $ 54.56       $ 54.34       $ 54.42       $ 54.00       $ 53.35
(8)
Postpaid
churn rate      1.8%          1.7%          1.6%          1.6%          1.6%
(9)
Capital
expenditures  $ 253,100     $ 199,100     $ 183,200     $ 201,300     $ 276,400
(000s)
Cell sites in   8,028         7,984         7,932         7,875         7,882
service



(1) Used only to calculate market penetration of consolidated markets and
    consolidated operating markets, respectively. See footnote (2) below.
    Market Penetration is calculated by dividing the number of wireless
(2) customers at the end of the period by the total population of consolidated
    markets and consolidated operating markets, respectively, as estimated by
    Claritas®.
(3) Smartphones represent wireless devices which run on an Android™,
    BlackBerry®, or Windows Mobile® operating system, excluding tablets.
(4) Smartphone penetration is calculated by dividing postpaid smartphone
    customers by total postpaid customers.
(5) Includes net postpaid additions (losses) and net prepaid additions
    (losses).
    Total ARPU - Average monthly service revenue per user includes retail
(6) service, inbound roaming and other service revenues and is calculated by
    dividing total service revenues by the number of months in the period and
    by the average total customers during the period.
    Billed ARPU - Average monthly billed revenue per user is calculated by
    dividing total retail service revenues by the number of months in the
(7) period and by the average total customers during the period. Retail
    service revenues include revenues attributable to postpaid, prepaid and
    reseller customers.
    Postpaid ARPU - Average monthly revenue per postpaid user is calculated by
(8) dividing total retail service revenues from postpaid customers by the
    number of months in the period and by the average postpaid customers
    during the period.
    Represents the percentage of the postpaid customer base that disconnects
(9) service each month. This amount represents the average postpaid churn rate
    for each respective quarterly period.



TDS Telecom
Summary Operating Data (Unaudited)
Quarter Ended          12/31/2012  9/30/2012  6/30/2012  3/31/2012  12/31/2011
TDS Telecom
ILEC:
    Residential
    Connections
     Physical access   350,100     355,800    360,100    363,500    367,600
     lines (1)
     Broadband         221,700     223,100    222,400    219,500    219,600
     connections (2)
     IPTV customers    7,900       6,700      5,600      4,900      4,600
      ILEC
     residential       579,700     585,600    588,100    587,900    591,800
     connections
    Commercial
    Connections
     Physical access   107,600     109,800    111,100    112,600    114,400
     lines (1)
     Broadband         18,500      18,500     18,400     18,200     18,200
     connections (2)
     managedIP         17,200      15,000     13,200     10,800     8,600
     connections (3)
      ILEC commercial 143,300     143,300    142,700    141,600    141,200
     connections
CLEC:
    Residential
    Connections
     Physical access   24,600      26,200     27,900     29,600     31,800
     lines (1)
     Broadband         8,200       8,900      9,500      10,100     11,000
     connections (2)
      CLEC
     residential       32,800      35,100     37,400     39,700     42,800
     connections
    Commercial
    Connections
     Physical access   135,500     140,300    145,100    151,100    157,300
     lines (1)
     Broadband         11,200      12,000     12,800     13,700     14,600
     connections (2)
     managedIP         77,400      69,500     61,400     53,700     44,900
     connections (3)
      CLEC commercial 224,100     221,800    219,300    218,500    216,800
     connections
Total ILEC and CLEC    979,900     985,800    987,500    987,700    992,600
Customer Connections



(1) Individual circuits connecting customers to TDS Telecom's central office
    facilities.
(2) The number of customers provided high-capacity data circuits via various
    technologies, including DSL and dedicated Internet circuit technologies.
(3) The number of telephone handsets, data lines and IP trunks providing
    communications using IP networking technology.



TDS Telecom
Capital Expenditures (000s)
Quarter        12/31/2012    9/30/2012    6/30/2012    3/31/2012    12/31/2011
Ended
ILEC         $ 43,400      $ 33,700     $ 32,500     $ 27,500     $ 50,300
CLEC           6,100         5,400        4,900        5,100        7,200
HMS            2,300         4,400        5,500        3,100        5,900
             $ 51,800      $ 43,500     $ 42,900     $ 35,700     $ 63,400



Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
Three Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)
                                                        Increase/ (Decrease)
                              2012         2011         Amount       Percent
Operating revenues
 U.S. Cellular                $ 1,115,206  $ 1,099,633  $  15,573     1%
 TDS Telecom                    221,495      206,770       14,725     7%
 All Other (1)                  9,508        10,324        (816)      (8%)
                                1,346,209    1,316,727     29,482     2%
Operating expenses
 U.S. Cellular
   Expenses excluding
   depreciation, amortization   979,461      937,473       41,988     4%
   and accretion
   Depreciation, amortization   169,242      141,976       27,266     19%
   and accretion
   Loss on asset disposals      2,121        3,868         (1,747)    (45%)
   and exchanges, net
   (Gain) loss on sale of
   business and other exit      25,170       -             25,170     N/M
   costs, net
                                1,175,994    1,083,317     92,677     9%
 TDS Telecom
   Expenses excluding
   depreciation, amortization   165,585      144,748       20,837     14%
   and accretion
   Depreciation, amortization   49,455       46,168        3,287      7%
   and accretion
   Loss on asset disposals      390          485           (95)       (20%)
   and exchanges, net
                                215,430      191,401       24,029     13%
 All Other (1)
   Expenses excluding
   depreciation and             7,865        19,117        (11,252)   (59%)
   amortization
   Depreciation and             2,767        3,735         (968)      (26%)
   amortization
   (Gain) loss on asset
   disposals and exchanges,     514          (193)         707        >(100%)
   net
                                11,146       22,659        (11,513)   (51%)
          Total operating       1,402,570    1,297,377     105,193    8%
          expenses
Operating income (loss)
 U.S. Cellular                  (60,788)     16,316        (77,104)   >(100%)
 TDS Telecom                    6,065        15,369        (9,304)    (61%)
 All Other (1)                 (1,638)      (12,335)      10,697     87%
                                (56,361)     19,350        (75,711)   >(100%)
Investment and other income
(expense)
 Equity in earnings of          19,071       18,507        564        3%
 unconsolidated entities
 Interest and dividend income   2,354        2,229         125        6%
 Gain (loss) on investment      10           (2,000)       2,010      >(100%)
 Interest expense               (18,645)     (24,017)      5,372      22%
 Other, net                     524          2,157         (1,633)    (76%)
   Total investment and other   3,314        (3,124)       6,438      >100%
   income (expense)
Income (loss) before income     (53,047)     16,226        (69,273)   >(100%)
taxes
 Income tax expense (benefit)   (12,037)     18,239        (30,276)   >(100%)
Net loss                        (41,010)     (2,013)       (38,997)   >100%
 Less: Net income
 attributable to                (837)        (4,173)       3,336      80%
 noncontrolling interests,
 net of tax
Net loss attributable to TDS    (41,847)     (6,186)       (35,661)   >100%
shareholders
 Preferred dividend             (12)         (12)          -          -
 requirement
Net loss available to common  $ (41,859)   $ (6,198)    $  (35,661)   >100%
shareholders
Basic weighted average shares   108,481      108,492       (11)       -
outstanding (2)
Basic loss per share
attributable to TDS           $ (0.39)     $ (0.06)     $  (0.33)     >100%
shareholders (2)
Diluted weighted average        108,481      108,492       (11)       -
shares outstanding (2)
Diluted loss per share
attributable to TDS           $ (0.39)     $ (0.06)     $  (0.33)     >100%
shareholders (2)



(1) Consists of Suttle Straus printing and distribution operations, Airadigm,
    corporate operations and intercompany eliminations.
    On January 13, 2012 TDS shareholders approved a Share Consolidation
    Amendment to the Restated Certificate of Incorporation of TDS. Shares
    outstanding at December 31, 2012, as well as average basic and diluted
(2) shares outstanding used to calculate earnings per share as of the
    beginning of all periods presented, have been retroactively restated to
    reflect the impact of the increased shares outstanding as a result of the
    Share Consolidation Amendment.
N/M – Percentage change not meaningful



Telephone and Data Systems, Inc.
Consolidated Statement of Operations Highlights
Twelve Months Ended December 31,
(Unaudited, dollars and shares in thousands, except per share amounts)


                                                         Increase/ (Decrease)
                               2012         2011         Amount      Percent
Operating revenues
 U.S. Cellular                 $ 4,452,084  $ 4,343,346  $ 108,738    3%
 TDS Telecom                     854,506      815,388      39,118     5%
 All Other (1)                   38,687       21,737       16,950     78%
                                 5,345,277    5,180,471    164,806    3%
Operating expenses
 U.S. Cellular
    Expenses excluding
    depreciation, amortization   3,647,685    3,490,882    156,803    4%
    and accretion
    Depreciation, amortization   608,633      573,557      35,076     6%
    and accretion
    (Gain) loss on asset
    disposals and exchanges,     18,088       (1,873)      19,961     >(100%)
    net
    (Gain) loss on sale of
    business and other exit      21,022       -            21,022     N/M
    costs, net
                                 4,295,428    4,062,566    232,862    6%
 TDS Telecom
    Expenses excluding
    depreciation, amortization   619,503      534,964      84,539     16%
    and accretion
    Depreciation, amortization   193,094      180,530      12,564     7%
    and accretion
    Loss on asset disposals      1,167        1,243        (76)       (6%)
    and exchanges, net
                                 813,764      716,737      97,027     14%
 All Other (1)
    Expenses excluding
    depreciation and             39,283       27,157       12,126     45%
    amortization
    Depreciation and             11,899       11,689       210        2%
    amortization
    Loss on impairment of        515          -            515        N/M
    assets
    (Gain) loss on asset
    disposals and exchanges,     525          (180)        705        >(100%)
    net
                                 52,222       38,666       13,556     35%
          Total operating        5,161,414    4,817,969    343,445    7%
          expenses
Operating income (loss)
 U.S. Cellular                   156,656      280,780      (124,124)  (44%)
 TDS Telecom                     40,742       98,651       (57,909)   (59%)
 All Other (1)                   (13,535)     (16,929)     3,394      20%
                                 183,863      362,502      (178,639)  (49%)
Investment and other income
(expense)
 Equity in earnings of           92,867       82,538       10,329     13%
 unconsolidated entities
 Interest and dividend income    9,248        9,145        103        1%
 Gain (loss) on investment       (3,718)      24,103       (27,821)   >(100%)
 Interest expense                (86,745)     (118,201)    31,456     27%
 Other, net                      720          3,658        (2,938)    (80%)
    Total investment and other   12,372       1,243        11,129     >100%
    income (expense)
Income before income taxes       196,235      363,745      (167,510)  (46%)
 Income tax expense              73,582       113,503      (39,921)   (35%)
Net income                       122,653      250,242      (127,589)  (51%)
 Less: Net income attributable
 to noncontrolling interests,    (40,792)     (49,676)     8,884      18%
 net of tax
Net income attributable to TDS   81,861       200,566      (118,705)  (59%)
shareholders
 Preferred dividend              (50)         (50)         -          -
 requirement
Net income available to common $ 81,811     $ 200,516    $ (118,705)  (59%)
shareholders
Basic weighted average shares    108,671      108,562      109        -
outstanding (2)
Basic earnings per share
attributable to TDS            $ 0.75       $ 1.85       $ (1.10)     (59%)
shareholders (2)
Diluted weighted average         108,937      109,098      (161)      -
shares outstanding (2)
Diluted earnings per share
attributable to TDS            $ 0.75       $ 1.83       $ (1.08)     (59%)
shareholders (2)



(1) Consists of Suttle Straus printing and distribution operations, Airadigm,
    corporate operations and intercompany eliminations.
    On January 13, 2012 TDS shareholders approved a Share Consolidation
    Amendment to the Restated Certificate of Incorporation of TDS. Shares
    outstanding at December 31, 2012, as well as average basic and diluted
(2) shares outstanding used to calculate earnings per share as of the
    beginning of all periods presented, have been retroactively restated to
    reflect the impact of the increased shares outstanding as a result of the
    Share Consolidation Amendment.
N/M – Percentage change not meaningful



Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
ASSETS
                                               December 31,  December 31,
                                               2012          2011
Current assets
 Cash and cash equivalents                     $  740,481    $  563,275
 Short-term investments                           115,700       246,273
 Accounts receivable from customers and others    574,328       542,577
 Inventory                                        160,692       130,044
 Net deferred income tax asset                    43,411        40,898
 Prepaid expenses                                 86,385        80,628
 Income taxes receivable                          9,625         85,636
 Other current assets                             32,815        16,349
                                                  1,763,437     1,705,680
Assets held for sale                              163,242       49,647
Investments
 Licenses                                         1,480,039     1,494,014
 Goodwill                                         797,194       797,077
 Other intangible assets, net                     58,522        50,734
 Investments in unconsolidated entities           179,921       173,710
 Long-term investments                            50,305        45,138
 Other investments                                824           3,072
                                                  2,566,805     2,563,745
Property, plant and equipment, net
 U.S. Cellular                                    3,022,588     2,790,302
 TDS Telecom                                      934,188       936,757
 Other                                            40,490        57,476
                                                  3,997,266     3,784,535
Other assets and deferred charges                 133,150       97,398
Total assets                                   $  8,623,900  $  8,201,005



Telephone and Data Systems, Inc.
Consolidated Balance Sheet Highlights
(Unaudited, dollars in thousands)
LIABILITIES AND EQUITY
                                                   December 31,  December 31,
                                                   2012          2011
Current liabilities
    Current portion of long-term debt              $  1,233      $  1,509
    Accounts payable                                  377,291       364,746
    Customer deposits and deferred revenues           222,345       207,633
    Accrued interest                                  6,565         7,456
    Accrued taxes                                     48,237        41,069
    Accrued compensation                              134,932       107,719
    Other current liabilities                         134,005       144,001
                                                      924,608       874,133
Liabilities held for sale                             19,594        1,051
Deferred liabilities and credits
    Net deferred income tax liability                 862,580       808,713
    Other deferred liabilities and credits            438,727       383,567
Long-term debt                                        1,721,571     1,529,857
Noncontrolling interests with redemption features     493           1,005
Equity
  TDS shareholders' equity
    Series A Common and Common Shares, par value      1,327         1,326
    $.01 (1)
    Capital in excess of par value (1)                2,304,122     2,268,711
    Treasury shares, at cost (1)                      (750,099)     (750,921)
    Accumulated other comprehensive loss              (8,132)       (8,854)
    Retained earnings (1)                             2,464,318     2,451,899
             Total TDS shareholders' equity           4,011,536     3,962,161
  Preferred shares                                    825           830
  Noncontrolling interests                            643,966       639,688
    Total equity                                      4,656,327     4,602,679
Total liabilities and equity                       $  8,623,900  $  8,201,005



    The December 31, 2011 amounts reflect the impact of the Share
(1) Consolidation Amendment to the Restated Certificate of Incorporation of
    TDS, as approved by the TDS shareholders on January 13, 2012.



Balance Sheet Highlights
December 31, 2012
(Unaudited, dollars in thousands)
               U.S.         TDS        TDS          Intercompany  TDS
                                       Corporate
               Cellular     Telecom    & Other      Eliminations  Consolidated
Cash and cash  $ 378,358    $ 89,479   $ 272,644    $  -          $  740,481
equivalents
Affiliated
cash             -            356,414    -             (356,414)     -
investments
Short-term       100,676      -          15,024        -             115,700
investments
               $ 479,034    $ 445,893  $ 287,668    $  (356,414)  $  856,181
Licenses,
goodwill and
other          $ 1,878,639  $ 582,909  $ (125,793)  $  -          $  2,335,755
intangible
assets
Investment in
unconsolidated   144,531      3,809      37,932        (6,351)       179,921
entities
Long-term and
other            50,305       824        -             -             51,129
investments
               $ 2,073,475  $ 587,542  $ (87,861)   $  (6,351)    $  2,566,805
Property,
plant and      $ 3,022,588  $ 934,188  $ 40,490     $  -          $  3,997,266
equipment, net
Long-term
debt:
   Current     $ 92         $ 95       $ 1,046      $  -          $  1,233
   portion
   Non-current   878,858      749        841,964       -             1,721,571
   portion
       Total   $ 878,950    $ 844      $ 843,010    $  -          $  1,722,804
Preferred      $ -          $ -        $ 825        $  -          $  825
shares



Telephone and Data Systems, Inc.

Schedule of Cash and Cash Equivalents and Investments

(Unaudited, dollars in thousands)
The following table presents TDS' cash and cash equivalents and investments at
December 31, 2012 and December 31, 2011.
                                          December 31,        December 31,
                                          2012                2011
Cash and cash equivalents                 $     740,481       $     563,275
Amounts included in short-term
investments (1) (2)
        Government-backed securities (3)        115,700             218,829
        Certificates of deposit                 -                   27,444
                                          $     115,700       $     246,273
Amounts included in long-term investments
(1) (4)
        Government-backed securities (3)        50,305              45,138
Total cash and cash equivalents and       $     906,486       $     854,686
investments



(1) Designated as held-to-maturity investments and are recorded at amortized
    cost in the Consolidated Balance Sheet.
(2) Maturities are less than twelve months from the respective balance sheet
    dates.
    Includes U.S treasury securities and corporate notes guaranteed under the
(3) Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee
    Program.
(4) Maturities range between 14 and 23 months from the balance sheet date.



Telephone and Data Systems, Inc.
Consolidated Statement of Cash Flows
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)


                                                     2012         2011
Cash flows from operating activities
 Net income                                          $ 122,653    $ 250,242
      Add (deduct) adjustments to reconcile net
      income to net cash flows

      from operating activities
                   Depreciation, amortization and      813,626      765,776
                   accretion
                   Bad debts expense                   74,695       68,611
                   Stock-based compensation expense    41,871       36,837
                   Deferred income taxes, net          58,785       202,547
                   Equity in earnings of               (92,867)     (82,538)
                   unconsolidated entities
                   Distributions from unconsolidated   84,884       92,231
                   entities
                   Loss on impairment of assets        515          -
                   (Gain) loss on asset disposals      19,741       (810)
                   and exchanges, net
                   (Gain) loss on sale of business     21,061       -
                   and other exit costs, net
                   (Gain) loss on investment           3,718        (24,103)
                   Noncash interest expense            (572)        18,849
                   Other operating activities          1,393        1,067
      Changes in assets and liabilities from
      operations
                   Accounts receivable                 (81,107)     (95,426)
                   Inventory                           (29,917)     (13,382)
                   Accounts payable                    (12,332)     29,291
                   Customer deposits and deferred      32,981       35,457
                   revenues
                   Accrued taxes                       77,458       (27,871)
                   Accrued interest                    (891)        3,351
                   Other assets and liabilities        (30,523)     (4,418)
                                                       1,105,172    1,255,711
Cash flows from investing activities
 Cash used for additions to property, plant and        (995,517)    (971,759)
 equipment
 Cash paid for acquisitions and licenses               (163,382)    (105,508)
 Cash paid for investments                             (120,000)    (180,920)
 Cash received for divestitures                        50,182       -
 Cash received for investments                         243,444      393,246
 Other investing activities                            (12,796)     (1,148)
                                                       (998,069)    (866,089)
Cash flows from financing activities
 Repayment of short-term debt                          -            (32,671)
 Repayment of long-term debt                           (2,566)      (614,639)
 Issuance of long-term debt                            195,358      643,700
 TDS Common Shares and Special Common Shares           (1,119)      32
 reissued for benefit plans, net of tax payments
 U.S. Cellular Common Shares reissued for benefit      (2,205)      1,935
 plans, net of tax payments
 Repurchase of TDS Common and Special Common Shares    (20,026)     (21,500)
 Repurchase of U.S. Cellular Common Shares             (20,045)     (62,294)
 Dividends paid                                        (53,165)     (48,670)
 Payment of debt issuance costs                        (8,242)      (21,657)
 Distributions to noncontrolling interests             (20,856)     (16,236)
 Payments to acquire additional interests in           (3,167)      -
 subsidiaries
 Other financing activities                            6,136        3,970
                                                       70,103       (168,030)
Net increase in cash and cash equivalents              177,206      221,592
Cash and cash equivalents
 Beginning of period                                   563,275      341,683
 End of period                                       $ 740,481    $ 563,275



TDS Telecom Highlights
Three Months Ended December 31,
(Unaudited, dollars in thousands)
                                                          Increase (Decrease)
                                    2012       2011       Amount      Percent
Local Telephone Operations
  Operating revenues
    Residential                     $ 69,680   $ 69,745   $  (65)     -
    Commercial                        24,665     24,039      626      3%
    Wholesale                         50,900     53,840      (2,940)  (5%)
                                      145,245    147,624     (2,379)  (2%)
  Operating expenses
    Cost of services and products     48,549     48,313      236      -
    Selling, general and              44,020     43,784      236      1%
    administrative expenses
    Depreciation, amortization and    37,669     36,489      1,180    3%
    accretion
    Loss on asset disposals and       269        532         (263)    (49%)
    exchanges, net
                                      130,507    129,118     1,389    1%
  Operating income                  $ 14,738   $ 18,506   $  (3,768)  (20%)
Competitive Local Exchange Carrier
Operations
  Operating revenues
    Residential                     $ 3,871    $ 4,910    $  (1,039)  (21%)
    Commercial                        34,900     34,514      386      1%
    Wholesale                         3,856      4,973       (1,117)  (22%)
                                      42,627     44,397      (1,770)  (4%)
  Operating expenses
    Cost of services and products     22,457     22,654      (197)    (1%)
    Selling, general and              17,574     16,790      784      5%
    administrative expenses
    Depreciation, amortization and    5,490      5,450       40       1%
    accretion
    (Gain) loss on asset disposals    118        (105)       223      >100%
    and exchanges, net
                                      45,639     44,789      850      2%
  Operating loss                    $ (3,012)  $ (392)    $  (2,620)  >(100)%
Hosted and Managed Services
Operations
    Revenues                        $ 36,148   $ 17,258   $  18,890   >100%
  Operating expenses
    Cost of services and products     25,585     9,729       15,856   >100%
    Selling, general and              9,925      5,987       3,938    66%
    administrative expenses
    Depreciation, amortization and    6,296      4,229       2,067    49%
    accretion
    Loss on asset disposals and       3          58          (55)     (95%)
    exchanges, net
                                      41,809     20,003      21,806   >100%
  Operating loss                    $ (5,661)  $ (2,745)  $  (2,916)  >(100)%
Intercompany revenues               $ (2,525)  $ (2,509)  $  (16)     (1%)
Intercompany expenses                 (2,525)    (2,509)     (16)     (1%)
Total TDS Telecom operating income  $ 6,065    $ 15,369   $  (9,304)  (61%)



TDS Telecom Highlights
Twelve Months Ended December 31,
(Unaudited, dollars in thousands)
                                                          Increase (Decrease)
                                   2012        2011       Amount      Percent
Local Telephone Operations
  Operating revenues
    Residential                    $ 279,400   $ 279,858  $ (458)     -
    Commercial                       97,382      98,581     (1,199)   (1%)
    Wholesale                        201,630     219,372    (17,742)  (8%)
                                     578,412     597,811    (19,399)  (3%)
  Operating expenses
    Cost of services and products    192,514     191,591    923       -
    Selling, general and             170,493     158,302    12,191    8%
    administrative expenses
    Depreciation, amortization and   150,557     145,687    4,870     3%
    accretion
    Loss on asset disposals and      574         1,043      (469)     (45%)
    exchanges, net
                                     514,138     496,623    17,515    4%
  Operating income                 $ 64,274    $ 101,188  $ (36,914)  (36%)
Competitive Local Exchange Carrier
Operations
  Operating revenues
    Residential                    $ 17,192    $ 22,006   $ (4,814)   (22%)
    Commercial                       138,637     138,230    407       -
    Wholesale                        17,568      20,096     (2,528)   (13%)
                                     173,397     180,332    (6,935)   (4%)
  Operating expenses
    Cost of services and products    89,949      91,348     (1,399)   (2%)
    Selling, general and             66,886      64,509     2,377     4%
    administrative expenses
    Depreciation, amortization and   21,969      21,976     (7)       -
    accretion
    Loss on asset disposals and      485         85         400       >100%
    exchanges, net
                                     179,289     177,918    1,371     1%
  Operating income (loss)          $ (5,892)   $ 2,414    $ (8,306)   >(100)%
Hosted and Managed Services
Operations
    Revenues                       $ 113,010   $ 47,180   $ 65,830    >100%
  Operating expenses
    Cost of services and products    75,781      23,502     52,279    >100%
    Selling, general and             34,193      15,647     18,546    >100%
    administrative expenses
    Depreciation, amortization and   20,568      12,867     7,701     60%
    accretion
    Loss on asset disposals and      108         115        (7)       (6%)
    exchanges, net
                                     130,650     52,131     78,519    >100%
  Operating loss                   $ (17,640)  $ (4,951)  $ (12,689)  >(100)%
Intercompany revenues              $ (10,313)  $ (9,935)  $ (378)     (4%)
Intercompany expenses                (10,313)    (9,935)    (378)     (4%)
Total TDS Telecom operating income $ 40,742    $ 98,651   $ (57,909)  (59%)



Telephone and Data Systems, Inc.
 Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
                                                                  Consolidated
Three Months Ended        U.S. Cellular  TDS Telecom  All Other   Total
December 31, 2012                        (1)          (2)
 Operating revenues       $  1,115,206   $  221,495   $ 9,508     $  1,346,209
 Deduct:
  U.S. Cellular
  equipment sales            106,282
  revenue
      Service revenues       1,008,924
 Operating income (loss)     (60,788)       6,065       (1,638)      (56,361)
 Add (Deduct):
  Depreciation,
  amortization and           169,242        49,455      2,767        221,464
  accretion
  Loss on impairment of      -              -           -            -
  assets
  Loss on asset
  disposals and              2,121          390         514          3,025
  exchanges, net
  (Gain) loss on sale of
  business and other         25,170         -           -            25,170
  exit costs, net
      Adjusted OIBDA (3)  $  135,745     $  55,910    $ 1,643     $  193,298
      Adjusted OIBDA         13.5%          25.2%
      margin (4)
                                                                  Consolidated
Three Months Ended        U.S. Cellular  TDS Telecom  All Other   Total
December 31, 2011                        (1)          (2)
 Operating revenues       $  1,099,633   $  206,770   $ 10,324    $  1,316,727
 Deduct:
  U.S. Cellular
  equipment sales            69,588
  revenue
      Service revenues       1,030,045
 Operating income (loss)     16,316         15,369      (12,335)     19,350
 Add (Deduct):
  Depreciation,
  amortization and           141,976        46,168      3,735        191,879
  accretion
  Loss on impairment of      -              -           -            -
  assets
  (Gain) loss on asset
  disposals and              3,868          485         (193)        4,160
  exchanges, net
      Adjusted OIBDA (3)  $  162,160     $  62,022    $ (8,793)   $  215,389
      Adjusted OIBDA         15.7%          30.0%
      margin (4)
                          TDS Consolidated
Three Months Ended        2012           2011
December 31,
 Cash flows from          $  344,636     $  316,510
 operating activities
 Deduct:
 Cash used for additions
 to property, plant,         264,620        369,999

 and equipment
      Free cash flow (5)  $  80,016      $  (53,489)



Telephone and Data Systems, Inc.
Financial Measures and Reconciliations
(Unaudited, dollars in thousands)
                                                                 Consolidated
Twelve Months Ended      U.S. Cellular  TDS Telecom  All Other   Total
December 31, 2012                       (1)          (2)
 Operating revenues      $  4,452,084   $ 854,506    $ 38,687    $  5,345,277
 Deduct:
   U.S. Cellular
   equipment sales          353,228
   revenue
      Service revenues      4,098,856
 Operating income           156,656       40,742       (13,535)     183,863
 (loss)
 Add (Deduct):
   Depreciation,
   amortization and         608,633       193,094      11,899       813,626
   accretion
   Loss on impairment       -             -            515          515
   of assets
   Loss on asset
   disposals and            18,088        1,167        525          19,780
   exchanges, net
   (Gain) loss on sale
   of business and          21,022        -            -            21,022
   other exit costs,
   net
      Adjusted OIBDA     $  804,399     $ 235,003    $ (596)     $  1,038,806
      (3)
      Adjusted OIBDA        19.6%         27.5%
      margin (4)
                                                                 Consolidated
Twelve Months Ended      U.S. Cellular  TDS Telecom  All Other   Total
December 31, 2011                       (1)          (2)
 Operating revenues      $  4,343,346   $ 815,388    $ 21,737    $  5,180,471
 Deduct:
   U.S. Cellular
   equipment sales          289,549
   revenue
      Service revenues      4,053,797
 Operating income           280,780       98,651       (16,929)     362,502
 (loss)
 Add (Deduct):
   Depreciation,
   amortization and         573,557       180,530      11,689       765,776
   accretion
   Loss on impairment       -             -            -            -
   of assets
   (Gain) loss on asset
   disposals and            (1,873)       1,243        (180)        (810)
   exchanges, net
      Adjusted OIBDA     $  852,464     $ 280,424    $ (5,420)   $  1,127,468
      (3)
      Adjusted OIBDA        21.0%         34.4%
      margin (4)
                         TDS Consolidated
Twelve Months Ended      2012           2011
December 31,
 Cash flows from         $  1,105,172   $ 1,255,711
 operating activities
 Deduct:
 Cash used for
 additions to property,
 plant,                     995,517       971,759

 and equipment
      Free cash flow     $  109,655     $ 283,952
      (5)



(1) Includes ILEC, CLEC and HMS intercompany eliminations.
    Consists of Suttle-Straus and Airadigm (as of September 23, 2011), which
    represents TDS' Non-Reportable Segment, corporate operations and
(2) intercompany eliminations between U.S. Cellular, TDS Telecom and corporate
    operations. Amounts in this column are presented only to reconcile to
    consolidated totals and may not otherwise be meaningful.
    Adjusted OIBDA is defined as operating income excluding the effects of:
    depreciation, amortization and accretion (OIBDA); the loss on impairment
(3) of assets (if any); the net gain or loss on asset disposals and exchanges
    (if any); and the net gain or loss on sale of business and other exit
    costs (if any).
    Adjusted OIBDA margin is 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,
(4) and the net equipment subsidy is effectively a cost for purposes of
    assessing business results and is already reflected in adjusted OIBDA. 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.
    Free cash flow is defined as cash flows from operating activities less
    Cash used for additions to property, plant and equipment. Free cash flow
(5) 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.



SOURCE Telephone and Data Systems, Inc.

Website: http://www.teldta.com
Contact: Jane W. McCahon, Vice President, Corporate Relations and Corporate
Secretary, +1-312-592-5379, jane.mccahon@teldta.com, or Julie D. Mathews,
Manager, Investor Relations, +1-312-592-5341, julie.mathews@teldta.com
 
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